MARKETING

Rejuvenating the Marketing

Mix
by Benson P. Shapiro
FROM THE SEPTEMBER 1985 ISSUE

The marketing mix concept is an essential part of marketing theory. But describing the
concept and putting it to effective use are two different things. In this article, the author
reviews the elements of the marketing mix and lends insight into how these elements
interact. Applying such ideas as consistency, integration, and leverage, he demonstrates
how a marketing program must fit the needs of the marketplace, the skills of the company,
and the vagaries of the competition. To meet such disparate demands, the elements of the
marketing mix must (among other attributes) make the most effective use of company
strengths, take aim at precisely defined segments, and protect the company from
competitive threats.

he marketing mix concept is one of the most powerful ever developed for
executives. Since just after World War I, it has been the essential organizing theme
of many MBA marketing courses. It is now the main organizing concept for

countless corporate marketing plans as well as for most marketing textbooks and many
courses and executive education programs. It has endured because it is both effective and
simple.
Rejuvenating the Marketing Mix
Now there are several ways to add even more strength to the concept while maintaining its
simplicity. This article examines the marketing mix as an integrated whole, presents
criteria for explaining why some programs prosper and others fail, and can help improve

your ability to predict which programs will succeed and which will not. It then restates
some of the more important themes behind the marketing mix concept and suggests
several ways to add more power to it.

First, though, a review of the basic marketing mix concept is in order. The marketing mix is
the tool kit that marketers use to do their job. It consists of four elements:

1. Product (or product policy)

2. Pricing

3. Communication (the most visible element of the mix, which includes advertising and
personal selling)

4. Distribution

The marketing mix gives executives a way to ensure that all elements of their program are
considered in a simple yet disciplined fashion. One can describe the essence of almost any
marketing strategy by presenting the target market segment and the elements of the mix in
brief form. IBMs personal computer strategy might, for example, be described as follows:

Target market segment. Managers and professionals (not hobbyists or technical specialists).

Product. Parity technology, fairly easy to use.

Price. Reasonable (not high enough to provide an umbrella for competition but high
enough to yield healthy profits for IBM).

Communication. Personal sales to large customers through IBMs powerful sales force;
heavy advertising stressing friendliness and broad applicability of the product.

Distribution. Directly through the sales force to major customers; mainly through
independent full-service dealers to smaller customers.

Most companies would benefit from the discipline of a similar description of their
marketing strategys core. It helps ensure that the plan is clear and that the details do not
obscure the strategy.

A few examples will quickly make apparent the wide variety of marketing approaches
available. A big difference exists between the marketing approaches of companies that sell
toothpaste and those that sell huge coal-fed boilers for electric generation. Such a
difference is, of course, natural and to be expected. Toothpaste costs little, and companies
can sell it in small quantities to many consumers for whom it is more than a trivial but less
than a major purchase decision. Coal-fed boilers cost tens of millions of dollars and few
people buy them; producers sell them to companies where many people labor over the
choice of a unit for a long time.

More surprising are the variations among marketers of the same product categories.
Cosmetics, for example, are sold in many different ways. Avon has a sales force of several
hundred thousand who call directly on individual consumers. Charles of the Ritz and Estee
Lauder use selective distribution through department stores. Cover Girl and Del
Laboratories emphasize chain drugstores and other mass merchandisers. Cover Girl does a
great deal of advertising, while Del emphasizes personal selling and promotions. Redken
sells through beauticians. Revlons strategy encompasses a wide variety of brands and
selling approaches.

These variations are more than anomalies. They represent fundamental strategies in the
war for a distinctive, comparative advantage and competitive success.

Interaction Within the Mix

The marketing mix concept emphasizes the fit of the various pieces and the quality and
size of their interaction. There are three degrees of interaction. The least demanding is
consistencya logical and useful fit between two or more elements. It would seem
generally inconsistent, for example, to sell a high-quality product through a low-quality
retailer. It can be done, but the consumer must understand the reason for the
inconsistency and respond favorably to it. Even more difficult is maintaining such an
apparent inconsistency for a long time.

