Tomicide Solutions, Feb 2018

What Is A Marketing Mix? (And Does Your IT Firm Really Need One?

By Tom "Bald Dog" Varjan


Do you know that in Alabama it's illegal to wear a fake moustache in church that may make the congregation burst out with laughter? After all, the sudden loud sound may also scare the local church mouse.

And it reminds me how you can end up at the poverty level of a church mouse if you don't pay due attention to regularly re-evaluating your marketing mix.

Yes, the famous group of product, price, place, promotion, physical evidence, people and process can have an earth-shattering impact on your business both ways.

If you do it right, it can raise your business to dizzying heights of elation. But if you make a pig's ear of it, it can hurl you into some of the most pestilential pits of entrepreneurial hell.

So, in this article, we dig a bit deeper into...

It may seem overwhelming first, but when we break it down to its components, you see it can be tamed quite nicely.

So, roll up your sleeves and let's see what we have here for today.

What Is This Marketing Mix All About?

The marketing mix is a set of strategies and tactics, that a company uses to take its products or services to the market to sell them and turn them into profits.

Originally, the marketing mix consisted of four Ps (Product, price, place and promotion), but over the years, three more Ps (Physical evidence, people and process) have snuck into the equation.

Some academics argue that politics should be included in the mix too, but the way I see it when you mix politics and commerce, you end up with big, bloated governments staffed with people who don't understand business, but now try to regulate it.

So, the best bet is to keep politics out of the marketing mix even though many big corporations operate more like political lobby groups than commercial entities.

Let's also consider that academics are employed by their governments, so no surprise here.

What that in mind...

What Makes The Marketing Mix So Important?

The marketing mix is an interdependent system.

It's like a laundry line. You pull on one sock at one end of the line and the bras, shirts and other bits and bobs at the other end start dancing.

The marketing mix is a significant part of the business plan, from which later the marketing plan is crafted.

The marketing mix is really a summary of what a business intends to do once it throws its hat into the ring. After all, marketing defines whether the business flies and becomes profitable or flops and dies a rather miserable death.

Let's look at an example...

Well, just think of buying a car.

The car has a certain buying mix.

If the buying mix is one side of the coin, expressed from the buyer's perspective, the marketing mix is the other of the same coin, expressed from the seller's perspective,

In the case of a car, the buying mix looks like this...

Similarly, the marketing mix is made up by several ingredients that present a product or service from the seller's perspective with a little difference.

While the buying mix is a list of self-serving wants and needs from the customer's standpoint, the marketing mix must address how to fulfil those wants and needs and make a profit doing it.

Naturally, clients don't give a hoot about sellers' profits.

The problem is when sellers are so eager to please their markets that they drop their prices on par or even under their costs. It means, the more they sell, the deeper in the hole they dig themselves.

Well, live by low price, die by low price.

I know some people say, Wal-Mart sells cheap products and still is the world's biggest retailer with gigantic gross revenue.

Yes, and some 73% of Wal-Mart's full-time employees are on income assistance because they would starve to death on their wages alone.

Not to mention the number of good vendors Wal-Mart has ruined over the years by demanding lower and lower prices from them.

Here is an outline of the marketing mix, and then later we go deeper into it.

IT Marketing Mix
Click on image to magnify it!

Note that both sides of the "buying coin" is client-based, but from slightly different perspectives.

The more clearly customers know what they want (clear buying mix), and the more clearly sellers can address that specific want in the marketing mix, the more likely that buyer and seller do business together.

When Should You Re-Evaluate Your Marketing Mix?

As most businesses run in quarterly cycles, it only makes sense to follow that cycle in your marketing mix too.

But there is one caveat. As we have already discussed the marketing mix is a collection of strategies and tactics.

With that in mind, feel free tweaking your tactics in any controlled way you want to, but stay away from your marketing strategy.

The reason is that direct response marketing tactics can be tested pretty quickly, so you know what works and what doesn't.

But marketing strategy needs a bit more time.

