One of the first and most important things you learn when you start studying the “science” of marketing, is the so-called Marketing Mix. Originally proposed by E. Jerome McCarthy in 1960, the marketing mix is consistent with the four P’s, which are:
Even though it has been over sixty years since those tools were introduced, they are still relevant and marketers are relying on them. Of course, there has been criticized recently for limiting the scope of marketing management, but never the less, if you want to be in marketing, these are the tools you should learn as a base. Marketing is not an exact science, but as someone once said, “to be able to think outside the box, you will first need to know what the box is”. So look at the four P’s like the box and feel free to think outside of it and develop it as much as you like.
Let’s break down the four elements and be sure of what we know about each one of them.
Product is anything that can be offered in a market for use or consumption in exchange for something else, most often money. The product can be a physical object, a service, an idea, a place, or anything that you can think of that can be sold. A product satisfies a need in the consumer. This need can be created by the seller, does not have to be in the consumer’s mind.
Think of the energy drinks market for example. How did people function before Red Bull start giving everyone wings, or what were they drinking their vodkas with at three in the morning? I am sure people were doing just fine and they did not need a weird coloured drink to make them feel energised. A cup of coffee was enough to satisfy that need. Now is a different story, because someone came up with the idea of an ice-cold refreshing drink that will keep you buzzing till the early hours of the morning. A need was created and people adopted it.
When a need is discovered the next step for every marketer is to develop the product, so the need would be satisfied in the best possible way. Individual product decisions have to be made:
- Product attributes
- Product Support Services
Throughout this blog, we will look more closely to all these aspects, as it is an important subject.
When you have found the product or service you want to offer to the market, the next step you will need to make is to put the right price on it. This stage is crucial and not as easy as just putting a random number on a label. There are several factors you will need to consider first, before putting a price on your product.
The first thing you should look at is the cost of the product, or in other words, how much are you paying to create, market and deliver the product or service. This should include, production costs, manpower costs, distribution costs, packaging, advertising, shipping and anything else that you had to spent on the product or service.
When you have the costs figured out, the next step is the market research (another big subject that we will look in to in detail later in the blog). If you decide to sell a product that is similar to other products on the market you should consider their prices and what is the demand for them. The demand and supply are crucial in pricing. To penetrate and establish yourself in the market scene, you should probably start with a lower than the competitors’ prices, so you can get a chance to be noticed and take a share of that market.
For a completely new product or service, you will have more freedom as you are the first and you will be the one who is the leader in that niche. An often mistake people do is underestimate their products and selling them cheap.
Take for example the smartphone market. It is no secret that the cost to make one iPhone or Samsung Galaxy S is nowhere near the price from what the end producer is buying it for. Even if you consider paying the programmers for developing the software, still there would be a huge profit left for the company.
Then there are the lower class smartphones that flooding the market. Some of them are as well designed and made as to the leaders in the sector, but cost half of the price. These smartphones will take a share of the market, but it will not affect the likes of iPhone or Samsung and the reason for that is that people will think of them as low-class phones because they are so cheap.
So if you are on the market, trying to be a leader, do not under-price your service or product. Stick to the niche you originally wanted to be in.
This part of the marketing mix is the most interesting and creative of all four. Promoting or communicating your product to the customers using all kinds of tools will make you stand out or blend in on the market scene. We live in an era where we are bombarded with messages from companies almost every moment of our days. From the moment we wake up to the moment we go to sleep. At any time and in a different way, a product is communicated to us.
Companies need to be extremely creative to get their messages to stand out from all the clutter we are surrounded with. Thankfully there are all sorts of tools to help you to get your message to the right audience. Here are some of the main ones, which we will also look more closely later in the blog:
- Sales promotions
- Public Relations
- Digital marketing
- Personal selling
Placement, also known as distribution, is the channels that a company uses to get its product to the end-users. These channels are crucial and once the firm has decided on which one to use, they usually stick with it.
A very good example is Apple and how they sell their products. Apple uses their own stores or if their products, most often the iPhone, are sold in other than Apple store, they will make sure the staff is qualified to sell an iPhone as an Apple employee would be. You will also not see bulk deals or sales promotions like “buy one, get one-half price”. They realise that this will harm the brand image, so they stick to the one way of distributing their products, which as we know, works very well.
Distribution channel decisions are among the most complex and challenging decisions facing a firm. Each channel system creates a different level of sales and costs.
Here is a very good and accurate explanation of the importance of choosing the right channel or channels systems, described by my lecturer in Dublin Business School:
“The major channel alternatives are identified in terms of the types of intermediaries, the number of intermediaries and channel responsibilities of each. Just as the marketing concept is receiving increased recognition, more business firms are paying attention to the physical distribution concept. The task is to design physical distribution systems that minimize the total cost of providing the desired level of customer service”
So you can see how important and tricky this is for a company. You can market your product very well, create the best campaign there is, but if you do not find the right channel with the proper distribution to your customers, you will probably fail to make sales.