The essence of operational marketing: Kotler and the Bass model

Leveraging the marketing mix

After building a brand, brand assets, and a long-term strategy, every company must turn to operational marketing. That is, to the concrete actions on channels (online, offline, press, events, PR...) aimed at bringing the results outlined in the marketing plan. Such as increased sales, site visits, development of brand popularity and awareness, and so on.

The operational marketing phase is definitely the most important step for a company that has set up a certain marketing plan, since it is the direct consequence of what has been decided with the analysis and strategic phases. And it will lead the company to employ a lot of resources, both economic and human.

Properly managing operational marketing is no picnic.

One of the most solid and scientifically ascertained avenues for the past 70 years is the use of the Marketing Mix, which is the set of actions that the enterprise takes to combine the main controllable variables of marketing in order to achieve the goals set during the strategic phase.

It is important for you to focus on the adjective "controllable." The market is very largely a black box for every company. You cannot manage it. But you can certainly control our reaction to it and the outputs we provide to it.

The Marketing Mix was initially summarized by Edmund J. McCarthy in the handbook "Basic Marketing: A Managerial Approach" in 1960. Later, university lecturer Philip Kotler took the key concepts from the handbook and came to concentrate the "levers" of the Marketing Mix into four "P's." The proven effectiveness of applying this method in the years to come resulted in associating the operational marketing phase with Kotler's "4Ps."

The 4 "p" and Bass

These P's represent, precisely, the cornerstones of the marketing mix, and they are:

Product

The variable that concerns the process related to the design, production and development of the products or services that the company produces, choosing what to produce based on the market in which it operates. It is of paramount importance to constantly check that the product or service offered has characteristics that meet the needs of the consumer.

It seems obvious, but we often forget to provide the market with what the market wants or believe false narratives such as "we invent the market." No, we don't.

Price (price)

It represents the value the company assigns to the proposed product/service. It can represent a company's fortune but also its downfall. In fact, price is directly related to the set of attributes that a consumer associates with what we propose to satisfy his or her needs, shaping the perception that the proposed product/service has in his or her perceptual sphere. A price that is too low can make people think that what we are proposing is of low quality, resulting in a loss of potential sales; just as a price that is too high can discourage those who value the proposed products/services more "cheaply."

Bass's model

Price is so important that it also enters into a much more upstream choice of operational marketing, namely, the strategy of attacking the market. Indeed, a company may opt for two opposing modes:

• Penetration, that is, starting with a low price and, over time, increasing it. You get back costs slowly, but the benefit is a large amount of potential customers.
• Skimming, that is, starting by skimming the customers with a very high price, so as to intercept only the most motivated, highest innovation rate customers, and in the meantime return costs with higher margins.

Both of these paths find their rationality in Bass's market adoption model. The mathematical details are complicated, but let us simply mention that it is a curve that distinguishes potential customers into "innovators" and "imitators," and allows some degree of sales prediction by exploiting the "p" and "q" indices, referring respectively to the effectiveness of the product on these two targets.

The demand for a new product usually follows a pattern that is always similar during its life cycle: we have an initial early growth, then we reach maturity, and finally decline. The Bass model is a probabilistic model, that is, it does not predict the adoption of a product by all potential customers, but only by a portion of them. It can be applied to the following fields:

• dissemination of a new product to the market
• marketing campaigns
• launch of new services
• adoption of new technologies
• dissemination of new ideas

The concept is always the same: Humans will behave in partially predictable ways, and deciding whether to appeal first to imitators over innovators starts with barriers to entry. And price is one of the most powerful.

Place (distribution)

It concerns the actionsthat form the channels and logistical processes aimed at placing the product/service with the consumer. In this case, it is useful to observe and compare the methodologies used by competitors in order to adapt them to the structure of one's own reality and make them more effective than the competition itself.

Often the market has already discovered which sales channels are best. Better to study them in order to always raise the bar. Again, experience shows that all too often entrepreneurs and consultants want to "rediscover" the wheel, forgetting that in mature markets the distribution channels are already broken in and weaned. It is often suicidal to deny the facts.

Promotion (promotion)

The set of actions that a company takes to make itself known and propose the goods/services it offers. Ideally, you should identify the right communication strategies to best present what you are offering to potential customers in order to increase sales and brand awareness. Promotion in turn contains 4 sub-levers of the marketing mix:

• the sales organization
• public relations (PR)
• advertising (ADV)
• sales promotions.

In summary

The "4Ps" form the backbone of traditional marketing and geared toward creating, distributing, promoting and selling a product that is first and foremost qualitatively good and as much better than the competition as possible, with the ultimate goal of increasing the company's revenues.