A marketing mix defines the marketing strategy a business plans to use in order to sell their products or services to consumers. The marketing mix is a combination of the four P’s of marketing, known as the product, place, promotion and price. By reducing the elements of the marketing mix into these four categories, management can manage the marketing plan more efficiently and develop an effective marketing strategy. No one element of the marketing mix is more important than any other element. The objective of a business’s marketing strategy is to develop a successful marketing mix using an optimal combination of the four P’s.
Product
The first P, product, in the marketing mix involves determining the products or services to offer for sale. “The product area is concerned with developing the right “product” for the target market” (Perreault & McCarthy, 2004, p. 38). The product refers to tangible products and intangible services. Marketing research is vital in developing the marketing mix and continues throughout the marketing process. Research allows the business to discover what products or services the consumer wants, needs or desires. “If you don’t understand what the market needs first, you can’t possibly put the Ps to work effectively” (Scott, 2004, ¶2).
The product category includes developing the physical good, the service or a combination of the two, which consumers want, need or desire. Developing the product can include making decisions regarding the features, accessories, quality, and benefits offered with the product. Other areas related to making decisions about the product or service includes installation, instructions and the warranty, if any, to provide with the product. Additional decisions regarding the product include creating a product line, designing the packaging and branding. Above all consumers must perceive a benefit in purchasing the product or service. Once a business has determined the products, services or combination of products and services to offer consumers, the next P of the marketing mix (the place) is determined. How will the business deliver the product to the consumer?
Place
Making decisions regarding the second P, the place, of the marketing mix involves more than simply determining the actual place the consumer can purchase the product or service. Of course, the means of distributing the products or services to the consumer requires research to determine the most advantageous place to sell the product or provide the service and is an important decision in the marketing mix. Business must decide whether to use inclusive, selective or exclusive distribution channels to deliver the product to consumers and manage those channels to the advantage of the business. However, businesses also must determine the methods of storing, transporting and handling the product. “The product must be available in the right place, at the right time and in the right quantity, while keeping storage, inventory and distribution costs to an acceptable level” (The Chartered Institute of Marketing, 2009, p.5). Determining the desired amount of market exposure will help determine the distribution channel that is most appropriate for the product or service. The place also includes deciding the service levels associated with the product. If the business uses exclusive distribution channels, the service provided for the product may be offered at the place the product was purchased. However, if the business uses inclusive distribution channels, the service provided may be limited to a single centralized location. After determining the place category the decisions of how to inform the public of the product or service’s availability is the next step.
Promotion
The third P, promotion, involves educating the public, or more specifically the target market, and others of the availability and benefits of the product or service the business is offering for sale. Whether the business is introducing the product or service for the first time or reminding the consumer of the product or service’s availability a promotion campaign is an essential tool to the success of the marketing strategy. Promotion of a product or service includes advertising, sale promotions, a sales force, and publicity. Determining whether to advertise on television, radio, the internet, in print or a combination of some or all, is important to ensure the desired market segment is aware of the product or service. Notifying the target market of the availability of the product or service in order to make sales is the primary goal of promoting the product. The promotion category can incorporate sales promotions such as discounts, coupons or contest to entice consumers to try the product or service. Another aspect of promotion involves the sales force. The sales force may or may not be employees of the business, however, they represent the product or service to the consumer. Lastly, publicity, which is any form of unpaid advertising, is important in order to help shape the public’s opinion of the product or service offered and the business. “Promotion must gain attention, be appealing, tell a consistent message and above all else give the customer a reason to choose your product rather than someone else’s” (The Chartered Institute of Marketing, 2009, p. 5).The promotion educates the target market on the value of the product or service and helps determine the price the business will charge.
Price
Determining the price consumers are willing to pay and the price a business must charge in order to cover fixed and variable costs for production of the product or providing the service is the final P of the marketing mix. The first three P’s (product, place and promotion) contribute fixed and variable costs to the price of the product. Determining the price to charge for a product or service requires research to answer the following questions.
1. How much is the consumer willing to pay for the product or service offered?
2. What is the competition charging for the same or similar product or service?
3. Does the business need to consider including an intermediary markup in the price?
4. What are the fixed and variable costs associated with the product or service?
5. How much profit does the business require in order to continue offering the product or service?
6. Should the business use a pricing strategy such as penetration pricing, skimming, loss leaders, competitive pricing or psychological pricing, or consider other pricing strategies?
While the list of questions above is not all-inclusive, it will provide a sound starting point for determining the price of the product or service. The price communicates to the consumer the value the business places on the product or service. A price set too low may communicate the product is of poor quality or the service is substandard. A price set too high may communicate the business is trying to gouge consumers by charging too much for the product or service that can be obtained at a lower price from a competitor. Every business, whether offering a product or service, stands to improve on their success by researching, planning, monitoring and adjusting their marketing mix.
Applying the Marketing Mix
Businesses of every type use the marketing mix to promote and profit from their product or service while bringing value to the consumer. For example, the rental housing industry provides consumers with a place to live in exchange for rental payments. The product is an apartment or other type of housing. In order to be competitive, management of available rental properties have the unit (product) cleaned, freshly painted and ensure items are in working order before presenting their product to the consumer. The location (place) of the rental property helps determine the number of potential consumers and the amount consumers are willing to pay. An apartment community located in an undesirable neighborhood will not be able to demand rental rates equal to those communities located in areas that are more desirable. Promoting the availability of rental property can include print advertising in newspapers, the internet or magazines designed specifically to inform renters of the various apartment communities of a specific area. Along with print advertising, promotional campaigns often include rent specials or discounts. The price an apartment community charges is dependent on the current rental market. Market surveys provide management with the going rental rates of comparable apartment communities and any discounts offered. These market surveys are used to determine the rental rates the apartment community will charge consumers. While this is an abbreviated explanation of the four Ps in action, the basic concept is the same for every type of business. Product, place, promotion and price are essential elements in the exchange of value between the consumer and the business receiving something of value to replace the product.
Conclusion
Ensuring the marketing mix is made up of an optimal level of the four Ps will assist in the success of the business. One important factor in combining the four Ps is to ensure they are sending the same message. You do not want to promote an exclusive, expensive product such as a Ferrari or a Rolex to a below median income market segment. “For instance, make sure that if you have a practice that caters to a niche market that your product is geared towards the need of that market, your price is within the budget of that market, you are distributing your product or service where it will be seen by that market, and gear your promotion to solve the problems that they are encountering” (Lake, 2009, ¶8). The product, place, promotion and price combine to bring something of value to the consumer in exchange for something of value to the business.
References:
Lake, L. (2009). Developing your marketing mix. Retrieved September 4, 2009 from http://marketing.about.com/od/marketingplanandstrategy/a/marketingmix.htm
Perreault, Jr., W. D., & McCarthy, E. J. (2005). Basic marketing. Retrieved from University of Phoenix eBook Collection Database.
Scott, D. M. (2004). Buying & selling…but what about marketing?. EContent, 27(4), 48. Retrieved September 5, 2009, from Academic Search Complete database.
The Chartered Institute of Marketing. (2009). Marketing and the 7 Ps. Retrieved September 4, 2009, from http://www.cim.co.uk/resources/understandingmarket/definitionmkting.aspx