Description
The marketing mix is a business tool used in marketing and by marketing professionals. The marketing mix is often crucial when determining a product or brand's offering, and is often synonymous with the four Ps: price, product, promotion, and place; in service marketing, however, the four Ps have been expanded to the Seven Ps or eight Ps to address the different nature of services.
The 4 P’s of Marketing Product Price Place Promotion Product : A product is anything that can be offered to the market to satisfy a want or a need. It represents solutions to the customers problems. The product is always a combination of tangible and intangible benefits
E.g. A refrigerator is not just merely steel, plastic, brand name, number of doors and so on but also involves factors like after sales service, delivery and installation, assistance in the purchase of the product, dealer network and service. It is same with products like TV, music system, automobiles and services like banks, airlines, telephone, courier and so on.
Product
? While formulating the marketing strategy, product
? ? ? ? ? ? ? ? ?
decisions include: What to offer? Brand name Packaging Quality Appearance Functionality Installation After sale services Warranty
Price
? Traditionally Price has been the major determinant of
buyers choice. To a manufacturer, price represents the quantity of money received by the firm or seller for its products. To customer, it represents a monetary sacrifice.
? Price remains an important factor in determining sales
and profitability
? Price is all around us. Paying rent for an apartment,
tuition fee for education, fee to the physician or dentist, paying for transport facilities like railways, airlines, taxi, bus and the local bank charging an interest for the money borrowed
Price
? Price decisions include:
? ? ? ? ?
Pricing Strategy (Penetration, Skim, etc) Payment period Discounts Financing Credit terms Using price as a weapon for rivals is sometimes risky. Consumers are often sensitive for price, discounts and additional offers. Another aspect of pricing is that expensive products are considered of good quality.
Place
? It not only includes the place where the product is
placed, but all those activities performed by the company to ensure the availability of the product to the targeted customers. Availability of the product at the right place, at the right time and in the right quantity is crucial in placement decisions.
? Most Producers do not sell their goods to the final users;
between them stands a set of intermediaries performing a variety of functions . These intermediaries constitute a marketing channel.
? Formally marketing channels are set of interdependent
organizations involved in the process of making a product or a service available for use or consumption
Place
? Placement decisions include: ? Distribution channels ? Logistics
? Inventory
? Order processing ? Market coverage ? Selection of channel members
Promotion
? Promotion is the means by which the firm attempts
to inform, persuade and remind customers about the products that they sell. It includes all communication and selling activities to persuade future prospects to buy the product.
? While designing the marketing mix, changes need to
be made in such a way that all conveys the same message
Promotion
Promotion decisions include: ? Advertising ? Media Types ? Message ? Budgets ? Sales promotion ? Personal selling ? Public relations ? Direct marketing
Components of Product
? Each Level adds more
Potential Product Augmented Expected
customer value and the five constitute a customer value hierarchy.
Basic
core
Components of a Product
Core benefit ? The fundamental level is the core benefit : the service or benefit the customer is really buying. A hotel guest is buying rest and sleep. Marketers must see themselves as benefit providers Basic Product The marketer has to turn the core benefit into basic product Thus a hotel room include a bed, bathroom, towel, desk, etc.
Components of a Product
Expected Product ? At the third level the marketer prepares an expected a set of attributes and conditions buyers normally expect when they purchase this product Hotel guests expect a clean bed, fresh towels, working lamps and a relative degree of quiet. Because hotels can meet this minimum expectation the traveler normally will settle for whichever hotel is more convenient or least expensive
Components of a Product
? Augmented product
At this level the marketer prepares an augmented product that exceeds customer expectations As observed by Levitt : The new competition is not between what companies produce in their factories but between what they add in their factory output in the form of packaging, services, advertising, customer advice, financing, delivery arrangements etc.
Things to noted in Augmentation strategy
? Each augmentation add’s cost ? Augmentation
benefits
some
become
expected
benefits
? As companies raise the price of their augmented
product some competitors offer a stripped down version at a much lower price
Components of a product
? Potential Product
At the fifth level stands the potential product which encompasses all the possible augmentations and transformations the product offering might undergo in the future. Here is where companies search for new ways to satisfy customer and distinguish their offer. E.g. Companies can learn by seeing what different customers prefer. P & G for example has developed Reflect.com which offers customized beauty products created interactively on the website
Components of Price
Selecting the pricing objective
? Survival ? Maximum Current Profit
? Maximum Market share
? Maximum Market Skimming ? Product quality leadership ? Other objectives
Components of Price
? Survival : Companies pursue survival as the major
objective they there facing intense competition or changing consumer wants. Survival is short run objective, in the long run the firm must learn how to add value ? Maximum Current Profit: Many companies try to set a price that would produce maximum current profit. The strategy assumes that the firm has knowledge of its demand and cost functions ; in reality these are difficult to estimate. In emphasizing the current performance the company may sacrifice long run performance by ignoring the effects of other marketing mix variables
Components of Price
? Maximum market share : Companies set the lowest
price assuming the market is price sensitive. This strategy is also called as market penetration pricing
? Maximum market skimming : Companies unveiling a
new technology favor setting high prices to maximize market skimming.
