Rejuvenating the Marketing Mix https://hbr.

org/1985/09/rejuvenating-the-marketing-mix

Marketing

Rejuvenating the Marketing

Mix
by Benson P. Shapiro

From the Magazine (September 1985)

The marketing mix concept is an essential part of marketing

theory. But describing the concept and putting it to effective use
are two different things. In this article, the author reviews the
elements of the marketing mix and lends insight into how these
elements interact. Applying such ideas as consistency,
integration, and leverage, he demonstrates how a marketing
program must fit the needs of the marketplace, the skills of the
company, and the vagaries of the competition. To meet such
disparate demands, the elements of the marketing mix must
(among other attributes) make the most effective use of company
strengths, take aim at precisely defined segments, and protect the
company from competitive threats.

The marketing mix concept is one of the most powerful ever

developed for executives. Since just after World War I, it has been
the essential organizing theme of many MBA marketing courses.
It is now the main organizing concept for countless corporate
marketing plans as well as for most marketing textbooks and
many courses and executive education programs. It has endured
because it is both effective and simple.

Now there are several ways to add even more strength to the
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concept while maintaining its simplicity. This article examines

the marketing mix as an integrated whole, presents criteria for
explaining why some programs prosper and others fail, and can
help improve your ability to predict which programs will succeed
and which will not. It then restates some of the more important
themes behind the marketing mix concept and suggests several
ways to add more power to it.

First, though, a review of the basic marketing mix concept is in

order. The marketing mix is the “tool kit” that marketers use to do
their job. It consists of four elements:

1. Product (or product policy)

2. Pricing

3. Communication (the most visible element of the mix, which

includes advertising and personal selling)

4. Distribution

The marketing mix gives executives a way to ensure that all

elements of their program are considered in a simple yet
disciplined fashion. One can describe the essence of almost any
marketing strategy by presenting the target market segment and
the elements of the mix in brief form. IBM’s personal computer
strategy might, for example, be described as follows:

Target market segment. Managers and professionals (not

hobbyists or technical specialists).

Product. Parity technology, fairly easy to use.

Price. Reasonable (not high enough to provide an umbrella for

competition but high enough to yield healthy profits for IBM).

Communication. Personal sales to large customers through IBM’s

powerful sales force; heavy advertising stressing friendliness and
broad applicability of the product.
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Distribution. Directly through the sales force to major customers;

mainly through independent full-service dealers to smaller
customers.

Most companies would benefit from the discipline of a similar

description of their marketing strategy’s core. It helps ensure that
the plan is clear and that the details do not obscure the strategy.

A few examples will quickly make apparent the wide variety of

marketing approaches available. A big difference exists between
the marketing approaches of companies that sell toothpaste and
those that sell huge coal-fed boilers for electric generation. Such a
difference is, of course, natural and to be expected. Toothpaste
costs little, and companies can sell it in small quantities to many
consumers for whom it is more than a trivial but less than a major
purchase decision. Coal-fed boilers cost tens of millions of dollars
and few people buy them; producers sell them to companies
where many people labor over the choice of a unit for a long time.

More surprising are the variations among marketers of the same

product categories. Cosmetics, for example, are sold in many
different ways. Avon has a sales force of several hundred
thousand who call directly on individual consumers. Charles of
the Ritz and Estee Lauder use selective distribution through
department stores. Cover Girl and Del Laboratories emphasize
chain drugstores and other mass merchandisers. Cover Girl does a
great deal of advertising, while Del emphasizes personal selling
and promotions. Redken sells through beauticians. Revlon’s
strategy encompasses a wide variety of brands and selling
approaches.

These variations are more than anomalies. They represent

fundamental strategies in the war for a distinctive, comparative
advantage and competitive success.

Interaction Within the Mix

The marketing mix concept emphasizes the fit of the various

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pieces and the quality and size of their interaction. There are
three degrees of interaction. The least demanding is
“consistency”—a logical and useful fit between two or more
elements. It would seem generally inconsistent, for example, to
sell a high-quality product through a low-quality retailer. It can be
done, but the consumer must understand the reason for the
inconsistency and respond favorably to it. Even more difficult is
maintaining such an apparent inconsistency for a long time.

