It is common knowledge that marketing is an important area of focus if you want to grow your business. However, it is not easy to know where to begin. Understanding the 5 P’s of marketing can become something that can propel you ahead of others. The 5 P’s of marketing are namely product, price, place, promotion and people. It is alternatively known as the marketing mix.
This particular concept of a ‘marketing mix’ first came to light in the 1960s when an American professor named E Jerome McCarthy began to study the various tactics, which, when combined, influence their customers’ purchasing decisions. McCarthy was responsible for articulating the initial 4 P’s, and it helped companies immensely as they reached new clients and grew their businesses.
Over the years, another P representing people was added to this mix to embody current business methods better. The importance of this ‘marketing mix’ lies in its ability to describe a framework a business should follow to find maximum reach and penetration of its products and services in the market. Let us now look at all these 5 P’s in detail.
You should study your product or service before you begin selling it. Ensure that your customer is instantly able to understand why your offering is better. Therefore, a product is not just a tangible object. It has many intangible effects on your client, such as increasing their happiness, boosting their status, saving time and opportunity, to name just a few.
After that, you must take the time to understand how your consumers will perceive your products. That means identifying the main issue that your product is helping them overcome. Ultimately, every product needs to answer its place in the market by justifying the customer’s need it lives up to.
An excellent example of the above point is Apple phones. Every other phone almost serves the same functions as an iPhone: calling and various applications. However, what apple markets successfully is its operating system, which it claims has fewer glitches, is safer and faster. Thus, by addressing the problems that other phone consumers face with lags and bugs, Apple has set itself apart. Learn more about product development.
You need to be aware of the price points in the market. Furthermore, you should be clear about the added value your product brings to the consumers. That will define to what extent your product is different from the other and to what level people will pay over your product’s market value.
Simply put, to arrive at a pricing level, you need to know how your product fares against your competitors. While that is the first order of pricing, the other side is to look at a price that can cover your expenses. Thus, for sustainable pricing, a product cost should compete in the market and cover your expenditure.
Take, for example, a product like Huggies. There are many diapers available in the market, and generally, the same pharmacists that stock Huggies will stock generic brands as well. However, because Huggies have successfully marketed their product, they can charge a premium over other generic brands even though they offer the same products.
The place of doing business has changed from what it used to be in the past decades. Today, a business place does not mean a brick-and-mortar store or an office in a tower. It might mean a virtual office space or a website and domain instead. Whatever place you end up setting your business in, it is vital.
The first order of business when strategically designing your place is to identify your target clients correctly. See where they are approaching to resolve the difficulties they have. For example, a customer may be searching for solar panels.
If you are a dealer of this product online, this means that your website should be easily searchable and accessible. Once they reach your website, it should be easy for them to make a purchase. On the other hand, if you have a storefront, it should be in a market where people come to look for such items, and it should be easily reachable.
In short, irrespective of whether your business is online or offline, your place should be easy to search, easy to reach and in the marketplace for similar products.
Once you have designed your product and decided the price for it and the place where you want to sell it, you come to the promotion part of marketing; Promotion means making people aware that you have a product at a particular price available for sale at a specific location. Your message should revolve around the core problems that you have identified and which you want to solve. Your marketing communique should inform the customer of your mission and vision and briefly explain what your organization is about.
Take, for example, the solar panel example that we took earlier. The core messaging in promotion should perhaps reflect around noiseless, clean electricity generation. Once the message is ready to go out, you also need to ensure that it reaches the right audience at their location.
One of the most pervasive methods of promotion nowadays is advertisements online. They can include your website, search engine ads and social media promotions. Offline methods include traditional media such as leaflets, brochures, and signboards.
However, promotion also gives you a chance to get creative and eschew traditional methods. One of the most common promotion methods done by snack companies is by including a small gift in them, which forms part of a larger collection. This tactic has worked exceptionally well on kids as they try to buy more to complete their sets.
But remember a golden rule. No amount of initial promotion can mask bad service. Therefore, once your initial batch of customers comes into your location, provide them with the best experience. This will convert one-time customers into regular clients, and they will also help spread your brand around through word-of-mouth.
