Product life cycle theory comprises analysis of a product's life in the market from the time it has been launched to its withdrawal from the market. This article dwells on…
A Thorough Explanation of the Marketing Mix Strategy
Marketing mix is a strategy that has been formulated after taking into consideration the 4P’s of marketing: product, price, place and promotion. Marketers have to use a combination of these P’s to steer their firms towards success.
Marketing mix is a concept proposed in the 1960s by marketer, E. Jerome McCarthy and has been widely used by marketers since then. Marketing mix is nothing but a set of tools used by the marketer to rope in as many customers as possible, so as to gain maximum profits. This marketing mix comprises four components namely; Product, Price, Place and Promotion. These four components are popularly known as the 4P’s of marketing mix. A marketer has to use a combination of these 4P’s to develop a profit-yielding strategy. The problem is, there’s no standard proportion. You have to work with different permutations and combinations of the 4P’s and find out what works for your product. To understand the 4P’s better, let’s have a look at a fishing analogy.
Marketing Mix: An Analogy (Fishing)
In this analogy we are comparing the marketer to the man and the customer to the fish in the picture. However, it’s important to remember this is just an analogy used to help comprehend the subject better and should not be taken literally. We do not intend to make fun of either the marketer or the customer. In the analogy the customer (fish) looks like he is being lured into a trap, however, this is not true in reality. ‘Customer is the King’ and every marketer has to consider the customer’s needs, wants and desires before designing a product. This analogy just helps understand the 4P’s better, which is why it has been used.
Is Your Product Attractive Enough?
Without a bait, don’t ever dream of catching fish. Product is similar to the bait that is dangled towards the customer. Just like how the bait draws the fish towards itself, the product draws customers towards it. Product is not necessarily an item for sale, but can also be services, ideas, solutions, etc.
Product should Satisfy a Need
If you offer a bait that a fish isn’t likely to grab on, you’re wasting your time! So a product is something a customer would like to own! A marketer should first find out what the customer needs and then design the product accordingly and not vice versa. Same goes for those providing services or solutions. Before designing a product, ask yourself, if it’s going to add value, fulfill a desire or make life easier for the buyer.
Product must Deliver
Then again, the marketer must always make sure the product delivers what’s expected from it. This is where quality comes in. Don’t think you can fool your customers by providing sub-standard products. They sure can be lured into buying your product once, with all those inviting advertisements, however, they won’t come back again. Only good quality goods and services brings back customers. One satisfied customer brings in ten more customers, but one dissatisfied customer turns away 15.
Our Product Vs. Existing Ones
If your product is not an entirely new concept, you will have to work on the additional features. Ask yourself why a customer should choose to purchase your brand? What additional benefits will he gain? Differentiating your product from existing ones does not mean adding unnecessary features. Take the example of mobile phones. Adding new features not provided by others is great, however, make sure these features don’t complicate things further. User-friendly always has the edge. Have a look at Google, who has strictly maintained its simple homepage, devoid of ads, fancy graphics, etc. So getting your product to stand out has to be done wisely.
Competition in the Market
Just as how one needs to adjust the line while catching fish, a marketer must adjust the price in such a way that it yields maximum profits. Price can never be fixed and will change from time to time, depending on various internal and external factors. Price is nothing but that which the customers give in exchange for the product.
Pricing a Product
The sole objective of any firm is to make profits, so setting the right price is crucial. The price of the product has to be such that it ropes in maximum profits. Costs involved in manufacturing the product, promotional expenses, distribution costs, etc. have to be taken into consideration while determining the price. You also have to consider the prices quoted by competitors. Moreover, you have to keep in mind how much a customer is willing to pay for the product. So the optimum pricing strategy would be finding a balance between the price customers are willing to pay and the price at which you have a decent margin.
Under and Over Pricing
Underpricing products may increase volumes, however, it may not result in profits. So before slashing prices, one must think twice about the profit margin. Moreover, marketers think if their product is unique, they can overprice. However, there’s always the risk of copycats who will come-up in no time, with a similar version of your product at a cheaper rate. This will throw you off track. Thus, underpricing and overpricing can be risky. Consider the prices placed by your competitors and adjust accordingly.
Quality Vs. Price
Slashing prices will not necessarily attract the masses. Not everybody wants a cheap product. People want quality and class as well, for which they are ready to pay more. Then again, don’t raise the prices with the intention that people will want to purchase something expensive. The price of the product has to correspond to the quality.
