Slack reached $4 billion in revenue in under four years with a laser focus on its product, barely advertising at all.
Chick-fil-A has risen to the top of its industry with an extreme focus on location.
Starbucks’ pricing enables growth even though it’s hard to believe the company can still expand.
And there’s no contesting the role of Lego’s promotion strategy in reversing its decline to become the world’s most valuable toy brand.
These examples underscore the importance of marketing mix in the development of marketing strategies. All of your marketing activities must be aligned to support your marketing objectives. But the importance of marketing mix extends beyond that. By examining the mix, you may identify a lever — a single standout element — that will fuel your growth.
What Is Marketing Mix?
Marketing mix refers to the combination of elements that shape how a business delivers value to its customers. These elements are called the 7Ps: Product, Price, Promotion, Place, People, Process, and Physical evidence.
The concept was originally introduced in 1960 as the 4Ps: Product, Price, Promotion, and Place. But as the marketing landscape evolved, the 4Ps expanded to 7Ps, adding People, Process, and Physical Evidence to the mix. It’s thought that the additional elements better address modern competitive environments affected by the rise of technology and the changes in how people communicate.
The Importance of Each Element of the Marketing Mix in Fueling Growth
The importance of marketing mix in achieving business objectives cannot be overstated. As we mentioned, you must make sure each element of the marketing mix works with the others to support your objectives. For example, you need to support a premium product with premium pricing and location, and your promotion must communicate that value. When even one element is “off,” you may find yourself handicapped.
Some companies with standout growth are experiencing the effects of leveraging individual elements of the marketing mix. One element can even help elevate the others, as we’ll see in some of these examples.
1. Slack doubled down on “product” to grow to $4 billion in under four years.
“Product” refers to the goods or services that you offer and how they meet your customers’ needs and desires. This extends to quality, warranties, packaging, features, variety of products or service levels, and so on.
Product-led-growth is a go-to-market strategy currently popular in the startup world. The basic idea is to put the user experience at the forefront of every aspect of strategy to create a product that satisfies users more than any other solution. Instant-messaging platform Slack famously used product-led growth to reach $4 billion in revenue in under four years.
Rather than relying on marketing or sales, this growth strategy expects word of mouth to take care of the “promotion” element of the marketing mix. And that’s how it played out for Slack: they achieved growth without a sales team or elaborate marketing, relying on users to spread the word.
2. Starbucks uses “price” to maximize profitability.
“Price” is how much customers pay — or are willing to pay — for your product or service. It encompasses factors such as payment methods, financing/credit terms, discounts, price-matching, referral bonuses, affiliate payments, loyalty discounts, free trials, subscription options, etc.
To make your business viable, your price must lead to a profit. In fact, the price element offers a seemingly straightforward way to fuel growth, since even a 1% increase in price can increase profits 11%, on average. Yet many companies still fail to price their product optimally.
Not Starbucks, though. Its approach to pricing gives us an insightful look into how the company continues to grow and operate profitably. Knowing that its customers are not price-sensitive lets Starbucks increase prices in tiny increments. This means the company can continually move its pricing upward, toward the highest amount customers are willing to pay, without causing them to stop buying.
3. Lego became the world’s most valuable toy brand with “Promotion.“
“Promotion” refers to the way you communicate with potential customers. It includes what you say, who you say it to, what channels you use to reach them, and how often you do it. Activities in the promotional mix fall within advertising, PR, direct marketing, and personal selling and can encompass search engine marketing, social media, billboards and signage, print advertising, and much more.
Promotion plays a significant part in growth because it makes it possible for potential customers to hear about you. For Lego, it meant a spectacular turnaround from deficits and layoffs, becoming the “world’s most valuable toy brand,” valued at $7.57 billion.
The company had been facing decline until it turned to branded entertainment to connect with customers. It created movies in partnership with franchises like Star Wars and Batman, and it created a YouTube channel that became one of YouTube’s most popular, with 5 million subscribers. It also encouraged user-generated content within its Lego Life online community and on YouTube, allowing its own customers to market its products. Large brands may consider embracing promotion via its users a risky move, but it paid off for Lego.
