The 5 Ps of marketing is a framework for understanding and making decisions about your marketing mix. The concept refers to five primary elements that you can manipulate to increase revenue. By learning these key marketing strategy components, you’ll better understand what levers you can pull to increase sales, average order value, and repeat purchases.
The Marketing Mix
The idea of a “marketing mix” may be confusing if you’ve never heard of it and have no idea where it came from. Neil H. Borden, a professor at Harvard business school, began to use the term “marketing mix” sometime in the late forties or early fifties. It was based on a description made by another Harvard professor, James Culliton, that referred to the business executive as a “mixer of ingredients.”
In ” The Concept of the Marketing Mix, ” Borden explained the concept in “The Concept of the Marketing,” a chapter of the 1964 textbook “Science in Marketing,” which I could only find on Amazon for $579.95. If that’s not in your professional development budget, you can read the chapter here as it was published in The Journal of Advertising Research.
What is a Marketing Mix?
According to Borden, the marketing mix is a “mix of marketing procedures and policies” established to increase profits.
While we now commonly refer to the 5 Ps of marketing or (or four, depending on who you read), Borden wrote that the list of ingredients could be of any length. The deciding factor is how in-depth you feel you need to be to develop an effective marketing program.
In “The Concept of the Marketing Mix,” Borden identifies 12 elements of the marketing mix:
- Product Planning.
- Distribution Channels.
- Personal Selling
- Physical Handling
- Fact Finding and Analysis
Depending on your situation, some of these may be unnecessary (e.g., physical handling if you sell a digital product) or unimportant.
Why Your Marketing Mix is Important
The marketing mix concept is highly flexible. The factors you consider should be the ones that are likely to have the greatest impact on your bottom line.
The true importance of the concept is that it illustrates the importance of identifying and understanding every factor that influences a company’s net revenue.
By accounting for these factors as you develop your marketing strategy and plan, you will be able to capitalize on your business’s strengths and overcome weaknesses as you respond to market conditions.
What are the 5 Ps of Marketing?
In 1960, Notre Dame marketing professor Jerome McCarthy distilled the marketing mix to four factors in “Basic Marketing: A Managerial Approach.” He worked things out, so each factor started with ‘P’ and called them the 4 Ps of Marketing.
McCarthy’s 4 Ps of Marketing were product, price, place, and promotion. The fifth P—people—was later added to recognize the critical role that a company’s people play in its success.
This is your product or service. Product is comprised of the factors that influence customers’ purchasing decisions. Some of the levers you can pull here are:
- Functionality. For example, you might add a unique feature to differentiate your product or service from the competing offerings.
- Packaging. For example, you might use cheap boxes to keep costs low or. custom-designed boxes to enhance branding.
- Appearance. For example, you might consider a highly designed product or a utiliarian, minimalist design depending on your positioning.
- Warranty. For example, you might offer a lifetime warranty to reduce perceived risk for consumers.
- Quality. Depending on other elements of your marketing mix, you might offer a high quality product at a higher price or a lower quality product at a lower price. (Those aren’t the only options. There are situations where you might offer a lower quality product at a relatively higher price, for example. This will partially depend on other elements of your marketing mix.)
It’s essential to consider the strengths and weaknesses of your product when determining your marketing strategy. If you’re selling a phone with a crystal clear picture quality but limited battery life, of course, you’ll want to highlight the great picture quality.
But you can’t just hide the fact that the phone will die after halfway through an episode of Bridgerton. You’ll want to take steps to improve the battery life or persuade people that the picture quality is worth it.
You can also rely on the other elements of your marketing mix to make up the difference. For instance, if it dies in an hour, but it’s half the price of similar products, you can make up some ground.
This is the cost of your product or service. The list price is not the only factor. You should also consider:
- whether you’ll offer discounts, price matching, or free shipping
- whether you’ll offer financing
- whether you’ll offer payment plans
When determining how to price your product:
- Consider the value you provide. Is your offering one-of-a-kind? Will it save your customers time, money, or headaches? Based on the benefits of your product, what price will the market bear?
- Research what your competitors are charging. But remember, while this can give you a range to consider, you don’t have to go along with the market. Apple is the perfect example. There are many good smartphones and laptops out there, but Apple can charge a premium because they’re so good at promoting their products.
- Make sure you can cover your costs. If you can’t charge enough to stay in business, it’s time to go back to the drawing board.
This element comprises all distribution channels such as a brick-and-mortar shop, online, or through a distributor. It also includes logistical concerns (e.g., transportation and delivery) and anything else required to make your offering accessible to customers.
Promotion refers to how you will make consumers in your target market aware of your product or service. It includes activities like:
- public relations
Depending on your marketing plan, it might make sense to divide these categories further. For example, you might break advertising out into digital advertising and traditional advertising.
A company’s team is critical in the services business. But even when selling products, the people you hire will play a significant role in the success or failure of your company.
Customer-facing employees like customer service and sales representatives are highly influential team members. Still, even someone you may think of as expendable probably plays an important role in the smooth operation of your company.
Ultimately, your goal should be to have the right person in every seat.
The 5 Ps of Marketing in Practice
To see the 5 Ps of Marketing in action, let’s consider ScopeStack, a services CPQ for IT companies. Services CPQ software helps managed service providers (MSPs) and value-added resellers (VARs) in the IT industry develop proposals more efficiently and accurately.
CPQ (configure, price, quote) software has been around for decades to make it easier to sell complicated products. But, until recently, this software was not suited for selling services. Instead, MSPs and VARs continued to rely on Microsoft Word and Excel to scope and price services.
ScopeStack identified this problem and created the first services CPQ for the IT industry.
ScopeStack’s ideal customers have multiple presales engineers scoping projects. Customers are charged a base price and a fee per user. Since many of ScopeStack’s customers work with third-party contractors, the company also created an option for customers to give these contractors access to projects in ScopeStack. The company charges a monthly subscription fee to these contractors.
Since it occupies a unique space in the market and customers are happy with the product (the churn rate is almost nonexistent, and their first customer still uses the platform), the company primarily relies on referrals for new business. The company also sponsors industry events and promotes the company through a vendor booth.
As a Software-as-a-Service, the product is sold online.
The company has a small team, the most important member of which is an onboarding specialist who understands the needs of MSPs and VARs and knows how to help them get the most out of the platform.
Focus on the 5 Ps of Marketing to Increase Sales
What do the 5 Ps look like for your business? Examine your current marketing mix to see what’s working and what’s not. Then brainstorm new ideas in each of the five areas to determine ways to improve your marketing approach.