Introduction

The easiest way to understand the main aspects of marketing is through its more famous synonym of “4Ps of Marketing”. The classification of four Ps of marketing was first introduced and suggested by McCarthy (1960), and includes marketing strategies of product, price, placement and promotion.

The 7 P of Marketing

The easiest way to understand the main aspects of marketing is through its more famous synonym of “4Ps of Marketing”. The classification of four Ps of marketing was first introduced and suggested by McCarthy (1960), and includes marketing strategies of product, price, placement and promotion. The following diagram is helpful in determining the main ingredients of the four Ps in a marketing mix.

Product

In simpler terms, product includes all features and combination of goods and related services that a company offers to its customers. So the Airbus product includes its body parts such as the engine, nut bolts, seats, etc along with its after-sales services and all are included in the product development strategy of the Airbus. However, a serious criticism can be raised here in terms of how marketing mix analysis will cater for companies such as ABN Amro Bank, Natwest Bank, British Airways and Fedex Corporation as they don’t possess tangible products. It was argued that is it feasible to omit service-oriented companies with the logic that the term “services” does not start with a “P”, however, it was asserted that these companies can use the terminology of “service products” under marketing mix strategy making (Kotler & Armstrong, 2004). Lazer (1971) argued that product is the most important aspect of marketing mix for two main reasons. First, for manufacturers, products are the market expression of the company’s productive capabilities and determine its ability to link with consumers. So product policy and strategy are of prime importance to an enterprise, and product decisions dictate the scope and direction of company activity. Moreover, the market indicators such as profits, sales, image, market share, reputation and stature are also dependent on them. Secondly, it is imperative to realize that the product of any organization is both a component and a determinant of the marketing mix as it has a great influence on the other elements of the mix: advertising, personal selling, channels of distribution, physical distribution and pricing. So without proper product policy, a company cannot pursue for further elements of marketing mix.

Pricing

Pricing is basically setting a specific price for a product or service offered. In a simplistic way, Kotler and Armstrong (2004) refer to the concept of price as the amount of money that customers have to pay to obtain the product. Setting a price is not something simple. Normally it has been taken as a general law that a low price will attract more customers. It is not a valid argument as customers do not respond to price alone; they respond to value so a lower price does not necessarily mean expanded sales if the product is not fulfilling the expectation of the customers (Lazer, 1971). Generally pricing strategy under marketing mix analysis is divided into two parts: price determination and price administration (ibid). Price determination is referred to as the processes and activities employed to arrive at a price for a product including consideration of relative prices of products within the same line, and differences in price for similar products of differing grades and qualities. Price administration is referred to as the activities involved in fitting basic prices to particular sales situations such as geographic locale, functions performed by customers, position of distribution channel members, or special sales situations. An example of this is special discounted prices at, for instance, GAP, NEXT etc or Coca Cola and Pepsi where different prices are set in different geographical areas considering the difference in patterns of usage as well as varying advertisement costs.

Placement

Placement under marketing mix involves all company activities that make the product available to the targeted customer (Kotler and Armstrong, 2004). Based on various factors such as sales, communications and contractual considerations, various ways of making products available to customers can be used (Lazer, 1971). Companies such as Ford, Ferrari, Toyota, and Nissan use specific dealers to make their products available, whereas companies such as Nestle involve a whole chain of wholesaler retailers to reach its customers. On a general note, while planning placement strategy under marketing mix analysis, companies consider six different channel decisions including choosing between direct access to customers or involving middlemen, choosing single or multiple channels of distributions, the length of the distribution channel, the types of intermediaries, the numbers of distributors, and which intermediary to use based on the quality and reputation (Proctor, 2000)

Promotion

Promotional strategies include all means through which a company communicates the benefits and values of its products and persuades targeted customers to buy them (Kotler and Armstrong, 2004). The best way to understand promotion is through the concept of the marketing communication process. Promotion is the company strategy to cater for the marketing communication process that requires interaction between two or more people or groups, encompassing senders, messages, media and receivers (Lazer, 1971). Taking the example of Nokia, the sender of the communication in this case is Nokia, the advertising agency, or both; the media used in the process can be salesmen, newspapers, magazines, radio, billboards, television and the like. The actual message is the advertisement or sales presentation and the destination is the potential consumer or customer, in this case mobile phone users.

