This post involves a fictional company called It’s Popcorn Time! (IPT). IPT manufactures snacks and treats for the local Philadelphia area.
Once the market research has been done, it is time to move on to “The 4 P’s” of marketing ¬– product, price, promotion, and place. For the purposes of this document, it is assumed that the existing product mix will remain the same. Therefore, it is necessary to focus on the pricing, promotion, and distribution strategies to ensure a proper marketing mix for the selected target segment.
Developing a pricing strategy first requires an understanding of the pricing objectives the company is hoping to achieve. It is important that the pricing objective be clearly stated so that there is a definite understanding of the pricing policies. There are three kinds of pricing objectives. Profit-oriented objectives focus on increasing returns and maximizing profits. Sales-oriented objectives encourage sales growth and market share. Finally, status quo pricing objectives seek to meet the pricing of competitors (Perreault, Cannon, & McCarthy, 2008).
Since IPT already enjoys a large market share, it will focus on maximizing products via profit-oriented pricing policies. The initial pricing model will focus on a skimming price policy that seeks to sell the product to the top end of the target market. The initial pricing will be used as a list price from which discounts can be taken. This kind of flexible pricing can be used in sales promotions and frequent buyers clubs to encourage further market penetration (Perreault et al., 2008).
Promotion is based on several different promoting methods, which are blended together to form a promotional strategy. The four primary methods of promotion are personal selling, mass selling, publicity, and sales promotions. Personal selling involves using sales people to speak directly with consumers. This method is especially effective when targeted at businesses, wholesalers, and retailers. In the case of IPT, this method will be used with the businesses that resell gourmet snacks, as well as, large corporate customers who buy snacks in bulk for their employees or as gifts, This list includes both storefront retailers as well as catalog retailers both in print and online (Perreault et al., 2008).
Promoting to the non-business portions of the target market will require a blending of the remaining three promotion methods. Mass selling in the form of Mid-Atlantic regional advertising is slight expensive on a per-person basis. Consequently, advertising should be somewhat reserved in favor of publicity. Publicity is similar to advertising yet costs nothing at all. Publicity specialists try to get the attention of media without incurring any costs. This method is a bit trickier to use, but the potential rewards are great. Finally, sales promotions aimed at consumers will help bring in new customers, as well as, redirect existing customers to different products (Perreault et al., 2008).
The final “P” is place, or as it is more commonly referred to, distribution. In light of IPT’s target mix, the company will use both direct and indirect distribution channels. Direct distribution will handle delivering products to large corporate buyers. Since these consumers will generate less frequent orders, IPT’s own distribution systems should be able to handle them directly. Indirect distribution channels will be utilized to deliver products to retail storefronts and catalog retailers. These consumers require large orders over a diverse area. A distribution company that specializes in this form of distribution already has the equipment and processes necessary to facilitate this kind of distribution (Perreault et al., 2008).
The “4 P’s” of marketing – product, pricing, promotion, and place – are the final piece of the marketing strategy planning process. These “P’s” are also known as the marketing mix. Marketing managers use specific marketing mixes to target individual market segments.
Perreault, Jr., W. D., Cannon, J. P., & McCarthy, E. J. (2008). Essentials of marketing: A marketing strategy planning approach, 11th ed. New York: McGraw-Hill Irwin.