You have a product in mind and don’t know what to do next? Or, you’re a student trying to understand what marketing mix is?
Either way you’ve landed in the right place. Here’s a way to understand it.
An organisation does whatever it can to influence customers to buy its product or service. Apple does it by offering quality products in attractive designs; Nike does it by collaborating with athletes; Cadbury does it by associating its products with the human emotion of happiness (so does Coca Cola). Each product or service is, therefore, sold to its targeted customers with a certain objective or an end state in mind.
If you need a formal definition for marketing mix, then you need to understand that there are three parts to it. The first is that it’s a set of tools, the second is marketing objectives and the third is targeted market.
Combine the three and you have the definition of marketing mix. It is a set of tools that a company uses to meet is marketing objectives to capture a targeted market. Simple, right?
But, how is it implemented? Popularly, marketing mix is seen as a four-level structure or as ‘4Ps’.
Now, let’s a quick look at the four elements.
Product is the intended end-state that needs to be delivered to the customer. It can be a physical or a tangible product or an intangible one, like an experience. Price is the cost (not necessarily money) paid by the customer to experience the product/service. Place refers to the channels and distribution mechanism employed to deliver the product or service. Promotion is the communication to the customer, in terms of advertisement or media strategy.
How to implement the 4Ps?
Let’s take a simple example to understand the 4 Ps better.
I want to sell a product — a radio that can play songs using the internet as well. I’m defining the product in terms of how people can tune in to their favourite frequency to listen to songs as well as play the ones they like using the internet. Radio is essentially a one-way communication device. With this, I aim to make it a two-way communication one.
I will design the product and its features, based on understanding my target audience. Some of the other questions that I will need to answer are:
- Does my product actually satisfy the needs of my audience?
- What are the other services I need to offer? After-sales service?
- Is there any data or business study that indicates the need for such a product?
- What will be the product lifecycle?
- How am I going to package and brand the product?
- How well and long should I test my product before I release it in the market?
Once we decide on the product, its features, functionality, branding, packaging, lifecycle and other services, we can go to the next level, which is pricing.
Pricing doesn’t mean just the monetary costs involved for the consumer. It also includes the psychological costs. If I want to sell the radio, I will also have to factor in the internet costs, the additional cost of electricity and how it’s going to affect my consumer — both financially and psychologically. I will also have to decide how I’m going to set the price, what the market can afford and how much will it pay for my product, and whether should I give a discount or not.
How crucial is pricing?
It should take into consideration the supply and demand factor. Pricing can make or break the product. It is the easiest way to reach the market as the changes to the pricing immediately reflect on the consumer habit.
Now, we know about the product and the pricing involved, so the next question is: “how am I going to reach my customers with my product?”
Let’s talk about the third ‘P’, Place, now.
I will need to decide on my distribution strategy, and how best can I reach consumer which is both effective in terms of logistics and cost. Based on my understanding of the audience, their affinities and dislikes, I will like to devise a distribution strategy to reach them. Should I sell my radio in online marketplace? Which of the marketing channel should I take? What about transportation, warehousing and logistics?
Pricing helps you reach the customer fast. But your distribution strategy is crucial to retaining them and creating a loyal audience.
Now, the last but a crucial aspect of marketing — promotions. In this stage, you answer these questions:
- What mode of communication should I adopt to reach a customer?
- What should be the messaging?
- How often should I communicate?
- How do I capture the interests of those who might not be interested in the product?
I hope these four basic levels of marketing mix is clear. In short, marketing mix is about understanding the audience needs and trying it satisfy them in the most effective manner. There are tools to perform these actions but the idea behind marketing it to listen and understand the concerns/needs of a customer and delivering on them.
A quick recap of the 4Ps
Let’s do a quick recap. Here are the questions you need to ask yourself in each of the four levels:
In the product ideation stage:
- What do you want to sell?
- Why do you want to sell?
- Will it satisfy the needs of the consumer?
In the pricing stage:
- What is the pricing strategy?
- How competitive is the pricing?
- Any discounts/rebates for customers/distributors?
In the ‘place’ stage:
- What is distribution strategy?
- What about transport, warehousing, logistics?
- Is the distribution model cost-effective?
In the ‘promotion’ stage:
- What is the message I want to convey?
- How to reach the target audience?
- How often should I communicate?
That’s all there is to understanding the basics of 4Ps. Simple, right? If things were clear thus far then let’s take it to the next step now.
