Use of Marketing Mix by Small or Medium Businesses - Essay Example

Marketing Mix Order No. 167698 MAY 2007 The success of any business depends on how well a manager can develop a marketing strategy that will help in building a strong customer base. He should be able to identify customers needs and chart out a program to satisfy them. At the same time he should have the organizations profitability in mind. In todays highly competitive market, a company must be on its toes and employ the right tools so that its brand comes out on top. An owner or a manager of a small business has to design and plan out a comprehensive marketing program for the company to meet its objectives. In order to do this, he makes use of a number of tools, which is known as the marketing mix. Use of Marketing Mix by small or medium businesses Marketing mix generally consists of the choices an organisation has to make to introduce a product or service or to increase the saleability of the product. According to renowned marketing guru Philip Kotler, "The marketing mix is the set of marketing tools the firm uses to pursue its marketing objectives in the target market" (Kotler P.2003, Marketing Management, pg 15). In 1960, E.J. McCarthy put together the 4Ps of marketing, which is now widely considered to be the best way to make the marketing mix work most effectively. Small business owners can use this marketing mix model of the 4Ps - Product, Price, Place, Promotion effectively when deciding to introduce a new product or when they want to evaluate their existing strategy. Product Choosing a Product: Any business that wants to sell its products must first choose the market it wants to sell its product to. Once that is determined it is easy to identify the customers and their needs. A product should also be one that has to be replaced periodically. Customers who buy the products should come back to buy again once they use the product. This will automatically increase the volume of sales. When choosing a product based on popularity it is very important to time the product. A product has to be picked before it becomes popular and it should be at the beginning of the product life cycle that means building product awareness, low pricing, selective distribution and innovative promotion. Quality is another important aspect to be considered before choosing a product. The range of products offered must be narrow. The product should be simple to start with. More products can be added as the business grows. The design and appearance of the product are also very important for a product to succeed. A product must be functional and satisfy the needs and requirements of the customer. For example, Haagen-Dazs ice cream used a high percentage of cream and milk in their ice cream to create a rich, creamy texture. This was because, the luxury ice cream category was seen as a premium segment and hence customers wanted their ice creams to look and taste rich and creamy. After selecting a product the next function a company must take up is product strategy. The first step toward this is to evaluate its existing capabilities. It must evaluate how capable it is in the areas of production and sales (distribution), whether it is able to satisfy the customers needs, the delivery time of its products and so on. It must also analyse its competitors. In any business it is not enough if one makes products, which people want or need to buy. Successful companies always think ahead and come out with innovative products. This gives them a competitive edge over other companies. Innovation does not mean only successful new business but also means innovative approaches to selling, management functions and other areas that help in taking a business forward. For example while launching Corn Flakes, Kellogg in order to persuade people in UK who were used to having bacon and eggs for breakfast, employed hundreds of casual labourers and Boy Scouts to cover the whole country. These salesmen knocked on all doors and gave away free samples of Kelloggs Cornflakes. This encouraged the consumers to first try and then buy the product. They were in fact able to change the eating habits of the consumer Price Companies ultimately look at making the maximum money from their product. The right price will enable the company to generate sales and make a profit from their product. A marketer also looks at competitor pricing while setting the price on a product. Take South-West Airlines as an example. In a time where air travel was increasingly becoming expensive for the customers, South-West Airlines re-looked at their strategy and decided to come out with a low priced airline. Margins did take a hit, but through some effective cost-cutting procedures, the Airlines became one of the most successful brands in America. Place The distribution strategy and the location of retail outlets if any is a crucial component of the marketing mix. The company must decide on a sound distribution strategy, which ensures that the product reaches all potential customers. It should set up a good network of dealers and distributors who reach the product to the right stores. The company should also choose where and how it wants to sell its product. Most companies choose the conventional way or retail outlets for selling their product. However, some companies like Amway sell their products directly to customers through a network of salesmen. Companies should also decide which retail outlets they want to sell their product. This has an impact on how the product will be perceived by the customer. Haagen-Dazs sells it product through all major supermarket chains in America such Wal-Mart, K-mart, Target etc. thus creating a major presence in the country. Location is extremely important when it comes to setting up retail stores for selling a product. Haagen-Dazs ice cream stores are generally found in prime localities and malls in upscale commercial areas. Selection Of Distributors Distributors are the vital link in any supply chain. They are the intermediaries between the company and the end-user that is the customer. They help in reducing the expenses that are incurred while selling a product and also help in making the marketing operations more competent and proficient. In addition to this they can also provide other services like technical support, sales forecasting and sales analysis, credit services, warehousing and logististic services and so on. For selling products through distribution channels one has to make a careful selection of distributors. To get the selection right one has to take the following steps - identify customer requirements (what kind of support they need from you), find out exactly the customer segment that will buy the product, identify the distributor who will help in servicing this segment and then analyse what it will cost you for using his distributor. After selecting a distributor the company must decide how it is going to manage its Physical Distribution. Physical distribution management means that the product is at the right place at the right time. The main components of Physical Distribution of Management are Order Processing, Inventory management, Warehousing and Transportation. A successful implementation of Physical Distribution revolves round integrating all these components. A well-organised Distribution system is an important component of marketing mix. Promotion Companies conduct promotional activities to inform, build awareness, persuade and remind customers about their product. Super brands such as Nike, BMW, Levis etc. have managed to create an image around them in the minds of customer primarily through their advertising and promotion strategies. Promotion consists of various components. Most companies use advertising as a medium to communicate their product. Advertising can be through mass media (T.V, Radio, Press), direct (mailers, brochures etc) or through point-of sale collaterals. Companies conduct activities that directly involve sales people in order to entice and motivate them to sell the product. Companies also use public relations to promote their product. They hire P.R agencies that give them free media exposure through news articles, reports, reviews etc. Haagen-Dazs ice creams use advertising to a large extent to position and promote their product. Even their media mix is so designed to convey the premium ness of the product. Haagen-Dazs advertises in publications such as People, Vanity Fair, Vogue, and Esquire etc., which are read by the premium segment. Today, because of the fragmentation of the media it is difficult to find a mass audience in a single channel in the traditional advertising media like television. It is becoming increasingly difficult to hold the attention of the consumers these days because they do not have the time or patience. The Internet has become an alternative to traditional media advertising as it provides all information about brands, which is normally found in advertisements. As a result of digitalisation of the media consumers now have the advantage of devices like PVRs and anti-Spam devices that can delete or edit commercials. Effective Marketing Communication For any communications strategy to be successful an organisation should first keep these elements of marketing communication in mind. The elements to be considered are Message, Audience, Right medium and Response. The company should first decide what message they wish to communicate and the message should emphasize the benefits of their product. Next the audience to be targeted should be identified by creating a customer profile, which includes basic information about income, age, lifestyle, gender etc. This should be followed by selecting the right medium be it radio, newspaper, television, direct mail, billboards, etc. which is most appropriate to the consumer they are targeting. The response to the communication strategy should be reviewed and evaluated periodically and adjusted accordingly if any change is needed. Conclusion For a marketing mix to be successful and effective the owner or manager of a firm should ask these questions: Does the product meet the needs of the customer? Is the product available in the place where the customer shops? Is the price acceptable to the customer? Has the marketing communications reached the customer? If he is not satisfied with the answers he should make changes in his marketing mix till he arrives at the most effective marketing mix References 1. Kotler P. 2003, Marketing Management, 11th Edition, Pearson Education, pg 15 Read More