- November 9, 2019
- Posted by: Ramkumar
- Category: Strategy
4 Ps of the Marketing Mix
Marketing can help tech companies grow. We have all heard of the 4 Ps of the Marketing Mix. They are Product, Price, Place and Promotion. All the 4 Ps are important for the marketing strategy to be successful.
When we look at Technology companies, Product is usually owned by the Product Management teams or the engineering teams. The next P – Place/Distribution is usually owned by the business development and sales. The next P – Price is handled by the sales or product management team. The final P – Promotion is the only one that is handled by the marketing team. The marketing teams usually define promotion as advertising or “growth hacking”.
The argument here is not that Marketing should own all 4 Ps. This is not possible and neither it is feasible. This is because complexities and skillsets required are great. At the same time, if marketing isn’t deeply involved in all the 4 Ps, then it can result in a poor market fit, money wasted in acquiring the wrong customers which can erode the company’s brand and reduce profitability.
Let us deeply understand the each P of the marketing mix.
Most of the tech companies fail because they have developed a product that just aren’t close enough to customers to understand their pain points. These tech companies have incredibly smart technical teams. For instance when we look at virtual reality segment there are not many customers who really care for virtual reality because it doesn’t solve a problem for them.
Another big concern with tech products are that these products are crammed with excess features which can sometimes ruin the customer experience. Let us look at WhatsApp and Instagram. These are great products loved by the customers. What makes these products great is not their cool features. It is that they offer a simple solution to a real customer problem. Many real life products are complicated, do not have proper tutorials or simply do not address a customer need.
To design a product with great customer experience, one needs to focus on the market’s lowest common denominator. Once this is achieved, the company should refine their products over time.
The key to nailing the product – market fit is ensuring the product manager and marketing manager work together from the concept phase. The product manager develops product requirements documents working with engineering to build and test the product. The marketing manager needs to study the market, consumers and competition to ensure that product solves a customer pain point and the product is differentiated. The marketing manager needs to come up with a solid go-to-market plan at launch time.
Place or Distribution can make or break the product. A company can have the best product and might have spent high on advertising but if the product is not widely available then it will be a failure. The reason for Coke’s success is not better advertising but better distribution.
Similarly in technology, companies need to be where the customers are. This is because when more customers see the company’s brand, the more they will consider it when planning a purchase. Twitter and Facebook are successful because it is visible everywhere on multiple third party websites via the Share option. This ubiquity reflects their strong distribution strength.
Marketers need to identify all possible distribution channels. They need to work with business development teams to determine how to market to each segment based on their unique characteristics. The classic example is the Google Play marketing where handset vendors were provided with tools reminding users that Android devices came with Google Play content. The marketing team of Google conveyed the message to their Android users that the Google Play platform have content so that they don’t switch to iPhone.
Pricing is generally determined by the sales teams and can impact profitability, extend product life cycles and destroy competition. At the same time a wrong pricing can have negative repercussions on the sales. For instance when Samsung introduced its tablet in the same price range as iPad, it became a big disaster. This is because the samsu ng tablet was a far inferior product when compared with iPad.
In order to have the right pricing, marketing and product management should have a joint pricing strategy not just for launch but for the entire lifecycle of the product. The pricing should reflect the competitive landscape, product features and the planned obsolescence of the product. Many tech companies do not give sufficient focus on pricing. They often underprice the product in order to eliminate competition. Many times they do not identify features that would justify higher pricing. Pricing not only affects the profitability but also influences the brand perception. When a company positions itself as a market leader then its pricing should reflect that.
Marketing needs to determine how sales and volume change as a function of pricing. They should plan promotions at the right time of the year, increase prices when latest features are added and reduce prices when the products are phased out.
Advertising have lost their relevance especially among millennials because of increase in noise and channel fragmentation. Customers base their purchasing decision on their friends recommendations and the latest fads. Around 50% of clicks in the Adwords are accidental.
On the B2B side, customers make their purchasing decision based on trust and past relationships. Hence marketers should focus on content marketing by creating valuable materials centered on clients needs instead of trying to sell.
Tech companies should focus on product awareness. Customers should like the product and should have an opportunity to try the product before considering a purchase. This does not mean that the customers will stick with the product after they try the product. An existing customer is always more valuable than a future customer. Hence firms focus more on retention than customer acquisition.
Marketers need to develop advertising strategies that addresses each stage of the customer journey. They need to have different messages and channels depending on the goals at each stage. For instance retargeting is effective for consumers who are already considering for a purchase but not for the current customers who are already using it.
Marketing can help tech companies grow and hence is assuming more significance. A better marketing strategy will result in better products, solving problems for the customers with the right message at the right price and available where customers are.