The Marketing Mix

Marketing mix refers to the four major areas of decision making in the
marketing process that are blended to obtain the results desired by the
organization. The four elements of the marketing mix are sometimes
referred to the four Ps of marketing. The marketing mix shapes the role of
marketing within all types of organizations, both profit and nonprofit. Each
element in the marketing mix—product, price, promotion, and place—
consists of numerous subelements. Marketing managers make numerous
decisions based on the various subelements of the marketing mix, all in an
attempt to satisfy the needs and wants of consumers.
These variables are known as the marketing mix or the 4 P's of marketing.
They are the variables that marketing managers can control in order to best
satisfy customers in the target market. The marketing mix is portrayed in the
following diagram:

The Marketing Mix

Product Place

Target
Market

Price Promotio
n

The Marketing Mix

These four P's are the parameters that the marketing manager can control,
subject to the internal and external constraints of the marketing
environment. The goal is to make decisions that center the four P's on the
customers in the target market in order to create perceived value and
generate a positive response.

Product
The first element in the marketing mix is the product. A product is any
combination of goods and services offered to satisfy the needs and wants of
consumers. Thus, a product is anything tangible or intangible that can be
offered for purchase or use by consumers. A tangible product is one that
consumers can actually touch, such as a computer. An intangible product is a
service that cannot be touched, such as computer repair, income tax
preparation, or an office call. Other examples of products include places and
ideas. Typically, a product is divided into three basic levels. The first level is
often called the core product, what the consumer actually buys in terms of
benefits. For example, consumers don't just buy trucks. Rather, consumers
buy the benefit that trucks offer, like being able to get around in deep snow
in the winter. Next is the second level, or actual product, that is built around
the core product. The actual product consists of the brand name, features,
packaging, parts, and styling. These components provided the benefits to
consumers that they seek at the first level. The final, or third, level of the
product is the augmented component. The augmented component includes
additional services and benefits that surround the first two levels of the
product. Examples of augmented product components are technical
assistance in operating the product and service agreements.
Products are classified by how long they can be used—durability—and their
tangibility. Products that can be used repeatedly over a long period of time
are called durable goods. Examples of durable goods include automobiles,
furniture, and houses. By contrast, goods that are normally used or
consumed quickly are called nondurable goods. Some examples of
nondurable goods are food, soap, and soft drinks. In addition, services are
activities and benefits that are also involved in the exchange process but are
intangible because they cannot be held or touched. Examples of intangible
services included eye exams and automobile repair.
Shopping goods are those products that consumers compare during the
selection and purchase process. Typically, factors such as price, quality,
style, and suitability are used as bases of comparison. With shopping goods,
consumers usually take considerable time and effort in gathering information
and making comparisons among products. Major appliances such as
refrigerators and televisions are typical shopping goods. Shopping goods are
further divided into uniform and nonuniform categories. Uniform shopping
goods are those goods that are similar in quality but differ in price.
Consumers will try to justify price differences by focusing on product
features. Nonuniform goods are those goods that differ in both quality and
price.
Specialty goods are products with distinctive characteristics or brand
identification for which consumers expend exceptional buying effort.
Specialty goods include specific brands and types of products. Typically,
buyers do not compare specialty goods with other similar products because
the products are unique. Unsought goods are those products or services that
consumers are not readily aware of or do not normally consider buying. Life
insurance policies and burial plots are examples of unsought goods. Often,
unsought goods require considerable promotional efforts on the part of the
seller in order to attract the interest of consumers.
Industrial goods are those products used in the production of other goods.
Examples of industrial goods include accessory equipment, component parts,
installations, operating supplies, raw materials, and services. Accessory
equipment refers to movable items and small office equipment items that
never become part of a final product. Office furniture and fax machines are
examples of accessory equipment. Component parts are products that are
turned into a component of the final product that does not require further
processing. Component parts are frequently custom-made for the final
product of which they will become a part. For example, a computer chip
could be produced by one manufacturer for use in computers of other
manufacturers. Installations are capital goods that are usually very
expensive but have a long useful life. Trucks, power generators, and
mainframe computers are examples of installations. Operating supplies are
similar to accessory equipment in that they do not become part of the
finished product. Operating supplies include items necessary to maintain and
operate the overall firm, such as cleaners, file folders, paper, and pens. Raw
materials are goods sold in their original form before being processed for use
in other products.
Price
The second element in marketing mix is price. Price is simply the amount of
money that consumers are willing to pay for a product or service. In earlier
