Almost every company on the planet sets out with the primary objective of making money. This is usually done by producing some form of product, or offering a service, and then charging people money for it. This fundamental theory is fairly straight-forward, although it contains many specific details.

First of all, it is a very rare case that a company can offer a product or service that is genuinely unique and cannot be supplied by anyone else. This means that your business will be competing with other businesses that sell a similar item and you will both be trying to earn money from the same customers, who only want to spend their money once. So how can you improve the chances of them spending money with you?

Marketing is the primary tool used by modern businesses to draw prospective customers to do business with them and not with their rivals. It is a very extensive topic that is affected by a great number of internal and external variables, but when done right it can be the one business practice that could make or break a corporation. Any time spent on marketing will reap benefits, although spending this time efficiently can yield incredible results.

So where should you begin when constructing a marketing strategy for your own company? Well, each situation is different, and every company will have its own set of strengths and flaws that must be taken into consideration, but there is a marketing principle that can be applied to almost any corporation to be used as a marketing platform. It is known as the “Marketing Mix”.

The Marketing Mix

The marketing mix was a phrase that was first coined in the 1950′s and is a phrase that is used to describe the fundamental building blocks of any marketing system. It demonstrates the fact that marketing is not a simple, blunt-edged business technique, but rather a subtle balance of different elements of business operations. It got its name because it is similar to the ingredients checklist for a recipe.

The term was later developed to include the idea of “four P’s” that described the essential elements of the marketing mix. The formalisation of these P’s made it very easy for company managers and marketers to quickly relate the elements of marketing to the strengths of their own companies, and by doing so could very quickly form a customised and efficient marketing plan.

The “product” element of the four P’s could refer to a product, such as novelty childerens bed linen services, or any kind of intangible asset being provided for sale by a business.

Product

Whilst every element of the marketing mix is a necessity, the “product” element mentioned as one of the four P’s is possibly the most crucial of all. It identifies the physical product or intangible service that your business will be offering, and at the end of the day it is the reason that buyers are going to spend money with you. If this part is not correctly managed then your organisation will find it hard to survive.

Several people don’t think that marketing has any place to play when it comes to the physical product that your business is selling. In fact, the common train of thought very often bears the precise opposite sentiment. Surely it should be the other way around – your production department creates a product for sale and then it is the job of the marketing department to discover ways to sell it, right? This is not necessarily the case.

Take the computer software market as an example. There are many established brands of both operating system and software application solutions on the marketplace already, and since the market is fairly well saturated it would be very tough (and expensive) to “take on the big boys”. So how could the principles of the marketing mix help in this circumstance?

Rather than creating an operating system and then attempting to craft a marketing strategy to rival the likes of Microsoft or Apple, it would be more effective to look at what sorts of product are sought after in the current marketplace, and how viable it would be to manufacture and sell them. By being mindful of the marketing mix early on in your product development cycle you can prevent business dead-ends at a later time.

Once your goods have been fashioned and created it is still a critical skill to be able to objectively review your own products to recognise the reasons that a customer would buy your product rather than a competitors’.

Another form of this part of the marketing mix is known as product variation and is generally used to either extend the lifecycle of a product currently in the market, or to make your brand new product attractive to as many customers as possible. Once again, this method can be applied at all stages of product development.

The motor industry uses this technique very effectively by offering various engines, trim packages and interior options with the cars that they offer. They use the marketing mix to great effect to sell their own products in an extremely competitive marketplace.

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Price

Another important factor in the marketing mix relates to the price of your products or services. This isn’t a simple case of carrying out market research to determine the highest price that your customers would spend (although that can be a useful tool to use), but rather making use of the price of your products as a strategic tool designed to achieve any particular goals your company has.

Whilst it may seem obvious, it is still worth noting that price has always been, and probably always will be, one of the crucial factors that customers take into account when they are making a purchase. It is also worth noting that customers do not constantly consider the lowest price to be the best price.

There are many questions that you need to ask yourself while devising a good pricing strategy, key among which are the price sensitivity of your customers, what your rivals are doing and how can pricing maximise your own profits. From a strategy point of view however, pricing can be covered by two main principals; price skimming and also penetration pricing. These are outlined below.

Price skimming

The principal idea behind price skimming is to make as much cash as possible from the segment of the market which is price-insensitive and are going to be willing to spend a premium amount of money to receive a product or service early on. Not only can this technique deliver great economic advantages, but it can also promote an exclusive and high quality image of your item.

This pricing strategy is frequently used in the consumer electronics market where customers will often eagerly await the launch of a new mobile phone or computer games console. Makers could set almost any price they wanted to and there would still be a loyal base of customers that would pay it.

Penetration pricing

Penetration pricing is at the other end of the pricing spectrum, and is geared towards gaining a large market share at a short-term cost so that financial rewards can be earned long into the future. It can be a risky strategy, but when employed correctly it can create revenue streams for many years to come. When setting a price for penetration it is still critical to not give a poor impression of your product by aiming for too low a figure.

Another thing to keep in mind is that “price” is the only part of the marketing mix that will generate revenue for a business. The other members of the four P’s will all cost money to produce or carry out. So it is even more vital to get your pricing technique right.

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Place

Place is the portion of the marketing mix that is often disregarded by companies, but it’s still an important part of selling your product effectively. In short, it describes the method in which you provide your product to your consumer, and consequently how you collect money from them. It can be a fantastic marketing approach when used appropriately.

The most typical ramifications of place-based marketing are the physical venues in which your products are sold. For the majority of consumer products, this involves the distribution network between your manufacturing centres and shops or other outlets around the country. Since distribution of a physical product costs money it is crucial to identify your own priorities and alter your distribution network appropriately. This is the primary application of this element of the marketing mix.

With the growing use of the Internet by your potential customers, marketing strategies have had to take into account how they use the Internet to help distribute their products. By using the Internet as a place of contact (or even as a whole distribution route in download-based markets such as MP3s) companies are now able to reach out to a large pool of potential customers. Effective placing of your product or service can therefore yield impressive economic results.

Promotion

When you say the word “marketing”, many people immediately think of the promotional aspect of the marketing mix, although as we have seen, this is merely one branch of a more comprehensive system. Promotion can be used on a very individual basis or as a mass communication instrument, and whilst it might be an expensive undertaking it is often an essential one.

Advertising is one of the most common forms of promotion. Classically it would be done by posting on billboards, producing short clips for TV and radio or by physically handing out flyers or leaflets to potential customers. With the coming of the information age we have seen a great increase in promotion via e-mail and the Internet, or just as targeted advertising materials posted through your front door. The potential for individualised advertising has never been so good.

Another significant part of promotion involves branding, which will not necessarily yield more sales directly, but relates back to one of the preliminary purposes of marketing; getting customers to pick your product over those of your competitors. When all other pieces of the marketing mix are equal it can be branding that sways a customer’s choice.

Putting it into Practice

As previously mentioned every company is unique and will have different marketing requirements. By using a balance of the four P’s discussed above you can take an effective view of your own marketing strategy.