Product, Price, Place & Promotion

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

Firstly, it is a very rare case that a business can offer a product or service that is genuinely unique and cannot be supplied by anyone else. This means that your enterprise 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 cash once. So how can you increase the chances of them spending money with you?

Marketing is the main tool used by modern businesses to draw prospective customers to do business with them and not with their rivals. It is a very broad topic that is influenced by a great deal of internal and external variables, but when done right it can be the one business practice that could make or break a company.

So where should you start when creating a marketing strategy for your own company? Well, each situation is different, and every business will have its own set of strengths and weaknesses 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 framework.

The Marketing Mix

The marketing mix was a phrase that was first coined in the 1950′s and is an expression that is used to express the fundamental building blocks of any marketing strategy. It reflects the fact that marketing is not a simple, 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 critical elements of the marketing mix. The formalisation of these P’s made it very easy for business 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 personalised and effective marketing plan. The four P’s are Product, Price, Place and Promotion.

Our organisation created a marketing approach for our industrial floor repair by applying this advertising and marketing mix to determine our marketing strengths

Product

Although every aspect of the marketing mix is a necessity, 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 selling, and at the end of the day it is the reason that customers are going to spend money with you. If this element is not adequately managed then your organisation will find it hard to survive.

Several people do not think that marketing has any role 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 exact opposite sentiment. Surely it should be the other way around – your manufacturing department creates an item 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 as well as software application products on the market already, and because the market is relatively well saturated it would be incredibly tough (and expensive) to “take on the big boys”. So how could the principles of the marketing mix assist in this situation?

Rather than developing 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 types of product are desired in the current marketplace, and how feasible it would be to produce and sell them.

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

A different 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 brand new product attractive to as many customers as possible.

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

With the rise of the Internet and ecommerce companies find their sitesincluding lace tablecloths could be used 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 carrying out market research to figure out the highest price that your customers would spend (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 business has. The potential advantages of an effective pricing plan are surprisingly large!

Whilst it may seem obvious, it is still worth noting that price has always been, and probably always will be, one of the key factors that customers take into account when they are making a purchase. It is also worth noting that customers don’t always 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 amongst which are the price sensitivity of your customers, what your competitors are doing and how can pricing boost your own profits. From a strategy point of view though, pricing can be covered by two main principals; price skimming and also penetration pricing. These are outlined below.

Price skimming

The principal idea driving price skimming is to make as much cash as possible from the sector of the market which is price-insensitive and will be willing to spend a premium amount of money to receive a product or service early on. Not only can this approach yield great economic benefits, 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 release 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 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 money flow.

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 benefits can be earned long into the future. It can be a risky strategy, but when used correctly it can setup revenue streams for many years to come. When setting a price for penetration it is still important to not give a bad impression of your product by aiming for too low a number.

Another thing to bear in mind is that “price” is the one part of the marketing mix that will generate income for a business. The other members of the four P’s will all cost money to produce or carry out.

Our company has tweaked its company website so pork cooking appears more regularly so more people can find us through search engines.

Place

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

The most common implications of place-based marketing are the physical venues in which your products are sold. For the vast majority of consumer products, this involves the distribution network between your manufacturing plants and retailers and other outlets around the country. Since distribution of a physical product costs money it is crucial to identify your own priorities and adapt your distribution network appropriately. This is the principal application of this element of the marketing mix.

With the increasing use of the Internet by your potential customers, marketing methods have had to take into account how they use the Internet to help distribute their products. By using the Internet as a point of contact (or even as a complete distribution route in download-based markets such as MP3s) firms are now able to reach out to a huge pool of possible customers.

Promotion

When you mention the word “marketing”, most people instantly think of the promotional side 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 can be a costly undertaking it is often an essential one. The primary concern of promotion is to deliver a particular 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 customers. With the coming 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 product sales directly, but relates back to one of the preliminary functions 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 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 reviewed above you can take an effective view of your own marketing plan.