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The 7 Ps of Marketing
Take charge of your marketing efforts and beat the competition with
this simple formula.
May 17, 2004
By Brian Tracy
URL: http://www.Entrepreneur.com/article/0,4621,315531,00.html
Once you've developed your marketing strategy, there is a "Seven P
Formula" you should use to continually evaluate and reevaluate your
business activities. These seven are: product, price, promotion,
place, packaging, positioning and people. As products, markets,
customers and needs change rapidly, you must continually revisit these
seven Ps to make sure you're on track and achieving the maximum
results possible for you in today's marketplace.
Product
To begin with, develop the habit of looking at your product as though
you were an outside marketing consultant brought in to help your
company decide whether or not it's in the right business at this time.
Ask critical questions such as, "Is your current product or service,
or mix of products and services, appropriate and suitable for the
market and the customers of today?"
Whenever you're having difficulty selling as much of your products or
services as you'd like, you need to develop the habit of assessing
your business honestly and asking, "Are these the right products or
services for our customers today?"
Is there any product or service you're offering today that, knowing
what you now know, you would not bring out again today? Compared to
your competitors, is your product or service superior in some
significant way to anything else available? If so, what is it? If not,
could you develop an area of superiority? Should you be offering this
product or service at all in the current marketplace?
Prices
The second P in the formula is price. Develop the habit of continually
examining and reexamining the prices of the products and services you
sell to make sure they're still appropriate to the realities of the
current market. Sometimes you need to lower your prices. At other
times, it may be appropriate to raise your prices. Many companies have
found that the profitability of certain products or services doesn't
justify the amount of effort and resources that go into producing
them. By raising their prices, they may lose a percentage of their
customers, but the remaining percentage generates a profit on every
sale. Could this be appropriate for you?
Sometimes you need to change your terms and conditions of sale.
Sometimes, by spreading your price over a series of months or years,
you can sell far more than you are today, and the interest you can
charge will more than make up for the delay in cash receipts.
Sometimes you can combine products and services together with special
offers and special promotions. Sometimes you can include free
additional items that cost you very little to produce but make your
prices appear far more attractive to your customers.
In business, as in nature, whenever you experience resistance or
frustration in any part of your sales or marketing activities, be open
to revisiting that area. Be open to the possibility that your current
pricing structure is not ideal for the current market. Be open to the
need to revise your prices, if necessary, to remain competitive, to
survive and thrive in a fast-changing marketplace.
Promotion
The third habit in marketing and sales is to think in terms of
promotion all the time. Promotion includes all the ways you tell your
customers about your products or services and how you then market and
sell to them.
Small changes in the way you promote and sell your products can lead
to dramatic changes in your results. Even small changes in your
advertising can lead immediately to higher sales. Experienced
copywriters can often increase the response rate from advertising by
500 percent by simply changing the headline on an advertisement.
Large and small companies in every industry continually experiment
with different ways of advertising, promoting, and selling their
products and services. And here is the rule: Whatever method of
marketing and sales you're using today will, sooner or later, stop
working. Sometimes it will stop working for reasons you know, and
sometimes it will be for reasons you don't know. In either case, your
methods of marketing and sales will eventually stop working, and
you'll have to develop new sales, marketing and advertising
approaches, offerings, and strategies.
Place
The fourth P in the marketing mix is the place where your product or
service is actually sold. Develop the habit of reviewing and
reflecting upon the exact location where the customer meets the
salesperson. Sometimes a change in place can lead to a rapid increase
in sales.
You can sell your product in many different places. Some companies use
direct selling, sending their salespeople out to personally meet and
talk with the prospect. Some sell by telemarketing. Some sell through
catalogs or mail order. Some sell at trade shows or in retail
establishments. Some sell in joint ventures with other similar
products or services. Some companies use manufacturers'
representatives or distributors. Many companies use a combination of
one or more of these methods.
In each case, the entrepreneur must make the right choice about the
very best location or place for the customer to receive essential
buying information on the product or service needed to make a buying
decision. What is yours? In what way should you change it? Where else
could you offer your products or services?
Packaging
The fifth element in the marketing mix is the packaging. Develop the
habit of standing back and looking at every visual element in the
packaging of your product or service through the eyes of a critical
prospect. Remember, people form their first impression about you
within the first 30 seconds of seeing you or some element of your
company. Small improvements in the packaging or external appearance of
your product or service can often lead to completely different
reactions from your customers.
With regard to the packaging of your company, your product or service,
you should think in terms of everything that the customer sees from
the first moment of contact with your company all the way through the
purchasing process.
Packaging refers to the way your product or service appears from the
outside. Packaging also refers to your people and how they dress and
groom. It refers to your offices, your waiting rooms, your brochures,
your correspondence and every single visual element about your
company. Everything counts. Everything helps or hurts. Everything
affects your customer's confidence about dealing with you.
When IBM started under the guidance of Thomas J. Watson, Sr., he very
early concluded that fully 99 percent of the visual contact a customer
would have with his company, at least initially, would be represented
by IBM salespeople. Because IBM was selling relatively sophisticated
high-tech equipment, Watson knew customers would have to have a high
level of confidence in the credibility of the salesperson. He
therefore instituted a dress and grooming code that became an
inflexible set of rules and regulations within IBM.
