What is the marketing mix?
The concept of “marketing mix” was introduced over 60 years ago. In 1953, Neil Borden mentioned it in his presidential address to the American Marketing Association (AMA).
In general terms, marketing mix is a variety of different factors that can influence a consumer’s decision to purchase a product or use a service. It most commonly refers to the 4Ps of marketing─product, price, promotion and place.
These four factors can be controlled by a business to a certain extent. When “mixed” or blended strategically, they can produce desired behaviors from your target audiences (i.e. signing up as a subscriber or making a purchase).
It can also help businesses further understand their product and service offerings and the best ways to plan for a successful launch and marketing strategy.
The 4Ps Model
The 4Ps were created by marketing professor E. Jerome McCarthy in 1960, seven years after Borden’s speech. They are a framework that marketers and businesses can use when designing strategies and campaigns to promote their products and services.
Instead of leaving it up to chance and hoping that people will do what you want, you can increase your conversions by using a framework. Each P stands for a different element that influences a consumer’s decision-making process.
Product refers to the physical goods or the intangible services that you offer, but there’s more to it than that. It’s also about the experience that users and customers have with your product. What makes customers choose your product over others? What problem does it solve? What attracts people to your products or services?
They may be attracted to the product packaging, features, ease-of-use, name, quality, design or support. The transaction may be for the physical product. But, the purchase is influenced by the entire buying experience.
All of the four elements are centered around the customer. It is important to know who your audience is and what they care about. Create buyer personas. Conduct customer research. Learn as much about your current or potential customer base as you can. This will help you make decisions that are more likely to resonate and appeal to your target audiences.
It is critical to choose the right price for your product or service. If your product is underpriced, consumers may question its effectiveness or think that it’s “too good to be true”. On the other hand, if you price your product too high, consumers may see it as overpriced and unnecessary. Unless you are an established luxury brand like Coach or Chanel, you’ll find it hard to make a sell.
There are a number of pricing strategies that businesses employ. Some models are: bundle, subscription, competitive, economy, discount, and psychological pricing.
At grocery stores, generic food brands are priced lower than name-brands. This is an example of economy pricing. In department stores, prices with odd decimals like “53.99” or “3.97” are psychological pricing. People tend to perceive it as less expensive than an even “$54.00” or “4.00”. It’s also a common practice in auto sales.
The strategy that you choose should be based on the value of your product, the production and distribution costs, consumer demand and competitive landscape.
Price is also heavily influenced by your consumers. Of course, you need to price to make a profit. However, if your target market is in the middle-income bracket, charging $900+ for a handbag is unrealistic.
How are you going to tell people about your products and services? Promotion covers all of the communication tactics that you will use to spread the word.
Note that promotion isn’t synonymous with marketing. Promotion focuses on how you will communicate your product to people. It doesn’t only encompass the entire marketing function. It also addresses the sales process and other areas such as public relations and advertising.
Also, the purpose of promotion isn’t to simply sell your products and services. (Yes, that would be an ideal result.) Before you can jump to the transaction part, you need to let people know what your products and services are, what they offer customers, and why they are worth buying.
Promotion lets people know that your product solves a specific need. In the promotion stage, your message should be clear and geared towards your target audiences. Tell them why they need your product and how it will benefit them. What makes your business different from the competitors? Is it a lower-price? Higher quality? Faster service? More flexibility?
Identify what sets you apart from everyone else. It is key to include those differentiators into your promotional messages. When selecting which channels to use for promotion, remember that your audience is the focus. What types of content do they consume on a daily basis? Where are they located? What times are they most actively consuming content?
Some channels that you may use for promotion are: word-of-mouth, podcasts, radio, social media, email, press releases, public relations, print, television ads, and pay-per-click (PPC) ads.
Place refers to the distribution of your product. How will customers find and purchase what you’re trying to sell? Will it be sold in retail stores or exclusively online? Two of the most common distribution channels are: direct sales and wholesalers.
If you run a local retail business, you will likely use direct sales at your location. You may also offer certain items through an online store. Whether in-store or online, you are the primary contact managing and shaping the customer experience.
Another option for businesses is to sell through an intermediary─a wholesaler or reseller. If you sell through Walmart or Amazon, you would fit into this category. The advantage of working with a wholesaler is that they tend to have a wider distribution network and larger customer-base.
Although it makes it possible to reach more customers, you lose some of that customer connection that is associated with direct sales. It can also be extremely difficult and lengthy process to land a deal with big name wholesalers like Walmart.
If your business doesn’t have a year-round consistent supply of products, it is not an ideal fit for intermediary sales. If your sales are more seasonal or available for a limited-time only, then direct sales are a more suitable option.
There’s a difference between knowing the framework and actually putting it into practice in your strategy. Below, we’ll take you through the process step by step with examples.
4Ps in Action: Marketing Strategy Template
Now that you know what the model is, how do you use it? First, you need to start with a solid understanding of your target market. In other words, describe your ideal customer.
Define your audience.
If you have already established a customer, describe the people that buy your product. Information that you should consider are:
- Socioeconomic status
- Education level
- Hobbies and interests
- Profession or industry they are in
- Common problems they face
- Other identifying characteristics
Once you have a clear understanding of who your target audiences are, then you can start to develop the 4 P's of marketing, beginning with product.
Describe your product and benefits.
