Product, Price, Place & Promotion

Practically every company on the planet sets out with the main 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, although it contains many specific details.

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

Marketing is the main tool used by modern firms 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 deal of internal and external factors, but when done right it can be the single business practice that could make or break a corporation.

So where should you begin when creating a marketing strategy for your own company? Well, every situation is different, and each industry will have its own set of strengths and flaws 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. It is called the “Marketing Mix”.

The Marketing Mix

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

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 business managers and marketers to swiftly relate the elements of marketing to the strengths of their own companies, and by doing so could very rapidly create a tailored and efficient marketing plan.

The “product” element of the four P’s can refer to a product, such as this great website, or even any kind of non-physical service being provided for sale by a business.

Product

Although 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 describes the physical product or intangible service that your company will be selling, and at the end of the day it is the reason that buyers are going to spend money with you.

Many people do not think that marketing has any place to play when it comes to the actual product that your company is selling. In fact, the common train of thought very often bears the precise 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 discover 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 on the market already, and since 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 help in this circumstance?

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 far more effective to look at what types of product are sought after in the current marketplace, and how feasible 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 stage.

Once your products have been fashioned and created it is still a critical skill to be able to objectively review your own products to identify the reasons that a customer would buy your product rather than a competitors’. The technique is called product differentiation and forms one of the basic skills of the product part of the marketing mix cake.

A different form of this part of the marketing mix is known as product variation and is generally used to either prolong the lifecycle of a product currently in the market, or to make your new product attractive to as many consumers as possible.

The car industry uses this technique very effectively by offering different engines, trim packages and interior options with the cars that they offer. They use the marketing mix to great effect to sell their own goods in an incredibly competitive marketplace. Whilst these companies may have substantial marketing budgets, the same concepts can be applied to all businesses.

We do not have a distinct marketing division in our own how to make bread operation though several of our own administrators have been able to take up marketing as part of their job role.

Price

Another important factor in the marketing mix relates to the price of your products or services. This isn’t a simple case of performing market research to determine the highest price that your customers would pay (although that can be a handy tool to use), but rather using the price of your products as a strategic tool designed to achieve any specific targets your business has.

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 constantly consider the lowest price to be the best price.

There are many questions that you need to ask yourself when devising a good pricing strategy, key among which are the price sensitivity of your clients, 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 primary principals; price skimming and also penetration pricing.

Price skimming

The principal idea driving price skimming is to make as much money 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 get a product or service early on. Not only can this technique deliver great economic benefits, but it can also promote an exclusive and high quality image of your product.

This pricing strategy 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 opposite end of the pricing spectrum, and is tailored towards gaining a large market share at a short-term cost so that monetary benefits can be made long into the future. It can be a high risk strategy, but when employed correctly it can setup revenue streams for many years to come. When establishing 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 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. So it is even more essential to get your pricing technique right.

To optimise our website for google marketing we chose DVD for Children as an aimed key phrase since it relates to our business and what we offer.

Place

Place is the component of the marketing mix that’s often not addressed by companies, but it is still a significant part of selling your product effectively. In short, it describes the way in which you deliver your product to your consumer, and subsequently how you collect money from them.

The most typical implications of place-based marketing are the physical venues in which your products are sold. For the majority of consumer products, this includes the distribution infrastructure between your production centres and shops and other outlets around the country. Since distribution of a physical product costs money it is important to determine your own priorities and modify your distribution network accordingly.

With the growing use of the Internet by your potential customers, marketing techniques 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 a complete distribution route in download-based markets such as MP3s) companies are now able to reach out to a large pool of possible customers. Effective positioning of your product or service can therefore yield impressive financial results.

Promotion

When you mention the word “marketing”, many people instantly 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 employed on a very individual basis or as a mass communication instrument, and whilst it may be an expensive undertaking it is often an important one. The key concern of promotion is to deliver a specific message that will improve sales.

Advertising is one of the most typical 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 witnessed a great increase in promotion via e-mail and the Internet, or just as targeted advertising material posted through your door.

Another important part of promotion involves branding, which will not necessarily yield more product sales directly, but goes back to one of the preliminary purposes of marketing; getting customers to pick 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 unique 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 strategy.