If your marketing strategy is to establish your firm as a respected authority to provide legal counsel to medium-sized construction companies, it would be unwise to change strategy after three months and start offering bookkeeping services to beekeepers.

So what sort of changes are we talking about here?

Let's see.

1. Product

Under product, the three areas to fiddle with...

By target market, I mean how accurately you can hone in on your buyer persona's expensive problems. I emphasise "expensive" because clients treat expensive problems differently.

When you show up at the Emergency Department with a paper cut, you get laughed out. But when you show up with a slashed carotid artery and blood is gushing all over the land, staff members know that unless they do something pretty promptly, you can quickly become an ex-patient, which could even mean a few years in the clink for them.

So, you want to emphasise those expensive problems whose wreaked havoc you can quantify for prospects and aid their decision-making.

By positioning, I mean how solidly your product resides in the minds of your target market. But don't get carried away. Don't compare your product to Coke or McDonald's. They've already spent several decades and several billion dollars to have their unhealthy garbage reside in people's minds. Besides, they use the kind of corporate marketing that is totally useless for SMBs.

You can get a better sense of positioning from the feedback you get from your clients, website visitors, newsletter subscribers, etc.

By packaging, I mean how attractively your products and services are packaged for your target market. If you have ever looked at an iPhone and a Samsung phone side-by-side, you know what I mean.

Even better. Go to your telephone store, like Best Buy or similar, and look inside the dumpsters at the back of the building. Among the many Samsung packaging, you won't find one single iPhone box. Yeah, people don't throw away Apple boxes.

2. Price

Price is an interesting animal. You should leave some aspects of prices alone, while you can freely fiddle with others.

Namely, you can play with the amount your charge, but leave your pricing methodology alone. Your pricing methodology is part of your business model, not just a tactical ingredient.

For instance, if you charge $250 per hour for your consulting services, you can raise it to $275 or $300 per hour (10-15% increase almost always goes unnoticed), but don't change your pricing model cold turkey by changing it to fixed pricing. That can be a major disaster, because pricing model change requires significant strategic changes in your business.

If you charge fixed prices, play with options for "good", "better" and "best" tiers. Offer relevant names for your options that are meaningful to your buyers.

If your buyer loves steak, offer options based tenderness

  1. High option: (super-tender): Tenderloin (Filet Mignon)

  2. Mid-High option: (tender): Sirloin

  3. Middle option: (Intermediate): Chuck

  4. Low option: (tough): Brisket

By the way, do you know that most artisan butchers, and I am one, would rather die than eat snob steak (tenderloin). It's just tasteless.

Anyhoo...

If she loves nice cars, offer options based on cars

  1. High option: Batmobile

  2. Middle option Popemobile

  3. Low option: Flintstone mobile

This is where, especially for information products, you can play with strange numbers. For instance, instead of $100, you can price a product to $97 or $99. Yes, you drop the price a bit, but your sales volume can go up significantly.

But don't do this with your services. Keep them roundish. Neither too round nor too non-round. When you estimate a project to be $70,000, in your proposal write either $69,700 or $71,500.

3. Place

This is the locations(s) where you sell. It really means how you offer your services. Do you work on your clients' sites or remotely? In most cases, it's a mix. In some cases, it's either this or that.

Again, don't introduce brand new type of locations like adding a retail outlet to an IT consulting operation, but feel free to add new locations of the same type.

4. Promotion

Promotion is the forms of marketing you use to get your message your target market.

Again, tweak your existing methods but without introducing new promotions. This is not the time to launch a brand-new YouTube channel or a podcast series. You can do that at the next strategic review.

But you can tweak the headline and copy in your already running Google Adwords ads or change headline and copy in your already running classified ad in your target market's trade magazine.

5. Physical Evidence

What evidence pieces do you use to reaffirm the quality of your products and services?

If you use audio testimonials, collect some more and better ones, but stay away from getting into video testimonials or other new non-existing evidence channels.

