Marketing Mix Analysis

With the application of D-SWOT for the offerings mix analysis, the next step in the internal analysis involves a marketing mix analysis specifically for digital platforms. A typical marketing mix analysis looks at the four classic Ps of Product, Price, Place, and Promotion along with an STP (Segmenting, Targeting, and Positioning) analysis. With the growth witnessed across online platforms a new set of four more Ps have been added specifically for digital marketing including People, Process, Programs,and Performance. Let us look at these 8Ps and STP concepts to understand how to analyze the marketing mix from a digital perspective.

Marketing Mix and the 8Ps

The term marketing mix was initially developed by Neil Borden who first starting using the phrase in 1949. He started teaching the term after an associate, James Culliton, described the role of the marketing manager in 1948 as a mixer of ingredients, “one who sometimes follows recipes prepared by others, sometimes prepares his own recipe as he goes along, sometimes adapts a recipe from immediately available ingredients, and at other times, invents new ingredients no one else has tried.”

This is also the reason why we have used the word mix to name the four key components of the internal analysis, as we believe that like marketing mix it is a mix of offerings, resources, and competencies, which are specifically chosen and carefully implemented depending upon the situation at hand and the company’s position relative to it.

The marketing mix concept relies on 4Ps as its key constituent (Product, Price, Place, and Promotion) and E. Jerome McCarthy (McCarthy1960) was the first person to suggest these four Ps. But with the advent of holistic marketing concept and the growth of online platforms, four more Ps have been added to the list, including People, Process, Programs,and Performance (Kotler). In this section, we would understand only the basic definitions of these 8 Ps. The strategic elements and applications of these 8Ps would be discussed in detail in the next chapter as a part of the ASCOR Strategy Phase.

Let us understand the definitions of the 8Ps of marketing mix as below:

1. Product: A product is an item that satisfies what a consumer demands. Products can either be physically tangible (which can be handled and felt) or in the form of intangible services (without a physical presence). As discussed earlier, most products which are sold online assume a service orientation to them as a customer cannot touch and feel them and it is the service elements only that can differentiate a product from its online competition.
2. Price: Simply put, it is the amount a customer pays for the product. But if we go deeper into the multiple considerations that go into pricing a product or service, we would see that pricing involves a lot of analysis and careful consideration of which price brackets would be suitable for a particular segment of consumers. And with the impact of cloud and pay-per content-based emerging digital models, pricing has become an even more crucial element in a highly competitive, per transaction-driven online environment.
3. Place: It refers to the provision of the product where the customer finally accesses it. This element has also assumed prime importance with changing retailing trends wherein, earlier, customers used to visit the stores but in present times, online deliveries are being done at every possible location where the customer wants to receive the product. In the next chapter, we would also go deeper into the key business considerations which product placement brings up in terms of an impact on distribution and related logistics efforts.
4. Promotion: It includes the type of communication which a firm uses to sell its products and services across multiple purchase channels. In a traditional marketing world, it was typically referred to the set of media and marketing activities but as we have seen in the last chapter, integrated market communications has had a major impact on how new digital channels, (based on the strengths and the potential impact they have on the customer receiving that promotion), are being utilized to communicate. Chapter 6 will cover the whole gamut of digital channels and communication techniques in detail.
5. People: This is the first of the new set of 4 Ps representing modern marketing. According to Kotler, ‘People’ reflect internal marketing and the fact that employees are critical to marketing success. Also, it places an emphasis on looking at consumers more deeply than just looking at them as bodies consuming products and services. Essentially, it relates to the need of deep-set consumer data which helps understand the influencer community to market specifically to key digital personas.
6. Process: It includes the creativity, discipline, and structure brought to marketing management in terms of a planned marketing and campaign process. It reflects the manner in which marketing as a discipline is changing from its traditional avatar (where objectives were not clearly defined and executed) to a much more process-driven and structured approach using technology and automation tools to drive efficiencies.
7. Programs: It relates to consumer-directed activities which a firm organizes. This involves the set of all traditional and digital marketing activities which the marketer would run in parallel where each one would leverage the other to execute an integrated marketing program.
8. Performance: The final addition to the 4 Ps is Performance which relates to capturing and measuring the range of possible outcome measures that have financial and non-financial implications (profitability as well as brand and customer equity) and those beyond the company itself (social responsibility, legal, ethical, and community related). It essentially means planning for and exhibiting not only business performance but also being seen as a company that has an impact on environment and society as a whole.

With an understanding of the 8Ps, we now have an idea about the key points of analysis which a company should undertake to see how they are presently performing and make specific adjustments when they enter the digital marketing arena. Specific implementation strategies related to each of these 8Ps would be discussed as we go through the rest of the ASCOR Digital Marketing framework elements.

We would now take a look at the second aspect of marketing mix which is the development of STP (Segmenting, Targeting, and Positioning) strategies post the 4P development.

Understanding STP Basics

STP is an acronym for three key marketing development and application concepts and stands for Segmenting, Targeting, and Positioning. The STP process demonstrates links between the overall market and how a company chooses to compete in that market. It is sometimes referred to as a process with segmentation being conducted first, followed by selection of one or more target markets, and finally, the implementation of market positioning. Let us understand each of the three concepts in more detail.

1. Segmentation: It is defined as the process of splitting a market into smaller groups with similar product needs or identifiable characteristics, for the purpose of selecting appropriate target markets. Typical segmentation categories include demographic segmentation (age, income, marital status, education, family size, gender, occupation, geographical location, social status etc.), psychographic segmentation (brand preferences, price sensitivity, hobbies, lifestyle, service preferences, peer influence, etc.), and behavioral segmentation, also covered in detail in Chapter 3 (purchase history, shopping pattern and preferences, internet usage, information sources, etc.). With the use of technology and pattern recognition possible with digital marketing, the field of segmentation is getting sophisticated by the day which makes its application even more pertinent.
2. Targeting: It refers to an organization’s proactive selection of a suitable market segment (or segments) with the intention of heavily focusing the firm’s marketing offers and activities towards this group of related consumers. Typically, if the marketer understands the customer segments deeply, he/she would be in a much better position to have a differentiated and focused targeting strategy depending on their key exhibited characteristics. In the present world of multiple audience segments across channels, it also becomes crucial for marketers to decide which channels to invest more and make efforts to be one-up on competition.
3. Positioning: It is the target market’s perception of the product’s key benefits and features, related to the offerings of competitive products. Positioning exercise typically involves understanding target consumers, analyzing market/competition, and defining the competitive advantage and relevant attributes to successfully communicate and deliver the chosen position. The positioning a marketer decides for his/her brand should be strongly differentiated, credible while communicating, and should be relevant to the audience in terms of providing the perceived benefit over and above competition.

The concepts of STP and their execution are core to developing the overall digital marketing mix strategy and we would understand the application of these concepts in more depth in the next chapter on digital strategy formulation.

Let us now move on to the third key element of internal analysis—the resources mix.