? Product quality leadership : Companies aim to be a
product quality leader in the market. Many brands strive to be affordable luxuries by high levels of quality, taste and price
Components of Price
? Other Objectives : Non profit organizations have other
pricing objectives. A university aims partial cost recovery knowing that it must rely on private gifts to cover the remaining costs.
Whatever the specific objective businesses that use price as a strategic tool will profit more than those who simply let costs or markets determine their pricing
Components of Place
Besides making the product available to the customer, middlemen perform several other roles and responsibilities which form the components of place
? Information : about market to manufacturer ? Price Stability : by keeping overheads low ? Promotion : incentive programs to build customer
traffic ? Financing : by providing working capital in the form of advance payments ? Title : taking the title diffuses the risk
Components of Promotion
? Firm selects a mix to effectively communicate with ?
?
? ?
their target customer group. Some of the components are : Advertising : paid form of communication with identified sponsor Personal Selling: Provide competitive product information to the customer about product/service Sales Promotion: An incentive to buy the product/service Public relations : Sustained effort to establish and maintain goodwill between organization and its public
Extended 7P’s for Services
? Product
? Price
? Place ? Promotion
? People
? Process ? Physical Evidence
People
? People management is an important aspect of service
organizations. Service organizations gain a competitive advantage through their service personnel. The personnel in the service organization can have an impact on the services delivered in various ways. ? Customers often judge the performance of a service organization by associating it with the behavior and the attitude of its service personnel. ? E.g. An unpleasant experience with a rude employee at the restaurant leaves bitter memories of the restaurant in the customers mind
People
? Service organizations take a lot of care in providing
behavioral training to their personnel. Emphasis is on courteous behavior and friendliness while dealing with the customers. These measures by service firms help in maintaining high quality of service delivery.
? British Airways for example differentiates itself from
other airlines on the basis of its personnel
Process
? Marketing of services depends on meeting customer
expectations. Over the years some service organizations have standardized their process and reduced the element of human judgement and error in their service delivery. Labour cost and competition have increased in the service industry and many service organizations have made customers as integral part of the service delivery process so that labour cost can be reduced and the benefit to be passed on the customers. Though the expectations of some customers are not met, others are ready to be involved in the service production activity for lower prices
Process
? E.g. A restaurant offering self service charges lower
prices than others ? Service organizations identify the customers who do not want to take the co-production responsibility and are willing to pay higher prices for the services to be delivered to them ? E.g. Customers are even ready to pay an additional amount as commission to portfolio managers for managing their mutual funds
Physical Evidence
? Service customers experience greater difficulty in
assessing a service as they cannot rate it until it is consumed. Therefore service providers try to attach an element of tangibility to their service offers. This is the physical evidence and can be any form
? For E.g. brochures in travel agencies showing the
details of a holiday destination and the interiors of a fast food outlet provide physical evidence to the customers
Significance in the competitive environment
? The organization can gain competitive edge/advantage
over others. Competitive advantage is the critical advantage the firm possesses in the market over the competitor in the industry. According to Michael Porter there are two types of competitive advantages – cost advantage and differentiation advantage ? Situations can be reviewed and controlled i.e. changes in consumer tastes, lifestyle and technology ? The mix can be formulated keeping in mind the needs of the target consumers and the environmental forces ? There are different patterns which can be used by different firms i.e. Entrepreneurial marketing, formulated marketing and social cause marketing
Significance in the competitive environment
? There are different patterns which can be used by
different firms i.e. Entrepreneurial marketing (visible in entrepreneurial firms. E.g. Reliance group, Karsanbhai Patel’s or late Gulshan Kumar’s Nirma products and T Series audio cassettes) formulated marketing ( research centric and well planned. Money is spent on advertising, sales persons, marketing research and product planning) and social cause marketing (marketing for social purposes. E.g. Child care, child marriages, dowry, drinking and driving, no smoking etc. )
doc_420543449.pptx
The marketing mix is a business tool used in marketing and by marketing professionals. The marketing mix is often crucial when determining a product or brand's offering, and is often synonymous with the four Ps: price, product, promotion, and place; in service marketing, however, the four Ps have been expanded to the Seven Ps or eight Ps to address the different nature of services.