In your testimonials, make sure your clients talk both about the experience of what it was like working with you and the quantitative improvements in their businesses. These testimonials prove that you're both a pleasant business to work with and you make a positive impact on your clients' businesses.

6. People

Focusing on your current people, how can you help them to become even better at what they do? For now, let's forget about hiring more staff. First, let's optimise your existing people's performance.

The good news is that most people want to do a great job, and you can help them in several ways.

7. Process

After people, process is really the bee's knees.

You can have the world's best bookkeeper on board, but if you condemn her to using an abacus because you're too cheap to get proper accounting software, then you have a problem.

How effective and fault-proof are your processes to perform certain tasks in your business?

The good news is that you don't need to create new processes.

Sam Carpenter writes in Work the System: The Simple Mechanics of Making More and Working Less that in most cases the current system works but needs a little adjustment.

Look, just because your phone socket has got ripped out of the wall, you don't have to bulldoze the whole house to the ground and build a new one with a new phone socket. Just put the socket back to its place and Bob's your uncle. Your system is operational again.

So...

Annual, Strategic Evaluation Of Your Marketing Mix

After four quarters, on tactical level, we hope, everything is humming along as gracefully as a humming bird flies as peacefully hums the famous Ying Tong Song.

And now comes the annual revision, when you have to revise your strategies.

But what does strategy really mean in this context?

Using military lingo, after all, the word "strategos" originates from the military, this is the time when the good king realises that the neighbouring bad king tries to invade his kingdom.

For strategy, the invading army uses heavy bombers. To resist the attack and fight back the invaders, the good king's strategy is the use of tanks.

It's a clear mismatch of strategies. Tanks have no hope in hell to shoot the bombers that roam the sky at 20-30,000 feet.

Tactically the good king has tried everything, including cursing the enemy through megaphones, sending up voodoo dolls with balloons to mess with the bomber pilots' minds and even standing up the tanks vertically on their backs, so they can shoot in the general direction of the planes, but nothing has been successful.

The bombs keep falling. And the good king is running short both on tanks and tank crews. And he is as frustrated as a centipede trying to buy pants.

So, let's look at the individual elements of the strategic review.

1. Product

Well, let's use "Product" to stay with all the other Ps, but this is really the services you offer.

Just like in the tactical review, the three areas to fiddle with...

Target market: Do you want to continue serving your current target market or do you have a new one in mind? If you have a new market in mind, you have some extra work to do.

Positioning: Where do you want this product/service to be in your industry's pecking order? Positioning on the strategic level means that you want your offer take a big step up in your market's perception.

A form of strategic positioning was when Toyota came up with the idea for Lexus in 1989. Today, Lexus represents only 3% of Toyota's gross revenues, but over 60% of its net profits.

By contrast, IBM has missed out on a lot by selling its home computers under the same name as the mainframes.

Packaging: While in tactical packaging, you merely beautify the existing packaging, under strategic packaging, you can repackage your offer into an Apple-like package.

2. Price

This is the time when you can change your pricing model.

If you're repositioned your offer to a higher level, then you have to raise your price too.

If you charge hourly rates for your services, look into charging fixed fees or even value-based fees for them. Break the connection between your earning potential and the passage of time. After all, hourly pricing is nuts.

3. Place

Over the last 12 months you've collected more than enough data on how your places of business perform.

This is the time when, based on previous due diligence, you can set up a new place.

For instance, your website has been working well to generate sales leads, but you've never used it to sell. Maybe this is the time to try.

Just make sure your market research is solid, because it costs money to set up new places.

So you want to make sure you don't invest in place that you could have declared as a dud with a little research.

There is a bit of number crunching here, and I ask you to do it because by now as far as the new place that you have in mind is concerned, you've likely to have developed a pretty high level of Texas Tower Syndrome[1] and run the risk of going ahead with the new place on an emotional basis.

This way, you can use the numbers to either prove or refute the validity of the new place and act accordingly.

