FIGURE 2.1: FICTIONAL ORGANIZATIONAL CHART
Figure 2.2 above schematically describes the marketing ‘dialogue’. The outbound factors on the right hand side of the diagram are commonly known as the ‘marketing mix’, which classically contains the four elements of the business within the marketer’s control, these are known as the four ‘p’s which are:
• product
• promotion
• placement (standing for ‘marketplace’, i.e. getting the product to where the customer can buy it) – and
• price.
This is the ‘classic’ marketing mix, the current version has five ‘P’s’ and we will be examining each element in more detail during Chapter 3.
The classic marketing mix was developed for products which were ‘goods’, i.e. what was sold was tangible. Nowadays, particularly outside straight re-buy consumer goods, much of what customers buy involves either a pure service (e.g. package holidays, legal advice buying a house, account- ancy, a church wedding etc) or a service is used to add value, maybe even the competitive differential (e.g. delivery, maintenance, training, hotline support, insurance, software etc for the PC at home or in the office). Where service is involved in any of these ways, the marketing mix employed must be extended to handle the fact that services are intangible.
This ‘extended’ mix will additionally include:
• Physical evidence– to ‘tangiblize’.
• Process– to manage the customer’s experience.
• People – service is performed by people, if people are not involved, as is the case of automatic teller machines outside banks, then, it is not a ‘service’, it is a facility, i.e. incapable of building a favourable relationship between the buyer and the vendor.
• Time – there are five ‘flavours’ of time: duration, when avail- able, speed of response, punctuality and speed of innovation, each of which is capable of providing a competitive advantage.
• Resource Management– i.e. services are constrained by the capacity of the resources available, e.g. the number of seats on a plane, or free hours in a lawyer’s diary, and it is important for the service marketer to manage this capacity so that the company is able to serve customers well at the peak of demand, yet not bleed to death with costly spare capacity during the troughs.
(We refer again to this ‘extended mix’ in Chapter 5, The marketing plan.) The conventional view about marketing is to confuse it with the promo- tion that the business uses to sell its products (advertising, direct mail, PR, editorial publicity, exhibitions and the ‘message sources’ such as: letter- head, cars the sales people drive, the way the call centre deals with customers etc). Promotion is certainly the most visible part of the business (it wouldn’t work if it were not visible), but as can be seen, the whole of this outbound part of the ‘dialogue’ will be conveying a message to customers, consumers and influencers.
The product must be right, ‘you don’t sell a bad product twice’.
Although this is an old marketing adage it is still very true if a company has to do its business in a competitive market place. The price of a product communicates where in the range of things the product is being posi- tioned. To illustrate: the price of cars indicates where the producer would like us to see them, for example, Rolls Royce at the top of the market, Skoda near the bottom end, and BMW, Audi et al, somewhere in the middle. Where the product is for sale also has something to say about where it is positioned, shirts in Harrods would be seen differently from the same shirts available via a mass market mail order catalogue.
But marketing is a ‘dialogue’ and it is important not to forget that commu- nication is two-way. The business must be asking questions of its customers (market research), indeed in an ideal world that is the starting point. Nothing should get made, designed, written, advertised, priced or distributed to the shops until the company knows what it is the customer wants and is willing to pay for at a price that allows the company
to do business profitably. Once up-and-running, the dialogue expands to include a listening mode.
For businesses where the buying cycle is fairly short, sales (e.g. fast moving consumer goods, package holidays, pop concerts etc) are a quick indi- cator as to how well the marketing mix is working. Sales can also be made to build database information that will enable the company to see who is buying, what they are buying, when they buy, and perhaps even enable database marketing to be used to target these customers again.
Research can be carried out via database strategies to discover which customers are not as responsive as the rest and what can be done about it. Where the market place has a long buying cycle (e.g. new cars, indus- trial plant and/or equipment, legal advice etc) then it will be a while before any given marketing mix will have an effect. In cases such as these, where it can take a long time between the customer or prospect (i.e. potential customers) hearing about a product and buying it, the business must monitor how successfully the mix is at moving prospects toward the sale (see the D.A.G.M.A.R model, Chapter 4). This is done via the Customer Information System (CIS) which will comprise an appropriate range of tools (such as customer satisfaction questionnaires, loyalty measures derived from the database etc.) to keep the marketer in the picture about how well the marketing mix is working, and to avoid discovering in a couple of years time that it was not right and as a result the customer has purchased elsewhere. (We cover this in more detail in Chapter 7, Getting the feedback.)