In 1964 Neil Borden published an article describing the concept of the
marketing mix. In that article, Borden described the criteria that are within the control of the marketer, as well as how decisions related to each criterion affect the target market. This concept became known as the "four P's" of marketing. The four P's refer to Product, Price, Place and Promotion.
The four P's is a crucial concept that ultimately determines your success or failure. Together, they form the basis of your Market Mix. The decisions you make for each of the four criteria identify your target market. You can't effectively create a marketing campaign if you don't fully understand who your target audience is. Conversely, if you know your target market beforehand, you need to adjust the approach for each of the criteria in order to successfully reach that market. Simply taking a "shotgun" approach doesn't work.
Let's use Nike as an example. Nike understood that their target was primarily sports oriented young people (teens and young adults). What if Nike had used former Senator Bob Dole as their spokesman rather than Michael Jordan? Would their marketing campaign have succeeded? It's unlikely that seeing Bob Dole run around a basketball court in Nike shoes would have been an effective marketing approach.
On the other hand, Pfizer did use Bob Dole for their Viagra marketing campaign. Pfizer had a completely different target market from Nike. That target, middle-aged men, could relate to Dole. He also brought a level of acceptance to the idea of taking Viagra: "if it's good enough for Bob, it's good enough for me".
Successful businesses understand their target market, and how to effectively reach them.
Let's now examine each of the four P's and their effect on the overall
marketing mix.
PRODUCT
As it relates to the
marketing mix, product can refer to any business sector: sales of physical items, services, training, consulting, or Internet Marketing. Product is whatever your business provides.
A key component of the product criteria is branding. Whether it's shampoo, bicycles, or any other product, studies have shown that people generally purchase products they are familiar with. When you go to the store to buy shampoo, do you just pick up the first product you see or do you buy a specific brand?
The same applies to other business sectors. As a result of a very aggressive marketing campaign, The University of Phoenix has become known as a leader in the field of online continuing education. Let's presume you wanted to take such classes to further your education or obtain your degree. If you did a Google search for "online education", the result would be page after page of potential options. Included in that list would be the University of Phoenix, as well as many others you have most likely never heard about. Given the name recognition, which of those links would you most likely click on first? It's all about branding.
Another consideration within the product criteria is quality. No matter how successful the Nike marketing campaign, if their shoes fell apart after just a week or two there would be no repeat sales. Customer loyalty is achieved by having a quality product. Offering a substandard product is not a formula for long-term success.
Ongoing support is another crucial element. Even a company with a quality product will suffer if support for that product is difficult to obtain. The support issue is more of a factor in some business areas (e.g., consumer electronics) than others, but it can't be overlooked. Several of the computer providers that were at the top of the list for sales a few years ago are now down in the middle of the pack. Not surprisingly, their decline in sales coincided with their decline in customer support. People remember painful experiences. Customer support should be an integral part of your
marketing mix.
The way you package your product is also important. Whether it is warranted or not, people often buy products with the most attractive packaging. Packaging includes everything from the physical box a product comes in to the design of your web site. Image matters.
One way to have your product stand out from those of your competition is to offer additional features, accessories or services. Doing this may increase your cost, but it can also increase your sales. It is yet one more decision to consider as you develop your
marketing mix.
PRICING
One of the trickiest aspects of determining your
marketing mix is pricing. There is generally some flexibility with this component, but it should not be considered in isolation.
One of the critical factors of course is anticipated volume. If you can offer your product at a lower price than your competitors, that certainly gives you an edge in your marketing approach. On the other hand, the price you charge must also provide you a realistic opportunity to make a viable profit margin.
Keep in mind; your overall cost for the product is not just your wholesale price. Your cost also includes operational expenses such as telephone lines, web hosting services, accountant fees, and so on.
You can't afford to take a knee-jerk, emotional approach to setting a low price just to beat your competition. You must weigh the decrease in profit margin with the increase in sales volume. Selling your product lower than the competition with little or no margin is not the route to a successful business. The price points you identified in your business plan should be used as a guide. You did do a business plan right?
One of the major areas of pricing flexibility comes with "bundling". When I ran a hardware sales business in the early 90s, I made a calculated decision to sell memory cards at my cost when I bundled them with motherboards. While I made no profit on the memory cards in the bundle, I did increase the volume of motherboard sales.