So, make sure whether or not you introduce a new place is a calculated and clear-headed decision not the result off some infatuation with some elements that the new place would involve, "We really have to sell online because I love web technology and want to learn PHP programming anyway". This is an idiotic excuse.

4. Promotion

Here you can implement big changes in your promotion methods.

For instance, if you use flat (letter in a normal #10 envelope) snail mail letters to generate leads, you can start experimenting with lumpy mail. This is also the time when you can make major changes in your message.

5. Physical Evidence

This is the time to up the ante on social proof on your product/service.

If you start promoting a new product, you need new and up-to-date social proof.

6. People

"People want to succeed. They want to do a good job. They don't like to turn out lousy work. If your people are consistently failing, it's not their fault - it's your system's fault." ~ W. Edwards Deming

I'd also add that if the system remains faulty, it's the business owner's fault.

This is the time to consider personnel changes in your business.

When it comes to staffing, Brian Tracy has a brilliant question in one of his books...

"If you knew what you now know about your people when you hired them, would you hire them?"

It seems, if they could start again, many business owners wouldn't hire the very people they have on the payroll.

We know from Pareto that 20% of the people generate 80% of the revenue.

Based on Derek J. de Solla Price's research, we also know that the square root of the number of employees produce 50% of the revenue.

One conclusion is that, for maximum effectiveness, you may want to work your people in four-person teams.

The magic number is four because the square root of four equals to 50% of four. If in a team of four, two people do 50% of the work, that means you can optimise the performance of the other two, until they do the other 50%.

Now you have a peak-performing team. Some other considerations...

Many business owners say they don't have so much time to spend with their people.

Then what do they have time for? Nuclear warfare or what?

The perverted notion is that business owners should focus on taking care of customers.

But we know from Richard Branson (Virgin Group), Tony Hsieh (Zappos) and many other successful business owners that business owners' #1 job is to take care of their people, so, in return, their people can and will take equally good care of their customers.

Fidelity Brokerage Services LLC. (Smithfield, RI, USA) reports (The Benefits of Building a Financially Savvy Workforce) that there is a close correlation between employees' financial savviness and their levels of drive perform better but not only at work but at home too.

The sad reality is that many people with impressive real estate- or self-managed investment portfolios are treated as financial idiots at work.

And since they get regularly beaten up by some twentysomething MBAs they just don't care.

We know that it's the people who can make the biggest difference to a business. But that sword cuts both ways. Respected and appreciated people make a positive difference to the business. Disrespected and unappreciated people make a negative difference.

The overall employee engagement level is pretty low.

According to Gallup's The Engaged Workplace, some 87% of the workforce is disengaged. These people show up like sleepwalkers on the job, so you can imagine how they treat your clients.

And we know from the ultimate wise man, Homer Simpson, that people don't kick up a fuss about being treated poorly. They just go in and merely pretend to work. In Homer's words, they do in a half-ass way.

In a 1997, organisational psychologist, Dr. Amy Wrzesniewski of Yale University School of Management, did an extensive study, and categorized employees into three groups.

Group #1 views work as a job. For these people the motto is, "Fair work for fair wage." They don't care about what they do. They do it because the money they receive pays the bills. There is no pride and fulfilment in the work. It's merely another chore like taking out the rubbish or mowing the lawn. It's just another necessary evil to kill time between weekends. Loyalty is non-existent. These people leave their companies for the smallest wage increase.

Group #2 views work as a career, but the main goal is still mere promotion and financial advancement. These people work because it gives them social status, prestige and title power. These are the people who love using their designations after their names. They also make significant investments in their careers and keep advancing their skills. But their work satisfaction still depends on promotions and other external conditions (motivation), while the internal conditions (inspiration) are missing. When promotion stops, they move on to the competition.