times, the price was determined through a barter process between sellers
and purchasers. In modern times, pricing methods and strategies have taken
a number of forms.
Pricing new products and pricing existing products require the use of
different strategies. For example, when pricing a new product, businesses
can use either market-penetration pricing or a price-skimming strategy. A
market-penetration pricing strategy involves establishing a low product price
to attract a large number of customers. By contrast, a price-skimming
strategy is used when a high price is established in order to recover the cost
of a new product development as quickly as possible. Manufacturers of
computers, videocassette recorders, and other technical items with high
development costs frequently use a price-skimming strategy.
Pricing objectives are established as a subset of an organization's overall
objectives. As a component of the overall business objectives, pricing
objectives usually take one of four forms: profitability, volume, meeting the
competition, and prestige. Profitability pricing objectives mean that the firm
focuses mainly on maximizing its profit. Under profitability objectives, a
company increases its prices so that additional revenue equals the increase
in product production costs. Using volume pricing objectives, a company
aims to maximize sales volume within a given specific profit margin. The
focus of volume pricing objectives is on increasing sales rather than on an
immediate increase in profits. Meeting the price level of competitors is
another pricing strategy. With a meeting-the-competition pricing strategy,
the focus is less on price and more on nonprice competition items such as
location and service. With prestige pricing, products are priced high and
consumers purchase them as status symbols.
In addition to the four basic pricing strategies, there are five price-
adjustment strategies: discount pricing and allowances, discriminatory
pricing, geographical pricing, promotional pricing, and psychological pricing.
Discount pricing and allowances include cash discounts, functional discounts,
seasonal discounts, trade-in allowances, and promotional allowances.
Discriminatory pricing occurs when companies sell products or services at
two or more prices. These price differences may be based on variables such
as age of the customer, location of sale, organization membership, time of
day, or season. Geographical pricing is based on the location of the
customers. Products may be priced differently in distinct regions of a target
area because of demand differences. Promotional pricing happens when a
company temporarily prices products below the list price or below cost.
Products priced below cost are sometimes called loss leaders. The goal of
promotional pricing is to increase short-term sales. Psychological pricing
considers prices by looking at the psychological aspects of price. For
example, consumers frequently perceive a relationship between product
price and product quality.
Promotion
Promotion is the third element in the marketing mix. Promotion is a
communication process that takes place between a business and its various
publics. Publics are those individuals and organizations that have an interest
in what the business produces and offers for sale. Thus, in order to be
effective, businesses need to plan promotional activities with the
communication process in mind. The elements of the communication process
are: sender, encoding, message, media, decoding, receiver, feedback, and
noise. The sender refers to the business that is sending a promotional
message to a potential customer. Encoding involves putting a message or
promotional activity into some form. Symbols are formed to represent the
message. The sender transmits these symbols through some form of media.
Media are methods the sender uses to transmit the message to the receiver.
Decoding is the process by which the receiver translates the meaning of the
symbols sent by the sender into a form that can be understood. The receiver
is the intended recipient of the message. Feedback occurs when the receiver
communicates back to the sender. Noise is anything that interferes with the
communication process.
There are four basic promotion tools: advertising, sales promotion, public
relations, and personal selling. Each promotion tool has its own unique
characteristics and function. For instance, advertising is described as paid,
nonpersonal communication by an organization using various media to reach
its various publics. The purpose of advertising is to inform or persuade a
targeted audience to purchase a product or service, visit a location, or adopt
an idea. Advertising is also classified as to its intended purpose. The purpose
of product advertising is to secure the purchase of the product by
consumers. The purpose of institutional advertising is to promote the image
or philosophy of a company. Advertising can be further divided into six
subcategories: pioneering, competitive, comparative, advocacy, reminder,
and cooperative advertising. Pioneering advertising aims to develop primary
demand for the product or product category. Competitive advertising seeks
to develop demand for a specific product or service. Comparative advertising
seeks to contrast one product or service with another. Advocacy advertising
is an organizational approach designed to support socially responsible
activities, causes, or messages such as helping feed the homeless. Reminder
advertising seeks to keep a product or company name in the mind of
consumers by its repetitive nature. Cooperative advertising occurs when
wholesalers and retailers work with product manufacturers to produce a
single advertising campaign and share the costs. Advantages of advertising
include the ability to reach a large group or audience at a relatively low cost
per individual contacted. Further, advertising allows organizations to control
the message, which means the message can be adapted to either a mass or
a specific target audience. Disadvantages of advertising include difficulty in