The second level of positive relationship among elements of the mix is integration. While
consistency is a coherent fit, integration is an active, harmonious interaction among the
elements of the mix. For example, heavy advertising is sometimes harmonious with a high
selling price because the added margin from the premium price pays for the advertising
and the heavy advertising creates the brand differentiation that justifies the high price.
National brands of consumer package goods such as Tide laundry detergent, Campbell
soup, and Colgate toothpaste use this approach. This does not mean, however, that heavy
advertising and high product pricing are always harmonious.

The thirdand most sophisticatedform of relationship is leverage, whereby each

element is used to the best advantage in support of the total mix. The sales response curve
helps answer this question (see Exhibit I). In its simplest form, the curve shows the
relationship between sales, usually measured in units but sometimes in dollars, and a
marketing input measured in either physical or financial terms.

Exhibit I The Sales Response Curve

The relationship between advertising expenditures and sales is shown in Exhibit I. This
relationship can often be represented by a mathematical formula or by a chart listing unit
sales and advertising expenditures. But the graphical representation of the sales response
curve is more meaningful to most people.

Sales response curves enable a marketer to study the relationship between a given level of
expenditure of one or more marketing variables and the likely level of sales. More

powerful, however, is the ability to look at the changes in sales related to changes in
expenditure level. Exhibit I, for example, implies that as advertising expenditures increase,
they have little impact initially, then a great deal of impact, and, finally, little impact again
from additional expenditures. In the same way, the marketer can understand the dynamics
of the relationships and interactions of two elements in a three-dimensional graph.

It would not be sensible to invest additional advertising dollars in the flat part of the curve
(upper end) to generate sales, but rather to invest dollars in other elements of the mix.
Products with heavy advertising would then benefit more from improved distribution than
from an overkill of advertising.

I now go beyond the relationships of the elements of the mix with one another to consider
the relationship of the total program with the market, the company, and the competition.

Program-Market Fit
Product policy discussions both in business schools and in real life invariably put great
emphasis on the product-market fit. An important question in new product development,
for example, is whether the product concept fits market needs. Some years ago, when J.M.
Smucker considered the introduction of a thick catsup in a wide-mouthed jar, the
companys executives agonized over whether consumers would respond positively to the
new concept. When Loctite Corporation introduced the Bond-A-Matic 2000, a dispenser for
its industrial adhesive line, a serious concern was how the dispenser would fit into the
prospective customers manufacturing operation. Managers can expand the concept of
product-market fit to encompass the relationship between the total program and the
market. The idea is to develop a program that fits well the needs of the target market
segments the company is exploiting.

Such a program builds logically on consistency, integration, and leverage. To leverage you
use the most efficient tools for the market segment being emphasized. (Efficiency, in this
sense, relates to the engineering concept of output per unit of input. Thus we might look at
unit sales generated per dollar of advertising or personal selling to determine which was

more efficient, or what combination of the two was most efficient.) It is probably best to
approach the price-sensitive, brand-insensitive consumer, for example, with price
promotions instead of expensive advertising programs or elaborate packaging.

One of the first steps in marketing-program development is to completely, carefully, and

explicitly delineate the market. One of the last steps before launching a program is to
review the impact of each element and of the total mix on the target consumers. The
review should include tests for consistency, integration, and leverage.

Program-Company Fit
A good program-market fit and a consistent, integrated, and leveraged program are not
enough for success. The program must fit the company. Just as each individual has certain
strengths and weaknesses, so do organizations.

A marketing program must be symbiotic with the company or operating unit implementing
the program. A marketing organization with extensive mass advertising experience and
expertise, for instance, is more likely to be able to carry out a program that depends heavily
on advertising than an organization with less strength in that area.

Over time, these behaviorial or cultural attributes can change. But the rate of change is
limited. It usually takes quite a long time for a company to develop a strength in
advertising if it has little understanding of the field. For example, it is not easy for novices
to identify and hire advertising experts from other companies. Such an approach takes
time and, often, several trial-and-error cycles. Sometimes the beginners hire the wrong
people; even when they hire the right people, the newcomers they select are often so alien
to the culture of the company that the transplant is rejected. One executive usually
cannot change a whole culture, particularly in a large organization. Over time, strong
leaders can change the culture, but not with ease and great speed. Thus the behavioral fit
between the program and the company must be carefully considered.