This is the newest P. However, perhaps it is the most critical in today’s consumer-centric world. As mentioned before, focus on great service for your customers. Establishing a bond with your customers that is based on loyalty is often the best way to grow your business. Some of the ways to retain your customer base are by having great after-sales service, having dedicated staff to attend individual complaints, and tailored services for individual clients.
However, people do not only include your customers. They also include your employees, and you must treat them right. Without content employees, your business is bound to suffer. There are many ways to do this. Many fast-food chains around the world use this method.
Walk into any particular store, and you will often find an employee of the month picture along with a board for all the previous winners. This keeps the employees motivated and also gives them an added incentive to serve their customers better. There is no definite way to get this right, but it is crucial to keep your people satisfied for better results. Learn more about the future scope of marketing.
Illustration and Conclusion
Having looked at the 5 P’s of marketing, we should now look at how we can apply this marketing mix to our own business. To illustrate the point, let us consider a sandwich shop that you want to set up. Let us go through all the P’s one by one.
Firstly, describe your product. It cannot just be an ordinary sandwich because that does not set you apart from your competitors. In essence, when your target client thinks of a sandwich, they should come to you instead of going to someplace else. Do not use clichés that undermine the uniqueness of your product. Say, for example, you use organic products. Then mention it instead of just labelling it healthy.
Second up is price. If your product is organic, it is probably going to be more expensive than a regular sandwich. Ensure, however, that your product does not become too pricey for your target consumers to afford. In short, they should find your product gives the correct value for money. Do not go too high or too low than your competitors’ prices. In the first instance, customers may ignore you, and in the second case, they might think you are offering an inferior product.
Third up is place. If you have a healthy sandwich to market, you have to market it to a health-conscious crowd and not just any people. Go to places like gyms and parks and hand out your promotional material. Those who exercise in the morning or evening might be more likely to try your product.
Go all-in on the promotion. Ensure good slogans, great logos, nice pictures and color schemes that grab attention. Try something like giving at a discount for a limited period. Give offers to those who recommend it to their colleagues and acquaintances. Try varied strategies.
The final attention should be on the people. Reaching to the people means not positioning yourself as the best in everything you do but showing that you add the most value to the local community. In this example, it can be making them healthier. Ensure that your customers find a reason to use your products and services.
MBA courses with marketing specialization are available in both on-campus and online formats across Indian colleges and abroad. Before enrolling in a program, you should research your options and consider all the pros and cons. The above information will help you arrive at a decision!
Liverpool Business School & upGrad offers Global MBA program which helps you to transform your career. The program provides 1-on-1 mentorship from industry leaders, 1-week immersion program at University campus, dual credentials (MBA from LBS & PGPM from IMT), network with peers at offline basecamps and more.
Learn MBA Courses from the World’s top Universities. Earn Masters, Executive PGP, or Advanced Certificate Programs to fast-track your career.
Which is the most important P in the marketing mix?
Historically, it was a reasonable balance between all the parameters of the marketing mix. However, in the 21st century, the importance is changing and shifting towards price. The retail market today has drastically changed from being a monopoly to becoming a customer’s market where the customer is the king. In many of the product as well as service categories, customers are very price sensitive to price but not any factor. In addition to this, customers have direct access to the marketplace today because of the online shopping mode, hence price discovery and comparisons is very likely and comparable.
What is the need for online promotions?
With the advent of technology and digitization, most consumers are searching for their needs online on the internet. Online promotion gives you access to a larger audience as well as better product visibility. In addition to this, the customer acquisition cost reduces drastically with the help of digital marketing techniques as compared to the traditional modes of marketing. Further, the creative side of digital marketing has grown leaps and bounds because of animation and digitization. Lastly, online marketing can include search engine ads and social media promotions.
Why are people important as part of the marketing mix?
This is the most recent ‘P’ in the marketing mix. In today’s world where the consumer is the king, people play a very important role to improve customer experience. High quality service has become a key differentiator and is highly rated when asked about customer experience and feedback for a particular product or a service. Some of the ways where people contribute immensely to improve the customer experience are by offering timely and quality after sales service, key accounts management programs for top customers, customized service offerings to select clients etc.