MARKETING MIX VALUE GRID TO CREATE THE OPTIMAL MARKETING STRATEGY

A successful marketing effort requires the creation of value for a company, its customers and its collaborators. The only way this value can be created is through the mix of the four marketing Ps. The mix that is successful provides a profit for the company and a product or service that is acceptable to a set of customers. The greatest creation of value to all concerned is based on the optimal value of the 4Ps used in concert.  The Marketing Mix Grid (Grid 1) below provides an approach to identify the optimal marketing mix.

MARKETING MIX VALUE GRID – Grid 1

AREA ABOVE AND TO THE RIGHT OF THE DIAGONAL IN GREEN TYPE CREATES VALUE FOR COMPANY, AREA TO THE LEFT AND BELOW OF THE DIAGONAL IN RED TYPE CREATES VALUE FOR CUSTOMERS AND COLLABORATORS.

Copyright GWR Research	PRICE	PLACE	PRODUCT	PROMOTION
PRICE	OPTIMAL PRICE	1B. PRICE CHARGED FITS WITH COSTS TO GET PRODUCT TO CUSTOMER LOCATION	2B. PRICE CHARGED PROVIDES NEEDED MARK UP TO COVER COSTS AND PROFIT NEEDS	3B. PRICE CHARGED COVERS ALL MARKETING COSTS
PLACE	1C. CUSTOMER’S PRICE FITS WITH THE SEARCH TIME INTENSITY CUSTOMER IS WILLING TO EXPEND	OPTIMAL PLACE	4B. LOCATION AND LOGISTICS MAXIMIZE ABILITY TO EFFICIENTLY DISTRIBUTE PRODUCT TO CUSTOMER	5B. LOCATION AND LOGISTICS TIES WITH BRANDING AND COMMUNICATION EFFORTS
PRODUCT	2C. PRODUCT IS PRICED TO FIT CUSTOMERS BUDGET AND AMOUNT WILLINGLY PAID FOR VALUE RECEIVED	3C. LOCATION AND LOGISTICS MATCH CUSTOMERS EXPECTATIONS FOR PRODUCT ACQUISISTION	OPTIMAL PRODUCT	6B. PRODUCT LENDS ITSELF TO PROMOTION EFFORTS THAT CAN SUPPORT NEEDED REVENUES AN VOLUMES
PROMOTION	4C. PROMOTION SUPPORTS VALUE INDICATED BY PRICE PAID BY CUSTOMER	5C. PROMOTION UTILIZES LOCATION AND LOGISTICS ARE INTERPRETED AS CUSTOMER BENEFITS AND ARE PART OF PROMOTION EFFORTS	6C. PRODUCT PROMOTION FOCUSES ON CUSTOMERS’ EXPECTATIONS OF PRODUCT DOING THE JOB THEY NEED DONE	OPTIMAL PROMOTION

To find the Optimal marketing mix simply line up the horizontal and vertical squares leading to each of the four Ps. For example, to find the optimal Place to create customer value, squares 1C, 3C and 5C would have to be addressed. To find the optimal Place to create value for the company, squares 1B, 4B and 5B would have to be addressed.  The location and logistics that addresses the requirements for the customer and company value creating squares combined yields the optimal Place (location and logistics) strategic component of the marketing mix and assures that the resulting Place strategy for creating customer value is in alignment with the Place strategy for creating value for the company. Repeating this for each of the four Ps determines the optimal value for each element of the marketing mix that assures alignment in creating value for the customer and the company. The resulting matrix provides the best strategy that supports company, customer and collaborator success.

Company Value

The value for the company rests on its ability to capture the value created for the customer in the form of profits. The best approach to address the requirements for the company value creating squares (those above and to the right of the diagonal column of the Optimal Ps, in green) is to determine a clear understanding of the direct costs and the mark up provided by the price willingly paid by the customer for the products and services offered and the size of the market. This understanding provides the strategist with an estimate of the cash flows that will be available to sustain the organization.

A situation analysis that is part of the marketing plan regimen usually requires that an assessment of the customer base, competition, industry and so forth take place before any marketing goals are set. This would be critical in determining potential price ranges, competition and size of the market.

Once direct costs are understood then a break-even analysis can help determine the strategy used for fixed costs. This approach allows the potential cash flows that result from providing customer value to drive the nature of the strategy rather than a preconceived notion of how the organization should be developed that might be have an emotional foundation.

