A marketing mix: the right strategies for success

The four marketing mix pillars are:

• Product
• Price
• Place
• Promotion

Together, they form a unified marketing concept that has proven itself time and time again when it comes to marketing products. However, with regards to marketing a service, the 4P model does have some weak­nesses – but it is still a basic model that every marketer should be aware of. The need-to-know basics are explained below:

Product

The product is at the heart of any marketing mix and in­flu­ences all other marketing processes. It covers all areas con­cern­ing the design of the product, like the material, design, brand name, and services offered around the product.

Good product strategy requires detailed planning. First of all, you need to consider which target group you want to address and their specific re­quire­ments. Answering the following questions is important: How old is the target group, and what are the char­ac­ter­ist­ics and needs of that age group? Is the product being aimed more toward women, men, or both genders? Is it possible to offer product variants (like different versions in different price ranges, or gender-specific versions)?

As part of your product strategy, you need to determine what qualities the product should have and what features it will offer its customers. In addition to benefits and specific char­ac­ter­ist­ics, the product strategy also covers other topics too. Here are some examples.

Design and packaging

Both the design and packaging of a product play a central role. They con­trib­ute sig­ni­fic­antly to the product image and dif­fer­en­ti­ate it from competing products.

Product design considers both function and aesthetic. For example, a coffee maker should have buttons that are self-ex­plan­at­ory and easy to use, as well as have a classic or ex­tra­vag­ant look. In addition to the design, the name of the product or the cor­res­pond­ing brand should be well con­sidered.

The design not only affects the product as such, but also the packaging: is the quality of your product reflected in cheap film, or high-quality cardboard? Does a striking colourful packaging appeal to the target group, or would muted colors be more suitable? These kind of con­sid­er­a­tions are important for food, drinks, toi­letries, and other products that need to stand out among other competing products on the store shelf.

Product service

Another important part of product strategy is the service you provide to your customers before and after you buy a product. You should strive to have a good, readily available customer service for your customers, a warranty with a decent length, and even free delivery of your products. In­ex­pens­ive in­stall­a­tion of home fur­nish­ings, supply tech­no­logy, and other similar aspects are other things to consider in this area.

Marketing mix example: product strategy for a fashion company

Any fledgling company in the fashion industry who is striving to produce quality clothing should pay attention to the following steps:

• Products: Which garments does your product range include? For example, if you are selling trousers, the company has to decide how many models will be produced, what materials they will be made from, what cut they will be, and whether they are aimed towards men, women and/or children.
  
  
• Material: What fabrics will you need to source for your planned garments? In addition to the fun­da­ment­ally required material (like denim for jeans), the quality of the textiles (high-quality, durable denim) also plays a role.
  
  
• Garment Design: What are the current fashion trends? What shapes, colors, and patterns will your trousers feature? 
  
  
• Product Variants: What sizes, colours, and designs will be offered in your range? Are you selling jeans in just light blue, or other colours as well? Do you only produce standard clothing sizes, or do you offer a wider range than usual?
  
  
• Pro­duc­tion: Who makes the clothes, and what will your working con­di­tions be like for those making your clothing?

The pricing strategy is also an integral part of the marketing mix and is about setting product prices. The strategy should also include any price ad­just­ments or variants, as well as short-term discount campaigns.

The basic price of a product should give you the highest possible return, while also keeping the product com­pet­it­ive. To determine the ideal price, you need to calculate the pro­duc­tion and dis­tri­bu­tion costs correctly and consider the pur­chas­ing power and buying habits of your target group.

Prime Costs

Make sure that you know what the total ex­pendit­ure costs of each of your products will be. To do this, you need to calculate all costs incurred for the man­u­fac­tur­ing process. In addition to pro­duc­tion costs (e.g. the hourly wages of your employees) and the material costs, it also includes factors like energy con­sump­tion for pro­duc­tion and fixed costs (like room rental for staff and storage rooms).

Once you know how much money (and time) you are investing in the pro­duc­tion and dis­tri­bu­tion of each product, you can set the price to optimise the profit margin of each product sold.

Pricing based on your target groups and com­pet­i­tion

When de­term­in­ing the final price, you also need to consider the previous target group analyses and the current market situation: how much do your potential customers spend on similar products? What is your target groups’ average pur­chas­ing power?

In terms of pricing, you should also keep an eye on your com­pet­i­tion. Find out how expensive competing products are. If your potential customers find a similar product at lower prices from com­pet­it­ors, they often opt for the cheaper one. Prices far above the market average can usually only be justified by your product having a special added value over the com­pet­i­tion.

