Marketing mix for product software

The marketing mix for product software parallels the notion of marketing mix for general products and is likewise composed of the four controllable factors of marketing managers: price, promotion, product, and place (Kern, 2003). There are some characteristics that differ for software products than other mass produced goods such as clothing.

• Price – Price of software can be a fixed rate paid to a store or vendor. Additionally, it can be a subscription for usage of software with an application service provider like Salesforce.com (In 2010, this has become known as software as a service, or SaaS). Price can be determined by number of licenses and/or users. Mainframe and other large processing software is still sold by the type and number of processors the software runs on. Virtualization is changing pricing models for software across the industry.

• Promotion – Promotion of software can use traditional methods such as advertising. Furthermore, the testing of software products is usually possible before purchasing with either limited trial application for a specific period of time or free-ware containing limited functionality. An example is the month long trial of statistical software from SPSS. The software industry is known for its use of trade shows as a promotional tool.

• Product – The actual product differs from normal mass produced goods since the vendor company actually stays the owner of the original code and auxiliary materials, while product is used by consumers under a license, either signed or shrink-wrapped. (Open source software was created to combat this; it allows users to download full code and use it for non-commercial purposes. However, it is still offered under a license, often the GPL, that has restrictions on usage and re-distribution.)

• Place – Place refers to the distribution channel of product software. Typically this consists of either Direct or Indirect distribution. Direct Distribution refers to a customer having a direct relationship with the producer of the software, with no intermediaries. Direct product is most often delivered in an intangible digital form that can be downloaded off the internet such as Adobe Acrobat 7.0 from adobe.com. Indirect Distribution comes in several forms: specialized software resellers, shrink-wrapped product located in a store or value added resellers (VARs) who combine software with another service. The end user customer may have the license or the intermediary may be the licensee in this structure. Typically, producers offer intermediaries a substantial discount for volume purchases, which makes the transaction more cost effective for an individual consumer.

References

Kern, R. A., Berkowitz, E. N., Hartley, S.W. and W. Rudelius, Marketing . McGraw-Hill Irwin, 7th Edition, 2003. ,