measuring results and the inability to close sales because there is no
personal contact between the organization and consumers.
The second promotional tool is sales promotion. Sales promotions are short-
term incentives used to encourage consumers to purchase a product or
service. There are three basic categories of sales promotion: consumer,
trade, and business. Consumer promotion tools include such items as free
samples, coupons, rebates, price packs, premiums, patronage rewards,
point-of-purchase coupons, contests, sweepstakes, and games. Trade-
promotion tools include discounts and allowances directed at wholesalers
and retailers. Business-promotion tools include conventions and trade shows.
Sales promotion has several advantages over other promotional tools in that
it can produce a more immediate consumer response, attract more attention
and create product awareness, measure the results, and increase short-term
sales.
Public relations is the third promotional tool. An organization builds positive
public relations with various groups by obtaining favorable publicity,
establishing a good corporate image, and handling or heading off
unfavorable rumors, stories, and events. Organizations have at their disposal
a variety of tools, such as press releases, product publicity, official
communications, lobbying, and counseling to develop image. Public relations
tools are effective in developing a positive attitude toward the organization
and can enhance the credibility of a product. Public relations activities have
the drawback that they may not provide an accurate measure of their
influence on sales as they are not directly involved with specific marketing
goals.
The last promotional tool is personal selling. Personal selling involves an
interpersonal influence and information-exchange process. There are seven
general steps in the personal selling process: prospecting and qualifying,
pre-approach, approach, presentation and demonstration, handling
objections, closing, and follow-up. Personal selling does provide a
measurement of effectiveness because a more immediate response is
received by the salesperson from the customer. Another advantage of
personal selling is that salespeople can shape the information presented to
fit the needs of the customer. Disadvantages are the high cost per contact
and dependence on the ability of the salesperson.
For a promotion to be effective, organizations should blend all four
promotion tools together in order to achieve the promotional mix. The
promotional mix can be influenced by a number of factors, including the
product itself, the product life-cycle stage, and budget. Within the
promotional mix there are two promotional strategies: pull and push. Pull
strategy occurs when the manufacturer tries to establish final consumer
demand and thus pull the product through the wholesalers and retailers.
Advertising and sales promotion are most frequently used in a pulling
strategy. Pushing strategy, in contrast, occurs when a seller tries to develop
demand through incentives to wholesalers and retailers, who in turn place
the product in front of consumers.
Place
The fourth element of the marketing mix is place. Place refers to having the
right product, in the right location, at the right time to be purchased by
consumers. This proper placement of products is done through middle
people called the channel of distribution. The channel of distribution is
comprised of interdependent manufacturers, wholesalers, and retailers.
These groups are involved with making a product or service available for use
or consumption. Each participant in the channel of distribution is concerned
with three basic utilities: time, place, and possession. Time utility refers to
having a product available at the time that will satisfy the needs of
consumers. Place utility occurs when a firm provides satisfaction by locating
products where they can be easily acquired by consumers. The last utility is
possession utility, which means that wholesalers and retailers in the channel
of distribution provide services to consumers with as few obstacles as
possible.
Channels of distribution operate by one of two methods: conventional
distribution or a vertical marketing system. In the conventional distribution
channel, there can be one or more independent product manufacturers,
wholesalers, and retailers in a channel. The vertical marketing system
requires that producers, wholesalers, and retailers to work together to avoid
channel conflicts.
How manufacturers store, handle, and move products to customers at the
right time and at the right place is referred to as physical distribution. In
considering physical distribution, manufacturers need to review issues such
as distribution objectives, product transportation, and product warehousing.
Choosing the mode of transportation requires an understanding of each
possible method: rail, truck, water, pipeline, and air. Rail transportation is
typically used to ship farm products, minerals, sand, chemicals, and auto
mobiles. Truck transportation is most suitable for transporting clothing, food,
books, computers, and paper goods. Water transportation is good for oil,
grain, sand, gravel, metallic ores, coal, and other heavy items. Pipeline
transportation is best when shipping products such as oil or chemicals. Air
transport works best when moving technical instruments, perishable
products, and important documents.
The 3 extended P’s
Physical evidence as a part of marketing mix
Physical evidence is the material part of a service. Strictly speaking there are
no physical attributes to a service, so a consumer tends to rely on material
cues. There are many examples of physical evidence, including some of the
following:
• Packaging.
• Internet/web pages.
• Paperwork (such as invoices, tickets and despatch notes).
• Brochures.
• Furnishings.
• Signage (such as those on aircraft and vehicles).
• Uniforms.
• Business cards.
• The building itself (such as prestigious offices or scenic headquarters).
• Mailboxes and many others . . . . . .

