The Marketing Mix

Almost every company on the planet sets out with the primary objective of making money. This is usually 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 specific details.

First of all, it is a very rare case that a business can offer a product or service that is truly unique and cannot be provided by anybody else. This means that your business will be competing 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 competitors. It is a very extensive topic that is influenced by a great number of internal and external variables, but when done well it can be the one business practice that could make or break a corporation.

So where should you begin when creating a marketing strategy for your own business? Well, each situation is different, and every industry will have its own set of advantages and weak points that must be taken into consideration, but there is a marketing rule that can be applied to almost any company to be used as a marketing framework.

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 reflects the fact that marketing is not a simple, blunt-edged business tool, but rather a delicate balance of different elements of business operations.

The term was later developed to include the concept of “four P’s” that described the critical elements of the marketing mix. The formalisation of these P’s made it very clear for company managers and marketers to quickly associate the elements of marketing to the strengths of their own companies, and by doing so could very rapidly form a personalised and efficient marketing system.

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Product

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

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

Take the computer software market as an example. There are many well-known brands of both operating system and software application products in the marketplace already, and because the market is fairly well saturated it would be incredibly tough (and expensive) to “take on the big boys”. So how can 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 rival the likes of Microsoft and 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 mindful of the marketing mix early on in your product development cycle you can avoid business dead-ends at a later stage.

Once your goods have been designed and created it is still a vital skill to be able to objectively review your own products to recognise the reasons why a customer would buy your product rather than a competitors’. The technique is called product differentiation and is one of the fundamental skills of the product part of the marketing mix cake.

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

The car industry uses this technique very effectively by offering different engines, trim packages and interior options with the cars that they sell. 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 companies.

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Price

Another key factor in the marketing mix relates to the price of your products or services. This is not a simple case of performing market research to figure out 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 weapon designed to achieve any specific goals your company has. The potential advantages of an effective pricing strategy are surprisingly large!

Whilst it may seem obvious, it’s 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 always consider the lowest price to be the best price. Actually a price that is too low can often turn customers away.

There are many questions that you need to ask yourself when devising a good pricing strategy, key amongst 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 though, pricing can be covered by two main principals; price skimming and also penetration pricing.

Price skimming

The main idea driving price skimming is to make as much money as possible from the sector of the market which is price-insensitive and are going to be willing to spend a large amount of money to get a product or service early on. Not only can this technique yield great financial advantages, but it can also promote an exclusive and high quality image of your item.

This pricing technique is very often used in the consumer electronics market where customers will often eagerly await the release of a new mobile phone or computer games console. Manufacturers could set almost any price they wanted to and there would still be a loyal core of customers that would pay it. By using this method as part of a pre-ordering strategy, a company can help to smooth its own cash flow.

Penetration pricing

Penetration pricing is at the opposite 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 setup 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 earnings 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 essential to get your pricing strategy right.

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Place

Place is the part of the marketing mix that is often not addressed by companies, but it’s still an important part of selling your product effectively. In a nutshell, it describes the method in which you deliver your product to your consumer, and consequently how you collect money from them.

The most common implications of place-based marketing are the physical locations in which your products are sold. For the vast majority of consumer products, this includes the distribution infrastructure between your production plants and shops or other outlets around the world. Since distribution of a physical product costs money it is crucial to determine your own priorities and adjust your distribution network accordingly. This is the main use of this element of the marketing mix.

With the growing use of the Internet by your prospective 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) firms are now able to reach out to a large pool of possible customers. Effective placing of your product or service can therefore deliver impressive financial results.

Promotion

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

Advertising is one of the most typical forms of promotion. Typically it would be done by posting on billboards, creating short clips for TV and radio or by physically handing out flyers or leaflets to potential customers. 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 materials posted through your front door.

Another important part of promotion involves branding, which may not necessarily yield more sales directly, but goes back to one of the initial functions of marketing; getting customers to choose your product over those of your competitors. When all other parts of the marketing mix are equal it can be branding that swings a customer’s decision.

Putting it into Practice

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

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