Premium products can have premium prices. For example, designer clothes or customized goods can have higher rates. Of course, such products will be targeted to the upper class. Then again stores in airports can charge premium prices at airports, because people don’t have an alternative and the cost of running a store at the airport is very high.
Building Price Confidence
Are You in the Right Place?
Just like how fishing in the wrong area can leave you fish-less, marketing in the wrong places can leave you profit-less. Place refers to the location where the products are available. It involves the distribution channels, right from the manufacturer to the final customer. As a marketer one has to try to reduce the distance a customer has to travel to purchase or avail the product.
Target the Right Audience
Once you narrow down on your target market, you have to decide how you will take the products to them. For example, if you are selling trendy shoes for teenagers, you will not do well by opening a store in a residential area. You need to take your products to places where young people hang out, like multiplexes, malls, etc. Only then will you gain the attention of your target market. Then again, posh brands should be placed in stores situated in high profile areas, so as to attract the right kind of customers.
Brick and Mortar Stores
Retail chains need to be present at multiple locations, so as to increase the customer’s convenience. If a customer finds an alternative product or substitute near his house, he will even be willing to pay a higher price for the product. So it’s important to ensure your product is easily available to the customer.
Online sales has made life simpler for both the customer and the marketer. The customer can view the product line, place the order and wait for the goods to be delivered, while the marketer need not spend money in opening more brick and mortar stores. Online shopping saves time, energy and money for both parties. These days all kinds of shopping apps are also available that make shopping all the more easier.
A marketer should always be on the lookout to provide easier shopping. When Tesco, the second largest retail chain in South Korea analyzed their customer base, they found them to be the busy, working class. They had the money, but no time to purchase groceries. So the cost involved for the customer was not just the price on the product, but also the time invested in going to the supermarket. So Tesco reducing the price on its products wouldn’t make significant difference. Instead, what Tesco did was it tried to reduce the time cost involved. They managed this by bringing virtual stores in subway stations and bus stands, such that the customers could click on virtual items displayed at the station walls and get the goods delivered home. This increased their sale rapidly.
Good Service is Essential
With home delivery making things convenient for the customer, most marketers provide free home delivery service. However, if the service is not good and involves delays, customers will shift loyalty. So having an attractive, useful product is not enough in itself. It has to be backed up with excellent service.
Promoting the Right Way!
Just like how a fishing rod helps take the bait closer to the fish, promotional tools take the product closer to the customer. Moreover, just like how the length of the fishing rod used depends on the types of fish one wants to catch, so also the type of promotional tool used will vary depending on the type of product.
What does Promotion mean?
Promotion is any measure you take to increase awareness about the product. It can be done indirectly through advertisements on television, internet, etc. or even directly through mails, phone calls, etc. Optimum price does not drive sales, in fact, it’s your ability to promote your product that drives it. The customer needs to know you have a product for him.
Required or Not
Some are of the school of thought that promotion is not required. In a way they are right, because Google and Facebook’s popularity grew by word-of-mouth and not by fancy promotional measures. So we cannot say promotional tools are strictly required. However, on the other side, some have been affected negatively by lack of promotion. For example, Hershey’s, the largest chocolate producer in North America was seen to lose out on market share when the fourth ‘P’; promotion was neglected. They came to the understanding that no matter how good your product, customers need constant reminding. Walmart’s aggressive promotional strategies have kept them at number 1 position. So it varies from product to product.
Promotional Offers and New Features
You want to increase sales, so you offer discounts. It’s important to spread the word about such discounts. This is where promotion comes in. Promotion tools like advertisements (TV, internet: social media sites, newspapers, billboards, etc.) help spread word about the discounts you are offering. Moreover, if you are introducing a new product in your product line, people have to know about it. Promotion is very important for food items because advertisements create the urge to buy and eat it.
Promote the Right Features
For the service sector, another 3P’s are included: people, processes and physical evidence. People refers to the staff involved in providing service.
Marketing mix strategies often take time to deliver. Results won’t be instant, however, they will yield results in the long run. So be patient. Always remember, there’s no such thing as ‘Perfect Marketing Mix’. What may work for one may not work for another. Moreover, what may work for you once, may not work for you the next time. It’s all about analyzing different permutation and combination and experimenting. Moreover, a different marketing mix will be required for different stages of the product life cycle. All the best!