Launch I: What is the marketing mix?
The Marketing Mix concept is an old one both in the marketing literature and in practice. It originated in the 1960s to systematize thinking about how marketing should operate and therefore succeed in its mission to motivate customers and sell a product.1 Traditionally, the mix consists of what is known as the Four Ps, although the number has increased as academic researchers put their mark on this approach.2 Whatever the count, I will stick with the traditional four: Product, Price, Place, and Promotion. This whole book is about the first, Product, so nothing more will be said about it here. This chapter is concerned with the Promotion, Price, and Place components.
This chapter is divided into five sections. I will first discuss Promotion followed by Price and the Place. The promotion of a product, especially a new product, involves an optimal message and claim about it. The message is what you want a customer to hear or read that will motivate a product purchase. This message is not simple or straightforward, but complex because it actually has to appeal to a customer’s intelligence, reasoning, and emotion about the product. Claims are what you want a customer to believe, statements that describe the product as being superior to other products. I normally view messages and claims as the same so I use the terms interchangeably.
Message deliver)' can be by traditional print media, TV ads, radio spots, and, increasingly, through digital channels. The last offers great opportunity for message deliver)' since messages can be quickly changed (almost instantly, in fact) if a message is not resonating with customers and motivating them to buy the product. Several messages can be tested at once to discover which is the best because of this adjustment speed and the way they are displayed. One group of online shoppers could be shown one message and another group shown another message with the results statistically compared for their effectiveness in converting an online shopper to an online buyer. Testing messages this way is termed A/В Testing and is the subject of a subsection below.
The product price is all-important because no matter how right the other components of the Mix, if the price is not right then either a sale will not be made or money will be “left on the table,” which means lost revenue opportunities. Pricing was discussed in Chapter 3 from the business case perspective. The business case acts as a gate keeper process in which it is decided whether or not development, and even launch, of a product will continue. As I discussed in Chapter 3, a price point or price range is needed in the early stages of development to calculate potential revenue. Usually, a range is used so that a reasonable revenue range can be developed. At launch, however, the pricing problem narrows and becomes more focused on a specific price point. More specifically, a pricing strategy' must be developed. As noted in Paczkowski , a pricing strategy' consists of a structure and a level. The structure is either a uniform price or a form of price discrimination. Since details on developing these are presented in Paczkowski , this chapter will only present highlights of issues and methods.
The place where the product will be marketed is a complicated issue because of online stores and online channels such as Amazon. It is also complicated by legalities, that is, contracts that may prohibit more than one (or a few) vendors from selling in a locale. I will discuss this in the third section.
The last two sections are a software review and summary.
In this first section, I will discuss the analysis of messages or claims for the promotion of a new product. This is not to say the methods are only useful in this situation since promotion is ongoing. New messages have to be constantly developed and tested throughout a products lifecycle. Since this book is about new products, the focus is only on messaging at this stage.
Stages of message analysis
Figure 5.1 illustrates four stages of message analysis:
- 1. creation;
- 2. testing;
- 3. deployment; and
- 4. tracking.
There are two ways to view the operationalization of these stages that are actually evolutionary. I refer to them as the Old Messaging Paradigm and the New Messaging Paradigm. These are illustrated in Figure 5.2 and Figure 5.3, respectively. In the old paradigm, there is no (or minimal) use of data at the Creation and Deployment
FIGURE 5.1 The four stages of message development.
FIGURE 5.2 The old messaging paradigm.
stages and some use of data at the Testing and Tracking stages. Creation could be influenced by Message Tracking based on what did and did not work regarding sales and customer acquisition. It is, however, largely left to a creative team, perhaps influenced or directed by a management team, to “dream up” a message. The New Messaging Paradigm, Figure 5.3, is data intensive at all stages. This is largely a result of the Big Data and Social Media world in which we now live. These two have impacted all aspects of business, not just messaging. Both Big Data and Social Media
FIGURE 5.3 The new messaging paradigm.
were part of the idea generation process I discussed in Chapter 2. Both come to play again in messaging.
At the same time, the skill-sets of marketing practitioners have expanded, software has evolved to a more sophisticated level, and analytical tool sets have been developed to handle more challenging real-world problems. Statistical and econometric theory and machine learning techniques are in this last category. In the following subsections I will develop a perspective and methods for the four stages of messaging under the new data-intensive paradigm. The first stage, message creation, is discussed in the next subsection which is followed by approaches for the analysis of messages based on data.
Where do messages come from? This is equivalent to the question: “ Where do new product ideas come front?”. In a data-intensive world, Big Data from internal and external sources can be used in conjunction with social media data to identify pain points for customers. Pain points are customer problems that affect their daily lives. In terms of products, a new one (both new-to-the-world and an enhancement to an existing product) would alleviate, or at least ameliorate, the “pain.” The message tells customers how the new product accomplishes this.
Internal data includes transactions data, product returns data, warranty data, call center logs, and so on. External data consists of socioeconomic and demographic data on customers and potential customers. Social media data consists of reviews, complaints, blogs, and so forth that emphasize issues. Combined, they can be used to identify issues that can be addressed by the new product. The creative team crafts messages explaining how their “pain” is addressed by the new product. This could be done for the entire market or micro markets (a.k.a., market segments).
134 Deep Data Analytics for New Product Development