4. Chick-fil-A uses “Place” to sell more than any other restaurant chain.
“Place“ is where and how a company will make its products available to its customers. It includes the channels a company uses to sell its products, such as local stores, ecommerce websites, personal networks, direct sales, affiliates, and so on. It also includes logistics such as distribution centers, product transport, and warehouses and inventory.
Despite the fact that Chick-fil-A has fewer locations than competitors and only operates six days a week, the chain has become the third-largest restaurant chain in America. Some experts think that is because of Chick-fil-A’s great focus on selecting locations for new stores. It has invested heavily in location technology to help it evaluate sites, looking at psychographic and demographic data to determine potential. It also supports local communities by taking great care that its locations do not put individual store owners in competition with each other.
5. Bonjoro Focused on “People” to become one of the fastest-growing apps.
The “People” component of the marketing mix encompasses everyone who is on your team. This includes managers, customer service reps, product engineers, production workers, salespeople, and support staff. It also includes the hierarchy of relationships at an organization, which is meant to help employees get things done efficiently and work together smoothly.
Bonjoro, a video-sharing tool, has become one of the fastest-growing apps on Zapier, very likely because of its focus on people. The company capitalizes on the people surrounding its brand to communicate what the product does and why it’s useful. It features its own staff — and its customers — in all its videos. The CEO even appears in videos on its site wearing the company’s mascot costume. This focus on people can help a brand connect with its audience on a more intimate, personal level.
6. Zara’s unique feedback “Process” lets it launch designs ahead of other clothing retailers.
“Process” in the marketing mix refers to the flow that a company uses to deliver its product or service to the customer. This includes the logistics involved in building and marketing a product, from R&D through to the final production line. It can also extend to how the marketing team works together to create campaigns.
Thanks to automation and advanced technology, companies can take advantage of software and tools to create a competitive advantage stemming from processes. Improving processes helps businesses improve productivity to increase profits. It can also increase a company’s speed to market, giving it first-mover advantage.
Take, for example, how retail fashion giant Zara gets new clothing designs into its stores quickly. The company has built its innovation process around customer feedback, using its stores to gather input and then communicate it to its designers. This streamlined approach lets its designers quickly incorporate new designs, so the company can fill its shelves with the latest trends before its competitors do.
The customer-feedback process has meant more than just speed for Zara. It has reduced the company’s reliance on promotion. Though the company spends very little on advertising — just 0.3% of sales — it has built an avid following, thanks to involving fans in the innovation process. The company boasts over 30 million Instagram followers and 28 million Facebook fans.
7. By Chloe, the restaurant, raised $31 million in funding as it tapped into a new trend in “Physical Evidence.”
“Physical evidence” includes tangible items that a customer can see or touch, like documentation, receipts, product reviews, demos, packaging, your website, and other materials that provide information about your brand. It functions as proof for the customer that the company or product lives up to its promises.
For a restaurant, the components that make up ambiance or dining atmosphere can function as physical evidence: the colors and decor, menu designs, even staff uniforms. While these things have always been important to restaurants, some new operators are blazing the way with a bold new angle on physical evidence that, until recently, no one thought to incorporate.
New vegan fast-food chain By Chloe, which raised $31 million to expand its concept, is optimizing the physical evidence it provides patrons to grow a thriving audience. The tangible aspects of its unique dining experience — bright colors, modern interior design, and visually appealing menu — are suited perfectly for the sort of tantalizing photos that are popular on Instagram. The Instagram hashtag #bychloe has been used over 30,000 times. This sort of viral exposure can capture new customers and help reduce the need for company-led promotion.
The benefits of marketing mix elements that emerge as fundamental to a company’s growth can spill over into the other elements. We saw this in Slack’s relentless focus on its product, which also provided the vehicle for its promotion. We can say the same for By Chloe’s strategy, which uses physical evidence to fuel promotion, for example.
Importance of Marketing Mix: 7Ps in Your Growth Strategy
The benefits of a marketing mix analysis can make all the difference when it comes to growing your business. With the marketing mix model on hand, you can start to think of ways to apply the 7Ps. Consider each element — product, price, place, promotion, people, processes, and physical evidence — and how your firm approaches each. What about how your competitors approach them? Can you spot opportunities to apply any of the 7Ps differently to capture a competitive advantage?