As a result, every salesperson was required to look like a
professional in every respect. Every element of their
clothing?including dark suits, dark ties, white shirts, conservative
hairstyles, shined shoes, clean fingernails?and every other feature
gave off the message of professionalism and competence. One of the
highest compliments a person could receive was, "You look like someone
from IBM."
Positioning
The next P is positioning. You should develop the habit of thinking
continually about how you are positioned in the hearts and minds of
your customers. How do people think and talk about you when you're not
present? How do people think and talk about your company? What
positioning do you have in your market, in terms of the specific words
people use when they describe you and your offerings to others?
In the famous book by Al Reis and Jack Trout, Positioning, the authors
point out that how you are seen and thought about by your customers is
the critical determinant of your success in a competitive marketplace.
Attribution theory says that most customers think of you in terms of a
single attribute, either positive or negative. Sometimes it's
"service." Sometimes it's "excellence." Sometimes it's "quality
engineering," as with Mercedes Benz. Sometimes it's "the ultimate
driving machine," as with BMW. In every case, how deeply entrenched
that attribute is in the minds of your customers and prospective
customers determines how readily they'll buy your product or service
and how much they'll pay.
Develop the habit of thinking about how you could improve your
positioning. Begin by determining the position you'd like to have. If
you could create the ideal impression in the hearts and minds of your
customers, what would it be? What would you have to do in every
customer interaction to get your customers to think and talk about in
that specific way? What changes do you need to make in the way
interact with customers today in order to be seen as the very best
choice for your customers of tomorrow?
People
The final P of the marketing mix is people. Develop the habit of
thinking in terms of the people inside and outside of your business
who are responsible for every element of your sales and marketing
strategy and activities.
It's amazing how many entrepreneurs and businesspeople will work
extremely hard to think through every element of the marketing
strategy and the marketing mix, and then pay little attention to the
fact that every single decision and policy has to be carried out by a
specific person, in a specific way. Your ability to select, recruit,
hire and retain the proper people, with the skills and abilities to do
the job you need to have done, is more important than everything else
put together.
In his best-selling book, Good to Great, Jim Collins discovered the
most important factor applied by the best companies was that they
first of all "got the right people on the bus, and the wrong people
off the bus." Once these companies had hired the right people, the
second step was to "get the right people in the right seats on the
bus."
To be successful in business, you must develop the habit of thinking
in terms of exactly who is going to carry out each task and
responsibility. In many cases, it's not possible to move forward until
you can attract and put the right person into the right position. Many
of the best business plans ever developed sit on shelves today because
the [people who created them] could not find the key people who could
execute those plans.
Excerpted from Million Dollar Habits
Copyright © 2006 Entrepreneur.com, Inc. All rights reserved.
Also from Wiki:
Marketing mix
From Wikipedia, the free encyclopedia
Jump to: navigation, search
The marketing mix approach to marketing is a model of crafting and
implementing marketing strategies. It stresses the "mixing" or
blending of various factors in such a way that both organizational and
consumer (target markets) objectives are attained. The model was
developed by Neil Borden (Borden, N. 1964) who first started using the
phrase in 1949. Borden claims the phrase came to him while reading
James Culliton's description of the activities of a business
executive:
(An executive is) "a mixer of ingredients, who sometimes follows a
recipe as he goes along, sometimes adapts a recipe to the ingredients
immediately available, and sometimes experiments with or invents
ingredients no one else has tried." (Culliton, J. 1948)
When blending the mix elements, marketer(s) must consider their target
market. They must understand the wants and needs (see Maslow)of the
market (customer) then use these mix elements in constructing
(formulating)an appropriate marketing strategies and plans that will
satisfy these wants. The mix must also meet or exceed the objectives
of the organization. As Borden put it,"When building a marketing
program to fit the needs of his firm, the marketing manager has to
weigh the behavioral forces and then juggle marketing elements in his
mix with a keen eye on the resources with which he has to work."
(Borden, N. 1964 pg 365). A separate marketing mix is usually crafted
for each product offering or for each market segment, depending on the
organizational structure of the firm. Borden goes on to suggest a
procedure for developing a marketing mix. He claims that you need two
sets of information; a list of important elements that go into the
mix, and a list of forces that influence these decision variables.
The most common variables used in constructing a marketing mix are
price, promotion, product and distribution (also called placement).
First suggested by Jerome McCarthy (McCarthy, J. 1960), they are
sometimes referred to as the four P's. McCarthy said that marketers
have essentially these four variables to use when crafting a marketing
strategy and writing a marketing plan. In the long term, all four of
the mix variables can be changed, but in the short term it is
difficult to modify the product or the distribution channel. Therefore
in the short term, marketers are limited to working with only half
their tool kit. This limitation underscores the importance of long
term strategic planning.
McCarthy's four P's look at marketing from the perspective of the
marketer. It describes what variables marketers have to work with, and
hence is sometimes referred to as a marketing management perspective.
