Dividing the multitude of marketing variables or mix into four distinct categories makes it much easier to formulate a marketing strategy. The four categories are (1) product, (2) place, (3) price, and (4) promotion, and are commonly called the “four p’s.” Note also that the client is not part of, but rather is the target of the marketing mix (Perreault, Jr. & McCarthy, 2004, p. 38).
Armstrong and Kotler define product as “anything that can be offered to a market for attention, acquisition, use, or consumption and that might satisfy a want or need” (Armstrong & Kotler, 2005, p. 223). Most definitions are similar and it should be emphasized that a “product is not limited to finished goods” (Perreault, Jr. & McCarthy, 2004, p.38). All businesses, whether for profit or not have at least one product. Even government, by providing services and physical goods, has products.
When creating a marketing strategy, product development and its related aspects such as packaging, warranty, and branding must be considered. Analyzing and understanding client needs is important to remember along with the specific demographics the product aims to address.
As stated by Perreault, Jr. & McCarthy, clients are buying satisfaction not parts (2004). Many companies fail to remember what the client is really searching for. In the words of famous marketer Jay Abraham, “give them your solution – or somebody else will” (Abraham, 2005, p. 235). Abraham also goes on to note that clients do not buy products, they buy benefits and advantages (2005).
Many managers are myopic when thinking about product development, focusing on procedures instead of the client’s perception of the product. This myopia goes hand in hand with the other aspects of product development; branding, features, quality, and warranty. Managers tend to see the tactical aspects of the product, and a clear, client-driven product strategy guides managers beyond this narrow tactical view.
Place includes marketing issues such as, channel type, exposure, transportation, distribution, and location. A product needs to be available to the client when and where the client wants it. Marketers describe this process as the “channel.” The channel describes “any series of firms (or individuals) that participate in the flow of products from producer to final user or consumer” (Perreault, Jr. & McCarthy, 2004, p.39). Services and business to business channels tend to have fewer partners, sometimes not any. The company may sell directly to the end-user. The internet has also shortened the channel in many businesses by effectively eliminating the need for intermediary partners that were historically needed. Other business types may require a large and complex distribution channel with multiple wholesalers. These tend to be big-box retail outlets and stores that purchase from both centralized jobbers and individual companies.
Marketing plans must include price considerations. The pricing mix includes competition, cost, markups, discounts, and geography. Even if all the other aspects of the marketing mix are perfect, with the wrong price clients will not buy the product. The marketing plan must include consideration on how flexible prices are, lifecycle pricing, who gets discounts, and who pays transportation (Perreault, Jr. & McCarthy, 2004, p. 465).
The internet has changed the way companies set prices. The days of fixed prices for all clients is giving way to dynamic pricing, where clients are charged “different prices depending on individual customers and situations” (Armstrong & Kotler, 2005, p. 293). Companies and clients alike can take advantage of dynamic pricing. Overstocked and slow moving items can be sold at a discount freeing up needed capital. New or high demand products can be priced higher until demand falls.
Marketing managers must also make sure to base price on customer value rather than simply on cost. One way to ensure maximum price is by changing the customer perception of value. Jay Abraham suggests making the service, assistance or expertise the value, not the product itself (Abraham, 2005, p. 59). Even commodity driven products can benefit from this approach. A company needs to emphasize the benefits that come with the product, not the product itself.
Promotion is what most people think about when creating a marketing plan. Promotion is only one fourth of the entire mix and not necessarily more important than any other part. Formally defined by Armstrong & Kotler, promotion is concerned with telling the target market or others in the channel of distribution about the “right” product (2004).
Sales and selling are part of promotion and can be either personal or mass selling. Personal selling is the traditional calling on clients or potential clients and having a conversation about the problems the product solves. Personal selling can also involve group presentations, and is not necessarily one-on-one. Mass sales are comprised mostly of advertising and publicity. Generally publicity and advertising accomplish the same goal, but publicity is not paid for whereas advertising is.
