Using the Marketing Mix
Overview
Using the Marketing Mix
Outcome: Using the Marketing Mix
What you’ll learn to do: explain how organizations use the marketing mix to market to their target customers
Now that we know what tools are available to create value, how can we use them most effectively? In this section we’ll cover a number of examples; later in the course we’ll discuss the role of the marketing mix in the planning process and in a range of specific applications.
As you begin to understand each of the individual components of the marketing mix, remember that none of the four Ps operates independently to create value for the customer. For instance, a higher price will create higher expectations for the quality of the product or service, and may demand a higher level of customer service in the distribution process. Heavy promotion of a product can create greater awareness of the value that is expected, increasing the importance of the product delivering value. The right mix of components supporting the value proposition becomes very important.
Learning Activities
The learning activities for this section include the following:
- Reading: Finding the Right Marketing Mix
- Case Study: Chobani
Licenses and Attributions
CC licensed content, Original
- Outcome: Using the Marketing Mix. Provided by: Lumen Learning. License: CC BY: Attribution
Reading: Finding the Right Marketing Mix
How does an organization determine the right marketing mix? The answer depends on the organization’s goals. Think of the marketing mix as a recipe that can be adjusted—through small adjustments or dramatic changes—to support broader company goals.
Decisions about the marketing-mix variables are interrelated. Each of the marketing mix variables must be coordinated with the other elements of the marketing program.
Consider, for a moment, the simple selection of hair shampoo. Let’s think about three different brands of shampoo and call them Discount, Upscale, and Premium. The table below shows some of the elements of the marketing mix that impact decisions by target customers.
| Discount | Upscale | Premium | |
|---|---|---|---|
| Product | Cleansing product, pleasant smell, low-cost packaging | Cleansing product, pleasant smell, attractive packaging | Cleansing product, pleasant smell created by named ingredients, premium packaging |
| Promotion | Few, if any, broad communications | National commercials show famous female “customers” with clean, bouncy hair | Differentiating features and ingredients highlighted (e.g., safe for colored hair), as well as an emphasis on the science behind the formula. Recommended by stylist in the salon. |
| Place | Distributed in grocery stores and drugstores | Distributed in grocery stores and drugstores | Distributed only in licensed salons |
| Price | Lowest price on the shelf | Highest price in the grocery store (8 times the prices of discount) | 3 to 5 times the price of Upscale |
A number of credible studies suggest that there is no difference in the effectiveness of Premium or Upscale shampoo compared with Discount shampoo, but the communication, distribution, and price are substantially different. Each product appeals to a very different target market. Do you buy your shampoo in a grocery store or a salon? Your answer is likely based on the marketing mix that has most influenced you.
An effective marketing mix centers on a target customer. Each element of the mix is evaluated and adjusted to provide unique value to the target customer. In our shampoo example, if the target market is affluent women who pay for expensive salon services, then reducing the price of a premium product might actually hurt sales, particularly if it leads stylists in salons to question the quality of the ingredients. Similarly, making the packaging more appealing for a discount product could have a negative impact if it increases the price even slightly or if it causes shoppers to visually confuse it with a more expensive product.
The goal with the marketing mix is to align marketing activities with the needs of the target customer.
Licenses and Attributions
CC licensed content, Original
- Finding the Right Mix. Provided by: Lumen Learning. License: CC BY: Attribution
CC licensed content, Shared previously
- Introducing Marketing. Authored by: John Burnett. Project: Global Textbook Project. License: CC BY: Attribution
- Vast Array of Hair Care Products. Authored by: Sea Turtle. Located at: https://www.flickr.com/photos/sea-turtle/3541657734/. License: CC BY-NC-ND: Attribution-NonCommercial-NoDerivatives
Case Study: Chobani
In 2005, Turkish immigrant Hamdi Ulukaya bought a yogurt plant from Kraft Foods in Johnston, New York. Ulukaya had a vision of a better product: the thick, rich yogurt he had enjoyed in Turkey but couldn’t find in the United States.
The Target Customer
Chobani started out making private-label regular yogurts for other large companies, but Ulukaya believed he could make a better yogurt than the competition. And, he had a good idea of the customers he wanted to target:
We aimed at people who never liked yogurt. We couldn’t blame them, because what was available was not what the rest of the world was eating.