The second level of positive relationship among elements of the

mix is “integration.” While consistency is a coherent fit,
integration is an active, harmonious interaction among the
elements of the mix. For example, heavy advertising is sometimes
harmonious with a high selling price because the added margin
from the premium price pays for the advertising and the heavy
advertising creates the brand differentiation that justifies the high
price. National brands of consumer package goods such as Tide
laundry detergent, Campbell soup, and Colgate toothpaste use
this approach. This does not mean, however, that heavy
advertising and high product pricing are always harmonious.

The third—and most sophisticated—form of relationship is

“leverage,” whereby each element is used to the best advantage in
support of the total mix. The sales response curve helps answer
this question (see Exhibit I). In its simplest form, the curve shows
the relationship between sales, usually measured in units but
sometimes in dollars, and a marketing input measured in either
physical or financial terms.

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Exhibit I The Sales Response Curve

The relationship between advertising expenditures and sales is

shown in Exhibit I. This relationship can often be represented by
a mathematical formula or by a chart listing unit sales and
advertising expenditures. But the graphical representation of the
sales response curve is more meaningful to most people.

Sales response curves enable a marketer to study the relationship

between a given level of expenditure of one or more marketing
variables and the likely level of sales. More powerful, however, is
the ability to look at the changes in sales related to changes in
expenditure level. Exhibit I, for example, implies that as
advertising expenditures increase, they have little impact
initially, then a great deal of impact, and, finally, little impact
again from additional expenditures. In the same way, the
marketer can understand the dynamics of the relationships and
interactions of two elements in a three-dimensional graph.

It would not be sensible to invest additional advertising dollars in

the flat part of the curve (upper end) to generate sales, but rather
to invest dollars in other elements of the mix. Products with heavy
advertising would then benefit more from improved distribution
than from an overkill of advertising.

I now go beyond the relationships of the elements of the mix with

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one another to consider the relationship of the total program with

the market, the company, and the competition.

Program-Market Fit

Product policy discussions both in business schools and in real

life invariably put great emphasis on the product-market fit. An
important question in new product development, for example, is
whether the product concept fits market needs. Some years ago,
when J.M. Smucker considered the introduction of a thick catsup
in a wide-mouthed jar, the company’s executives agonized over
whether consumers would respond positively to the new concept.
When Loctite Corporation introduced the Bond-A-Matic 2000, a
dispenser for its industrial adhesive line, a serious concern was
how the dispenser would fit into the prospective customer’s
manufacturing operation. Managers can expand the concept of
product-market fit to encompass the relationship between the
total program and the market. The idea is to develop a program
that fits well the needs of the target market segments the
company is exploiting.

Such a program builds logically on consistency, integration, and

leverage. To leverage you use the most efficient tools for the
market segment being emphasized. (Efficiency, in this sense,
relates to the engineering concept of output per unit of input.
Thus we might look at unit sales generated per dollar of
advertising or personal selling to determine which was more
efficient, or what combination of the two was most efficient.) It is
probably best to approach the price-sensitive, brand-insensitive
consumer, for example, with price promotions instead of
expensive advertising programs or elaborate packaging.

One of the first steps in marketing-program development is to

completely, carefully, and explicitly delineate the market. One of
the last steps before launching a program is to review the impact
of each element and of the total mix on the target consumers. The
review should include tests for consistency, integration, and

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leverage.

Program-Company Fit

A good program-market fit and a consistent, integrated, and

leveraged program are not enough for success. The program must
fit the company. Just as each individual has certain strengths and
weaknesses, so do organizations.

A marketing program must be symbiotic with the company or

operating unit implementing the program. A marketing
organization with extensive mass advertising experience and
expertise, for instance, is more likely to be able to carry out a
program that depends heavily on advertising than an
organization with less strength in that area.

Over time, these behaviorial or cultural attributes can change. But

the rate of change is limited. It usually takes quite a long time for
a company to develop a strength in advertising if it has little
understanding of the field. For example, it is not easy for novices
to identify and hire advertising experts from other companies.
Such an approach takes time and, often, several trial-and-error
cycles. Sometimes the beginners hire the wrong people; even
when they hire the right people, the newcomers they select are
often so alien to the culture of the company that the “transplant”
is “rejected.” One executive usually cannot change a whole
culture, particularly in a large organization. Over time, strong
leaders can change the culture, but not with ease and great speed.
Thus the behavioral fit between the program and the company
must be carefully considered.