The marketing program must fit the companys overall capabilities as well. A priceoriented strategy works well in a company that stresses efficient manufacturing and
distribution along with administrative austerity. An account-oriented marketing program

is much more likely to thrive in a customer-oriented culture that has responsive operating
and logistics people than in a manufacturing-oriented culture that stresses efficiency to the
detriment of customer service. The large plant geared to long production runs is well suited
to a strategy of a narrow product line with intense price orientation. And the company with
a strong balance sheet and low cost of capital can much more easily provide generous
credit terms than can a financially limited competitor.

Market position can also help to determine the most sensible marketing program. The
market share leader, for example, gains when it encourages competition on a fixed-cost
basis via elements like national advertising, company-owned distribution, or heavy
research and development. Its position enables it to spread the costs over a large volume,
reducing its cost per unit sold far below that of smaller competitors. Anheuser-Busch, for
example, spends less on advertising per barrel of beer sold than its major competitors
because it spreads its huge advertising budget over many more units than do its smaller
competitors.

Small unit-share competitors or niche marketers, on the other hand, should emphasize
marketing programs that stress variable costs so that their cost-per-unit-sold is equal to
that of their largest competitors. Thus small companies often stress intensive price
promotions, a commission sales force, and independent distributors.

The consumers or distributors image of the company can also have a big impact on
program-company fit. In the early 1980s, Levi Strauss & Company introduced a line of
mens suits in which the jacket, vest, and pants were displayed and sold separately in
department and specialty stores. The product line included matched items meant to look
like a tailored suit. Although the concept met success for some competitors, it failed for
Levi Strauss because the stores and the target consumers viewed the company not as a
credible source of suits, but as a jeans and sportswear manufacturer.

Executives cannot develop or review a program in isolation; they can assess it only in
relation to the company using it.

Competitor-Program Fit

How should the program deal with competition? Your companys program should be such
that it builds well on your strengths and avoids stressing your weaknesses, all the while
protecting you from the competition. Your company derives strength from a program that
evades your competitors strengths, capitalizes on their weaknesses, and in total builds a
unique market personality and position.

Accomplishing this set of related tasks requires meticulous analysis and honest
introspection. Perhaps the most serious danger, other than neglecting the competitorprogram fit altogether, is to underestimate the competitions strengths. Dont be too proud
or too uninformed to see your competitions good points and your own companys
weaknesses.

Too many companies display their disregard for the competition when they wonder,
particularly about market leaders, Why cant we emulate them? The answer is twofold.
First, the strengths of the leading competitor are almost certainly so distinctive that any
attempt at imitation would fall short of the mark. Second, the current leading competitor
in all likelihood took command when the market was quite differentwhen a leading
competitor with similar strengths and capabilities did not exist. Thus, in a sense, the leader
expanded into a vacuum that no longer exists. Companies that blindly attempt to imitate
the leader usually fall, often very painfully.

Companies compete with one another by emphasizing different elements of the marketing
mix and by using different mixtures of those elements. The competitive response or
reaction matrix is a useful table for visualizing the alternative action-reaction pattern.1 A
simple matrix might include two companies and three sub-elements of the marketing mix
such as price, product quality, and advertising (see Exhibit II).

Exhibit II Comparative Response Matrix

The vertical columns represent action taken by our company, Company A. We might, for
example, cut price (left-hand column), increase quality, or increase advertising. The
reactions of Company B, our competitor, are represented by the horizontal rows. The
coefficients (numbers indicated by the Cs in the matrix) represent the probability of
Company B responding to Company As move. The subscript p is for price, q for
quality, and a for advertising; the first subscript is Company As action and the second is
Company Bs response. The coefficient Ca,p (upper right-hand corner), then, represents the
probability of Company B responding to Company As increase in advertising (right-hand
column of the matrix) with a price cut (top row of the matrix). The diagonal (Cp,p, Cq,q, Ca,a)
represents the likelihood of Company B responding to a move by Company A with the
same marketing tool (by, say, meeting a price cut with a price cut). We can estimate the
coefficients by studying past behavior and/or by seeking managements judgment. The
coefficients must, of course, add to a total probability of one (or 100%).

