In many ways, marketers are like cooks.
To concoct a delicious meal, a cook must balance the right ingredients carefully. A dash of salt, a splash of hot sauce, a pinch of garlic. Miss an ingredient or dump in a tablespoon of salt when you only need a teaspoon and the whole meal is ruined.
If you’re in marketing, you also have basic ingredients that you use everyday when putting together a marketing plan.
These ingredients are called the 4 P’s, and by carefully balancing them in your marketing mix, you can make sure that you have a visible, in-demand product or service that is competitively priced and promoted to your customers.
What are the 4 P’s of marketing?
The 4 P’s of marketing are place, price, product, and promotion.
The 4 P’s concept was developed by Edmund Jerome McCarthy, a Notre Dame marketing professor, in his 1960 book, “Basic Marketing: A Managerial Approach.”
Rather than studying marketing from a functional standpoint, defining traditional marketing roles and how they work within an organization, McCarthy’s approach focused more on problem solving and the challenges marketers faced.
It was a revolutionary concept. Instead of just defining what marketing was, McCarthy sought to improve marketing practices by borrowing from fields such as sociology and psychology to gain insight into consumer behavior.
McCarthy’s research led to the 4 P’s—place, price, product, and promotion—and because they are so foundational, they are still used to teach marketing today and can be adapted to modern advances such as marketing software and internet marketing.
Read on to see why each P is so important, and how they fit into the overall marketing mix for your small business.
Product placement to the extreme
We’ve all heard the old real estate saw, “location, location, location.”
But we’re not talking about the 3 Ls, we’re talking about the 4 P’s.
Still, the concept is the same for both. In real estate, where your property is located is more important than its size or condition. In marketing, where and how your customer is exposed to your product is the foundation for any successful marketing mix.
Example: In the recent past, this meant how visible your product was in the physical marketplace. That’s why Coca-Cola’s iconic packaging is so important. Even in the 1900s, a parched consumer could stroll into the local general store and spot a bottle of Coca-Cola with minimal effort.
In modern times, things are a little more complicated.
Where your product appears on the internet is even more important than where it appears in the physical world. Why? Because your reach in the physical world is limited by physical space, while your reach online can be global. For example, is your product promoted on the front page of Amazon, or an obscure web site?
The takeaway: As a high-level concept, place can mean many things in many different situations, from a product display in a grocery store, to an internet pop-up ad, or even a product placement in a movie. The important question that marketers must ask themselves is: how can I make it easier for customers to find my product? And work from there.
Discount prices, or premium prices?
There’s a reason that $9.99 is a more popular price than $10.
The marketer’s challenge is to come up with a price that is attractive to consumers while still turning an acceptable profit for the company. Even though there’s only a one-cent difference, 99 cents just sounds like a much better deal than one whole dollar.
There are many factors that come into play when determining the price of your product or service, such as:
- competitor’s prices
- the actual cost of materials and production
- market fluctuations
- basic supply and demand
But beyond those factors, there are situations when companies artificially inflate the price of a product to increase perceived value, or even charge less than a product is really worth to build customer loyalty.
Example: A liquor company might be able to charge tenfold what a bottle of vodka is really worth by putting it in a fancy package, or a grocery story might sell eggs for 50 cents on the dollar to get customers through the doors.
The takeaway: What you charge for your product or service not only determines how much money you can make, but also how you’re perceived in the marketplace. Do you want to be known as the high-end, but also high-priced option for the elite? Or do you want to be known as the customer-friendly, affordable value option for the masses?
The first option typically means higher profits but fewer sales, while the second option usually yields a higher volume of sales but a smaller profit margin. For example, the Atlanta Falcons are using the latter approach with their “Fan First Pricing” at Mercedes-Benz Stadium.
You know, for kids!
In many ways, product is the most important ingredient in the marketing mix because without it, you don’t have a place in the market, and you certainly can’t sell or advertise something that doesn’t exist, or doesn’t have any demand.
Your product or service should be the essence and lifeblood of your business.
Even if your product is intangible, such as an insurance policy or consulting service, it should still stand out in the marketplace either because it does something that nothing else in the market does, or because it does—or at least strives to do—something better than everything else on the market.
Example: You want to open a lemonade stand. Unless you’re planning on selling something—say pink lemonade—that no other stand in your neighborhood offers, or you’re confident that your lemonade is going to taste better than your competition, you should focus on finding a new product.
The takeaway: When considering your product’s place in the marketing mix, you should ask yourself questions such as:
- What does my product or service do that nothing else in the market does?
- How is my product or service better than the competition?
- Why should a consumer pay for my product or service instead of the competition?
If you can’t come up with good answers to those questions, it’s time to go back to the drawing board.
Promotion on wheels
This is the fun P.
Promotion includes concepts such as brand awareness, influencers, social media marketing, sponsorships… basically any interaction that your company has with the consumer regarding your product. In many ways, promotion allows for more creativity than any of the other P’s.
Promotion is closely related to place in the marketing mix. The difference between the two is that place is more about passive visibility, while promotion is more about active communication.
Example: Not to dwell on the Wienermobile, but this is a nice way to start and end this piece with frankfurters.
At any given time, Oscar Mayer has six official Wienermobiles piloted by Hotdoggers (brand ambassadors) touring the country, spreading the good news about Oscar Mayer’s meat products. The Wienermobile is a promotional win because just the sight of it is enough to make people smile and develop a positive image of the Oscar Mayer brand.
The takeaway: Every last interaction you have with the consumer will become part of the story of your company in the mind of the consumer. Do you want them to think of your company as trustworthy, playful, or offbeat? Or do you want to be known as cold, uncaring, or greedy? Your brand voice should be reflected in every communication you have as a company.
Flavor your marketing mix with the 4 P’s
Now that you know more about each of the 4 P’s of marketing, remember to balance them all together to build a delicious marketing mix that ensures you have a desirable product or service that your customers can find and buy at a competitive price.
Are you still hungry for more marketing nourishment? Check out these articles to get your fix:
- How to Build a Social Media Marketing Plan: 5 Steps for Small Businesses
- A Beginner’s Guide to Pay-Per-Click Marketing
- 21 Social Media Marketing Tips for Small Businesses
- Top 7 Email Marketing Mistakes to Avoid in 2017
The post Understanding the Marketing Mix: The 4 P’s of Marketing appeared first on Capterra Blog.