The 4 P’s of Marketing Product Price Place Promotion Product : A product is anything that can be offered to the market to satisfy a want or a need. It represents solutions to the customers problems. The product is always a combination of tangible and intangible benefits
E.g. A refrigerator is not just merely steel, plastic, brand name, number of doors and so on but also involves factors like after sales service, delivery and installation, assistance in the purchase of the product, dealer network and service. It is same with products like TV, music system, automobiles and services like banks, airlines, telephone, courier and so on.
Product
? While formulating the marketing strategy, product
? ? ? ? ? ? ? ? ?
decisions include: What to offer? Brand name Packaging Quality Appearance Functionality Installation After sale services Warranty
Price
? Traditionally Price has been the major determinant of
buyers choice. To a manufacturer, price represents the quantity of money received by the firm or seller for its products. To customer, it represents a monetary sacrifice.
? Price remains an important factor in determining sales
and profitability
? Price is all around us. Paying rent for an apartment,
tuition fee for education, fee to the physician or dentist, paying for transport facilities like railways, airlines, taxi, bus and the local bank charging an interest for the money borrowed
Price
? Price decisions include:
? ? ? ? ?
Pricing Strategy (Penetration, Skim, etc) Payment period Discounts Financing Credit terms Using price as a weapon for rivals is sometimes risky. Consumers are often sensitive for price, discounts and additional offers. Another aspect of pricing is that expensive products are considered of good quality.
Place
? It not only includes the place where the product is
placed, but all those activities performed by the company to ensure the availability of the product to the targeted customers. Availability of the product at the right place, at the right time and in the right quantity is crucial in placement decisions.
? Most Producers do not sell their goods to the final users;
between them stands a set of intermediaries performing a variety of functions . These intermediaries constitute a marketing channel.
? Formally marketing channels are set of interdependent
organizations involved in the process of making a product or a service available for use or consumption
Place
? Placement decisions include: ? Distribution channels ? Logistics
? Inventory
? Order processing ? Market coverage ? Selection of channel members
Promotion
? Promotion is the means by which the firm attempts
to inform, persuade and remind customers about the products that they sell. It includes all communication and selling activities to persuade future prospects to buy the product.
? While designing the marketing mix, changes need to
be made in such a way that all conveys the same message
Promotion
Promotion decisions include: ? Advertising ? Media Types ? Message ? Budgets ? Sales promotion ? Personal selling ? Public relations ? Direct marketing
Components of Product
? Each Level adds more
Potential Product Augmented Expected
customer value and the five constitute a customer value hierarchy.
Basic
core
Components of a Product
Core benefit ? The fundamental level is the core benefit : the service or benefit the customer is really buying. A hotel guest is buying rest and sleep. Marketers must see themselves as benefit providers Basic Product The marketer has to turn the core benefit into basic product Thus a hotel room include a bed, bathroom, towel, desk, etc.
Components of a Product
Expected Product ? At the third level the marketer prepares an expected a set of attributes and conditions buyers normally expect when they purchase this product Hotel guests expect a clean bed, fresh towels, working lamps and a relative degree of quiet. Because hotels can meet this minimum expectation the traveler normally will settle for whichever hotel is more convenient or least expensive
Components of a Product
? Augmented product
At this level the marketer prepares an augmented product that exceeds customer expectations As observed by Levitt : The new competition is not between what companies produce in their factories but between what they add in their factory output in the form of packaging, services, advertising, customer advice, financing, delivery arrangements etc.
Things to noted in Augmentation strategy
? Each augmentation add’s cost ? Augmentation
benefits
some
become
expected
benefits
? As companies raise the price of their augmented
product some competitors offer a stripped down version at a much lower price
Components of a product
? Potential Product
At the fifth level stands the potential product which encompasses all the possible augmentations and transformations the product offering might undergo in the future. Here is where companies search for new ways to satisfy customer and distinguish their offer. E.g. Companies can learn by seeing what different customers prefer. P & G for example has developed Reflect.com which offers customized beauty products created interactively on the website
Components of Price
Selecting the pricing objective
? Survival ? Maximum Current Profit
? Maximum Market share
? Maximum Market Skimming ? Product quality leadership ? Other objectives
Components of Price
? Survival : Companies pursue survival as the major
objective they there facing intense competition or changing consumer wants. Survival is short run objective, in the long run the firm must learn how to add value ? Maximum Current Profit: Many companies try to set a price that would produce maximum current profit. The strategy assumes that the firm has knowledge of its demand and cost functions ; in reality these are difficult to estimate. In emphasizing the current performance the company may sacrifice long run performance by ignoring the effects of other marketing mix variables
Components of Price
? Maximum market share : Companies set the lowest
price assuming the market is price sensitive. This strategy is also called as market penetration pricing
? Maximum market skimming : Companies unveiling a
new technology favor setting high prices to maximize market skimming.
