The marketing mix

Placement, product, and promotion are the three tactics marketers use to create customer demand. The three tactics are usually referred to as the marketing mix. A brief description of each tactic follows.

Placement. Placing the product into the market in a way that both enhances the product’s image and makes the product easy for the customer to buy.

Product. Designing and modifying the product so it offers customers what they want.

Promotion. Advertising, positioning, and other promotions increase the perceived price/value relationship of a product.

A marketer typically has a fixed amount of resources that he or she can use to market a product. Every product has a price limit. A company needs to limit the total dollars spent on marketing a product so the company can profitably price the product and still be below the price limit. The term mix is important because a market generally cannot increase spending on one element of the marketing mix without reducing the impact of one or both of the other elements.

For example, food at a convenience store such as 7-Eleven is more expensive than food at a supermarket. The price is higher because convenience stores’ placement strategy of having several stores in a neighborhood is expensive. Convenience food stores sacrifice a product feature — low supermarket prices — to pay for the placement strategy.

Effective placement strategies are important not only because a marketer must get his product to the market, but also because the level of spending on placement affects how much a company can spend on both the product and its promotion.

Your Customers – Who They are, Why They Buy, and What They Think of Your Product

In Business magazine (April 1988, pages 41- 44) ran a feature story on The Enhancery, a jewelry store in San Diego. The store’s motto is, “Never say never to a customer.” The Enhancery will get or do whatever the customer wants. The owners feel that “management by customer feedback” is the key to the store’s success.

I’ve read hundreds of similar stories that emphasize that success comes from catering to the customer. Without a doubt, your relationship with customers is crucial, but few companies have the resources to do everything every customer wants. A company needs to focus on a few things the customer wants that the company can do well.

Another problem with simply listening to customers is that they may not tell you everything you need to know. Apple Computer’s founders were convinced that they could sell personal computers. Customers didn’t tell Apple that – customers had never thought of personal computers. A study of potential customers indicated that the market was ready.

To do successful marketing, you must understand the interaction between your customer and your product, but your analysis needs to do further than just what the customer tells you. Customers have at least one trait that makes analyzing them difficult – they look at a product and then think they decide whether they want to buy it or not based on few features. For example, someone in my office bought a Camaro. Why? He said he liked the Camaro’s image. But in fact, he didn’t just consider image. Instead, he had five to ten core features the car had to have before he would even consider buying it.

For instance, he would only buy an American car and he wanted a V6 engine, bucket seats, a high resale value, and space to travel with his two dogs. His final selection was based on image, but that selection was made from two or three cars that had his core features.

I pointed out to the person the core features that influenced his decision, and he agreed that they were important in his purchase decision. But he still says he bought the Camaro because of its image. The moral of this story: Don’t take the customer’s word at face value, and don’t jump to any quick conclusions about why the customer really buys.

What’s Your Customer Profile?

Once you’ve determined who your customer are, you should profile them in two ways:

1. Actual customers versus desired customers

2. Competitors’ customers and their profiles

Your customer profile should contain items such as age, income, geographic location, and so on. Anything that you feel is significant about your customers should be listed.

For example, a deli owner needs to know what type of customer she is attracting versus the type of customer she needs to succeed. The deli owner may find that she is selling primarily to teenagers from a local high school, but the teenagers only spend $1 or$2 per visit. The deli owner really wants to get more family trade, which averages $12 to $15 per visit.

A more detailed example is George’s Tire and Auto Center. It’s located in a middle-class, suburban neighborhood that has several office complexes. George decided on this location because five of the ten local gas stations had dropped their service bays. George felt his customers would be car owners who lived or worked within a three-mile radius of his business.

The store opened, offering prices 10 percent below its two main competitors. After nine months, the business was breaking even. George was concerned though because sales had flattened out in the last three months. A customer profile revealed that 85 percent of the store’s customers were from a 1/3-mile radius of the store. Before opening his business, George had talked to his competitors, who had given him the impression that they were drawing customers from a three-mile radius. This radius was confirmed by one of George’s mechanics who had worked for a competitor. George investigated why he was getting customers from a smaller area than his competitors. It turned out that one competitor had a shuttle bus while the other had two well-regarded mechanics.

George started drawing customers from within a wider radius after he added his own shuttle service and hired a mechanic who specialized in foreign cars.

Your Product – What are You Offering?

I’ve had many people tell me that a well-designed marketing program will sell anything. I don’t agree. A marketing program might get a product off to a fast start, but the product won’t sustain that momentum unless the product meets customer needs. For example, the Pontiac Fiero was introduced in 1984 with a lot of fanfare and a sound marketing program.

What happened? Pontiac’s market research found a demand for a two-seat sports car, and customers responded favorably when the Fiero, positioned as a low-priced, two-seat sports car, was introduced. But the Fiero had a sports car body built over what was originally meant to be a small commuter car. The Fiero lacked the power and maneuverability that sports car buyers wanted.

A bad marketing program, on the other hand, will kill a well-designed product. Marketing’s definition calls for creating a link between a product and its customers. For a product to be successful, a marketing program must start the linking process. A marketing program must make the customer aware of the product, show why the customer needs the product, and then put the product where the customer can buy it.

Before continuing, I should define what I mean by a product. A product is the total package of goods and services that is offered to a customer. For example, a retail store’s product includes its merchandise, in-store layout, merchandising racks, customer return policies, checkout clerks, in-store promotional material, and anything else in the store that might impact on a customer.

Remember that customers are knowledgeable and intelligent, and you must avoid underestimating them. The reason I mention this here is that you will be evaluating how well marketing programs fit a product. People typically overestimate the value of their products and marketing programs, while downplaying the value of competitors’ products and programs. The customer will be making an intelligent, objective evaluation. You need to do the same to develop a strong marketing program.