Once we have developed the matrix, we can review each of our potential marketing
actions, here, for example, with regard to price, quality, and advertising in light of probable
competitor response. If we expect that there is a 70% chance that the competitor will meet
our price cut but only a 20% chance that it will meet a quality increase, we might reason
that a quality increase helps us to develop a more unique marketing approach than the
price cut, which is more likely to be imitated. We can also continue our disciplined
conjecture by asking how we (Company A) should respond to the competitions (Company
Bs) most likely reaction to each of our actions. If we cut price, and it is 70% likely to meet
our new price, what should we plan to do when it does meet our new price?

The competitive response matrix is a flexible analytical approach. One can add more
columns representing many marketing tools, add more rows for delayed responses (for
example, will the competition cut price immediately, in a month, in a quarter?), and add
rows for additional competitors. The discipline of the approach is exceedingly valuable.

The competitive response matrix is useful in helping to develop a distinctive approach to

the market. It enables a competitor to understand more easily how it can differentiate itself
from the marketing programs of other competitors.

Formal competitive analysis programs are particularly important for making large capital
commitments. The essence of these programs is to play the role of the competitor or of a
group of major competitors. Some companies even go so far as to have their own
executives play competitive games built around their industry, with one or several
company executives representing each competitor. The response matrix can be
incorporated into these elaborate, formal approaches.

The Expanded Mix

Like most concepts, the marketing mix is an abstraction from reality. And real marketing
programs dont always fit the product, price, communication, and distribution paradigm
perfectly. For instance, several aspects of the total mix really involve combinations of the
four basic elements. These combinations include:

Promotion
Brand
Terms and conditions

Strictly defined, promotion includes short-term price cuts to the trade and consumer
incentives like coupons, contests, and price allowances; it involves price and
communication. In many industries and companies, trade and consumer promotion
account for a larger share of the budget than advertising or personal selling. There is
certainly no need to expend much effort trying to categorize consumer promotion as price
or communication. The important thing to note is that it is useful and fits into the mix.

Often viewed as part of the product, brand is also part of communication. In fact, it can
serve as a useful, integrative force to bring product policy and communication closer
together.

Terms and conditions relate to a myriad of elements of a contractual nature that are
closely related to price (payment terms, credit, leasing, delivery schedules, and so on). But
they are so close to personal selling that I think they should be viewed as an interface
between price and communication. Elements like service support and logistical
arrangements also approach product policy. The important thing is not necessarily to
categorize these issues but to consider them as marketing tools.

In conclusion, I suggest you use the marketing mix concept to answer the following
questions:

Are the elements consistent with one another?

Beyond being consistent, do they add up to form a harmonious, integrated whole?

Is each element being given its best leverage?

Are the target market segments precisely and explicitly defined?2

Does the total program, as well as each element, meet the needs of the precisely defined
target market segment?

Does the marketing mix build on the organizations cultural and tangible strengths, and
does it imply a program to correct weaknesses, if any?

Does the marketing mix create a distinctive personality in the competitive marketplace and
protect the company from the most obvious competitive threats?

Use these questions to help focus on the most important aspects of the marketing mix and
its fit.

1. Jean Jacques Lambin, in Advertising, Competition and Market Conduct in Oligopoly Over
Time (Amsterdam: North Holland Publishing, 1976), describes the approach in great depth.
I am indebted to my colleague, Robert J. Dolan, for introducing me to it.

2. See my article with Thomas V. Bonoma, How to Segment Industrial Markets, HBR
MayJune 1984, p. 104, and our book, Segmenting the Industrial Market (Lexington, Mass.:
Lexington Books, 1983), which explains that marketing segments can be defined by such
attributes beyond customer demographics as urgency of need or personality type.
A version of this article appeared in the September 1985 issue of Harvard Business Review.

Benson P. Shapiro is the Malcolm P. McNair Professor of Marketing, Emeritus, at Harvard Business School in
Boston. He is the author of numerous books and HBR articles.

This article is about MARKETING

FOLLOW THIS TOPIC

Loading...