The marketing program must fit the company’s overall

capabilities as well. A price-oriented strategy works well in a
company that stresses efficient manufacturing and distribution
along with administrative austerity. An account-oriented
marketing program is much more likely to thrive in a customer-
oriented culture that has responsive operating and logistics
people than in a manufacturing-oriented culture that stresses
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efficiency to the detriment of customer service. The large plant

geared to long production runs is well suited to a strategy of a
narrow product line with intense price orientation. And the
company with a strong balance sheet and low cost of capital can
much more easily provide generous credit terms than can a
financially limited competitor.

Market position can also help to determine the most sensible

marketing program. The market share leader, for example, gains
when it encourages competition on a fixed-cost basis via elements
like national advertising, company-owned distribution, or heavy
research and development. Its position enables it to spread the
costs over a large volume, reducing its cost per unit sold far below
that of smaller competitors. Anheuser-Busch, for example, spends
less on advertising per barrel of beer sold than its major
competitors because it spreads its huge advertising budget over
many more units than do its smaller competitors.

Small unit-share competitors or niche marketers, on the other

hand, should emphasize marketing programs that stress variable
costs so that their cost-per-unit-sold is equal to that of their
largest competitors. Thus small companies often stress intensive
price promotions, a commission sales force, and independent
distributors.

The consumer’s or distributor’s image of the company can also

have a big impact on program-company fit. In the early 1980s,
Levi Strauss & Company introduced a line of men’s suits in which
the jacket, vest, and pants were displayed and sold separately in
department and specialty stores. The product line included
matched items meant to look like a tailored suit. Although the
concept met success for some competitors, it failed for Levi
Strauss because the stores and the target consumers viewed the
company not as a credible source of “suits,” but as a jeans and
sportswear manufacturer.

Executives cannot develop or review a program in isolation; they

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can assess it only in relation to the company using it.

Competitor-Program Fit

How should the program deal with competition? Your company’s

program should be such that it builds well on your strengths and
avoids stressing your weaknesses, all the while protecting you
from the competition. Your company derives strength from a
program that evades your competitors’ strengths, capitalizes on
their weaknesses, and in total builds a unique market personality
and position.

Accomplishing this set of related tasks requires meticulous

analysis and honest introspection. Perhaps the most serious
danger, other than neglecting the competitor-program fit
altogether, is to underestimate the competition’s strengths. Don’t
be too proud or too uninformed to see your competition’s good
points and your own company’s weaknesses.

Too many companies display their disregard for the competition

when they wonder, particularly about market leaders, “Why can’t
we emulate them?” The answer is twofold. First, the strengths of
the leading competitor are almost certainly so distinctive that any
attempt at imitation would fall short of the mark. Second, the
current leading competitor in all likelihood took command when
the market was quite different—when a leading competitor with
similar strengths and capabilities did not exist. Thus, in a sense,
the leader expanded into a “vacuum” that no longer exists.
Companies that blindly attempt to imitate the leader usually fall,
often very painfully.

Companies compete with one another by emphasizing different

elements of the marketing mix and by using different mixtures of
those elements. The competitive response or reaction matrix is a
useful table for visualizing the alternative action-reaction
pattern.1 A simple matrix might include two companies and three
sub-elements of the marketing mix such as price, product quality,
and advertising (see Exhibit II).
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Exhibit II Comparative Response Matrix

The vertical columns represent action taken by our company,

Company A. We might, for example, cut price (left-hand column),
increase quality, or increase advertising. The reactions of
Company B, our competitor, are represented by the horizontal
rows. The coefficients (numbers indicated by the “Cs” in the
matrix) represent the probability of Company B responding to
Company A’s move. The subscript “p” is for price, “q” for quality,
and “a” for advertising; the first subscript is Company A’s action
and the second is Company B’s response. The coefficient Ca,p
(upper right-hand corner), then, represents the probability of
Company B responding to Company A’s increase in advertising
(right-hand column of the matrix) with a price cut (top row of the
matrix). The diagonal (Cp,p, Cq,q, Ca,a) represents the likelihood of
Company B responding to a move by Company A with the same
marketing tool (by, say, meeting a price cut with a price cut). We
can estimate the coefficients by studying past behavior and/or by
seeking management’s judgment. The coefficients must, of
course, add to a total probability of one (or 100%).