The internet has magnified another type of promotion, word of mouth, or reputation. With the advent of social networking, a company can take advantage of unpaid salespeople; satisfied customers. Since the beginning of the internet, there were sites to compare prices and products, but with the advent of the new social website phenomenon companies can not control the reviews, negative or positive, of their products. A strategic marketing plan needs to take advantage of social habits and build a community of fanatical clients who in turn will indirectly represent a company’s product.
Communication with existing clients is also an excellent promotional tool, but it must be strategic and consistent. Email newsletters make this cheap and easy, and can turn a lukewarm client into a die-hard promoter of the company. Strategic communications always put the client’s needs and interests ahead of the companies and is also an ideal way to get ideas for new products.
Samuel Adams Brewing is not just selling beer; they are selling a lifestyle. Besides premium beer, they sell clothing, glassware, and beer paraphernalia. Sam Adams drinkers are more sophisticated than “normal” beer drinkers and understand the finer things in life and are prepared to pay for it. The beer is higher quality than the “big 3,” Bud, Miller, and Coors. Premium ingredients command a higher price and the beer is promoted as not only more costly to make, but also as having employees who are just as passionate about beer as the consumer, beer is not just a job for them.
Most states do not allow direct sales to on-premise or off-premise liquor establishments. Every state has a different method of handling alcoholic beverages creating a need for a fairly deep channel. In most cases Sam Adams is sent to a distributor in a particular state, although some states act as their own distributors, who then sell to a retail establishment (on or off premise), and ultimately to the consumer. Many states also do not allow a manufacturer to be a distributor so Sam Adams generally has no way to bypass the channel. Also, distributors are licensed by state and there are typically only a few distributors in each state. This creates some problems because Sam Adams is the number one craft brewer and number five overall brewery in the United States (Herz, 2008). Smaller distributors usually do not have the infrastructure or sales forces in place to service adequately the needs of a large brewery like Sam Adams. Sam Adams is brewing in several locations in the United States, but this is due to capacity more than for distribution.
For promotion Sam Adams has regional sales reps which call on distributors, but must rely on each states distribution for any other promotional activities. Sam Adams also has national advertising on television, in print, and on the internet. Due to laws and regulations, Sam Adams can not sell directly to the public. Therefore, Sam Adams uses point of sale merchandise at retail establishments and bars. Sam Adams also sponsors the LongShot competition for homebrewers.
Price is an area where Sam Adams competes in the upper-middle spectrum. Sam Adams has tremendous brand loyalty, in fact, surpassing Budweiser and Coors for the top spot (Hein, 2008). Sam Adams has a rolling price point with distributors based on volume, but local markets generally run their own promotions. Due to the restrictive legislative environment, coupons and other promotions are harder to implement (i.e. Sam Adams can not give away beer except in its own brewery). Sam Adams could implement a customer loyalty program good for other merchandise Sam Adams sells.
Once a company has a firm strategic marketing vision it can drive employees as well as clients. By understanding the strategic goals of the company, marketing managers can create a unique sales proposition (USP). An important part of the marketing strategy is deciding on the mix of product, place, promotion, and price for a target market. Understanding that clients buy solutions not products, needs to be kept in the forefront when planning the marketing mix. Utilizing existing client relationships can help identify new markets and product as well as promote existing ones. Price should not be based on cost, but rather on customer value and the internet has changed the way consumers and business buy products so building a loyal following must be planned for and taken advantage of.
Abraham, J. (2005). How to think like a marketing genius. Rolling Hills Estates, CA: The Abraham Group, Inc..
Armstrong, G., & Kotler, P. (2005). Marketing: An introduction (7th ed.). Upper Saddle River, New Jersey: Pearson Prentice-Hall.
Hein, K. (2008). McD’s, Sam Adams in Line With Shifting Loyalty Drivers. Brandweek, 49(7), 8. doi: Article.
Herz, J. (2008, April 7). Brewers Association releases top 50 breweries list. Retrieved May 15, 2008, from http://beertown.org/pr/pdf/2007Top50Release.pdf
Perreault, W., Jr., & McCarthy, E. J. (2004). Basic marketing: A global-managerial approach (15th ed.). New York: McGraw-Hill Irwin.