Objective 12-2 Marketing Tactics
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Describe the elements of a marketing strategy and the components of the marketing mix, and discuss how firms implement a marketing strategy by applying the marketing process.
Marketing Strategy: The Four Ps of Marketing
What is a marketing strategy? A marketing strategy consists of two major elements:
The target market. A specific group of potential customers on which marketing efforts are focused.
The marketing mix. The combination of controllable elements of a product’s marketing plan designed to serve the target market.
We will discuss target markets in more detail later in the chapter. Let’s first turn our attention to the marketing mix.
What elements are included in the marketing mix? Traditionally, there have been four elements in the marketing mix, which are known as the four Ps: product, price, promotion, and place. The idea is to provide the product customers need and want at an appropriate price, promote its sale, and then place, or distribute the product in a convenient location for the customer to purchase. Some feel there is a fifth P that should be added to the marketing mix: people. Particularly when a service is being offered, the people involved can add significant value.
The elements of the marketing mix need to be blended in a way that best meets the needs of the target market. As you can see in Figure 12.6, finding the best blend is constrained by environmental factors beyond a firm’s control. We will discuss these constraints found within the broader market environment later in this chapter. Let’s first look at each of the four Ps in more detail.
Figure 12.6
The Marketing Mix
The ideal marketing mix blends the four Ps in a way that best meets the needs of targeted customers.
Image sources: Lorelyn Medina/Fotolia; swisshippo/Fotolia; 3ddock/Fotolia; Venimo/Fotolia; Adisa/Fotolia; IQoncept/Fotolia
Product
The perfect product is one that provides value for the customer. Companies must determine what a customer wants from a product, or how a product satisfies a particular need. Additionally, distinguishing a product from that of the competitors is critical. If a product is not different from or superior to the competition, then why should customers buy it? Product differentiation is the creation of a real or perceived difference in a product designed to attract customers. Product differentiation is critical for most businesses and will be discussed in greater detail in Chapter 13.
Price
There is a lot to consider when deciding on the price for a product. The price has to be high enough for a firm to profit from it but be low enough to appeal to customers. The cost of warranties and returns must also be factored into the price.
Pricing a product competitively doesn’t always mean selling it at the lowest price in the marketplace, though. Sometimes when it’s difficult to offer a consistently low price, coupons, discounts, or other services can help reduce the cost to the customer. However, this strategy must be evaluated periodically to assess its overall effectiveness. We will investigate the price component of the marketing mix in more detail in Chapter 13.
Promotion
Promotion consists of all the methods used to inform customers about a product’s benefits and persuade them to buy it. Promotions are also used to build positive customer relationships. Communicating the benefits of your good or service to customers is done through advertising, sales promotions, personal selling, public relations, direct marketing, and publicity. We will explore promotion more fully in Chapter 14.
Place
The place (or distribution) component of the marketing mix refers to all the methods involved in getting a product into the hands of customers. A product is not beneficial to a customer if it cannot be purchased when and where it is needed. When a business is providing a good instead of a service, the delivery component is often more complicated. Many goods, such as grocery store items, go through a distribution channel, which is a series of firms or individuals that participate in the flow of a product from the manufacturer to the consumer. The middle players in a distribution channel are sometimes called distributors or wholesalers. Some goods, such as food products, go through many wholesalers before reaching a retail outlet (for example, a grocery store) and, finally, the consumer. Other goods, such as automobiles, typically move from the manufacturer to just one wholesaler, the car dealership, and then the consumer. Still other goods bypass wholesalers altogether and move from the manufacturer directly to the consumer, such as items ordered from a catalog or an online site and shipped directly to consumers. In Chapter 14, we will examine finding the appropriate distribution channel and managing it efficiently to get the product to the right place at the right time, in the proper quantity, and at the lowest cost.
The Four Cs of Marketing: Marketing from the Consumer’s Perspective
Can the marketing mix be represented a different way? The four Ps present marketing from the producer’s perspective. As Figure 12.7 shows, a more recent revision to the four Ps model looks at marketing from the consumer’s perspective:
Customer replaces product: This represents a shift toward niche marketing and creating individual solutions for customers rather than forcing them to buy a standard product solution.