First, describe your product and services and the qualities and benefits your business offers to customers. Other aspects you should cover are:
- Packaging and Design
- Warranties (If there are any.)
Here’s an example:
Product: Toggl Track is a time tracking app.
Main features include:
- Project management
- Team management
- Track work offline and online.
- Manage individual and team products.
- Assess and improve productivity.
- Generate reports and view billable hours.
Packaging and Design: Since Toggl Track is an app-based service, it doesn’t have physical product packaging. However, it does have a simple, easy-to-use interface and app design.
You get the idea, right? Describe your own products and services using these parameters. Then, compare them to the product qualities of your competitors.
This will help you identify one or two main benefits of your product. Your product benefits tell potential customers why they should buy from you and not a competitor. Some of the main benefits of Toggl Track are:
- Better internal resource planning for businesses
- Accurate and transparent client billing process
- Increasing productivity by making work time more focused
Your product may have several associated benefits but focus on the most unique and valuable for your marketing efforts.
Choose the right price.
Pricing your products can be tricky. If you are a reseller, you can use the MSRP or manufacturer’s suggested retail price as a basis. If your product is handmade or created completely by you, then there are certain factors you need to consider. Answer these questions to help you set a price:
- What are the production and distribution costs per unit?
- What’s your revenue goal?
- How much money do you expect to make?
- How much would my target customer be willing to pay?
- What are your overhead costs?
- How much do your competitors charge?
- What is a typical price for the industry?
In addition to the amount, you need to figure out at what frequency you will charge customers and which pricing strategy you will use. For instance, Toggl Track uses monthly subscription pricing, based on the number of users and size of the business.
Though the linear Waterfall PM strategy suits many organizations, managers in certain fields find it quite limiting. By planning only at the beginning of a project, they lose the benefit of the knowledge and experience they gain while completing it.
This subscription model is comparable to other enterprise and freelancer apps on the market, but it is still competitively priced.
Promotion and sales.
The first consideration for promotion is: What is the best way to market and sell your product? Since, Toggl Track is an online app, we focus on digital sales directly through our site. If you need to interact with your customers in-person, then you need a physical location. A hair salon or beauty spa, for instance, needs a store location to conduct business.
Again, you should research what your competitors are up to. You are most likely targeting the same demographic, so the channels they use may be similar to the ones you employ. However, the messages you use should be distinctly different.
Second, what is the best way to reach your customers? If your target audience is over the age of 55, you aren’t going to have success promoting on Snapchat. Television, print, and word-of-mouth may be more effective options. If your target audience is tech-savvy Millennials, Snapchat and other social media channels are the way to go.
When used effectively, the 4Ps can help guide and direct your marketing and business strategies. They help marketers and businesses learn more about their customers’ needs and buying behaviors.
For decades, the marketing mix and 4Ps have been a recognized business staple. As a marketing concept that is over 60 years old, you can imagine that there are some limitations.
Criticism of the 4Ps Model
Is the 4Ps marketing framework right for business? Some have found success with it, but not everyone is a fan. It is important to note the limitations of the model to decide if it is an effective option for you.
A lot has changed since the 4Ps of marketing were introduced in the 60s. Digital marketing, mobile technology, and changing consumer attitudes have led some to question if the model is outdated.
The Harvard Business Review assessed the effectiveness in a five-year global study of more than 500 managers and customers. The participants represented various industries in the B2B space.
They highlighted three main criticisms of the 4Ps model were that it:
- Leads marketing and sales teams to focus too much on a product’s features, technology and quality. They argue that these are no longer competitive differentiators, but simply the cost of entry.
- As a result, they don’t emphasize the need for superior and robust solutions.
- It also distracts them from highlighting real advantages like: being a trusted source and problem-solving.
This has led some to create alternatives and spinoffs of the original 4P model. The most notable is the SAVE framework. SAVE stands for Solution, Access, Value, and Education. Here’s how it works:
1. Instead of product, focus on the solution.
When communicating with customers, you wouldn’t focus on the cool features or the technology behind it. This is based on the idea that today’s consumers care more about how your product will solve their problems. They don’t need to know all the technical background.
2. Access (instead of Place)
In the digital era, brick and mortar locations have become less important to customers. Thanks to cloud software, mobile devices and high-speed Internet, you can run a business from virtually anyplace in the world. Store hours don’t matter because the Internet is always on. Therefore, the focus is on access─getting people what they want, when they want it.
3. Value (instead of Price):
Price will always be a factor in consumer behavior. But, today consumers make more informed and conscious buying decisions. What is your value proposition?
4. Education (instead of Promotion):
Unless it is an impulse buy, expect customers to conduct research before making a purchase. As a business, you build trust by providing prospective customers with videos, blogs and other material that helps them learn about your solution, the problem, and the industry.
The S.A.V.E. framework is an updated way to look at the 4Ps. However, the core concepts of McCarthy’s 4Ps marketing model are still relevant today. Although, the definitions of product, price, promotion, and place may need to be adjusted to fit with the 21st century consumer.
A Harvard Business Review states, “It’s not that the 4 P’s are irrelevant, just that they need to be reinterpreted to serve B2B marketers.”
When crafting marketing strategy for your business, the 4Ps are a useful model to get started. Although, it is important to remember that as new trends and technology emerge, your marketing mix and strategy should be updated to account for them.