IBM’s Marketing Mix (4Ps) Analysis

IBM marketing mix, 4Ps, product, place, promotion, price, information technology business strategy case study and analysis
An IBM IDE hard drive. IBM’s marketing mix or 4Ps involve focus on key product lines, pricing based on market conditions and perceived product value, and a variety of distribution channels and promotional tactics for the information technology market. (Photo: Public Domain)

International Business Machines Corporation’s (IBM) marketing mix facilitates brand development and market reach, with emphasis on core product offerings. A company’s marketing mix, also known as 4Ps (product, place, promotion and price), is the set of strategies and tactics applied for the successful execution of a marketing plan. In this case of IBM, the global information technology market involves tough competition, which imposes significant challenges or barriers to growing revenues and gaining market share (Read: Porter’s Five Forces Analysis of IBM). The company continues to streamline its business to address such challenges. For example, Big Blue focuses its resources on core business operations that represent the highest potential for growth, given current market conditions. Also, the company relies on its high-value brand to achieve results in implementing the marketing mix. This high-value brand is one of the major strengths of the business, as shown in the SWOT analysis of IBM.

Business partners must consider the influence of IBM’s marketing mix on their operations. The pertinent strategies and tactics affect the way the company develops its partnerships, especially for the purpose of gaining a bigger share of the market for information technology products. For example, the marketing mix’s strategies and tactics influence authorized IBM distributors’ interactions with target customers. Thus, business partners can use the company’s 4Ps to guide their respective approaches in growing their operations.

IBM’s Products (Product Mix)

IBM’s organizational outputs or products and their characteristics are determined in this aspect of the marketing mix. Products are what the company sells to target markets for information technologies. The set of all products, called the product mix, defines the other areas of the business organization, such as research and development (R&D) and manufacturing. For example, product suitability based on market demand affects the company’s revenues, and product design and features influence organizational processes involved in production or manufacturing. In this case, the product mix has the following product lines, which are represented as business segments in IBM’s annual reports:

  1. Cognitive Solutions
  2. Global Business Services
  3. Technology Services & Cloud Platforms
  4. Systems
  5. Global Financing

Cognitive Solutions are products that help businesses process large amounts of data into insights for managerial decisions and, consequently, competitive advantage. For example, IBM’s cognitive systems help clients develop effective strategies by determining patterns in consumer behaviors based on data collected through sales transactions. On the other hand, Global Business Services include consulting, application management, and global process services. The company also offers infrastructure services, technical support services, and integration software under the Technology Services & Cloud Platforms product segment. In addition, Systems products are focused on servers, storage, and operating systems software. Moreover, client financing, commercial financing, and remanufacturing and remarketing services are offered as part of Global Financing. IBM’s organizational structure reflects the focus on these core product lines. Each product line is represented as a division in the firm’s corporate structure. This aspect of IBM’s marketing mix or 4Ps indicates a shift of emphasis toward services, especially online services.

Place/Distribution in IBM’s Marketing Mix

The venues, channels, or places used to distribute IBM’s products are identified in this aspect of the marketing mix. These places affect the company’s strategic effectiveness in reaching target customers in the information technology market. In this case, IBM uses the following channels or venues to transact with customers and deliver its products to the market:

  1. Official Website
  2. Business Partners
  3. Delivery Centers
  4. Warranty Service Providers

IBM’s official website enables customers to access valuable information about the company’s products. The website is a convenient way to communicate with target clients around the world. Customers can also create and pay for accounts to use the company’s cloud-based services through the official website. On the other hand, business partners are the company’s traditional way of reaching its target market. For example, business partners like authorized distributors are major channels for distributing IBM products, even before the advent of the Internet. Delivery centers facilitate the delivery of some of the company’s products, such as Global Process Services, which are part of the Global Business Services product line. Furthermore, the firm has warranty service providers for current customers’ systems maintenance and related service needs. This aspect of the marketing mix influences the location strategy in IBM’s operations management.

IBM’s Promotion (Promotional Mix)

The communications strategies and tactics for reaching target customers in the information technology market are outlined in this aspect of IBM’s marketing mix. The objective is to support the company’s efforts in widening its market reach, especially in applying market penetration as an intensive growth strategy. Promotional tactics also impact the company’s ability to improve its brand image and corporate image. In this case, the following are the tactics in IBM’s promotional mix:

  1. Advertising (primary)
  2. Direct marketing (primary)
  3. Sales promotion
  4. Personal selling
  5. Public relations

Advertising takes a primary role in promoting IBM’s products. For example, the company advertises in print media as well as online media, inclusive of popular news websites. On the other hand, direct marketing takes the form of direct communications between the company and corporate customers, especially in introducing new products to current clients. For instance, the company sends emails about new products to firms that already use IBM systems and services. In addition, sales promotion is occasionally used to increase the company’s share of the information technology market. For example, discounts and free trials are offered to attract more customers to some of the firm’s products, such as cloud-based services. Personal selling is applied as a way of addressing the needs of specific customers, such as those in local markets. This communications tactic is also occasionally applied to support direct marketing. Public relations involve sponsorships of events, such as professional tennis events like the U.S. Open. Public relations tactics influence IBM’s corporate social responsibility (CSR) strategy and some activities of IBMers in employee engagement programs. These promotional efforts indicate that IBM heavily depends on advertising but also relies on other communications tactics for this aspect of the marketing mix or 4Ps.

IBM’s Prices and Pricing Strategies

This aspect of the marketing mix specifies IBM’s approach to setting prices. Price ranges and pricing strategies are significant in determining the company’s profit margins and product attractiveness. IBM has the following pricing strategies for its information technology products:

  1. Market-oriented pricing strategy
  2. Value-based pricing strategy

In the market-oriented pricing strategy, the objective is to set prices that are comparable with the prevailing prices for some products in the information technology industry. For example, IBM’s online products, such as cloud platforms services, are priced competitively, especially because of high competition and considerable price sensitivity affecting some products in the cloud-based services market. On the other hand, the value-based pricing strategy is applied in some of the company’s product lines. The objective of this strategy is to determine suitable prices and price ranges based on how customers perceive and need IBM’s products. For instance, the company’s customized business machines for restaurant chains are priced based on the value-based pricing strategy. The cost leadership strategy and the market penetration intensive strategy influence this aspect of the marketing mix or 4Ps (Read: IBM’s Generic Strategy and Intensive Growth Strategies).

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