Once we have developed the matrix, we can review each of our

potential marketing actions, here, for example, with regard to
price, quality, and advertising in light of probable competitor
response. If we expect that there is a 70% chance that the
competitor will meet our price cut but only a 20% chance that it
will meet a quality increase, we might reason that a quality
increase helps us to develop a more unique marketing approach

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than the price cut, which is more likely to be imitated. We can also
continue our disciplined conjecture by asking how we (Company
A) should respond to the competition’s (Company B’s) most likely
reaction to each of our actions. If we cut price, and it is 70% likely
to meet our new price, what should we plan to do when it does
meet our new price?

The competitive response matrix is a flexible analytical approach.

One can add more columns representing many marketing tools,
add more rows for delayed responses (for example, will the
competition cut price immediately, in a month, in a quarter?), and
add rows for additional competitors. The discipline of the
approach is exceedingly valuable.

The competitive response matrix is useful in helping to develop a

distinctive approach to the market. It enables a competitor to
understand more easily how it can differentiate itself from the
marketing programs of other competitors.

Formal competitive analysis programs are particularly important

for making large capital commitments. The essence of these
programs is to play the role of the competitor or of a group of
major competitors. Some companies even go so far as to have
their own executives play competitive games built around their
industry, with one or several company executives representing
each competitor. The response matrix can be incorporated into
these elaborate, formal approaches.

The Expanded Mix

Like most concepts, the marketing mix is an abstraction from

reality. And real marketing programs don’t always fit the product,
price, communication, and distribution paradigm perfectly. For
instance, several aspects of the total mix really involve
combinations of the four basic elements. These combinations
include:

• Promotion
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• Brand

• Terms and conditions

Strictly defined, “promotion” includes short-term price cuts to the

trade and consumer incentives like coupons, contests, and price
allowances; it involves price and communication. In many
industries and companies, trade and consumer promotion
account for a larger share of the budget than advertising or
personal selling. There is certainly no need to expend much effort
trying to categorize consumer promotion as price or
communication. The important thing to note is that it is useful
and fits into the mix.

Often viewed as part of the product, “brand” is also part of

communication. In fact, it can serve as a useful, integrative force
to bring product policy and communication closer together.

“Terms and conditions” relate to a myriad of elements of a

contractual nature that are closely related to price (payment
terms, credit, leasing, delivery schedules, and so on). But they are
so close to personal selling that I think they should be viewed as
an interface between price and communication. Elements like
service support and logistical arrangements also approach
product policy. The important thing is not necessarily to
categorize these issues but to consider them as marketing tools.

In conclusion, I suggest you use the marketing mix concept to

answer the following questions:

Are the elements consistent with one another?

Beyond being consistent, do they add up to form a harmonious,

integrated whole?

Is each element being given its best leverage?

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Are the target market segments precisely and explicitly defined?2

Does the total program, as well as each element, meet the needs of
the precisely defined target market segment?

Does the marketing mix build on the organization’s cultural and

tangible strengths, and does it imply a program to correct
weaknesses, if any?

Does the marketing mix create a distinctive personality in the

competitive marketplace and protect the company from the most
obvious competitive threats?

Use these questions to help focus on the most important aspects

of the marketing mix and its fit.

1. Jean Jacques Lambin, in Advertising, Competition and Market

Conduct in Oligopoly Over Time (Amsterdam: North Holland
Publishing, 1976), describes the approach in great depth. I am
indebted to my colleague, Robert J. Dolan, for introducing me to
it.

2. See my article with Thomas V. Bonoma, “How to Segment

Industrial Markets,” HBR May–June 1984, p. 104, and our book,
Segmenting the isIndustrial
Benson P. Shapiro the MalcolmMarket (Lexington, Mass.: Lexington
P. McNair
Professor of Marketing, Emeritus, at Harvard
Books, 1983), which explains that marketing segments can be
Business School in Boston. He is the author of
defined
numerousby such
books and attributes beyond customer demographics as
HBR articles.
urgency of need or personality type.

A version of this article appeared in the September 1985 issue of Harvard

Business
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