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.
Popular posts from this blog
When introducing a new product or service to the market a key, and often critical, consideration is the price for this offering. I have seen folks simply take the cost of production and use a percent mark up as a pricing model. This is the simplest model and it provides a good example for the need to consider other pricing model options. Here are 10 things to consider before setting a price for your product or service: · Mark up Based on Cost Vs Retail . In the opening paragraph I gave the example of a model being used that marked up a product by a percent over the cost. The cost used here is generally direct cost or labor and materials. If someone wants a 30% of the asking price to be the mark up, then using 30% of cost won’t provide the desired outcome. Simply put, it is the wrong math. If something costs $1 to make and it is marked up by 30% for a selling price of $1.30 then the profit of based on the asking price is 23.07%. To arrive at
Here is the third example of developing a marketing strategy project for a new product. This is a fictional company developed by a team of MBA students in my marketing strategy course at the University of Houston C.T. Bauer College of Business. Executive Summary Avenir is a forward thinking and progressive technology company seeking to positively impact the lives of our customers, collaborators, and shareholders through the creation of new technology. We were established in 2001 and are proud to employ 211 hardworking individuals at our Houston, TX headquarters. Avenir designs, markets and licenses the K-1 battery, a new kinetic powered battery that will enhance cellular telephone battery life. The K-1 battery will alleviate the need to constantly charge cellular phone batteries through electronic devices. Our new battery offers a significant leap forward in the world of portable electronic power to the cellular customer. Our collaborators will se
Here are some more thoughts on why newspapers may still be a wise investment and how they may find ways to develop a stable of print and digital products that complement each other. Virtually all newspapers have websites that look good and have great functionality. So why aren't they all producing acceptable amounts of profit? The question probably should be asked differently, "What do consumers and advertisers expect from newspapers?" Then ask, "What do they expect from the Internet?" The answers are different but there is overlap. The area of overlap is the area of opportunity for creating a business that is needed by consumers and advertisers and capable of creating value that translates into profits. To determine the real value of the website it is useful to measure the total advertiser dollars spent on a website only ad buy versus those being bundled with a newspaper or distribution ad buy. These stand-alone purchases might give so