DIY Wealth Creation

Almost every company on the planet sets out with the primary objective of earning money. This is generally done by manufacturing some form of product, or offering a service, and then charging customers money for it. This fundamental theory is fairly straight-forward, though it contains many intricate details.

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

Marketing is the main tool used by modern organisations to draw potential 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 factors, but when done right it can be the one business practice that can make or break a corporation.

So where should you start when constructing a marketing strategy for your own company? Well, each situation is different, and each business will have its own set of strengths and weaknesses that must be taken into consideration, but there is a marketing rule that can be applied to almost any corporation to be used as a marketing platform.

The Marketing Mix

The marketing mix was a phrase that was first coined during the 1950′s and is an expression that is used to describe the fundamental building blocks of any marketing system. It reflects the fact that marketing is not a straightforward, blunt-edged business technique, but rather a delicate balance of different elements of business operations.

The term was later built upon to include the concept 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 swiftly relate the elements of marketing to the strengths of their own companies, and by doing so could very quickly form a tailored and effective marketing strategy. The four P’s are Product, Price, Place and Promotion.

The “product” aspect of the four P’s could pertain to a product, just like conference production company, or even any intangible service being offered for sale by a company.

Product

Whilst every aspect of the marketing mix is a requirement, the “product” element mentioned as one of the four P’s is perhaps the most critical of all. It identifies the physical product or intangible service that your company will be offering, and at the end of the day it is the reason that buyers are going to spend money with you.

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

Consider the computer software market as an example. There are many established brands of both operating system as well as software application solutions on the market already, and because 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 assist in this circumstance?

Rather than creating an operating system and then attempting to craft a marketing strategy to take on the likes of Microsoft or Apple, it would be more effective to look at what sorts of product are desired in the current marketplace, and how viable it would be to produce and sell them. By being aware of the marketing mix early on in your product development period you can avoid business dead-ends at a later stage.

Once your products have been fashioned and created it is still a vital skill to be able to objectively evaluate your own products to recognise the reasons that a customer should buy your product rather than a competitors’. The skill is called product differentiation and forms one of the basic skills of the product part of the marketing mix pie.

Another form of this part of the marketing mix is known as product variation and is typically used to either extend the lifecycle of a product currently in the market, or to make your new product attractive to as many customers as possible.

The car 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 good effect to sell their own goods in an incredibly competitive marketplace. Whilst these companies may have substantial marketing budgets, the same principles can be applied to all businesses.

As part of our individual promotion plan, our business very carefully researched what exactly made our goods stand out from the crowd.

With the rise of the Internet and e-commerce businesses find their own website may be utilised as a direct sales channel and distribution network.

Price

Another important factor in the marketing mix concerns the price of your products or services. This is not a simple case of performing market research to determine the top price that your customers would pay (although that can be a handy tool to use), but rather making use of the price of your products as a strategic tool designed to achieve any particular goals your business has. The potential advantages of an effective pricing plan are surprisingly large!

Whilst it may seem obvious, it’s still worth pointing out that price has always been, and likely 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 cheapest price to be the best value. In fact a price that is too low can sometimes turn buyers away.

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

Price skimming

The main idea driving price skimming is to make as much money as possible from the segment of the market which is price-insensitive and will be prepared to spend a large amount of money to get a product or service early on. Not only can this technique deliver excellent financial advantages, but it can also advertise an exclusive and high quality image of your product.

This pricing technique is very often 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 nearly any price they wanted to and there would still be a loyal core 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 monetary rewards can be earned long into the future. It can be a high risk strategy, but when used correctly it can create revenue streams for many years to come.

Another thing to bear in mind is that “price” is the one 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 undertake.

It might seem evident that marketing is vitally important for a undergraduate physics text books seller like ours, but the suggestions still need to be put into practice, which isn’t always easy.

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 successfully. In a nutshell, it describes the way in which you provide your product to your consumer, and subsequently how you collect money from them.

The most typical implications of place-based marketing are the physical locations in which your products are sold. For the vast majority of consumer products, this involves the distribution network between your production centres and retailers or other outlets around the world. Since distribution of a physical product costs money it is important to determine your own priorities and adjust your distribution network accordingly.

With the growing use of the Internet by your potential customers, marketing methods have had to consider how they use the Internet to help deliver their products. By using the Internet as a point of contact (or even as an entire distribution route in download-based markets such as MP3s) companies are now able to reach out to a large pool of potential customers.

Promotion

When you mention the word “marketing”, many people immediately think of the promotional side of the marketing mix, although as we have seen, this is merely one branch of a more complete system. Promotion can be employed on a very individual basis or as a mass communication tool, and whilst it can be a costly undertaking it is often an important one. The key concern of promotion is to deliver a certain message that will boost sales.

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

Another significant part of promotion involves branding, which may not necessarily yield more sales directly, but goes back to one of the preliminary purposes of marketing; getting customers to pick your product over those of your rivals. When all other parts of the marketing mix are equal it could be branding that swings a customer’s choice.

Putting it into Practice

As previously mentioned every business is different and will have different marketing requirements. By using a mixture of the four P’s reviewed above you can take an effective view of your own marketing plan.

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