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The marketing mix has been the core of marketing theory and practice since the 1960s (Lehtinen, 2011). The marketing mix represents the controllable elements of marketing which collectively form the ground of an organization in the perception of customers(Judd, 2003). In the 1960s, McCarthy diminished Borden’s twelve controllable marketing elements to a four-element framework: product, price, place and promotion(Constantnides, 2006). Since the marketing mix and 4Ps entered the marketing textbooks, they have been treated as the unchallenged basic model of marketing and been universally accepted(Lehtinen, 2011).
With the development of marketing management and the business environment, great changes have taken place in mainstream marketing(Grönroos, 1994). Are the marketing mix and its 4Ps still in power? Does the marketing mix contribute to the success of an organization and how does it perform in the long-term development of the organization? The purpose of this essay is to analyze how the marketing mix contributes to the organization by taking innocent as an example, and to identify the limitations of the marketing mix as a marketing management tool in the long-term development of a company.
The debate over the marketing mix as a marketing management tool has been primarily argued theoretically rather than on an empirical level (Constantnides, 2006). While the marketing mix still has its stage, for long-term success, relationship management is the key to stable development in the dynamic business environment(Wahab and Ali, 2010). When involved with modern business trends, customer-oriented economics needs a relationship-oriented approach to marketing(Grönroos, 1994).
The marketing mix and the success of innocent
Innocent was set up by three young Cambridge students in 1998 as the UK’s only range of natural smoothies(Brown and Grayson, 2008, p.3). In just four years, the turnover rose from £0 to £10.6 million(Anonymous, 2004, p.6). Sales boosted to £80 million in 2006 and roared over £100 million in 2007(Brown and Grayson, 2008, p.3). The rapid increase in profit made innocent a huge success within the first five years (1999-2003). In the next five years (2004-2008), the expansion was a huge success in the middle of Europe(Innocentdrinks, 2012). How does the marketing mix contribute to the development of the organization in the following four aspects: product, price, place and promotion?
Keeping introducing new products successfully or services into the market is important to the long-term growth of a company (Tzokas et al., 2004). The first pallet of smoothies (250ml), labeled “innocent”, was introduced to the public in 1999, when the market for pre-packaged smoothies was still new(Brown and Grayson, 2008, p.5). In the first stage, little effort was made in introducing new products, but the company has constantly launched new flavors and formats to enhance brand awareness(Anonymous, 2004). In the year 2003, the company launched four new recipes for the existing ranges, a range of two super smoothies and three more flavors of a brand new range called Juicy Waters(Anonymous, 2004, p.7). New categories of products were introduced to the market in the second stage, especially the veg pots in 2008 and fruit tubs in 2009(Innocentdrinks, 2012). From 1999 to 2003, innocent focused on extending its existing smoothie product range rather than develop completely new categories such as cream or yogurt. Innocent’s sales benefited from new product development(Baxter, 2010). To some extent, profits can be increased by filling the existed product line(Kotler et al., 2005).
The 250ml bottle of smoothies was priced £1.89 when first introduced to the market(Brown and Grayson, 2008, p.4). Their main competitor PJs, UK’s biggest smoothies company then, was doing well in the high priced product section and growing very rapidly (Brown and Grayson, 2008). Innocent focusd on being an ethical company, producing green products(Salisbury, 2011), which contributes to its financial performance because potential consumers are willing to pay more for an ethical product, especially manufactured by a company with strong sense of sustainability and social conscience(Anonymous, 2004). On one hand, a company can charge its customers for the value-added factor in the prices (Lancioni, 2005). On the other hand, consumers may consider high price as a guarantee of quality (Huang and Sarigöllü, 2012). Sharma and Lyer(2012) demonstrated that there exists of a segment of consumers who would pay a premium for an ethical product.
Distribution network plays an important role between the marketing and supply chain interface(Chan et al., 2012). The industry pays more attention to coordination between retailers and suppliers, and a demand chain is preferred to a supply chain(Burt and Sparks, 2003). Research into distribution costs led to the decision that the sales effort should focus on London-based independents channels for the introduction stage, with a movement to multiples later(Brown and Grayson, 2008, p.4). The comparatively higher price of innocent tallied with the high living expense in London, and the place in marketing interacted with the brand image(Dhamija et al., 2011). The distribution infrustration, including the selling network and transportation system, has a close connection with the economic performance(Wilkie and Moore, 1999). Innocent’s London center set a good starting point for further economic development, as well as for its global expansion. Besides, due to the short shelf life feature, innocent innovated new ways of distribution to overcome this challenge: let the retailers dominant the order amount(Anonymous, 2004). Changing power relationships in the channels, from the organizations to the retailers, is a growing trend in the distribution perspective(Burt and Davies, 2010). By transferring the power to retailers, innocent reduced the wastage of products, which solved the thorny problem in fruit drinks and smoothies.
Promotional activity is an essential tool for tempting British consumers to purchase fruit juice, juice drinks and smoothies(Price, 2012). Like many small businesses in their early stage, many of Innocent’s most successful promotional activities started as one-off, opportunistic events (Brown and Grayson, 2008). These included putting woolen hats on the bottle in winter, the famous campaign called The Big Knit. 2012 takes the tenth year turn for Innocent to run this promotion(Innocentdrinks, 2012). Unlike many brands, relying on traditional advertisements, such as TV commercials, posters, POP, innocent mainly focused on low-cost activities and event promotion to increase the brand awareness, the Fruitstock, its famous annual summer jazz festival held in London, replaced in 2007 with the Innocent Village Fete, is an example(Brown and Grayson, 2008, p.7).