A sporting event is packed full of physical evidence. Your tickets have your
team's logos printed on them, and players are wearing uniforms. The
stadium itself could be impressive and have an electrifying atmosphere. You
travelled there and parked quickly nearby, and your seats are comfortable
and close to restrooms and store. All you need now is for your team to win!

'People' as part of the marketing mix.

People are the most important element of any service or experience.
Services tend to be produced and consumed at the same moment, and
aspects of the customer experience are altered to meet the 'individual
needs' of the person consuming it. Most of us can think of a situation where
the personal service offered by individuals has made or tainted a tour,
vacation or restaurant meal. Remember, people buy from people that they
like, so the attitude, skills and appearance of all staff need to be first class.
Here are some ways in which people add value to an experience, as part of
the marketing mix - training, personal selling and customer service.

Process as part of the marketing mix.

Process is another element of the extended marketing mix, or 7P's.There are
a number of perceptions of the concept of process within the business and
marketing literature. Some see processes as a means to achieve an
outcome, for example - to achieve a 30% market share a company
implements a marketing planning process.
Another view is that marketing has a number of processes that integrate
together to create an overall marketing process, for example - telemarketing
and Internet marketing can be integrated. A further view is that marketing
processes are used to control the marketing mix, i.e. processes that measure
the achievement marketing objectives. All views are understandable, but not
particularly customer focused.
For the purposes of the marketing mix, process is an element of service that
sees the customer experiencing an organisation's offering. It's best viewed
as something that your customer participates in at different points in time.
Here are some examples to help your build a picture of marketing process,
from the customer's point of view.

Summary of Marketing Mix Decisions

Product Price Place Promotion

Functionality List price Channel members Advertising

Appearance Discounts Channel Personal
Quality Allowances motivation selling

Packaging Financing Market coverage Public

Locations relations
Brand Leasing
options Logistics Message
Warranty
Service levels Media
Service/Suppor
t Budget

Sources:

www.wikipedia.com

http://www.netmba.com/marketing/mix

http://www.marketingteacher.com/Lessons/lesson_marketing_mix.htm

http://www.12manage.com/methods_marketing_mix.html

http://www.mindtools.com/pages/article/newSTR_94.htm