Saturday, March 1, 2014
WHICH OF THE FOUR Ps OF MARKETING IS MOST IMPORTANT?
The marketing mix of Price, Place, Product and Promotion is essential in every marketing strategy. The emphasis on components will shift with the circumstance or objective.
Getting the “right” marketing mix can be difficult but is easier to approach if the strategist recognizes that an increase in the value of one component affects the needed emphasis on the remaining components.
Below are some examples of situations where each of the components of the marketing mix may assume the dominant role in developing a marketing strategy
Some instances in which Product becomes the dominant P in the marketing mix can be:
1) The introduction of a new product that is anticipated by the consumers (new restaurant opening, electronic devices such as the Ipad),
2) When a new product is the basis of the organization’s success, for example for college education the curriculum is critical,
3) When a product is unique and delivers uncommon value. (it is important to remember here that value can be in a myriad of ways from improved productivity to an increase in status),
4) When a product is rare, for example early beanie babies and the first Iphones created long lines of customers waiting to purchase the limited supply.
Some instances in which promotion becomes the dominant P in the marketing mix can be:
1) When a new product is unknown and there is a need to make the consumers aware of its existence,
2) When a product is a commodity and requires differentiation,
3) When a product is complicated and requires education and training of users,
4) When success depends on continued reinforcement of brand and image.
Some instances in which price becomes the dominant P in the marketing mix can be:
1) When a product cannot be differentiated in another way and the competition can’t meet lower price ( here you shouldn’t lower the price unless you can retain the profitability through a competitive advantage),
2) When product is exclusive or exclusively available through one distributor,
3) When providing a “good enough” product for industry leaders least profitable customers (steel mini mills profitably providing rebar at a lower price than vertical steel mills).
Some instances in which place becomes the dominant P in the marketing mix can be:
1) When a product is exclusive to a distributor (e.g. a Lamborghini dealership),
2) When the location is part of an experience (e.g. a hotel in the wine country),
3) When products are readily available from several distributors at similar price points,
4) When convenience of purchase is of primary importance (e.g. bank branches, convenience stores).
The purpose of the marketing mix
The marketing mix of price, place product and promotion are critical to capturing the value of the marketing effort. Putting the emphasis on the wrong components can be the difference between success and failure.
For most businesses the level of profitability gauges the ability of a marketing effort to capture the value that has been generated.
If, for example, a business distributes a product that can be duplicated easily by competitors then differentiation has to be built around other components of the marketing mix. In this case pricing might be an option if production or financial advantages prevent the competition from following suit.
In Texas for example, HEB Grocery Company, is able to convert value to profitability by placing emphasis on supply chain management (the place marketing component) that is difficult for competitors to copy. This has allowed HEB to keep low prices and maintain acceptable profitability levels.
HEB’s focus on having outlet’s offerings reflect the communities in which they are located has increased customer loyalty and profitability.
An example of perhaps a marketing mix in need of attention might be the newspaper industry. This industry has had a difficult time responding to an onslaught of competitors from the Internet. There is no question that the Internet is a productive method for delivering content – the source of value. Yet on-line newspapers such as the Huffington Post and most of the mainstream newspapers have had a difficult time capturing the value they have created with content. Turning this content into profits may be achieved by a close look at the marketing mix.
For example, promotion could be increased significantly and pricing could be modified.
Some newspaper promotion programs might include:
1) Providing electronic readers or tablets with long term subscriptions,
2) Daily radio and television commercials with breaking news and entertainment to be found on newspaper sites,
3) Email blasts with news updates,
4) Billboard advertising promoting customized information feeds,
5) Coordinated co-op programs with advertisers who promote or include the newspaper sites in their ad campaigns.
Some pricing programs that might be include:
1) Pricing by content category (sport, comics, legal ads etc),
2) Pricing by delivery type (doorstep, on-line edition, combination)
3) Elite pricing for specialty content (congress, local government, industry, legal advertising etc.)
These changes might improve the demand for the content and provide value for the consumer.
Basic marketing concepts revolve around creating business value by occupying a market space that is differentiated from competitors in such a way that profits are generated. The only way this can be achieved is by finding the optimum combination of the marketing mix of price, place, product and promotion.
It is important to understand that over the life cycle of a company or marketing effort the emphasis on the various components of the marketing mix is likely to change. Competition, customer tastes, technology and the legal environment are just a few of the market characteristics that can change and require a marketing mix review.
A thoughtful, disciplined review process has the best chance of developing a marketing strategy that effectively uses the marketing mix.