The marketing mix consists of everything that the firm can do to influence the demand for its product. Marketing mix is a combination of product, price, place, and promotion, formed to make overall competitive marketing strategy. An effective marketing program is blends all of the marketing mix elements into a coordinated program to achieve set marketing objectives. These 4P’s are set of controllable marketing variables.
For achieving set target. Marketing mix is important program for competitive strategy.
The 4Ps are from a marketer’s angle. When translated to the perspective of customers, they may be termed as “4Cs”. Product may be referred as customer solution, price as customer cost, place as convenience and promotion as communication.
Marketing Mix – Product
Product stands for the combination of “goods-and-service” that the company offers to the target market. Products and markets are infinitely dynamic. An organization has to capture such dynamics through a set of policies and strategies. Some products have consistent customer demand over long period of time while others have short life spans. There are industrial or consumer products, essentials or luxury products, durables or perishables products. Strategies are needed for managing existing product over time adding new ones and dropping failed products.
Products can be differentiated on the basis of size, shape, colour, packaging, brand names, and after-sales service and so on.
Strategic decisions must also be made regarding branding, packaging and other product features such as warranties.
Organizations seek to hammer into customers’ minds that their products are different from others. It does not matter whether the differentiation is real or imaginary. Quite often the differentiation is psychological rather than physical. It is enough if customers are persuaded to believe that the marketer’s product is different from others. Organizations formalize product differentiation through designating ‘brand names’ to their respective products. Brands enable customers to identify the product and the organization behind it. The products’ and even firms’ image is built around brands through advertising and other promotional strategies. Customers tend to develop strong brand loyalty for a particular product over a period of time.
Marketing Mix –Price
Price is the amount of money customers pay to buy the product. The price can be measured in terms of value, utility, demand, quality, reliability, safety, competition, and desired profit and so on.
In an industry there can be low cost products and high costs too. The low cost company may adopt aggressive pricing strategy as they enjoy more freedom of action in respect of their prices. They may also afford selective decrease in price to push their sales.
Theoretically, organizations may also adopt cost plus pricing wherein a margin is added to the cost of the product to determine its price.
In current situation because of competition companies have to reduce cost in order to maintain their profitability. That is the reason there is concept of cost cutting concept in the air now a days everywhere.
Objective to be kept in mind while pricing new product
There are three objectives in pricing new product.
i. Acceptable to the customers- Making the product acceptable to the customers.
ii. Margin over cost.-Producing a reasonable margin over cost.
iii. Developing market share -Catering to a market that helps in developing market share.
Skimming Price vs Penetrating Price in new product
For a new product, company may either choose to skim or penetrate the market.
In skimming pricing policy, prices are set at a very high level. The product is directed to those buyers who are relatively price insensitive but sensitive to the novelty of the new product. For example, call rates of mobile telephony were set very high initially. Since the initial off take of the product is low, high price, in a way, helps in rationing of supply in favour of those who can afford it.
In penetration price company keeps a temptingly low price for a new product which itself is the selling point. A very large number of potential consumers may be able to afford and willing to try the product. For example the pricing kept by Reliance Jio is penetration.
Marketing Mix-Place
Place stands for location where product is available to target customers.
Place stands for company activities that make the product available to target consumers. Choosing the most appropriate marketing channel is the most important decision of marketing strategy. Marketing strategies must focus how ownership of product will be transferred to buyers. Marketing strategy must be clear that how ownership in goods is transferred from manufacturer to wholesale seller to retailer and to finally to consumer.
Distribution channel decides about placement and availability of goods to target customers. It is upto the company to choose one marketing channel or many marketing channel.
Marketing Mix-Promotion
Promotion stands for activities that communicate the merits of the product and persuade target consumers to buy it. Promotion can be regarded as communication, persuasion and conditioning process. Modern marketing is highly promotional oriented. Organizations strive to push their sales and market continuously in this cut throat competitive situation. Promotion provides strength and speed to marketing. There are at least four major direct promotional methods or tools — personal selling, publicity advertising and sales promotion.
They are briefly explained as follows:
Personal selling is a personal form of promotion. Personal selling is one of the oldest forms of promotion. It involves face-to-face interaction of sales force with the prospective customers and provides a high degree of personal attention to them. In personal selling, oral communication is made with potential buyers of a product with the intention of making a sale. It may initially focus on developing a relationship with the potential buyer, but end up with efforts for making a sale. Personal selling suffers from very high costs as sales personnel are expensive. They can physically attend only one customer at a time. Thus, it is not a cost-effective way of reaching a large number of people. However, as it is a highly effective method to persuade a potential customer in to making a purchase, personal selling is used in all kinds of industries for all products.
Publicity is a non-personal form of promotion similar to advertising. However, no payments are made to the media as in case of advertising. Organizations skillfully seek to promote themselves and their products without payment. Publicity is communication of a product, brand or business by placing information about it in the media without paying for the time or media space directly. Thus, it is way of reaching customers with negligible cost. Basic tools for publicity are press releases, press conferences, reports, stories and internet releases. These releases must be of interest to the public.
Advertising is a non-personal, highly flexible and dynamic promotional method. The media for advertising includes pamphlets, brochures, newspapers, magazines, hoardings, display boards, radio, television and internet. Choice of appropriate media is important for effectiveness of the message. The media may be local, regional, or national. The type of the message, copy and illustration is a matter of choice and creativity. Advertising may be directed towards consumers, middlemen or opinion leaders. Advertising is likely to succeed in promoting the sales of an organization but its effectiveness in respect to the expenditure cannot be directly measured. A sale is a function of several variables out of which advertising is only one.
Sales promotion includes all activities that are undertaken to promote the business but are not specifically included under personal selling, advertising or publicity. Activities like discounts, contests, money refunds, installments, kiosks, exhibitions and fairs constitute sales promotion. All these are meant to give a boost to the sales. Sales promotion done periodically may help in getting a larger market share to an organization.
Expanded Marketing Mix
Typically, all organizations use a combination of 4P’s in some form or the other. However, the above elements of marketing mix are not exhaustive. It is pertinent to discuss a few more elements that may form part of an organizational marketing mix strategy. Growth of services has its own share for the inclusion of newer elements in marketing. A few Ps included later are as follows:
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