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Figure 8.3 Each P of the marketing mix should work with the other Ps to create value for a business and its
customers. Product, promotion, price, and place relate more to goods, while the people, physical environment,
and process relate more to services. (attribution: Copyright Rice University, OpenStax, under CC BY 4.0 license)
Product
Within the marketing mix, product refers to a good or service that creates value by fulfilling a customer need
or desire. Goods are tangible products that can be touched, smelled, heard, and seen, such as a pair of tennis
shoes, a granola bar, or a bottle of shampoo. In contrast, services are intangible products. They usually entail
paying an expert to do something for you, such as car repair or house cleaning.
Companies can bundle both goods and services together to create extra value for their customers. Birchbox,
for example, provides goods (product samples) and services (customized product recommendations) to satisfy
their customers’ desire to be able to buy beauty products in a hassle-free manner. The value Birchbox
provides to customers relies on their ability to do both. In the United States, service-oriented businesses are
increasingly playing a larger role in our local and national economies.
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For start-ups, defining the value of the products they are going to offer is an important step toward identifying
their competitive advantage within a marketplace. On a basic level, if you don’t know what benefit your
product provides or what need it fulfills, neither will your customers. Kevin Plank, founder of Under Armour,
knew that the value of his product would benefit many athletes who were tired of having to frequently change
their wet sportswear. As a former football player, he had spent many hours training and enduring drenched
practices, and wondered how he could alleviate this problem that companies didn’t address well with cotton
sportswear. After college, he decided to take his idea to the next level and started a company making athletic
wear that had special microfibers that kept athletes dry throughout practice and games. He then embarked on
a trip to try to sell his value proposition to college football teams on the east coast. Nearing the end of 1996, he
landed his first sale of shirts to Georgia Tech, which totaled $17,000—and the rest is history. Under Armour
became a strong competitor to Nike and Adidas by providing a new type of athletic wear that has
revolutionized performance by keeping athletes dry.[6]
In contrast, Jawbone, the company that manufactured Bluetooth speakers and other hardware, has gone out
of business because it changed its focus from audio to health devices, which placed it directly in competition
with FitBit and similar hardware companies. Product failures, among other problems, caused this tech
company to flop.[7] The company is now working on reinventing itself and will use artificial intelligence and
sensor hardware to provide customers information about their health through a subscription. The wearable
sensors will record vital customer information that will be tracked on an online platform that will then provide
suggestions for medical action.[8] The company’s redesign is not yet complete, so it is not officially in business
again yet.
Promotion
Communicating a product’s benefits to customers is a significant aspect of any marketing mix. Even if a
product is the best in its class, a company must communicate this value to customers, or it will fail. This is what
promotion does: It is the process of communicating value to customers in a way that encourages them to
purchase the good or service. Promotions must have a goal, a budget, a strategy, and an outcome to measure.
Companies must use their promotional budget wisely to create the best results, which can include sales, profit,
and awareness through the use of a cohesive message throughout the campaign.
Some typical forms of promotion are advertising, social media, public relations, direct mail, sales promotions,
and personal selling.
Advertising is a form of mass communication that allows companies to reach a broad audience through TV,
radio, newspaper, Internet, magazines, and outdoor ads. Many of these media can be quite expensive for
small companies, forcing them to choose one strategy, or to opt for other less expensive tactics such as
guerrilla marketing or viral marketing (which will addressed in Marketing Techniques and Tools for
Entrepreneurs). As Table 8.2 shows, the advantages of advertising include reaching a mass audience and
increasing sales, but on the downside, the cost may be too much to bear, and the company might face a
difficult time reaching the right target. As we move from advertising to social media, we can see that social
media allows for more accurate targeting and better metrics to assess results.
Social media is a must-use tool for entrepreneurs to connect with consumers, especially younger
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6 Under Armour. “Our Story.” n.d. http://www.uabiz.com/company/history
7 Lauren Goode and Chris Welch. “Jawbone Is Going Out of Business.” The Verge. July 6, 2017. https://www.theverge.com/2017/7/6/15931080/
jawbone-going-out-of-business-report
8 Conor Allison. “Jawbone Health: Everything We Know So Far about the New Premium Health Platform.” June 17, 2019.
https:www.wareable.com/health-and-wellbeing/jawbone-health-hub-medical-health-wearable-2144
This OpenStax book is available for free at https://cnx.org/content/col29104/1.9
demographics. Many customers can be found online in one social media platform or another. The goal is to
find the customers who fit your target market. The benefits of social media include targeting customers more
accurately using the platform of their choice and being able to communicate directly with them. These
platforms include networking sites such as Facebook, Twitter, and LinkedIn; photo and video sites such as
Snapchat, Instagram, and Pinterest; blogs; and news sites. A business must find the time to connect with its
customers wherever they are. As a budding entrepreneur, the best way you can start connecting with them is
by identifying your target customers and by figuring out what kind of social media they frequent. You can ask
your current customers about their social media habits; you can look up reports about the types of social
media your customers frequent; or you can use special software that tracks conversations on social media that
pertain to your business and industry.
For example, you may find out that your young customers hang out mostly on Twitter and Instagram, and not
so much on Facebook. You could benefit from focusing on only those two platforms and finding out about
their conversations. You may want to search hashtags and stories that pertain to your type of business so you
can join their conversation. You could then set up your profile, write relevant content and hashtags that make
sense to your consumer, and request to follow influencers who can help you create awareness of your
business and product. Once you have a profile set up, there are many ways you can create campaigns:
contests, discounts, or by simply providing useful content that your customer appreciates. The goal is to be
part of the conversation and not sound like you are selling something.
