Many people think marketing involves going with your gut feeling and relying solely on intuition. In fact, marketing is as much a science as it is an art. Effective marketers develop detailed strategies based on the four P’s of marketing, carefully selecting the right elements to include in their campaigns.
TL;DR (Too Long; Didn't Read)
The four P’s of marketing are product, price, place and promotion. This is also known as the marketing mix.
The Four P’s of Marketing
Advertising professor Neil Borden developed the term "marketing mix" in 1964, and it is used widely today to encompass the elements on which marketers rely. Marketing professor E. Jerome McCarthy categorized the many elements Borden included in his mix to four essential high-level groups, which are today known as the four P’s of marketing: product, price, place and promotion.
Since that time, many marketers agree that two additional categories are now part of the marketing mix: process and people. Because current-day marketing has changed considerably from the time the term was coined, it’s natural to add to the basic fundamentals. The elements of process and people help businesses to further reach their customers.
Starting with Product
The first element of the four P’s of marketing, product, can be a tangible good or an intangible service offering. Whatever it is that a business is selling, they need to ensure they clearly outline how their product meets a specific customer need or demand. When developing the product, the business needs to understand what the benefits of the product are to consumers and how this product is different from similar products out there. The business needs to establish what problem this product can solve for their target audience and what that audience is looking for in their ideal product.
Deciding on a product for your business involves doing some detailed research on who your consumer is and what they need that they cannot find already. If a small business owner selling home décor items is looking to expand her product offering, for example, she should start by conducting more research on her target audience. She’ll want to know whether they are primarily homeowners or renters, what their income is, what their likes and dislikes are and where they like to shop. This will help her figure out what kind of product they want.
Once the small business owner has conducted her research and decided her consumer wants handcrafted wooden signs for the home, for example, she’ll need to establish how her product is unique from her competitors. The small business owner will need to figure out what makes her, her product and her business different and refer to those points when working on the rest of the elements in the marketing mix.
In addition to the actual good itself, the product also includes the design and packaging, plus peripheral items like warranties and return policies. To successfully market the product, the marketer needs to establish its full value, which is more than just the product itself. The way the product is packaged plays into the brand. For example, if a business is selling environmentally friendly food, packaging it in plastic bags goes against the mission of the company. The consumer, who is likely interested in sustainability, may not be pleased to find the environmentally friendly food wrapped in a material that is widely known to not be environmentally friendly. Instead, that business could choose to package the food in recycled paper bags or simply forgo the bags and let customers use their own reusable bags.
Deciding on Price
Once the business has established what the product is, it’s time to make some decisions on the price. The price is what the end user is expected to pay in exchange for the product. Pricing a product is no easy feat because the way a product is priced affects how it sells.
When establishing the price of a product, businesses need to determine more than just the cost of the materials for the product. Instead, it’s vital to understand what the value of the product is for the consumer. For the business, the price of the product affects their profit margins, supply, demand and budget. The price of a product also affects the distribution plans, markups and the price of competitive products.
Some industries rely on discounting strategies to price their products. Several large online retailers often discount everything they offer by a certain percentage, getting consumers used to receiving a certain discount and refusing to pay full retail prices.
When deciding how to price the handcrafted wooden signs, for example, the small business owner will need to consider the cost of the materials first. Then, she will need to see how competitor stores have priced their similar products. This will give the business an idea of what the consumer is willing to pay for that kind of product. If the small business owner can offer something to truly differentiate herself from her competition, she can charge a premium. For example, if she is the only one in the area who sells handcrafted wooden signs made from recycled barn doors, she can charge significantly more than her competition because what she is offering is of greater value to her consumer. It’s more difficult to find in that particular market, making it more desirable.
Establishing the Place
The four P's of marketing and marketing strategy concepts rely on the business to establish the place where the sale of the product will happen. "Place" refers to making the product accessible for potential customers. Today, online stores play an important role in distribution. Many kinds of products and services are available for purchase online, as that is where many consumers do their shopping.
However, online shopping doesn’t work for all kinds of products or services. The critical factor is understanding where the target audience shops. While placing a product online for sale may be a good way to garner awareness for the business, it may not be suitable for selling what they offer. Products that promise exclusivity, such as designer jewelry brands, may choose to only sell in a store or by appointment. Others that promote local commerce may choose to only offer their products at regional markets. Where the product is sold needs to compliment the rest of the marketing strategy.
In the case of the small business owner who sells handcrafted wooden signs made from recycled barn doors, an online store may not be the primary choice. While some customers may choose to buy online, the majority of her customers will likely need to see the product in person before making a purchasing decision. Because what she sells is tangible and what makes it unique are the materials used to create it, many customers might need to hold it in their hands and feel the texture of the recycled wood. Since she charges a premium price for her product, her consumers will likely need to feel the differentiating factor in order to believe the value of what she has to offer.
If the small business owner has a retail location where she sells other home décor items, selling her new product there is an obvious choice. In addition to her physical store, she may also choose to attend local and regional craft fairs and home décor trade shows where she can show off her product to her target market. As well as dealing directly with her end consumers, the small business owner could also attend interior design and decorating events to build a network of professionals who may use her products in their work. The place where the sale happens can actually refer to multiple places. What is key is determining where the target audience shops and where they will most likely need to be when making the ultimate buying decision.
Creating the Promotions
Sales promotions are special offers that are designed to attract customers to buy the product. They can include:
- free samples
- loyalty programs
The result of sales promotions are short-term increases in sales. They are often tied to a seasonal event, such religious or cultural holidays. For example, the small business owner could run a sale on her handcrafted signs directly before Christmas, encouraging customers to purchase them as gifts for their loved ones.
Including Process and People
What are the four basic marketing strategies? They are product, price, place and promotion. However, many marketers also rely on two additional strategies: process and people. Process involves optimizing the logistics side of the business. This lets businesses offer their products at lower prices than their competitors, which results in higher customer satisfaction. "People" refers to hiring the right employees to take the business to the next level. The marketing organization needs people with the right skills in order to best promote, price and place their products.