Marketing mix example: pricing strategy for a fashion company

Our example fashion company takes a number of elements when pricing a pair of jeans into account:

• All expenses incurred for producing the jeans: What is the real cost of pur­chas­ing the necessary materials and pro­duc­tion (personnel costs, costs for the purchase and operation of pro­duc­tion fa­cil­it­ies, space costs, storage costs, etc.)? These cost centers in­ev­it­ably affect the pricing strategy – they need to be low enough to be able to sell trousers at a profit in the targeted price range.
  
  
• Com­pet­i­tion’s prices: In order to estimate how expensive the trousers will be, you can research prices of com­par­able jeans already on the market. This de­term­ines a price segment, and helps you know what price range you should place your jeans in.
  
  
• Target group’s pur­chas­ing power: If the target group analyses show that there are numerous potential customers with higher pur­chas­ing power, then you can adjust your prices ac­cord­ingly. You can justify a higher price for your jeans if they display good work­man­ship, and/or make use of high-quality, durable denim.

Place: how will my product reach my customers?

Dis­tri­bu­tion strategy (also called dis­tri­bu­tion policy) is the aspect of a marketing mix that de­term­ines how your product reaches the customer. It includes all activ­it­ies related to the different dis­tri­bu­tion channels your product may take. There are a few important questions you need to ask yourself: Is my product being dis­trib­uted through in­ter­me­di­ar­ies or direct sales? Should the company offer just one or both options? The selection of dis­tri­bu­tion service providers also falls into this area.

Dis­tri­bu­tion channels

When choosing your dis­tri­bu­tion methods, you can choose between direct sales, indirect sales, and a mixture of both (fran­chising). With direct sales, you directly sell your product to your customers and are directly in contact with them. However, setting up your own direct sales can be costly. Only a few companies have the resources and in­fra­struc­tures to ensure long-term dis­tri­bu­tion of their mass products which are in demand all over the world. For direct sales, the profit margin per product is usually higher because you work without middlemen.

You can achieve a further customer range by choosing indirect sales. This means that you cooperate with an in­ter­me­di­ary (usually a wholesale or retail company or a com­mer­cial agency), which brings your product to the end consumer. The hardest part is con­vin­cing the dis­trib­ut­or that your product is worth selling. Once you have done this, the broker will seek out suitable customers for your product (you can then contact these customers directly) and will receive com­pens­a­tion (usually a small com­mis­sion) from you for each suc­cess­ful sale. This reduces the profit margin, but you will benefit from an existing dis­tri­bu­tion network.

Point of sale

In addition to your dis­tri­bu­tion process, your strategy also needs to take into account where exactly your customers will be able to purchase your product. Should it be offered in its own store or should it be sold alongside competing products from the same industry? Is it sold online (though an online shop) or offline (in a physical store)? Different dis­tri­bu­tion channels are often used in parallel.

Marketing mix example: dis­tri­bu­tion policy for a fashion company 

When dis­trib­ut­ing clothing, our hy­po­thet­ic­al fashion label needs to weigh in on the following aspects:

• The clothing should initially be sold through their own stores. To do this, both an online store is created, and a physical store in opened in a city, which also serves as the company headquar­ters. The goods are sold by direct sales and online purchases are posted.
   
• Since it is a newly founded and still largely unknown fashion label, it will be difficult to integrate into a range of larger retail chains. Therefore, they should only seek contact with retailers when their own brand has gained some pop­ular­ity. If this is suc­cess­ful and the clothing is dis­trib­uted through­out the US, they can begin con­sid­er­ing co­oper­at­ing with a sales partner. Although this would eliminate direct contact with your customers, the company would then benefit from a networked sales force. In addition, storage costs could also be saved as the goods will leave the warehouse faster and can even be stored directly with the sales partner.

Promotion: making customers aware of the product

Making customers aware of your product is one of the most important aspects of a marketing mix, so investing in promotion is extremely important. Com­mu­nic­a­tion policy refers to all measures taken to boost sales of a product and build a positive brand or corporate image. Typically, this is achieved through ad­vert­ising, PR, and marketing campaigns that draw your attention to products and encourage your target group to buy them. Without a coherent, func­tion­al promotion strategy, you will hardly make any sales.

Promotion is an umbrella term covering all com­mu­nic­a­tion measures taken to get in­form­a­tion about the product and its target group of customers.

Com­mu­nic­a­tion channels and content

The promotion must be designed to reach potential customers while being well received. The choice of com­mu­nic­a­tion platform is crucial and should take into account the pref­er­ences of the target group. Possible channels for promoting your product may include:

• Offline ad­vert­ising: tele­vi­sion, radio, newspaper, magazines, posters, etc.
  
  
• Online ad­vert­ising: display marketing, video ad­vert­ising (on YouTube, Facebook or as videos embedded on websites), social media ad­vert­ising, search engine ad­vert­ising etc.
  