Limitation of Marketing Mix Analysis (4Ps of Marketing)

Despite the fact that marketing mix analysis is used as a synonym for the 4Ps of Marketing, it is criticized (Kotler & Armstrong, 2004) on the point that it caters seller’s view of market analysis not customers view. To tackle this criticism, Lauterborn (1990) attempted to match 4 Ps of marketing with 4 Cs of marketing to address consumer views:

Product – Customer Solution
Price – Customer Cost
Placement – Convenience
Promotion – Communication

Examples of the 7Ps – For a Bank

Marketing Mix Product

The bank will offer a “Golden Years” deposit account that will target wealthy nationals over 50 years of age, returning home or resident locally, including doctors, lawyers, managers, entrepreneurs and retired persons. The account will allow for the writing of checks while at the same time will attract interest at a rate higher than that paid to regular savings. It will also allow the customer to access other banking services at reduced price, as well as personal banking services.

Marketing Mix Price

Interest rate will be 1% above the rate paid to regular accounts in the market. Charges for other services will be at half price.

Marketing Mix Place

Special counter will be made available to golden years customers for them to do their transactions without having to wait in the regular line. Provide the service through our network of branches throughout the country. Install six additional ATMs at strategic locations throughout the country. Introduce telephone banking to allow customers to transfer funds between accounts, perform account inquiry and pay their utility bills without visiting the bank. Perform personal banking for busy professionals, including doctors, lawyers, managers, etc.

Marketing Mix Promotion

Email or write to prospective customers informing them of the service. Phone prospective customers or visit them at their residents or place of business to sell the service to them. Advertise the service on our website. Develop an advertising program targeting the selected group.

Marketing Mix People

Recruit a sales team from members of the staff who possess the required skills for the task. Provide the members of the team with a formal written program of the project. Provide each member of the team with a job description setting out clearly the job expectations and goals, as well as the required job-related behaviors. Train the sales team for the job. Provide the team with the necessary tools and resources, for instance, cell phones. Provide the team with incentives, such as traveling allowances and rewards for sales volumes. Develop a performance appraisal system that will allow for feedback throughout the year and will determine annual salary increments.

Application of Marketing Mix

Make sure you have identified each of your target customer groups. If you have not already done so and would like further information on grouping your customers, take a look at our 10- minute Target Customer briefing. Now, with each customer group in mind, work through the steps outlined below.

Product

Marketing is about identifying, anticipating and satisfying customer needs. You need to be sure that your products and services continue to meet your customers needs.

1. Carry out simple research by asking your customers .

_ What they think of each product/service

_ How satisfied are they with the quality

_ How satisfied are they with any support services you may provide

_ How effective it is in meeting their needs

_ How they see their needs changing in the short and long term future

2. Carry out step 1 for each product or service you offer

3. Have a system for collecting and analysing feedback from your customers so that ideas are fed into a new product development process that is ongoing.

4. Ask yourself what stage of the product life cycle your products or services have reached.

5. Analyse the profitability of each product/service you offer. For more information on calculating this, take a look at the 10-minute 80/20 Rule.

Which products/services make the biggest contribution or provide the highest profitability? What support services do you offer with each product? Could it be improved, adding value with little cost?

Place

Place is the means of distribution you select depending on the type of product or service you are marketing. Your choice will impact on your pricing and your promotion decisions.

1. Are the customers for your products and services consumers or businesses? If they are consumers you will have three main options .

_ Selling to wholesalers who will sell to retail outlets who will sell on to the consumer

_ Selling direct to retail outlets

_ Selling direct to the customer. If your customers are businesses you will probably sell to them direct through your own sales force.

2. If you sell through wholesalers and retailers, remember when you price your products that they will each want their own mark-up to cover their overheads. You will also need to promote your products and services to all members of the channel. Wholesalers and retailers will have to be persuaded to stock your product and end customers to buy them.

3. If you are selling to businesses you will have to cover the cost of a sales force. This can be an expensive overhead and will again impact on your pricing.

