A marketing mix is made of 4 basic elements, also known as the marketing mix elements. It provides the basis for a marketing strategy in a business.
Marketing mix generally includes the 4Ps, and sometimes the model is extended to have 7Ps. I will explain the the 7Ps in a minute in a separate section of this article.
Marketing Mix Definition
Marketing Mix is a marketing toolbox that consists of product, price, promotion and place, and is used by a business to satisfy a consumer needs and wants.
4 Ps Marketing Mix
4 Ps or the 4 Ps model is a very popular concept and it is a part of almost every course on introduction to marketing in the MBA program. It was E. Jerome McCarthy, an American professor, who proposed the the concept of 4Ps in 1960s.
Here are the 4 Ps:
Let’s explore the marketing mix elements in details now.
#1 Marketing Mix: Product
A product is anything that you offer to the market and it can be an idea, place, experience, a tangible good or service.
A product is the beginning of marketing or a business activity. Every business must offer a product to serve their customer needs or wants.Therefore, a business always starts with the product idea and conducts a rigorous market research to refine it.
There are several types of products. Some products are tangible(physical) good while others are intangible such as services.
Often, you will find a combination of tangible product and an intangible product (i.e service). For example, when you order a burger in a restaurant, you get a burger (physical product) but along comes the service. The services part of a product includes how a burger is delivered. It means the staff of the restaurant delivers it on time. They are polite and friendly. The ambiance is pleasing and comforting.
It depends on the nature of a product. For example, some of the tech companies sell you a tangible product such as a cellphone but the service part comes after you purchase the product, and it includes a warranty and repairing services.
Whatever is the type of a product that a business offers to a marketing, but it should help solve a problem. If a product can’t provide a solution to a customer’s problem, it would just vanish. Most probably the entrepreneur or the business would also drop to the ground.
According to Jobber ( 2007, p.326),
‘a product is any thing that is capable of satisfying customer needs.’
As an entrepreneur or a marketing manager, it is your responsibility to devise the right combination of product. The product portfolio is often called the product mix. The important thing that a good entrepreneur must always avoid is product cannibalization in a given product portfolio.
A product cannibalization occurs when a business offers similar or the same products under different labels or names. The new product eats the sales of the existing product of the company. Thus the term, cannibalization.
This problem is faced by a business which has a great depth of a product mix i.e it offers too many variations or extensions of the products.
The following are a few important points to note about a product in the marketing mix:
- What is a Product life cycle?
- What is the competition like in the introduction stage of a product?
- Do we have the right packaging and labeling of the product?
- Are we sticking to a failed or a hopeless product?
- Does the product have global potential?
- Is the product environment friendly?
#2 Marketing Mix: Price
A business and its customers have a mutually profitable relationship that is based on the basic concept of exchange. When a business offers a product, it is satisfying a customer’s need. In returns, the customer provides value (i.e amount of money) to the business in the form of revenue and increases the business’ market share. The more satisfied customers you have , the better revenue and market share you will get.
Price carries a very special importance in the marketing mix of any business. You see, it is obvious that except Price, the rest of the Ps are an expense to the business or the entrepreneur.
When it comes to promotion, product or placement of the product, the business has to invest or spend a lot of money.
However, price is the only P that is about the business revenue and profit. Therefore, it is really important to get the price right.
Sometime, getting the right price can be a defining factor in a business success. For example, in the used car market once you know the right price that you can sell a certain car for, it becomes easy to sell & stay profitable.
There are several pricing strategies that an entrepreneur can employ and a few of them are below:
- Price skimming
- Extremely Low pricing
- perceived value pricing
Price skimming is often suitable for a new product that is innovative. If you have certain product features that others don’t have you can charge high prices and practically skim profit from the market.
For example Intel has successfully used this pricing strategy. When it would release the fastest and the most powerful processor chip in the market. It would leverage its competitive position. As a result, it could ask for the highest price in the market and customers were happy to pay. Hence, Intel was practically skimming the market.
Extremely low pricing strategy can be used by a new product or new business that would like to enter a market. The low- pricing strategy is devised to gain a quick market share for a new product. Often, the prices get normal once a product has consolidated its position.
Perceived value pricing is ,the name shows, based on the perception of the customers. Often, this pricing strategy is suitable for luxury goods such as Rolex watches. It is more about branding of the product.
Sometimes an entire country can enjoy a high perceived value. A good example is France in the fragrance category. People worldwide perceive French fragrance of high value and are willing to pay more for it.
An entrepreneur or the business takes care of the following while managing price in the marketing mix:
- Understand the importance of price for branding
- Relation of price to break-even point of business
- Are pricing objectives aligned with the product growth objectives?
#3 Marketing Mix: Promotion
Promotion is an important and perhaps the most visible element of the marketing mix. Promotion is about communicating a business’ product or brand message.
The promotion mix consists of advertising, personal selling and public relations. Let’s discuss each of the promotion mix elements briefly.
Advertising is a paid form of communication to get a product message in front of the target customers. Advertising is mostly non-personal. Traditionally advertising was associated with placing adverts on Radio and TV. Or it meant running ads in the traditional newspaper and magazines.