? Product quality leadership : Companies aim to be a
product quality leader in the market. Many brands strive to be affordable luxuries by high levels of quality, taste and price
Components of Price
? Other Objectives : Non profit organizations have other
pricing objectives. A university aims partial cost recovery knowing that it must rely on private gifts to cover the remaining costs.
Whatever the specific objective businesses that use price as a strategic tool will profit more than those who simply let costs or markets determine their pricing
Components of Place
Besides making the product available to the customer, middlemen perform several other roles and responsibilities which form the components of place
? Information : about market to manufacturer ? Price Stability : by keeping overheads low ? Promotion : incentive programs to build customer
traffic ? Financing : by providing working capital in the form of advance payments ? Title : taking the title diffuses the risk
Components of Promotion
? Firm selects a mix to effectively communicate with ?
?
? ?
their target customer group. Some of the components are : Advertising : paid form of communication with identified sponsor Personal Selling: Provide competitive product information to the customer about product/service Sales Promotion: An incentive to buy the product/service Public relations : Sustained effort to establish and maintain goodwill between organization and its public
Extended 7P’s for Services
? Product
? Price
? Place ? Promotion
? People
? Process ? Physical Evidence
People
? People management is an important aspect of service
organizations. Service organizations gain a competitive advantage through their service personnel. The personnel in the service organization can have an impact on the services delivered in various ways. ? Customers often judge the performance of a service organization by associating it with the behavior and the attitude of its service personnel. ? E.g. An unpleasant experience with a rude employee at the restaurant leaves bitter memories of the restaurant in the customers mind
People
? Service organizations take a lot of care in providing
behavioral training to their personnel. Emphasis is on courteous behavior and friendliness while dealing with the customers. These measures by service firms help in maintaining high quality of service delivery.
? British Airways for example differentiates itself from
other airlines on the basis of its personnel
Process
? Marketing of services depends on meeting customer
expectations. Over the years some service organizations have standardized their process and reduced the element of human judgement and error in their service delivery. Labour cost and competition have increased in the service industry and many service organizations have made customers as integral part of the service delivery process so that labour cost can be reduced and the benefit to be passed on the customers. Though the expectations of some customers are not met, others are ready to be involved in the service production activity for lower prices
Process
? E.g. A restaurant offering self service charges lower
prices than others ? Service organizations identify the customers who do not want to take the co-production responsibility and are willing to pay higher prices for the services to be delivered to them ? E.g. Customers are even ready to pay an additional amount as commission to portfolio managers for managing their mutual funds
Physical Evidence
? Service customers experience greater difficulty in
assessing a service as they cannot rate it until it is consumed. Therefore service providers try to attach an element of tangibility to their service offers. This is the physical evidence and can be any form
? For E.g. brochures in travel agencies showing the
details of a holiday destination and the interiors of a fast food outlet provide physical evidence to the customers
Significance in the competitive environment
? The organization can gain competitive edge/advantage
over others. Competitive advantage is the critical advantage the firm possesses in the market over the competitor in the industry. According to Michael Porter there are two types of competitive advantages – cost advantage and differentiation advantage ? Situations can be reviewed and controlled i.e. changes in consumer tastes, lifestyle and technology ? The mix can be formulated keeping in mind the needs of the target consumers and the environmental forces ? There are different patterns which can be used by different firms i.e. Entrepreneurial marketing, formulated marketing and social cause marketing
Significance in the competitive environment
? There are different patterns which can be used by
different firms i.e. Entrepreneurial marketing (visible in entrepreneurial firms. E.g. Reliance group, Karsanbhai Patel’s or late Gulshan Kumar’s Nirma products and T Series audio cassettes) formulated marketing ( research centric and well planned. Money is spent on advertising, sales persons, marketing research and product planning) and social cause marketing (marketing for social purposes. E.g. Child care, child marriages, dowry, drinking and driving, no smoking etc. )
doc_420543449.pptx