What about the 7Ps of marketing mix?
The 4Ps applied well for products. Some time after these Ps were conceived, marketers felt that they were not sufficient to address their needs, especially when they were providing a service, as opposed to a product. So what did they do?
They added another set of Ps to the existing list. And, they made it 7 Ps. Let’s take a look at the 3 extra Ps that were added to the list and see what difference they make to the marketing mix.
Let’s start with ‘People’. The importance of “Take care of your people and they will take care your business” can’t be stressed enough. Any endeavour is a team effort. A team needs like-minded people who are take care of to give its best.
Take care of people and their aspirations and well being, and they will take care of you.
That brings us to ‘Processes’.
Processes are put in place to avoid errors due to human carelessness or oversight. Why do we have a timetable in school? Why do we have a checklist at a factory assembly line? It helps to have a process and a checklist, right?
It serves as a reminder to make sure there’s no slip in the process. Processes streamline various departments and help in getting the best product or service out. It differentiates those who have occasional success and those who consistently excel. Over a period of time, a process becomes a template for others to follow.
Can you think of any service or product being delivered to a customer without a process in place?
The last of the Ps is a tricky one. It is called physical evidence.
One of the main problems that e-commerce faced in its initial days was that the physical product could not be felt before buying them. Imagine buying a pair of shoes without trying them on. Or, a buying a shirt without feeling the fabric or the fit.
We all need a feedback, a physical or a tangible evidence that is proof of our end of the transaction. It can be a bill or a new hairstyle, a tattoo, a product or anything. There needs to be a physical evidence to show that a transaction has happened.
As I said before, these 7Ps are quite straightforward to understand the grasp. What is difficult is to implement them in a real-life business situation. The 7Ps need to be treated as a template, a process to help us like a checklist of items that need to be taken care before a launch of a product.
And, if you’ve read this far, I’m assuming you’d love to learn another concept which is as interesting as the one we’ve just discussed. It’s another number and a letter. Yes, the number is 4 and the alphabet is ‘C’.
Now, let’s learn about the 4Cs
Let’s talk about the 4C concept. C replaces P, where C stands for customer. Yes, the focus shifts from creating a product to satisfying a customer’s needs. It’s a subtle difference. What I want to do vs. What do I do to satisfy the customer’s needs.
The first of the 4 Cs is consumer. The new perspective puts the customer at the centre and what their needs are.
Some of the questions that you need to answer are:
- What is that I can provide with my talent that can help someone?
- What is my passion that can serve others too?
- How can I contribute to solving a concern faced by many?
As you can see all questions are targeted at solving the consumer’s problems or concerns.
Let’s talk about the second C now — cost.
This talks about the overall cost incurred by the consumer is embracing a product — both monetary and psychological. Last year, I switched to an iPhone from an Android device. I had to get used to the new UI and experience, different set of buttons and so on. These are still costs that I had to endure.
People are hardwired to resist change. The product or service must help in breaking that notion by providing a much better experience — both in terms of money and intangibles, like user experience. The cost incurred by the consumer is crucial. There are three things why people buy a certain product/service — for convenience, or status or budget. Identify why your consumer would buy your product first.
The other important factor is convenience. To understand the importance of it, answer the question: how easy is it for a consumer to reach your product/service?
With the advent of e-commerce, any product or service is available at a click of a button. What about those still in brick and mortar business? It’s not just a one-time affair of buying. Convenience is also about how effective and easy is it for a consumer to reach a company post sales.
The last of the Cs talks about communication. Gone are the days when brands explicitly promote themselves. Subtlety and position are the key to communicating with consumers. How to promote your business, by communicating the value you offer to your consumers?
Marketing expert Seth Godin succinctly put it: “Marketing is no longer about the stuff that you make, but about the stories you tell.” It’s all about communicating to consumers about the value your product is going to add to their lives.
I hope the 4 Ps and Cs are clear now. Understand how they differ and where to use them effectively. Also, the 7 Ps are just an extension to the 4 Ps. Do note that the underlying theme of all these principles is same — understand the consumer, figure out how and why you need to satisfy their concerns, opt for the most effective way in reaching out to them, in terms of pricing and distribution, and add value to their lives.
To help you further, I have attached a document that will serve as a checklist. Every time you want to create a marketing plan, use it 🙂 I hope the article has empowered you and armed you with the basics of marketing mix. Do leave your suggestions/feedback as comments below. Let’s learn together!