Download Marketing Mix: Elements Explored

MARKETING MIX: ELEMENTS EXPLORED
Product
A product is what the company has to offer, whether it is something tangible, like
cornflakes, or a service, like lawn fertilizing. It's anything that can be offered to satisfy
a market's want or need. Successful companies consider the product's form, functionality,
features and benefits from the consumers' point of view.
CASE STUDY: 3M CORP.
3M Corporation turned a small square pad of yellow paper into a billion-dollar
multinational brand. They did it by focusing on the function of the product. The Post-It
note line includes a large variety of shapes, sizes and colors for assorted uses, as well as
clever designs and smells targeted to different personalities. The common feature of all
of them, of course, is the capability to easily stick almost anywhere and be completely
removed again.
3M didn't build its Post-It Note reach by creating a random set of price points,
entering the most possible distribution channels, or running a splashy Superbowl ad.
Instead, the marketing team looked for people. What do office workers, students,
teachers, and graphic designers all have in common? They are people who often seek
more organization for their lives and work. 3M built its product to fill those people's
needs.
After analyzing the demands of the consumer, 3M expanded its product line. In addition
to the original little square pad, the company has introduced Markers/Flags, Creative
Shape Pads, Easel Pads, and Super Sticky Notes under the Post-It brand name.
The newest innovation in the Post-It Note product line is PC Notes software. And even
their software comes in different versions with different features for different target
markets. By making "people" the focus when marketing Post-It Notes, 3M created a
diverse product line to suit the needs of a wide range of potential buyers, turning its
unique invention into a billion-dollar brand.
Many companies find success by focusing the product aspect of their marketing mix
on what people need and want.
Price
Price, another key component of the marketing mix, refers to the amount of money
charged for a product or service. Profits go to those who charge the right price. But there
is no one right price for every customer.
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When assigning a price, marketers must know more than how much the product
costs to make and distribute. They must ask many questions about the marketplace: How
much is charged by the product's direct competitors? How should the price compare to
similar products of different sizes and varieties? How much is the customer willing to pay?
Consider a company that markets cell phones. For $300, it can sell a phone with a lot
of features. But some people can’t or won’t pay $300 for a phone. That means lost sales
for the cell phone maker. There are many pricing strategies a cell phone company might
use to maximize their potential sales and profits.
1. Layered Pricing: One common pricing strategy is to offer a line of models ranging from,
say, $29 to $300. Each phone is basically the same, but some features are missing or
“deactivated” in the lower-price units. This strategy, however, still misses out on
consumers willing and able to spend MORE than $300 for a cell phone.
2. Luxury Pricing: Another marketing tactic is to offer a “luxury” product with an
exorbitant price--perhaps one with embedded jewels or a fashion designer’s name. This
appeals to people who want their accessories to display a certain social status. This
phone could command several times the price of the basic unit.
3. Price Skimming: is frequently used when products are first launched. Marketers can set
artificially high prices to "skim" profits by selling to the consumers most willing to pay a
high price for what they believe to be an innovative product.
 Skimming is often done with name-brand or high-technology items. Once the
marketing team believes the most eager consumers have purchased the product,
the price is lowered so that it appeals to more mainstream customers. In this
marketing game, the consumers willing to wait the longest to buy a new product
are usually rewarded with the lowest price.
4. Market penetration pricing: is based on a more price sensitive consumer. This strategy
is to set a low initial price to penetrate the market quickly and widely so the product
can reach the mass market and fend off competition that might not able to price its
products so low.
Many companies find success by using the pricing aspect of their marketing mix to
appeal to the maximum number of people who could buy their product.
A mental shortcut we consumers sometimes use to judge products and services is
“you get what you pay for.” In other words, many consumers believe that higher price
means a better product. But is the “price-equals-quality” assumption valid? Or might you be
paying for something else--like a name, or convenience, or some other attribute?
Place
The third "P" of the marketing mix is place, which refers to how a product gets to
the people who will buy it. It's often called the “distribution strategy.” The two basic
types of distribution are:
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• Direct, where a company sells straight to the consumer
• Indirect, which typically involves wholesalers and retailers
If a company doesn't offer its product or service at the right place and the right
time, fewer customers will buy it. Marketers must think about how much it costs to sell
through those locations. Some stores will charge placement fees and others will require
low prices that could make the company unprofitable. In addition, a marketing team must
consider the places the target market would be most likely to expect to buy the product.
You might think that the ultimate goal in distributing a product in as many locations as
possible. But many placement strategies are specifically designed to limit distribution
outlets.
CASE STUDY: DELL COMPUTER
Dell Computer began its business by selling PCs directly to consumers, while most
competitive PC makers were selling through distributors and mass-market retailers.
To address customer needs, Dell's business model went beyond product design. By
advertising in magazines, selling directly to consumers over the phone, and later,
through an online store, Dell fulfilled customer needs such as customization,
personalized service and support, and quick access to the latest technology.
At the same time, Dell used its direct customer relationships to research consumers'
needs and requirements so it could continually refine its product offerings.
Although Dell was usually not in retail outlets where people normally shopped for PCs,
the company earned a competitive advantage by focusing on a "place" strategy that
offered people a more direct and personalized experience.
Other companies that might seek to intentionally limit distribution of their products
include makers of gourmet foods. They understand that their potential customers might
have a different perception of a product if it's sold in an average grocery store that
caters to the mass market.
Most marketers, however, will try to use their resources to achieve as wide a
distribution network as possible to cost-effectively be wherever their target market
expects them to be. Makers of everyday soaps, toilet tissues, and canned fruit do their
best to be in every supermarket and convenience store that sells to the mass market. But
they probably won't sell in boutique stores where consumers are looking for upscale
products.
Similarly, the makers of books, videos and CDs will try to identify every possible
outlet where their audience might be motivated to purchase. It could be a mass market or
niche store, Website, or directmail catalog targeted to people with specific tastes and
preferences.
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Many companies find success by focusing the place aspect of their marketing mix on
the unique behaviors and expectations of the people who will buy the product.
Promotion
Promotion is the marketing strategy that includes advertising, selling, public
relations, trade shows, direct mail, and other communication techniques--even the
messages on packaging. Successful promotions are intended to change beliefs or increase
awareness, knowledge, and purchase intent among potential buyers. Promotion is often the
most obvious element of the marketing mix.
CASE STUDY: CHARMIN
In the past, Proctor and Gamble promoted its Charmin brand toilet tissue by relying on
newspaper coupons and TV advertising. From 1964 to 1985 Mr. Whipple blanketed the
airwaves with a familiar slogan -“Please, don’t squeeze the Charmin.”
While Charmin still promotes its products with traditional methods, it has also created
more innovative promotions. More recently, the brand set up free public restrooms in
New York’s Times Square. The restrooms were luxurious, clean and featured Charmin
tissue products.
More than 400,000 people used those restrooms in one month, making a more personal
impression than any TV commercial ever could. As an added benefit, 20 million viewers in
one month watched the nine Internet videos about the restrooms. Most of the viewers
were at least a generation younger than ones who had watched the original Mr. Whipple
ads.
Focus on technology
Technological inventions have played a major role in the development of marketing
promotions. From the ads created for radio commercials nearly a century ago to the virtual
stores in online worlds today.
Text messaging and video downloads have offered new opportunities to replace mass
marketing with niche marketing. Ad campaigns sometimes combine Web data with location
information so people with cell phones get messages when they are near a certain store.
Purchase of a product or service becomes more convenient for those people and makes the
advertising more personal--and therefore more powerful. Of course, it may also be
perceived as intrusive or excessive, even by people who signed up for the service.