MARKETING Mix
Welcome to the third post of this blog!
Let’s recall what the first post talked about: definition of MARKETING.
It can be defined as:
Putting the right product in the right place, at the right price, at the right time.
(for a more elaborate version, please refer to the previous post)
Now let us understand the basics of MARKETING.
MARKETING Mix (4Ps + 3Ps)
MARKETING mix is a general phrase used to describe the different kinds of choices organizations have to make in the whole process of bringing a product or service to market. The term MARKETING mix was first coined by Neil H Borden back in 1964 in his article “The concept of MARKETING mix”. The 4 Ps is one way – probably the best-known way – of defining the MARKETING mix, and was first expressed in 1960 by E J McCarthy.
· MARKETING Mix – Neil H Borden - 1964
· 4P’s - E J McCarthy - 1960
MARKETING mix or 4P’s are interchangeably used terms, but they may not be the same thing!
- For a product (tangible)
Example: Cars, shampoos, soaps etc. anything tangible (can be seen, felt etc.)
4P’s are
1. Product
2. Price
3. Place
4. Promotion
- For a service(intangible)
Example: Insurance services, banking, massage, tutors etc. (has to be experienced)
Apart from the 4Ps (Product (which becomes ‘service’), Price, Place & Promotion), intangible good/services have 3 extra Ps to take care of, this is called Extended MARKETING Mix
5. People
6. Process
7. Physical evidence
So, what does these terms mean?
Product
The first thing you need, if you want to start a business, is a product. Therefore Product is also the first variable in the MARKETING mix. A product is seen as an item that satisfies what a consumer needs or wants. It is a tangible good or an intangible service. Marketers should consider how to position the product, how to exploit the brand, how to exploit the company's resources and how to configure the product mix so that each product complements the other. The marketer must also consider product development strategies
Businesses have to decide which ‘market segment’ they are aiming at – age, income, geographical location etc. They then have to differentiate their product so that it is slightly different from what is on offer at present so that people can be persuaded to ‘give them a try’.
Price
The price must be high enough to cover costs and make a profit but low enough to attract customers. There are a number of possible pricing strategies. The most commonly used are:
1. PENETRATION PRICING – charging a low price, possibly not quite covering costs, to gain a position in the market. This is quite popular with new businesses trying to get a ‘toehold’.
2. PREMIUM/CREAMING – the opposite to penetration pricing, this involves charging a deliberately high price to persuade people that the product is of high quality. Luxury car makers often use this strategy
3. COST PLUS PRICING – this is the most common form of pricing. Costs are totaled and a margin is added on for profit to make the total price.
4. SKIMMING - Price skimming involves creating as many sales and as much profit early on before potential competitors have a chance to realize you’re there.
Place
Place refers to the distribution channel of a product. If a product is a consumer product, it needs to be available as far and wide as possible. On the other hand, if the product is a Premium consumer product, it will be available only in select stores.
Various strategies such as intensive distribution, selective distribution, exclusive distribution and franchising can be used by the marketer to complement the other aspects of the MARKETING mix.
Promotion
Promotions in the MARKETING mix include the complete integrated MARKETING communications which in turn includes ATL and BTL advertising as well as sales promotions. Promotions are dependent a lot on the product and pricing decision. Customers have to be made aware of the product. The two main considerations are target market and cost.
A new business will not be able to afford to advertise on national television, for instance and would not wish to because its market will be local to start with. Leaflets, billboards, advertisements in local newspapers, Yellow Pages and ‘word of mouth’ would be more appropriate.
The other 3 Ps particular to MARKETING of services:
People
People are a defining factor in a service delivery process, since a service is inseparable from the person providing it. Thus, a restaurant is known as much for its food as for the service provided by its staff. The same is true of banks and department stores. Consequently, customer service training for staff has become a top priority for many organizations today.
Process
The process of service delivery is crucial since it ensures that the same standard of service is repeatedly delivered to the customers. Therefore, most companies have a service blue print which provides the details of the service delivery process, often going down to even defining the service script and the greeting phrases to be used by the service staff.
Physical Evidence
Since services are intangible in nature most service providers strive to incorporate certain tangible elements into their offering to enhance customer experience. Thus, there are hair salons that have well designed waiting areas often with magazines and plush sofas for patrons to read and relax while they await their turn. Similarly, restaurants invest heavily in their interior design and decorations to offer a tangible and unique experience to their guests.
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