Customer Value

Creating customer value is by providing products or services that fulfill a need and for which a customer is willing to pay a certain price and expend a certain amount of effort to acquire. To assess the appropriate customer value creating squares (those below and to the left of the diagonal column of optimal, in red) a clear understanding of forces that cause customers to purchase a product or service. Here a set of Consumer Adoption Drivers developed by GWR Research and based on research studies by Gerald Zaltman and Nan Linn prove useful.

To determine the best approach to address the requirements for customer value creation squares, each square should be measured against the Consumer Adoption Drivers shown below (CAD).

The CAD list is as follows:

1)    Group Influence Intensity – relates to peer pressure exerted on customers

2)    Perish ability – the length of time the product is deemed useful,

3)    Psychological appeal – status associated with the product

4)    Price sensitivity – the need for the customer to budget for the purchase,

5)    Relative Price Influence – the attractiveness of other products as a substitute when price is a consideration,

6)    Frequency of Purchase – The frequency with which the customer purchases the product,

7)    Search Time Intensity – the amount of time invested in the search for the “right” product,

8)    Tangible Differentiability – physical differences between products,

9)    Intangible differentiability – non-physical differences between products (guarantees, relationships with company, branding etc.),

10)Technical Complexity – the need for training before a customer can use the product. This may be a factor in determining the type of sales force that will be required.

For example, square 1C would be considered against each CAD. It might be that the product is frequently purchased and there may be several products easily attainable that could be used as a substitute. It might also be found that peer influence or psychological appeal plays an important decision in where the customer shops. These attributes along with other CAD attributes might impact the time and effort a customer is willing to locate the “right” product. This can help describe the location and logistics that will create the greatest overall value. This can also contribute to the price a customer is willing to pay.

Usually the best approach to understanding the CADs for a potential market is to conduct focus groups or surveys of potential customers to determine the importance of each of the CADs as they relate to the proposed product or service.  These measures can then be applied to each of the four Ps to determine the optimal characteristics for each of the 4 Ps to create value for the customer.

Collaborator Value

Collaborator value is best determined by providing a structure that allows the vendors, brokers, alliance members and other contributors to benefit when the optimal value is created for the customer and company. This, in most cases requires an organization that can create value by providing value to the customer. For this reason having collaborators aligned with creating value for customers is most advantageous.

Strategy Development

To begin the development of a strategy it is necessary to understand how the requirements for each element of the optimal marketing mix would be achieved through the deployment of organizational resources.

The Marketing Mix Organizational Impact Grid (Grid 2) shown below allows a strategist to measure organizational resource requirements against each of the Optimal 4 Ps developed in the marketing mix grid.

Using this grid the strategist can begin developing a strategy that is within the company’s resources. For example, the workforce would have to be available for the logistics and location to provide the optimal Place value for customers and the organization. If workforce availability or costs are problematic the strategist might consider outsourcing certain tasks or forming alliances that can provide workforce needs that meet the company and customer value creation requirements. 

MARKETING MIX ORGANIZATIONAL IMPACT GRID (Grid 2)