Price

Price generates profit so is an important element of the mix. You need to consider -

1. What your target group of customers will be prepared to pay for your product or service. It is important not to set the price too low as customers may think there is something wrong with the product. Equally, if you set the price too high, customers may think that it is too expensive for the benefits offered. Think about how you have positioned your product in terms of quality. This will help you to assess how to price it.

2. What it costs you to produce it. This will show you what you need to charge and not what you could or should charge. However, if you do not calculate what it costs you to produce your product correctly, the more you sell, the more you will lose. Don’t forget to make an allocation for costs such as selling which are usually treated as fixed.

3. What your competitors charge. Look at your competitors. web sites, or simply phone them and ask for a price list or quotation.

Promotion

The promotional mix is made up of 5 elements:

_ advertising

_ sales promotion

_ public relations

_ direct marketing

_ personal selling

The combination of tools you use depends on the budget you make available, the message you wish to communicate and the group of customers you are targeting. To find out more about developing a promotional mix as part of your wider marketing mix, take a look at the 10-minute Promotional Mix.

People

The people employed in your organization will determine the quality of service your customers receive. This is truer for services, but also impacts on businesses making tangible products. Happy, skilled and motivated staff make happy customers. They are more likely to think about the customer and deliver good customer service if they are well trained and are recruited for their positive attitude to customers. You can achieve a competitive advantage over your competitors through offering a high level of pre-sales and after-sales support and advice. Again, this can impact on the price you set, as customers are likely to be prepared to pay more for the service they receive but there may be a higher cost for you to take into account. Identify those staff who come into contact with customers, either face-to-face or by phone.

1. Carry out a task analysis of what they do in terms of customer contact.

2. Involve your staff in setting standards for customer service.

3. Prioritize training needs for these staff and provide appropriate training

Process

The processes involved in delivering your products and services to the customer have an impact on the way in which your customers perceive you.

1. Look at all the processes involved in getting your products to the customer. Start with the identification of prospects and work through to after-sales support. Does any stage cause a delay? How can you improve this?

2. Are your customers kept informed about what is happening?

3. Do your staff keep their promises to customers?

4. How effectively are you handling customer complaints?

Physical Evidence

Physical evidence is a term used to describe the type of image that your business portrays through its physical presence, namely its premises, the appearance of its staff, its vehicles, etc. When customers do not have anything that they can touch, see or try before they buy, they are more likely to assess you by the image you put across. It is therefore particularly important if you offer services rather than tangible products.

1. How tangible is the product you market? If it is heavily dependent on the service element (for example, a restaurant, or hotel, or window cleaning service, or hairdressing) then you should pay particular attention to this element of the mix. Even if you are a manufacturer, this element is important if customers visit your premises.

2. Ensure that the image portrayed by your organization is consistent with the type of product or service you offer.

3. Look at your reception area, your car park (are there spaces for visitors near to the entrance), the appearance of your delivery staff or customer service staff, that condition of your vehicles, etc. Where can you make improvements?

Conclusion

All aspects of the marketing mix must function together as a whole in order to create a useful marketing campaign and get a product the sales it needs. The marketing mix must suit the company and the products it sells. Luxury items like mp3 players must have a good promotional campaign, be a quality product, be distributed in all the needed places and also have a competitive price that shows its value.

Other Factors in the Marketing Mix

• People. The staff that a company has must be happy and treat customers well, helping them. This is a small factor that can help the firm improve their reputation and keep customers returning.
• Environment. When shopping customers like to be comfortable. A friendly atmosphere with the right sound, lighting, decoration and other factors helps keep the customer happy and more likely to buy a product.
• Shopping process. This other small factor can help with sales. If a product is easy to order, buy, collect or be delivered a customer will be satisfied and may return for more goods.

Reference

Kotler, P & Armstrong, G (2004), ‘Principles of Marketing’, Tenth Edition, New Jersey: Pearson Education Inc

Lauterborn, R (1990), ‘New Marketing Litany: 4P’s Passe; C-Words Take Over’, Advertising Age, Oct 1, 1990:26

Lazer, W (1971), ‘Marketing Management: A Systems Perspective’ New York: John Wiley & Sons

McCarthy, E J (1960), ‘Basic Marketing - A Managerial Approach’, Illinois: Irwin

Proctor, T (2000), ‘Strategic Marketing: An Introduction’, London: Routledge