In addition to posting good content and reaching out to influencers, you may also benefit from buying ads
that can be geographically targeted to your customer and that are more affordable and effective because
you’re directly targeting someone who is specifically interested in your product. The disadvantages of
targeting social media include the time and skills required to engage with customers, and the need for
consistently fresh content. Many start-ups believe that having a Facebook page will be enough to reach their
customers, but their customers may spend more time on other social media platforms. The time and effort
required to findthe right platform, develop good content, and connect with customers on a daily basis is
worth it.
Public relations are the efforts and tools companies use to connect and develop goodwill with their
constituents. Constituents can include customers, investors, employees, business partners, government
entities, and the community at large. The goal is to highlight the company in a positive light by contributing as
a community player. Tools can include newsletters, press conferences, community service, events,
sponsorships, press releases, articles, and stories that help entrepreneurs create a positive image about their
company and get its name out there. If participating in an event, for example, the sponsor will display the logo
and name of the company in a place where everyone can see it. This shows the company as a supporter of the
community and as a provider of not just products and services, but of intangible contributions, such as
supporting the dreams of the event participants. The goal is not to make a sale at that point, but to impact the
community and create positive relationships in general because it’s the right thing to do—it may positively
influence the consumer when they make a purchase in the future.
Direct mail, which is a way to connect to consumers via email or through printed, mailed pieces, is also a
necessary tool to keep in touch with customers, especially when creating long-term relationships. The
advantage of this strategy lies in connecting to a customer who is already interested in your product and
would like to receive news and promotions from you; however, the disadvantage is that it usually takes time to
create these lists because it involves collecting information about customers during events, through online
requests, or at the cash register. It also can be expensive to send out pieces of mail that might end up in the
trash.
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Sales promotions are incentives that attract attention and push the customer to take action. These incentives
include discounts, samples, rebates, rewards programs, gifts, and premiums. Sales promotions can attract new
customers, but it may also reduce profits because coupons and discounts are offered for trying a product.
Personal selling is a tool that uses face-to-face interactions to communicate and influence a customer to
make a purchase. It is especially suited for luxury goods. Usually, higher-priced products will need a longer
selling process, and sales personnel will need more training on the product to learn about its unique qualities.
This is one of the most expensive ways to reach and retain customers, but it can be worth the investment.
Overall, a good entrepreneur must find the right mix of marketing communications to reach customers. This
will vary depending on the start-up’s budget, goals, and strategies. Table 8.2 identifies the advantages and
disadvantages of each, as they relate to small and new businesses.
Advantages and Disadvantages of Promotion Types
Promotion
Type
Examples Advantages Disadvantages
Advertising • TV ads
• Radio spots
• Newspaper
and magazine
spreads
• Internet ads
• Billboards
• Can reach a mass
audience
• Great for creating brand
recognition
• Increased sales
• Can be expensive
• Access can be limited
• Some targeting is possible,
but it is impossible to fully
control who sees the ad
Public
Relations
• Sponsoring
community
events
• Charitable and
civic
involvement
• Scholarships
and grants
• Press
conferences
• Develops positive brand
recognition
• Creates goodwill toward
company and brand within
the community
• Big events and public
relations campaigns can be
resource intensive
• Not focused on generating
sales
Social
Media
• Social
networking
sites such as
SnapChat,
Twitter, and
Facebook
• Pervasive and inexpensive
access to massive
audiences
• Target markets are highly
customizable based on
available data
• Many companies use social
media, so it is hard to stand
out from the crowd
• Can be time-consuming
• Success requires dedicated
personnel with special
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Advantages and Disadvantages of Promotion Types
Promotion
Type
Examples Advantages Disadvantages
• Blogs and
vlogs
• Influencers
(industry
experts who
act as
advocates)
• Easy access to young
people
• Can be used to create
goodwill and a loyal fan
base
expertise
• It is often difficult to track
conversion (customers taking
a desired action, such as a
purchase) and sales numbers
• Requires the creation of
unique/engaging content
Direct Mail • Mailed letters,
marketing
flyers,
postcards, and
coupons
• Email
newsletters
• Subscribers are already
interested in your product
and thus more likely to
convert to paying
customers
• Keeps already interested
consumers up-to-date on
product news, sales,
product releases
• Can target market based
on location, average
income, and other census-
derived information
• Building an email list of
interested customers can
take time
• Direct mail campaigns can be
expensive
• Results cannot be precisely
tracked
• Consumers often discard
physical and digital “junk
mail” without looking at it
Sales
Promotions
• Sales
• Limited-time
offers
• Coupons
• Free samples
• Rewards
programs
• Incentivizes buying and
encourages consumers to
take action
• Appeals to consumers’
desire to “get a deal”
• A good way to attract new
and reluctant buyers
• Reduces profits in exchange
for promotion
• The promise of future sales
and discounts can discourage
regular buying
Personal
Selling
• Sales
meetings
between a
salesperson
and a
potential
• Personalizes the
relationship between the
business and the
customer
• Effective salespeople can
convert reluctant parties
• Can be resource intensive
• Requires salespeople who are
well-trained and effective
• Consumers are turned off by
sales tactics they perceive as
aggressive
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