The marketing mix is often recognized as the +4P’s of marketing. The most commonly defined 4 is product, price, place, and promotion. A great many people like defining it as a means to show they have a knowledge of what the elements of the marketing mix are. The challenge in simply defining the marketing mix doesn’t necessarily translate in how someone might use them within their business. Here I would like to show a brief premise on how a clear understanding of the four elements can inform your business and improve profits.
The first is product. A product should be defined very loosely and refer to anything a business is offering but not limited to physical goods but services as well. As the product is defined it should also be considered what the benefits are to the consumer. If it is a t-shirt, the type of fabric, style gender, size, color, where it is manufactured, etc. is all considered pieces of the product and even the brand. As you might notice, we might begin to define a particular audience that this product would interest from the benefits analysis. That is a different exercise but the two correlate. An example is a premium brand that might use the highest quality of material in the manufacturing of the products. Or a low-end service company might use everyday materials and low-end staff while the high-end business might use organic products and/or experienced staff.
The second is price. It is near impossible to set a price without really knowing your cost of goods or services. See how this ties back to the actual product being offered. Many times a business might begin selling without knowing the real cost to operate. This can be difficult if you are new and sometimes unforeseen costs can be difficult to figure out. As an example, because a high-end company uses the best material or the most experienced staff and so in order to operate they need to charge a higher price. Conversely, a lower end company might be able to operate at lower prices because they might use cheaper material or less experienced staff.
Example 1: I worked with a chiropractic clinic who was very established. For nearly 10+ years they had been charging the same price on a specific service of theirs. With inflation alone and the cost of living and doing business meant they were slowly losing money. The difference was nearly 40% lower than their competition. In my mind, this was cash in the bank. We rolled out an announcement that messages were increasing in price and posted at the front counter and through the mail. The result was people pre-paying for the service and attracted add-on purchases for people who were unaware of the service.
Example 2: I had a friend that I talked through pricing of a new product. It was a new service and offering to help preserve costs of food spoiling through digitally connected devices (think thermometers). The price of his product on the rollout of the product was high along with a subscription after purchase. With a little research in the space, I found that my impression was right. There were other newly started ventures that were a fraction of the cost (0.1%) while some were offering a sole subscription. It was great idea but the value to the companies that would use was to high. The company didn’t make it past the testing phase within a few locations restaurants.
The third is place. Digital means has changed this but place still has an important role in the marketing mix. If margins and enough sales allow you to sit on Chicago’s Million Dollar Mile you can see how price might warrant the location. In the digital age, this can relate significantly as to position on a search engine, how accessible to clientele whether in person or online. The sales jobs has pivoted for many industries from door-to-door to online email and digital promotion. Mapping out how customers access your product or service might define whether you need a prime location or if a reseller like Amazon is the right approach to garnering enough sales.
Example 1: I remember driving by a restaurant that used to be a diner. It moved out and another restaurant moved in. A few years later it moved and another restaurant moved in. It seemed like a revolving door for restaurants. I could imagine the marketing to fill the location after each turnover. Great restaurant location, key turn ready. Probably should be asked is who was here before and what happened to them.
Example 2: A friend of mine started a carpet cleaning business. I helped with some of his online marketing and positioning the business with SEO work. The thing I noticed with him his place was online through local search but he also used some simple grit. After each carpet cleaning, he would set aside some time to canvas the homes nearby. This was clearly a piece of promotion but he added it into how reached other customers.
The fourth is promotion. For many, a jump to promotion is exciting because the goal is to sell and make a profit. The difficulty for many business owners is that they haven’t approached the promotion with price in mind. It is interconnected. There are typically two approaches to approaching the promotion cost of business. Top down in which the management defines what this cost is and the other is bottom-up which the team below helps define the needs to achieve certain objectives. By alotting, a specified amount toward marketing, a business can succeed where they might otherwise struggle or have a difficult time growing even though they promote. The SBA has stated that on average, businesses spend 8% on marketing and a new business may spend significantly more to gain visibility. If you don’t have a set goal, the 8% may be a good starting point. With promotion being a piece that fits into price can help you plan to grow by feeding profits to help growth. By knowing the cost of goods sold, this also can help you define KPI’s that can help you measure the success of your marketing efforts. Setting a price that is informed by overall operations is essential and should be considered by every business.
Example: A local service company I had worked with wanted growth. We began working with them on paid advertising and SEO. The first couple of years of growth was a 165% increase y.o.y. On the third year the company had begun to have attrition issues. Even though the company had been up they began to run into fulfillment problems because switching from a two-man team to highering more routes was difficult. They were unable to continue marketing as they had reached the limit of how much business they could handle. Really this could play into growth strategies and having a plan when to hire.
As you can see the marketing mix should help you with improving your offering and grow your business. The product, price, place, and promotion is important to help you find what is the best approach to reaching your customers. A plan in place to help you define different elements of what your offer and how to inform your target market is essential.