Group #3 views work as a higher calling. They do the work for the sake of work. These people don't have balance in their lives. They seamlessly blend life and work together. No, they're not workaholics. Workaholics are driven by external motivation not by internal inspiration. These are people who also have happy, healthy and fulfilling personal lives. These people do their work to serve a higher purpose, and in doing so they make their societies and the world a better place. Using Dr. Mihaly Csikszentmihalyi's definition, these people operate in flow, that is "being completely involved in an activity for its own sake. The ego falls away. Time flies. Every action, movement, and thought follows inevitably from the previous one, like playing jazz. Your whole being is involved, and you're using your skills to the utmost."

While you can find cheap people in Group #1, you're better off hiring people from group #3, and get the work done properly.

As the saying goes, your competitors can have exactly the same type of tools, offices, vehicles, loans, etc. as you do, but no one can have your people, their energy, enthusiasm and ambition.

Professional service firm expert, David Maister proved this beyond the shadow of a doubt in his 2001 book, Practice What You Preach: What Managers Must Do to Create a High Achievement Culture.

Business owners can either ignite or subdue people's energy, enthusiasm and ambition. Sadly, in most businesses, they subdue them.

And the better you treat your people and educate them, the longer they stay and the better they perform.

Again, many people say that ongoing employee training is expensive and they may leave after training.

Well, yes, they may leave after training.

But the bigger danger for your business is that they don't get the right training and stay.

Yes, it gives you the glorifying feeling that you're the genius in the company, but then comes the deflating feeling that you're surrounded by a legion of useless lazybones.

But you can't even complain because, as Navy SEAL Master Chief John James Urgayle (Viggo Mortensen's character) put it in the movie G.I Jane, "There are no bad teams only bad leaders".

Your team is just a reflection of you.

Everything your people do to your clients is merely a reflection of what you do to- and expect of them. Of course, there are exceptions, but those are people with various personality disorders.

So, as a business owner, focus on your people and let them do a great job for your clients.

Remember the wise words of someone whose names escapes me, "A man who wants to lead the orchestra must turn his back on the crowd."

So do business leaders.

7. Process

"If you can't describe what you are doing as a process, you don't know what you're doing." ~ W. Edwards Deming

Whatever business you're in, customer value is created when great people effectively use systems and processes.

What are the major systems in your business?

Something like...

  1. Management system

  2. Marketing system

  3. Financial systems

  4. Lead generation

  5. Lead conversion (sales)

  6. Value delivery

Every system has its subsystems. A great book to read on systems is Sam Carpenter's Work The System (free PDF copy and mp3 audio).

Why am I obsessed with systems?

Because we know from Deming that "94% of all business problems are system problems."

Many businesses make the mistake of laying off their receptionists and replace them with voice mail because they can save money.

What those firm leaders fail to realise is that while people are happy to call other people, they are not too keen on duking it out with ruthless voice mail machines with endless and hopeless option labyrinths.

Unlike voice mail systems, skilled receptionists can pre-qualify callers, so your people would know whether or not it's worth going to the next level with certain callers. All it takes is 4-6 qualifying questions, and she would know how to direct callers. Imagine that she could instantly disqualify dud callers, so they couldn't burden your subject matter experts.

How To Assemble Your Marketing Mix

To assemble your marketing mix, let's start with your goals for the next fiscal period.

Here are some questions to ask yourself...

Now lit all your products and services and list out…

  1. Target market in great detail.

  2. Products/services for this market segment

  3. Distribution channels in detail

  4. Price structures

  5. Promotional vehicles

    1. Advertising

      1. Online

        1. SEO

        2. PPC

        3. Directory listing


      2. Off-line

        1. Trade magazines

        2. Brochures

        3. Target market's trade journals


      3. Publicity

      4. Trade association

        1. Volunteering

        2. Advertising in association's newsletter


      5. Public relations

      6. Business publications - brochures, flyers

      7. Direct mail

      8. Content marketing

        1. White papers

        2. Case studies




  1. Content on own and other websites
  1. Personal selling

  2. Telemarketing
    1. Cold calling

    2. Follow up calling to previously sent letters


  3. Networking
    1. In your own industry

    2. In target market's industry


  4. Speeches
    1. Self-organized workshops, seminars

    2. Guest

And now create an action plan for each item you want to market in the next period. In your action plan, you specify...

