If you like Marketing and want to get better at it-or if you don’t like marketing but you know you have to use it to grow your business and bring in more sales, you need to know about the Marketing Mix.
It is one of the most used concepts in the industry and it presents four essential and fully controlable elements from a business: product, price, promotion and placement (or the four P’s). The mix is a tool that you can use to improve the way you offer your products or services to your customers.
A combination of these elements could bring your business a competitive advantage.
The business market is build from two factors: uncontrollable (like political, economical, social, technological, legal, environmental factors or demand) and controllable factors (like the Marketing Mix).
You can use the mix to create an efficient product or service “offering” to the market. To make a product sell better you can change one of the following:
In order to increase the success of your product (or service-this model applies to both) you have the control over the features of your packaging. In order to increase demand for your product (or service-we will refer to the product also as a service from now on) you have to either increase or decrease the quality of it. (We will explain in a second why sometimes it might be a good decision to decrease the quality).
This element alone could be a source of competitive advantage. Multiple multi-dollar businesses are built only by offering a different quality service. Apple is a good example here: they are different from any other phone company by focusing on the way their phone works and is designed.
Most businesses today focus on improving the quality of their products, by adding more features or using different (new) technologies or changing its design (some t-shirt printing companies make millions of dollars only by changing the design of the print).
Now, the idea of improving the quality of your product might not always be good. Why? Because sometimes the market might not be ready for it. Think about the Concorde: the fastest commercial plane in history. It offered the fastest flight from America to Europe but still failed (due to multiple reasons: to make the product offering very good they had to increase the Price, the other element that will be presented soon).
As we said above you can decrease the quality of a service to sell more! Why would you do that and why would that work? Because it could affect the other elements as well. In the Concorde example, the flight tickets were almost double than the tickets for a normal plane, so instead of arriving two hours earlier people would prefer to have more money on their pocket. Sometimes a lower quality product may bring your manufacturing cost down or maybe the premium feature you offer is not valued a lot by your customers. Take that into account when developing new products.
If you want to affect the demand (and sales) for your product you can change its price. This is a very used practice by most business owners. Most of them, because they don’t know how to increase the value of the product they sell; they just lower the price. This is why industries which have a lot of competition usually tend to have extremely low margins. In order to sell just a little bit more, most business people reduce their price; competitors want to stay in business too so they lower the price even more… this goes until most of the profit margin is eaten and the clients are already used with the price: good luck trying to increase your profitability then.
Lowering price isn’t always a bad thing for business as people are very motivated by “good deals”. This is the reason why most of the retail sales happen during Black Friday. This doesn’t necessarily mean that the people get the better deal, but there are more discounts overall in the market. You can find that the best deal you can get is not actually on black friday.
There are two books that we recommend you to read to understand the psychology of pricing: The Blue Ocean Strategy and The Lean Start-Up.
How to offer discounts?
When offering discounts you need to know that this approach might affect the perceived value of the service (usually depending on how big the discount is and how often it happens) so you have to do it strategically.
Products with low price usually have a low perceived value so when you lower your price too much or too often it happens that people won’t believe in it as much afterwards. It happened to us and our clients and it will happen to you if you offer it too often.
You can follow a couple strategies when it comes to offering discounts:
1. Seasonal price cuts
Offer discounts in a predictable manner so buyer ‘tension’ and excitement would build. Don’t do it too often, once or twice a year would be just right (depending on your business model you can have up to four as clothing brands have so you can sell more seasoned outfits) but don’t make discounts every month because it is easy for customers to wait… especially if what your are selling is not a necessity.
2. One day sale
This strategy is inspired by the Black Friday but goes a step further. The one day sale strategy is based around an event you participate in once a year (it could be organised by you or somebody else- you don’t necessarily have to be the host). You can offer this discount only in the event date (and maybe at the event location). This strategy works very well with local communities and events. Eventhough they may not offer the best sale day of the year (eventhough it could happen) they would bring you cheaper leads and higher conversion rates.
Instead of offering a price cut you could offer a free product. This is a very good way to boost the engagement your business had and get some spillover effects into real sales. A lot of people are afraid of doing contests because they think they will lose money, but in 90% of the cases we worked with, the benefits out-weighted the costs in big ways.
There are multiple approaches when it comes to promotions. Here you can be creative as possible. Depending on your budget you can create some highly convertible ads that will benefit your business a bunch. of course you don’t always have to spend money to get publicity. We are working on an article about Guerrilla Marketing strategies so if you want to get notified when we post it, sign up to our newsletter.
This element is very straight forward but complicated at the same time. We won’t be able to get into all the details about promotion and sales. We have two recommendations when it comes to it: remember that to stop marketing just to save money is the same thing as stopping your watch just to save time and read the book “The psychology of selling” by Brian Tracy.
Placement in a few words is what in the real estate market is called “location is everything”. Here there are two things that come into play: where your product (and promotion) is placed and how it is placed. If we are talking about the digital world (here we come into play-haha) we mean the rank your website has in the search engines, do you have Facebook, Instagram Ads?
If we are talking about the offline words we mean: Where is your store location? How visible are your products in the shops you sell in? How easy your clients can find you (if you offer a service)? How are you products arranged in the shelves? and many, many more.
In the online world getting a proper placement is easier and cheaper with PPC (pay-per-click ads), display ads and so on.
In the offline world it is a bit harder. If you don’t own your own store and sell through retail you need to negotiate your placement, which is harder to do and it might cost you more.
One company who focuses a lot on Placement is Coca-Cola. Almost always they negotiate the placement of their sodas in the stores… They even have product shelving specialists that focus on the psychology of how people behave in a store to increase their conversion rates… Pretty advanced stuff.
Placement is the reason Super Bowl ads cost so much. It goes by the saying: the more people know about you, the more likely someone will happen to want your product.
With this we come to an end to the Marketing Mix. You can use this model to increase your sales or to understand what you want from your advertising company.
So let’s recap:
The Marketing Mix has four elements:
You can use them to increase your competitive advantages. Follow the strategies written in this article to increase your business.
We would be extremely happy to hear your feedback.
Remember, we are preparing a post about Guerilla Marketing strategies that will help you promote your business with little to no money. Sign up to our newsletter to receive a notification when it will come up.
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