Copyright GWR Research	OPTIMAL PRICE	OPTIMAL PLACE	OPTIMAL PRODUCT	OPTIMAL PROMOTION
WORKFORCE – EMPLOYEES, CONTRACTORS, ALLIANCES, PARTNERS	WORKFORCE COSTS ARE WITHIN ACCEPTABLE LEVELS TO PRODUCE NEEDED PROFIT WITH PROJECTIED OPTIMAL PRICING AND SALES VOLUMES	WORKFORCE IS AVAILABLE FOR OPERATION OF OPTIMAL LOCATION AND LOGISTICS	WORKFORCE CAN EFFICIENTLY PRODUCE OPTIMAL PRODUCTS WITHIN ACCEPTABLE QUALITY REQUIREMENTS	WORKFORCE CAN PRODUCE AND DELIVER OPTIMAL PROMOTION/SALES CAMPAIGNS WITH HIGH DEGREE OF EFFICACY
CASH REQUIREMENTS	REVENUES GENERATED WITH OPTIMAL PRICING PROVIDES SUFFICIENT CASH FLOWS AND PROFITS TO MEET GROWTH GOALS	OPTIMAL LOCATION AND LOGISTICS ENHANCE CASH FLOWS AND MINIMIZE CASH OUTLAYS	OPTIMAL PRODUCT MAXIMIZES OPERATING MARGINS, INVENTORY TURNS AND CASH FLOWS.	OPTIMAL PROMOTION UTILIZES MIX OF MEDIA AND APPROACHES TO EFFICIENTLY BUILD AND MOVE CUSTOMERS TO ACTION
OPERATING PROCEDURES	OPTIMAL PRICE IS MANAGED BY SETTING PROPER SALES GOALS, DISCOUNTS AND ESTABLISHING METRICS TO ASSURE PROPER CONTIRBUTION PER UNIT.	OPTIMAL PLACE IS MANAGED BY ESTABLISHING METRICS FOR REVENUE/RENT, INVENTORY COSTS, PROFIT/ SQ.FT. ETC.	OPTIMAL PRODUCT IS MANAGED BY ESTABLISHING METRICS FOR COST PER PRODUCT, R&D COSTS ETC.	OPTIMAL PROMOTION IS MANAGED BY CREATING METRICS FOR PROMO COST PER CUSTOMER, SALES INCREASE PER PROMOTION ETC.
FIXED ASSETS	OPTIMAL PRICE SUPPROTS REQUIRED FIXED ASSTS	OPTIMAL PLACE MAXIMIZES PRODUCTIVITY OF REQUIRED ASSETS	OPTIMAL PRODUCT MAXIMIZES PRODUCTIVITY OF REQUIRED ASSETS	OPTIMAL PROMOTION MAXIMIZES PRODUCTIVITY OF REQUIRED ASSETS

Execution and Control

Once the Optimal Marketing Mix and the strategic organizational resources have been identified, the marketing strategist can begin assembling a plan for implementation and developing control metrics to assure that the strategic focus is maintained and the execution of the strategy results in creating the optimal value for the company, its customers and collaborators.

The Strategic Organizational Development Grid (Grid 3) allows the strategist to measure create processes to plan, organize, direct and control the execution of the strategy.

STRATEGIC ORGANIZATIONAL DEVELOPMENT GRID-TACTICS(Grid 3)

Copyright GWR Research	STRATEGIC WORKFORCE	STRATEGIC CASH REQUIREMENTS	STRATEGIC OPERATING PROCEDURES	STRATEGIC FIXED ASSETS
PLANNING	DEVELOP JOB DESCRIPTIONS AND JOB STANDARDS TO REACH OPTIMUM STRATEGY	DEVLOP ACCOUNTS RECEIVABLE AND PAYABLE PROGRAMS THAT ENHANCE CASH FLOWS	DEVELOP PROCESSES THAT ENSURE BEST WORKFORCE, QUALITY CONTROL AND VALUE DELIVERY	DEVELOP PROCESS OF IDENTIFYING BEST USE OF ASSETS (E.G. LEASE OR PURCHASE) ASSETS PLACED FOR MAXIMUM PRODUCTIVITY.
ORGANIZING	WORKFORCE SHOULD BE ORGANIZED IN MANNER THAT MOST EFFICIENTLY MATCHES OPTIMUM STRATEGY	ESTABLISH FINANCIAL MECHANISMS TO MAXIMIZE EFFICIENT USE OF CASH	ORGANIZATIONAL DEPARTMENTS SHOULD BE ORGANIZED TO OPTIMIZE OVERALL RESULTS	ASSETS ORGANIZED TO SUPPORT ORGANIZATIONAL PRODUCTIVITY.
DIRECTING	STNDARDS OF PERFORMANCE TIED TO NEEDED OUTCOMES	CASH FLOW TO HIGHEST AND BEST USE AREAS OF THE ORGANIZATION	OPERATING PROCESSES SUPPORT OPTIMUM STRATEGIC GOALS	ASSETS DELIVERED TO NEEDED AREA WHEN MOST PRODUCTIVE
CONTROLLING	METRICS FOR PAY AND BONUSES TIED TO STANDARDS OF PERFORMANCE	METRICS DESIGNED AND MANAGED TO DEFINE EFFICIENT CASH USEAGE	METRICS DESIGNED AND MANAGED TO ASSURE PROCESSES ARE EFFICIENT AND EFFECTIVE	METRICS DESIGNED AND MANAGED TO ASSURE EFFCIENT USE OF ASSETS

The overall process from developing the optimal marketing mix through the execution plan for strategy deployment provides an organization with an approach that focuses on creating optimal value for customers, collaborators and the company.