Be SMART With Your Marketing Mix

This is the time you set goals for your marketing, so let's be SMART about it.

Specific: What exactly are you aiming at to achieve?

Measurable: What indicators do you want to use to measure your progress?

Achievable: Are you in control of taking most of the necessary actions to reach that goal? Note that there are always some factors that we can't control.

Realistic: Your goal must be stretch-realistic. It must require stretch of effort and higher level of commitment and dedication than before.

Time-bound: Milestones

A few words about stretch-realistic goals.

Before Roger Bannister ran the sub-4-minute mile on 6 May 1954 in Oxford, it had been considered as a pipedream.

Then he did it and his record was broken within 46 days.

The 4-minute mile went from a pipedream to a stretch-realistic goal, meaning that it was possible with hard work and outstanding dedication.

So, set your marketing goals to be bold but realistic.

Or as English poet and playwright, Robert Browning put it, "Ah, but a man's reach should exceed his grasp, or what's a heaven for?"

You can divide your goals up into three levels of achievement.

Gold Levels è

Timid

Lukewarm

Bold

Goal #1 by 31 Dec 2018

 

 

 

Goal #2 by 31 Dec 2018

 

 

 

Goal #3 by 31 Dec 2018

 

 

 

Goal #4 by 31 Dec 2018

 

 

 

Granted, you can't always reach a bold goal, but in the words of the famous advertising man, Leo Burnett, "When you reach for the stars you may not quite get one, but you won't come up with a handful of mud either."

And even if you reach a goal at the timid level, you can repeat the process in the next fiscal period.

You may be worried that some of your people don't want to work too hard at reaching goals.

It all depends how you present the goals to them.

But if you tell people that a percentage of the revenue goes into a pool to be shared, the dynamic changes.

Base the sharing on total performance and don't turn it into an individual reward.

You may worry about individual performance. Don't!

Your people know from experience which team members are not pulling their weight, and they will demand those people's removal from the team. So, just remove them promptly.

Remember, A-players don't like working with B or C-players. And if you delay B and C-players' removal, you're a-players will quit.

Brand Management

Branding is like teenage sex. More talked about than done.

Yes, many companies do it, but they often miss an important connection.

The connection between culture and brand.

A business has an inside reality and an outside perception.

The Inside reality of a business is its culture.

The outside perception is how the world outside the business perceives its culture.

The brand is this outside perception of the inside reality.

Businesses can fool the market for a while, but soon the true colours of those businesses come out and they're as doomed as a mouse at a gastronomy conference for cats.

So, if you want to improve your brand, start with your company's culture.

Famous brands are also famous for their cultures. See Southwest Airlines or the Ritz Carlton.

And some brands are notorious for the companies' poor cultures.

So, manage your brand from the inside out.

Some brand considerations

Depending on your special circumstances, not all the above criteria may apply to you. Or maybe even more. But most of these points are parts of the backbone of any business.

Conclusion

As you can see, revamping your marketing mix, especially on a strategic level, is a pretty big job.

That's why it's important to do it during quiet times.

In a way, every business is seasonal. Some more, some less, but every business's workload fluctuates.

Accountants are crazy busy just before tax returns are due. After that, they are less busy and have more time to work on their businesses.

And this is the period you should use.

We've all heard the phrase that small hinges can open big doors.

Well, this marketing mix review can be one of those small hinges that can open the floodgates to new business for you.

And if you need some help with it, just drop me an email.

In the meantime, don't sell harder. Market smarter and your business will be better off for it.

Attribution: "This article was written by Tom "Bald Dog" Varjan who helps privately held information technology companies to develop high leverage client acquisition systems and business development teams in order to sell their products and services to premium clients at premium fees and prices. Visit Tom's website at http://www.varjan.com.