  
• Personal com­mu­nic­a­tion: face-to-face con­ver­sa­tions between seller and customers
  
  
• Public relations: contact with public in­sti­tu­tions and opinion leaders (parties, as­so­ci­ations, newspaper pub­lish­ers) to present your company pos­it­ively to the world
  
  
• Internet com­mu­nic­a­tion: e-mail, news­let­ters, social media marketing

Many of the above platforms and channels are par­tic­u­larly affected by how you choose to draw attention to your product. If you run a TV ad, your time slot should be during the break of a show that your target audience are most likely watching. If you decide to go to a trade fair, it should be one that is directly related to your company or product. The com­mu­nic­a­tion strategy also includes sales promotion. This refers to temporary actions that you use to promote your product spe­cific­ally (short-term discounts, com­pet­i­tions, tasting stands, etc.).

Marketing mix example: a com­mu­nic­a­tion policy for a fashion company

A newly-founded clothing company plans to reach its target group through the following marketing campaigns:

• Posters are put up in the city where the company is based, close to the newly-opened store and in the busy squares of the city. In addition, the company has leaflets printed and dis­trib­uted in shopping centres with lots of fashion stores, as these are likely places where your message will reach the target group. Both ad­vert­ising materials also refer to the company’s online shop.
  
  
• Online ad­vert­ising should also be featured on social media like Facebook and Instagram. Users who have fashion interests shown on their profiles should be targeted with these ads.
  
  
• Users can register for a news­let­ter on the company’s website or web shop.
  
  
• As soon as the company has made the first big gains, ads in fashion magazines and fashion websites will follow.

Below, we have sum­mar­ised the in­di­vidu­al areas of 4P marketing clearly in a table for you:

• Product
  • Main product: women’s, men’s and children’s fashion
  • Secondary products: ac­cessor­ies
  • Spectrum: from low-cost, mass-produced no-name products to custom-made, luxurious, haute couture fashion
  • Expensive packaging is usually un­ne­ces­sary
• Price
  • From very low prices for no-name products to extremely high prices for tailor-made designer pieces
  • Sale/end of line products
  • Discounts and pro­mo­tions
• Place
  • Point of sale: own branch(es)/own online shop and/or branches and retail partners’ online shops
  • Ware­houses
  • Transport to the point of sale through direct shipping/indirect shipping via in­ter­me­di­ary/mixed method between direct and indirect shipping
• Promotion
  • Classic ad­vert­ising channels: print media (ad­vert­ising posters, ad­vert­ising in magazines, flyers for certain discount campaigns, etc.), radio ad­vert­ising, tele­vi­sion ad­vert­ising
  • Videos posted to YouTube and various websites
  • Blog
  • Social media marketing and ad­vert­ising (like Facebook, Instagram, Twitter)
  • Word of mouth

For many companies, the 4P model is very suitable and helps create effective marketing campaigns. However, the model does not fit all companies. This is es­pe­cially true of those who primarily market services rather than products. Because 4P marketing is very much focused on marketing physical products, companies offering services rather than goods may not find it helpful. Meanwhile, there are marketing models that expand the 4P model. For example, three more P’s are in­tro­duced for the services sector. The 7P model marketing mix includes these three new aspects, in addition to the four well-known ones:

• People: This marketing tool focuses on the employees of a company and involves re­cruit­ing qualified personnel and de­vel­op­ing tactics to attract suitable pro­fes­sion­als. The long-term com­mit­ment of employees to your company plays a role in this.
  
  
• Process: This includes all measures to optimise the services offered and increase customer sat­is­fac­tion. Ideally, com­mu­nic­a­tion and in­ter­ac­tion with customers will run smoothly, because only satisfied customers will use the same service again.
  
  
• Physical fa­cil­it­ies/physical en­vir­on­ment: The visible en­vir­on­ment in which a service is offered, and the as­so­ci­ated equipment, in­flu­ences marketing success. Therefore, it makes a dif­fer­ence for the customer, whether a con­sulta­tion is offered in a com­fort­able meeting room where you can visualise content on the PC, or in a dusty back room. Providing suf­fi­cient parking spaces in front of the shop also plays a part. 

Which marketing model is best for a company cannot be uni­ver­sally defined, since not all models are all-inclusive. The 4P or 7P marketing mix model do not work equally well for every business plan. However, these two models form the basis for com­pre­hens­ive campaigns which involve several marketing tools being co­ordin­ated. More up-to-date models usually deviate from the original two only in detail. Anyone who studies the com­pon­ents of these models in detail will be focusing on the most important aspects of a marketing campaign and benefit from more plan security by outlining all pro­ced­ures in advance and de­vel­op­ing a suitable strategy for each marketing field.