All of that has changed now because of digital technologies and the internet. Now, businesses can reach their target customers using online or internet marketing.
Whether it is an online marketing or offline marketing, an advertising campaign can have broadly 3 objectives:
- Remind them of your product
- Inform i.e raise awareness
- Persuade or convince to buy from you
Personal selling is often considered the most expensive elements in the promotional mix of a business. However, it is an important business process to manage. In fact, it can be a crucial process in the early stages when the entrepreneur is building her business .
The following are some points that a marketing manager can keep in mind to effectively manage a promotional mix of a business:
Can we just go for online promotion?
Should you go for banner adverts or search engine ads?
How much can you spend on FM Radios and what objectives can you achieve?
Can you justify the ad spend or you are just doing it as the competitors are doing so?
What branding objectives can you achieve by the promotion?
How much immediate sales can we get by promotion?
#4 Marketing Mix: Place
Place, the 4th P, in the marketing mix is often not that exciting and many students get bored during the lectures about placement or distribution. At least, this is what I have observed. Or perhaps, I found the topic very boring in the classroom 🙂
Placing a product means creating a distribution channel or network. Yes, we are talking about retailers, wholesalers and distributors and it does seem boring, right?
But you know, it can be a defining marketing activity or process for a business. At least, it is true for many businesses which are killing it because they have built a great distribution network or power.
The power of distribution or placement is clearly demonstrated by Unilever or Nestle worldwide. These corporations are difficult to compete against in the channels. They have accumulated great resources around their distribution network and have built strong partnership in the channel.
These big corporations can be very aggressive in their tactics to win over partners in a distribution channel. For example, if a restaurant keeps their soda, juices, it gets the water free as incentive.
There are three broad strategies of placement or distribution that any business can employ in their marketing mix:
- Selective distribution
- Intensive distribution
- Exclusive distribution
Marketing Mix: 7 Ps
In 1981, Bernard H. Booms and Mary J Bitner upgraded Jerome McCarthy’s 4Ps model by adding 3 more Ps. That is how they created the 7Ps model of marketing mix.
The 3 additional Ps are: People, Process, and Physical Evidence.
As the additional Ps are about the intangible(i.e services) aspect of a business’ product, therefore, the Booms and Bitner’s model is also called a Service Marketing Mix.
Let’s look at the additional Ps of the service marketing mix now.
People. A great service or product delivery is not possible without people.It’s a challenge to manage a good service consistently because you can’t store services. A service delivered perishes and can’t be repeated by the person who delivers it.
It presents a unique management problem. To be precise, it’s a people problem. A good service all depends on the people who deliver it.
For the same reasons, services are difficult to deliver consistently. It requires highly motivated employees to replicate exactly the same level of quality over and over again. It is normally hard for a human being to stay the same emotionally and mentally.
You can be in a great mood in the morning, but not so in the evening. That’s how humans are, we can’t do anything about it. It is not humanly possible to have the same level of emotion or energy all the time.
However, you can try to manage the problem by introducing a system. A great entrepreneur or business manager would try to introduce a basic criteria to encourage service homogeneity. A good training program can go a long way in this regard.
In other words, there would be a certain level of service criteria that has to be met by the employees.The staff has to undergo rigorous training to develop the right attitude towards the task. The purpose of the training is normally geared towards the homogeneity. The rest is constant monitoring and control.
Processes. Processes are the business activities, roles or functions that ensures a smooth product or service delivery. A good business would have standard operating procedures in place for each process. The process would have a clear starting and ending point.
Physical evidence. It is the proof of your business product or service. It could be the promotional material or collateral. It is also the physical environment or ambiance of a business.
For example, physical evidence is more important for a restaurant, hospital, school, and a training center.
Marketing Mix 4Cs
For every P in the marketing Mix there is one C.
Product Customer Solution
Price Customer Cost
Promotion Customer Communication
Place Customer Convenience
The 4Ps is the entrepreneur or the business perspective but the 4Cs is the customer’s perspective.The best marketing practice always starts and finishes with the customer’s perception.
For you it is your product. No doubt, you love the product. But a customer is looking for a solution to her problems. She doesn’t care about the product. Therefore, focus on providing solutions to the problems.
Similarly, price is a cost for the customer, so you better price the product wisely. Promotion is nothing but simple communication for the customers. No one cares about what you push through a promotional program unless it resonates with the customers. First, the message has to be relevant and then it has got to be effective.
Place(distribution) is actually the customer’s convenience. We all look for our convenience when it comes to buying products. It all depends on the nature of the product. If it is a shopping good, we might go and walk or drive for a few blocks. But if it is an everyday use item, we need the products to be available in the grocery store nearby. That’s what convenience should be all about it.
It is not distribution that you need to worry about; it is the customer’s convenience that you need to take care of. After all, you can’t expect me to drive for 30 minutes just to get a pack of milk. Think convenience of the customers.
Jobber, D. (2007) Principles and practice of marketing ( 5th ed.) Berkshire: McGraw Hill.