Volume discounts for your customers is another possible option to consider. Obviously, doing this will depend on the type of product you sell. But using my hardware sales experience an example, I offered my customers volume discount pricing on most hardware items when purchased in lots of 3, 5, or 10+. The decrease in profit margin for each unit was offset by the increase in volume.
My recommendation would be to do market research to determine the lowest and highest prices for the same product offered by your competitors. With that information, and in conjunction with other relevant criteria, you can find your ideal price point.
PLACE
The "place" component originated with the famous marketing adage of "location, location, location". In today's world, especially with the availability of the Web, it really has more to do with distribution channels, market coverage, and payment methods.
In terms of the distribution channel, the question relates to how you will get the product to your customers. If you anticipate selling your product online to large numbers of people, do you have the resources to package and ship these yourself, or should you consider a 3rd party alternative?
As a general rule of thumb, people who purchase products online expect to have those products delivered within 3-5 days. A delay beyond that timeframe is not conducive to repeat sales. If you aren't able to meet that requirement you should consider using one of the many 3rd party companies that will do that for you.
Of course, if your product is software or some other electronic format material (such as an eBook) the question of distribution is greatly simplified. Products such as these can easily be transferred to the customer directly over the Internet.
Depending on your type of business, your distribution channel may also relate to your physical location. A business in Bangor, Maine that offers dog-grooming services isn't going to be concerned about providing that service to someone in Phoenix, Arizona. In such a case, the entire
marketing mix strategy should be focused on geographic location.
The Market Coverage element identifies another aspect of product distribution. Do you plan to offer your product exclusively, or will you have resellers, secondary distributors and/or affiliates in other parts of the country or world? This decision is largely a factor of your business model as well as the type of product. The exclusive distribution model allows all profits to come directly to you. Using resellers or affiliates dilutes your direct profit, but increases your potential coverage area.
The Payment Method element includes a number of factors, most of which are also dependent on your business model. For instance, a company that offers online training or consulting may offer payment plans. One that provides an ongoing service (e.g., a Traffic Exchange) would typically utilize recurring payments. A company that sells physical products (e.g., computer hardware) would generally require payment in advance.
If you plan to sell items on your web site, as opposed to just providing information about a service (e.g., dog-grooming), you need to accept online payments (credit cards, direct deposit, et cetera). Very few people are going to go to a product site to make a purchase and then put a check in the mail; they will just go to one of your competitors. The more payment options you give people, the more likely they are to buy. You also want to allow for the fact that people are prone to impulse purchases. Make it simple for them.
PROMOTION
Product promotion is where all the other elements of the
marketing mix coalesce. Promotion is not just about the product. It is about getting across the message you wish to convey. It includes several key elements: "push" vs. "pull", branding and image, and advertising.
The "push" part of promotion is simply making information about your product or service available. While this is obviously important, your primary focus should be on the "pull" aspect. Putting this concept in simple terms, don't just sell to people; make THEM want to buy from you. Whatever product you offer, make people think about your company first when they require that product. Better yet, make them want the product even when they don't need it.
A large part of an effective "pull" strategy is branding. You want to make your business synonymous with your product. You also want to associate a specific image to your target market audience. I've already spoken about the campaign Nike put in place. Do you even remember seeing one of their shoes in the ad? Their goal in that campaign was to portray an image: success in sports.
Consider other successful marketing campaigns: the "Marlboro Man" portraying an image of the rugged, self-sufficient man; the Prudential Rock, with its implication of solid stability; and Salomon Smith Barney with the "earn it the old fashioned way" projection of respect and integrity. It's all about image.
Many times, the branding applied to a product has nothing to do with the product itself. As with all marketing, the intent is to provide a unique, easy to remember identity. Consider the AFLAC Duck. A duck has as much to do with insurance as, well, as a duck has to do with insurance. But when you see the duck you immediately know the product. The same applies to Budweiser's Spuds McKenzie and the GEICO Gecko.
FINAL THOUGHTS
All too many people confuse advertising with sales. They are not the same. Advertising is important but it is only a subset of successful marketing. You use advertising to get your message out. It's what's in that message that is key however.
The components of that message (image, brand recognition, etc.) are what successful marketing is all about. A thorough understanding of the
marketing mix can most effectively help to identify, and refine, those components.
Ray has over 30 years of experience in the Information Technology and Business fields. He has been a Systems Analyst, Database and Network Administrator, Website Developer and Project Manager, IT Architect and Director of IT. Ray has owned a number of successful online businesses, several currently. He is also the author of several books and numerous magazine articles.
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