Microsoft Corporation’s marketing mix (4P) is a showcase of how rapid innovation combines with effective approaches to maintain a strong share of the market. The company’s marketing mix determines strategies and tactics for implementing marketing plans involving products, prices, places, and promotion (the 4Ps). This marketing mix supports business growth and market positioning despite the competitive rivalry shown in the Five Forces analysis of Microsoft. This rivalry involves IT, consumer electronics, online services, and video game console businesses, including Apple, Google (Alphabet), Amazon, IBM, Samsung, and Sony. Microsoft employs its marketing mix to maintain profitable operations despite innovative competitors.
The effectiveness of marketing strategies and the marketing mix in this case relies on the competencies and competitive advantages, like high brand equity, stated in the SWOT analysis of Microsoft. These competencies make the company’s IT, consumer electronics, and online services attractive to target customers. Through this marketing mix, the goals and requirements of Microsoft’s mission and vision are supported.
Microsoft’s Products
Microsoft started as a software developer. However, the business has since grown to include an increasing variety of products, as shown in its product mix. The product categories in Microsoft’s marketing mix are as follows:
- Devices
- Software
- Apps
- Games
- Entertainment
- Cloud and other online services
Microsoft’s devices include hardware products, such as personal computers, tablets, and the Xbox. On the other hand, the company’s software products are in the Software category. For example, software products include Microsoft 365 productivity software and Windows OS. Apps are free and proprietary software products from the company, as well as from third parties. For example, these apps include Microsoft Remote Desktop and proprietary apps from various software developers. The company keeps a percentage of all revenues generated through third-party apps on Microsoft online stores. Games include Xbox games, Windows games, and related gaming software. In the Entertainment category, the company also keeps a percentage of revenues from all entertainment content sold through its website. Cloud-based and other online services include Azure and online storage solutions. This element of Microsoft’s marketing mix reflects the increasing diversification of the company’s products. Such a condition is connected to Microsoft’s generic competitive strategy and intensive growth strategies, which emphasize growth by penetrating markets and providing attractive products.
Place in Microsoft’s Marketing Mix
Microsoft optimizes its market reach for its online services, information technology, and consumer electronics. This 4P element sets the strategies and locations used for product distribution to reach target customers. The following are the places or locations used in Microsoft’s marketing mix:
- Official websites and apps
- Authorized resellers
- Microsoft Experience Centers
Customers can access, purchase, or download software products through Microsoft’s official website and online store. This online place is a major avenue for the company’s revenues. Microsoft’s marketing mix also includes authorized resellers, which provide a direct approach to sales and marketing. These resellers, typically located in strategic commercial areas, enable the company to reach target markets. On the other hand, Microsoft Experience Centers are physical locations where customers can access the company’s products, such as Surface devices. These brick-and-mortar venues, although limited in number, are a direct approach to marketing that enhances the company’s brand image and improves customer experience. These places in Microsoft’s marketing mix show an expanding reach in the global market for computer hardware and software, online services, and related information technology. The departments and divisions of Microsoft’s company structure (business structure) provide support for the locations in this marketing mix.
Price in Microsoft’s 4Ps
Microsoft’s products are sold at price points and price ranges appropriate to target markets and market segments. The company’s pricing strategies influence product attractiveness, sales revenues, and profits in markets for information technology, consumer electronics, and online services. In this marketing mix, the following are Microsoft’s pricing strategies:
- Market-oriented pricing strategy
- Freemium pricing strategy
- Pay as You Go pricing strategy
In the market-oriented pricing strategy, Microsoft sets the prices of many of its products based on market factors, such as competitors’ pricing and consumer demand. The company’s marketing mix also includes a freemium pricing strategy, which involves offering a product for free, and requiring payment for additional functionality or features. For example, the Microsoft 365 cloud productivity suite is free to use on the web and on mobile devices. Payment is required to use the suite’s desktop apps and to access advanced features and more storage. This pricing strategy is advantageous because it allows customers to try Microsoft 365 free of charge, enabling the company to show the benefits of using the products in the suite.
Microsoft’s marketing mix applies the “Pay as You Go” pricing strategy for Azure cloud products. This strategy involves fees based on how much customers use instead of flat rates. The advantage of this pricing strategy is its flexibility in matching prices and customers’ needs. Through this pricing strategy, Microsoft’s marketing strategy attracts price-sensitive customers.
Market and industry factors, like the economic, social, and technological trends shown in the PESTLE/PESTEL analysis of Microsoft, influence the company’s pricing strategies. These pricing strategies ensure that the company’s IT products and services align with market conditions. Also, Microsoft’s operations management closely aligns with the pricing strategies used in this marketing mix to optimize profits. For example, the company fine-tunes its operations to optimize cost-effectiveness for economies of scale that support freemium pricing and market-oriented pricing.
Microsoft’s Promotion
Microsoft’s objective in this element of its marketing mix is to implement effective marketing communication strategies and tactics. The company’s promotional mix attracts and persuades target customers by highlighting product value and brand value. Microsoft’s promotion involves the following:
- Advertising (most significant)
- Sales promotion
- Direct marketing
- Personal selling
- Public relations
Microsoft’s biggest promotion expense is on advertising, which enhances the company’s corporate image and persuades customers to buy the company’s products. In sales promotion, the company offers discounts and other incentives to attract customers. For example, students can purchase Surface laptops and tablets at discounted prices. Microsoft’s marketing mix implements direct marketing for bulk sales with organizations, such as academic institutions and other companies. In personal selling, personnel at Microsoft Experience Centers present products and their features to potential buyers.
While some of the discounts also function as a public relations tactic, the main public relations strategy in the company’s marketing mix is implemented through grants, charity, and bulk discounts for qualified organizations, such as nonprofits. Donations and related activities are executed through this philanthropic arm of Microsoft. For example, the company donates computer hardware and software products to nonprofit organizations and provides financial support for programs that help at-risk youth. Through public relations, the marketing strategy satisfies corporate goals according to Microsoft’s corporate social responsibility (CSR) and ESG programs for stakeholder interests. Considering these promotional activities, advertising is the most important determinant of effectiveness in communicating with the target market, in the context of this marketing mix.
References
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- Microsoft 365.
- Microsoft Azure Pricing.
- Microsoft Corporation – AI, Cloud, Productivity, Computing, Gaming & Apps.
- Microsoft Corporation – Form 10-K.
- Microsoft Corporation – Segment Information.
- Microsoft Education Store – Student Discounts and Deals.
- Microsoft Experience Centers.
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- U.S. Department of Commerce – International Trade Administration – Software and Information Technology Industry.