Robert Lauterborn (Lauterborn, R. 1990) claims that each of these
variables should also be seen from a consumer's perspective. This
transformation is accomplished by converting Product into "customer
solution", Price into "cost to the customer", Place into
"convenience", and Promotion into "communication". He calls these the
four C's.
Shortly after McCarthy developed the four P's, Borden devised a model
with twelve decision variables. They were product planning, pricing,
branding, channels of distribution, personal selling, advertising,
promotions, packaging, display, servicing, physical handling, and fact
finding (Borden, N. 1964 pg 363).
Another set of marketing mix variables were developed by Albert Frey.
He (Frey, A. 1961) classified the marketing variables into two
categories: the offering, and process variables. The "offering"
consists of the product, service, packaging, brand, and price. The
"process" or "method" variables included advertising, promotion, sales
promotion, personal selling, publicity, distribution channels,
marketing research, strategy formation, and new product development.
More recently, Bernard Booms and Mary Bitner built a model consisting
of seven P's (Booms, B. and Bitner, M. 1981). In addition to product,
price, promotion, and place, they included people, physical evidence,
and process. "People" was added, to recognize the importance of the
human element in all aspects of marketing. They added "process" to
reflect the fact that services, unlike physical products, are
experienced as a process at the time that they are purchased.
"Physical evidence" or "peripheral clues" reflects the physical
surroundings associated with a service encounter or retail location.
Other marketing theorists include "partners" as a mix variable because
of the growing importance of collaborative channel relationships.
The marketing mix model is often expanded to include sub-mixes. For
example, the promotion variable can be further decomposed into a
promotional mix consisting of advertising, sales promotion, personal
selling, publicity, direct marketing, undercover marketing, viral
marketing, and e-marketing. Within the promotional mix, advertising
can be further broken down into an "advertising media mix" that
specifies how much emphasis is placed on television ads, radio ads,
newspaper ads, internet ads, magazine ads, etc.
Mix coherency refers to how well the components of the mix blend
together. A strategy of selling expensive luxury products in discount
stores has poor coherency between distribution and product offering.
Mix dynamics refers to how the mix must be adapted to a changing
business environment, to changes in the organization's resources, and
to changes in the product life cycle.
[edit]
Criticisms
Against the mix process generally, reengineering theorists claim that
it re-enforces functional divisions within a company that lead to
inefficiencies. According to Michael Hammer and James Champy (Hammer,
M. and Champy, J. 1993), rather than organizing a firm into functional
specialties (like marketing, sales, advertising, marketing research,
new product development, public relations, etc.) and looking at the
tasks that each function performs, we should be looking at complete
processes from materials acquisition, to production, to marketing and
distribution and customer satisfaction.
Also Peter Doyle (Doyle, P. 2000) claims that the marketing mix
approach leads to unprofitable decisions because it is not grounded in
financial objectives such as increasing shareholder value. According
to Doyle it has never been clear what criteria to use in determining
an optimum marketing mix. Objectives such as providing solutions for
customers' needs at low cost have not generated adequate profit
margins. Doyle claims that developing marketing based objectives while
ignoring profitability has resulted in the dot-com crash and the
Japanese economic collapse. He also claims that pursuing a ROI
approach while ignoring marketing objectives is just as problematic.
He argues that a net present value approach that maximizes shareholder
value "provides a rational framework" for managing the marketing mix.
Against McCarthy's four P's, some claim that they are too strongly
oriented towards consumer markets and is not an appropriate model for
industrial product marketing. Others claim it has too strong of a
product market perspective and is not appropriate for the marketing of
services.
[edit]
References
* Borden, N. (1964) "The concept of the marketing mix" Journal of
Advertising Research, vol 4, June, 1964, pp 2-7. - The same article
can also be found in: Schwartz, G. (ed), Science in Marketing, John
Wiley, New York, 1965, pp 386-397 - and also in: Enis, B. and Cox, K.
(1991) Marketing Classics, A selection of influential articles, Allyn
and Brown, Boston, 1991, pp 361-369.
* Bitner, J. and Booms, B. (1981) Marketing strategies and
organizational structures for service firms, in Donnelly, J. and
George, W. Marketing of services, American Marketing Association,
Chicago, 1981.
* Culliton, J. (1948) The management of marketing costs, Graduate
School of Business Administration, Research Division, Harvard
University, Boston, 1948.
* Doyle, P. (2000) Value based marketing, Wiley, Chichester, 2000.
* Frey, A. (1961) Advertising, 3rd ed., Ronald Press, New York, 1961.
* Hammer, M. and Champy, J. (1993) Reengineering the Corporation:
A Manifesto for Business Revolution, Harper Business Books, New York,
1993, ISBN 0066621127
* Lauterborn, R (1990) "New Marketing Litany: 4P's Passe; C words
take over", Advertising Age, October 1, 1990, pg 26.
* McCarthy, J. (1960 1st ed.), Basic Marketing: A managerial
approach, 13th ed., Irwin, Homewood Il, 2001. |