Further, the company chose not to target only women, a favorite target segment for the U.S. yogurt industry. Ulukaya believed that both men and women would appreciate the fresh ingredients and high protein that Chobani offered.
The Chobani Product
The recipe for Chobani is thicker and creamier than regular yogurt, with twice the protein and none of the preservatives and artificial flavors found in conventional yogurt. What’s in the yogurt—five live and active cultures, including three probiotics—is as important as what’s not, and Chobani turned this competitive advantage into the yogurt’s slogan: “Nothing but Good.” Ulukaya described the philosophy behind the product:
We look at our yogurt as pure, healthy, simple, and something that you enjoy tasting. That is very, very important for us.1
The Chobani Place
Existing Greek yogurt lines were most often sold in expensive specialty stores. Ulukaya hoped to sell his yogurt brand to a wider customer base through mass-distribution channels of grocery store chains. After more than a year developing Chobani’s trademark taste, in October 2007 Chobani’s first shipment included five different flavors—blueberry, peach, strawberry, vanilla, and plain—which were sold to a single Long Island grocery store. From there the company expanded regionally and then nationally to grocery store chains. The demand for broader distribution was fueled by the promotion campaign.
The Chobani Promotion
Chobani worked to develop a two-way dialogue with happy customers.
We’re on all the major social media platforms. The growth of Chobani really started virally, where one person would try it, tell five friends who each told five friends, and it really became a brand people loved to discover on their own and tell other people about. In the online landscape, we just had really great success at being able to talk to our fans. I think one of the great things about our company is our relationship with consumers; it’s really a lot of fun to hear what they have to say and take it to heart.2 —Nicki Briggs, a registered dietitian and head of the company’s communications team
Ulakaya also became a darling of the business press, which was persuaded by his philosophy that anything is possible with hard work. He was a frequent guest on national investment news programs and speaker at business conferences.
The company capitalized on the healthy and ambitious aspects of its brand, and in 2012 Chobani became the official yogurt of the U.S. Olympic Team. As a sponsor, Chobani followed athletes from U.S. Olympic training centers to the London Olympic Games.
Since then Chobani has also visibly committed to supporting local farmers and strengthening economic growth in the communities where it is located, which contributes to its reputation as a healthy brand.
You can view the transcript for “Shepherd’s Gift” here (opens in new window).
The Chobani Price
When Chobani entered the market, prices for the traditional offerings in the market clustered around 65 cents per cup. Premium Greek yogurt cost $1.34 per cup. 3
Chobani priced its product at roughly $1 per cup. This decision was based on the expectation that the product would be successful. Ulakaya set the price assuming economies of scale—that the company would gain efficiencies as sales increased—instead of trying to recover the early costs. The price factored in the higher cost of premium ingredients, which also supported the product and promotion goals. 4
- https://www.sba.gov/offices/district/ny/syracuse/success-stories/chobani-selected-sbas-2012-national-entrepreneurial-success-year ↵
- http://usbusinessexecutive.com/food-drink/case-studies/chobani-yogurt-healthy-products-nourishing-growth ↵
- http://minnesota.cbslocal.com/2012/04/26/behind-the-hype-costs-and-benefits-of-greek-yogurt/ ↵
- http://www.businessinsider.com/the-success-story-of-chobani-yogurt-2013-5#ixzz3l6bHLWtN ↵
Licenses and Attributions
CC licensed content, Original
- Provided by: Lumen Learning. License: CC BY: Attribution
CC licensed content, Shared previously
- Chobani Unboxing 05. Authored by: Brad P.. Located at: https://www.flickr.com/photos/bpende/4349120979/. License: CC BY: Attribution
All rights reserved content
- Chobani founder turns centuries old Greek yogurt into billion dollar craze. Authored by: Dan Moseley. Located at: https://youtu.be/7TY6JxR15og. License: All Rights Reserved. License Terms: Standard YouTube license
- Shepherd's Gift. Provided by: Chobani. Located at: https://youtu.be/jjurtKY13bc. License: All Rights Reserved. License Terms: Standard YouTube license