Cost replaces pricing: The price of a product is only a portion of the total cost of owning it. Other factors include the costs a consumer incurs by changing to a new product or service, such as driving to the place where it can be purchased, taking time to decide to buy it, and learning how to use it.
Convenience replaces place: Online shopping and other hybrid models of purchasing have reduced the importance of place. Convenience, instead, factors in the ease with which information about a product or where it is located can be communicated and how the actual purchase transaction takes place.
Communication replaces promotion: The proliferation of mobile devices and social networking platforms allows companies and consumers to be in constant communication with each other. Companies need to “listen” to their customers as much as they want their customers to listen to their marketing messages.
Figure 12.7
The Four Cs of Marketing
The four Cs reflect a movement to a more customer-oriented marketing approach.
The Marketing Process
How does the marketing process work? Figure 12.8 shows the marketing process. As the figure indicates, marketing is not just about advertising a product in the marketplace. A great deal of marketing research and analysis occurs before the final message about the product is communicated, followed by communication after the purchase.
Figure 12.8
The Marketing Process
Identify a market need. Think back to Aaron Hoffman’s mobile pet-grooming service. Aaron has his own pets, and before he became a groomer himself, he took his dogs to the pet-grooming service where he was later employed. Transporting his dogs was a huge hassle, and he felt horrible about leaving them in a cage for part of the day. He didn’t know it at the time, but Aaron had identified an unfilled market need: a mobile pet-grooming service that eliminates the hassle and guilt that trouble pet owners when they take their pets to a grooming service. Identifying a market need is the first step in the marketing process.
Conduct market research and develop a marketing plan. By analyzing the marketing environment, Aaron can determine if any political, economic, societal, or technological factors could affect his business and its profitability. In addition, he conducts an internal analysis that includes evaluating his potential customers, competitors, and collaborators. These analyses form the foundation for his marketing plan. Aaron discovers that sufficient demand already exists for the services of his potential business. We will discuss how to analyze the marketing environment, as well as how to conduct market research and develop a marketing plan, in more detail later in the chapter.
Identify target customers. If Aaron skips this step, he will waste effort and money promoting a service to people who are not interested in his service. Therefore, Aaron must consider who his ideal customers are and what they think and want and then use this information to inform his marketing decisions. Identifying a target market is discussed in more detail later in the chapter.
Implement the marketing mix. Next, Aaron needs to implement the marketing mix. He has already identified a customer need and has developed a product that not only meets that need but also fulfills it better than the competition. Then he will want to contemplate his pricing strategy to ensure that a profit is made and that he remains competitive. In developing his pricing strategy, Aaron needs to be sensitive to any other direct or indirect costs that the customer may incur from using his service.
The place component of the marketing mix involves deciding how his product will be distributed to his customers. The initial size and mobility of Aaron’s business affords him great flexibility. He will be delivering his product to his customers, within a reasonable distance, with little or no inventory management required. This service offers his customers much convenience. Are there other conveniences Aaron might also consider offering? Can he make scheduling appointments any easier?
Promotion, which can be expensive yet fruitful, is the most visible part of the marketing mix. Aaron should begin promoting his service by creating a memorable brand name for the business to distinguish it from all others. How should he communicate with the marketplace to engage with his current customers and attract new ones? Should he create a Facebook account, generate a mobile app, or set up a website? Should he blog or tweet about pet grooming and other care tips?
Maintain good customer relationships. The final step in the marketing process is to establish and nurture long-term, trusting relationships with customers to foster their loyalty and get repeat business. Aaron must develop a rapport with his customers and their pets. He should know which customers are returning clients and note any of their particular grooming preferences. He should also solicit suggestions from customers as well as respond to their complaints by continuing to improve his services. To build customer trust, he might also offer customers their money back if they are unsatisfied. To maintain and foster interest in his services, he may want to use social media. Aaron may also want to establish relationships with veterinary clinics and dog breeders. Personalizing and maintaining good customer relationships is critical to a business’s ongoing success.