These promotion activities link to innocent’s brand equity: sustainable. The brand equity helped to define the brand value in the beginning stage, and then shaped the sustainability strategy the company adopted (Brown and Grayson, 2008). Besides, the consistency and coherence in brand image, product descriptions and promotion availability played a vital role in the whole process(Edelman, 2010).
The limitations of the marketing mix in the long-term development of an organization
From a marketing management point of view, the 4Ps may have been helpful at one time, at least for the packaged goods(Grönroos, 1994). However, the marketing mix and its 4Ps cannot satisfy a market-oriented or customer-oriented definition of marketing(Grönroos, 1989). Kotler (1992, cited in Lehtinen, 2011) stated that “companies must move from a short-term transaction-oriented goal to a long-term relationship-building goal.” For innocent, the marketing mix did have its advantage in the introductory marketing, but people-power and the relationship marketing approach also play an active role in its marketing strategy, especially for the development in the secondary stage and long-term success.(Gordon, 2012).
It is widely accepted that people is an essential element of the mix ingredients(Baker, 2008). “People” as the fifth “p” formalizes the idea that the power of customer-oriented employees does make a difference in the market (Judd, 1987). Staff can help the organization differentiate itself in significant ways in order to gain a competitive advantage and deliver value to customers(Judd, 2003). Innocent created the innocent view of marketing along with the learning and personal development for its employees, compensation packages and incentives were set up to encourage employees to become personally involved in sustainability(Brown and Grayson, 2008). The reflection of these behaviors became a way of advertisement and promotion, and the influence was closely linked to its brand equity. As Judd(2003, pp.8-9) stated, “the ability of an organization to meet its external customers’ needs is a function of how clearly all the people are focused as they perform their respective jobs”.
Grönroos(1994) proposed that marketing is to establish, maintain, and enhance relationships with customers and other stakeholders at a profit, in order to achieve the common goal of the parties involved. Almost all the stakeholders are involved in people-power. Apart from the internal staff, media, retailers and distributors are all external people-power. Innocent was once ranked as “the UK’s best smoothie” by BBC(Brown and Grayson, 2008, p.7). The company’s blog and the monthly column in the Guardian served as advertisements. Innocent’s high rate of sale with a premium price also reflected its strong relationship with the distribution outlets. Since its creation, Innocent has invited its retailers to a birthday party every year to keep a close partnership(Anonymous, 2004). Such relationship building contributed to the boost in the quantity of distribution outlets by 265% in 2003, and secured major distribution partnerships with flagship retail brands such as Sainsbury’s, Starbucks and Boots(Anonymous, 2004, p.9). NGOs and charity organizations welcome the cooperation with Innocent; media advertise this brand even for free(Brown and Grayson, 2008, p.8). Cross-stakeholder integration incorporates the interests of all the stakeholders in the organizations’ way of communication(Mulhern, 2009). Good people-power management thus guarantees their success not only for the first two stages, but also for long-term operation due to the consistency.
The integration of relationship marketing and the marketing mix
While there are voices for a shift from the marketing mix to the relationship marketing(Gummesson,1995; Gronroos,1994), the co-exist of different marketing approaches are still acceptable(Lehtinen, 2011). The significance of the marketing mix would not fade out but might be reinforced through an interactive approach(Berry, 1983, cited in Lehtinen, 2011). Researchers have found that three basic types of relationship marketing (database, interaction and network) can co-exist with transaction marketing(Gould, 1998). For innocent, starting building relationship with customers and other stakeholders at beginning contributes to their continuous increase in sales and market expansion. Marketers pay heed to relationship marketing mainly because of customer retention, which values in the competitive environment(Doaei et al., 2011). For the long run, relationship marketing focuses on customer involvement and brand loyalty by setting up a long-lasting bond with the customers(Copulsky and Wolf, 1990). The combination of the marketing mix and relationship marketing should be efficient and effective in the current business environment (Lehtinen, 2011).
According to Copulsky and Wolf(1990), relationship marketing integrates elements of advertising, sales promotion, public relationships, and direct marketing to create more effective and efficient ways of reaching consumers. The most basic definition for relationship marketing is to attract and keep customers in the long-term(Leahy, 2011). Organizations intended to encourage continuous repeat purchase through this long-term relationship(Fournier, 1998). Relationship marketing increases repeat purchase and enhance customer loyalty(Wahab and Ali, 2010). Innocent performs well in its corporate business achievement, which is the key benefit from the implementation of relationship marketing.
It is demonstrated in innocent’s case that the marketing mix still has its advantage in the early developing period of an organization. For a long-term sustainable success, the combination of the marketing mix and the relationship marketing result in better performance. Innocent’s consistence and persistence in maintaining relatively good relationship with customers and other stakeholders implies the shift from one-way delivery to interaction. The application of marketing strategies differs from one organization to another. Parallel combination of the best options or systematic utilization of these approaches according to the organization’s developing stage, the characteristic of the products or service and the brand equity will make contribution to the long-term success of the organization.
Further researches can be done in more specific areas. For example: how to choose the most suitable marketing approach for each company and discovery of new key elements in marketing activities and related measurement. Besides, innocent insists in ethical operation. With the increasing awareness of sustainability, more attention can be paid to the interplay of the ethical issues and the marketing strategies.
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