The Four P’s

Nearly every business on the planet sets out with the main objective of earning money. This is generally done by producing some form of product, or offering a service, and then charging people money for it.

First of all, it is a very rare case where a business can offer a product or service that is truly unique and cannot be supplied by anyone else. This means that your enterprise will be contesting 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.

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

So where should you start when constructing a marketing strategy for your own business? Well, every situation is different, and every business will have its own set of strengths and weak points that must be taken into consideration, but there is a marketing principle 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 during the 1950′s and is an expression that is used to express the fundamental building blocks of any marketing system. It reflects the fact that marketing is not a simple, blunt-edged business technique, but rather a delicate balance of different elements of business functions.

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 clear 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 rapidly create a customised and efficient marketing system. The four P’s are Product, Price, Place and Promotion.

Nearly every segment in the modern marketplace is competitive, especially back treatment Ruddington, where proper promotional judgements can mean the success or failure of the business.

Product

Although every element of the marketing mix is a necessity, the “product” element mentioned as one of the four P’s is perhaps the most crucial of all. It describes the physical product or intangible service that your business will be selling, 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 company will find it hard to make it through.

Several people don’t think that marketing has any place to play when it comes to the actual product that your company is selling. In fact, the typical train of thought very often bears the exact opposite sentiment. Surely it should be the other way around – your manufacturing 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 well-known brands of both operating system as well as software application solutions in the market already, and because the market is fairly well saturated it would be very tough (and expensive) to “take on the big boys”.

Rather than developing an operating system and then trying 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 sought after 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 time.

Once your products have been fashioned and created it is still a critical 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’.

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 already in the market, or to make your brand new product attractive to as many customers as possible.

The motor 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 extremely competitive marketplace. Although these companies may have substantial marketing budgets, the same principles can be applied to all companies.

As part of our own promotion method, our Alarm Watch business carefully studied exactly what made our goods stand out from the crowd.

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 figure out 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. The potential benefits of an effective pricing plan are surprisingly large!

Whilst it may seem obvious, it is still worth pointing out 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 don’t constantly consider the cheapest price to be the best price. In fact a price that is too low can sometimes turn buyers away.

There are many questions that you need to ask yourself while devising a good pricing plan, key among which are the price sensitivity of your customers, what your competitors are doing and how can pricing maximise your own profits. From a strategy point of view though, pricing can be covered by two primary 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 sector 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.

This pricing technique is frequently used in the consumer electronics industry where customers will often eagerly await the launch of a new mobile phone or computer games console. Manufacturers could set nearly any price they wanted to and there would still be a loyal base of customers that would pay it. By making use of this method as part of a pre-ordering strategy, a firm 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 high risk strategy, but when employed correctly it can create revenue streams for many years to come. When establishing a price for penetration it is still essential to not give a bad impression of your product by aiming for too low a number.

Yet 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 undertake. So it is even more vital to get your pricing technique right.

When our organisation was performing market research before a brand new product release we identified get a boyfriend was the key phrase that promoted the best “value for money” image.

Place

Place is the part of the marketing mix that is often not addressed by companies, but it’s still a significant part of selling your product successfully. In short, it describes the method in which you deliver your product to your customer, and consequently how you receive money from them. It can be a fantastic marketing technique when applied appropriately.

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

With the increasing use of the Internet by your prospective customers, marketing methods have had to take into account how they use the Internet to help deliver 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 possible customers.

Promotion

When you say the word “marketing”, many people instantly think of the promotional aspect of the marketing mix, although as we have seen, this is only 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 might be a costly undertaking it is often an essential one. The primary concern of promotion is to deliver a specific message that will increase 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 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 simply as targeted advertising materials posted through your front door.

Another significant part of promotion involves branding, which will not necessarily yield more product sales directly, but relates back to one of the initial purposes of marketing; getting customers to choose your product over those of your rivals.

Putting it into Practise

As previously mentioned each business is unique and will have different marketing needs. By using a balance of the four P’s reviewed above you can take a good view of your own marketing strategy.