Marketing mix

"4 P's" redirects here. For other uses, see 4P.

The term "marketing-mix" was first coined by Neil Borden, the president of the American Marketing Association in 1953. It is still used today to make important decisions that lead to the execution of a marketing plan. The various approaches that are used have evolved over time, especially with the increased use of technology.[1]

The marketing mix is a business tool used in marketing and by marketers. The marketing mix is often crucial when determining a product or brand's offer, and is often associated with the four Ps: price, product, promotion, and place.[2] In service marketing, however, the four Ps are expanded to the seven Ps[3] or Seven Ps to address the different nature of services.

In the 1990s, the concept of four C's was introduced as a more customer-driven replacement of four P's.[4] There are two theories based on four Cs: Lauterborn's four Cs (consumer, cost, communication, convenience), and Shimizu's four Cs (commodity, cost, communication, channel).

In 2012, a new four P's theory was proposed with people, processes, programs, and performance.[5]

History

In his paper "The Concept of the Marketing Mix", Neil Borden reconstructed the history of the term "marketing mix".[6][7] He started teaching the term after an associate, James Culliton, described the role of the marketing manager in 1948 as a "mixer of ingredients"; one who sometimes follows recipes prepared by others, sometimes prepares his own recipe as he goes along, sometimes adapts a recipe from immediately available ingredients, and at other times invents new ingredients no one else has tried.[8]

McCarthy's four Ps

The marketer E. Jerome McCarthy proposed a four Ps classification in 1960, which has since been used by marketers throughout the world.[4]

Category Definition
Product A product is seen as an item that satisfies what a consumer demands. It is a tangible good or an intangible service. Tangible products are those that have an independent physical existence. Typical examples of mass-produced, tangible objects are the motor car and the disposable razor. A less obvious but ubiquitous mass-produced service is a computer operating system.

Every product is subject to a life-cycle including a growth phase followed by a maturity phase and finally an eventual period of decline as sales fall. Marketers must do careful research on how long the life cycle of the product they are marketing is likely to be and focus their attention on different challenges that arise as the product moves.

The marketer must also consider the product mix. Marketers can expand the current product mix by increasing a certain product line's depth or by increasing the number of product lines. Marketers should consider how to position the product, how to exploit the brand, how to exploit the company's resources and how to configure the product mix so that each product complements the other. The marketer must also consider product development strategies.[4]

Price The amount a customer pays for the product. The price is very important as it determines the company's profit and hence, survival. Adjusting the price has a profound impact on the marketing strategy and, depending on the price elasticity of the product, often it will affect the demand and sales as well. The marketer should set a price that complements the other elements of the marketing mix.[4]

When setting a price, the marketer must be aware of the customer perceived value for the product. Three basic pricing strategies are: market skimming pricing, market penetration pricing and neutral pricing. The 'reference value' (where the consumer refers to the prices of competing products) and the 'differential value' (the consumer's view of this product's attributes versus the attributes of other products) must be taken into account.[4]

The second element P is Price, which is the value customer’s exchange for a product. When the price rises higher, the demand will lower. As the result, some customers will not be able to afford the high price product, or they will find other product to replace (Prices come from supply and demand: Supply and demand, 2012). In the other hand, too lower price may not cover the cost. For instance, if the car costs only $100, the volume of sales will be increase because most consumers can bear the cost. In turn, if the car price rises to $1,000,000, the demand will be decreased rapidly. Only a few people will be able to afford them. When prices rise, demand drops. In the past, price may become a core factor because there are no more suppliers to fit the market, however, more and more C2C platforms have developed. To some extent, the Internet allows the customer access to a large amount of information on website. Customer would use different filters to choose the product online. Furthermore, it is definitely promote the manufactures use competitive price and service to compare with other same product operator.

Promotion All of the methods of communication that a marketer may use to provide information to different parties about the product. Promotion comprises elements such as: advertising, public relations, sales organisation and sales promotion.[4]

Advertising covers any communication that is paid for, from cinema commercials, radio and Internet advertisements through to print media and billboards. Public relations is where the communication is not directly paid for and includes press releases, sponsorship deals, exhibitions, conferences, seminars or trade fairs and events.

After web 2.0, the capacity of the customers to discuss products that they have bought, making reviews and testimonials related to their experiences, are examples of public relations, as well. This kind of behavior takes the dissemination of the product information over the internet space and creates the phenomenon known as word-of-mouth.Word-of-mouth is any apparently informal communication about the product by ordinary individuals, satisfied customers or people specifically engaged to create grassroots momentum. Sales staff often plays an important role in word of mouth and public relations (see 'product' above).[4]

In addition, promotion is the third significant P in the marketing mix. The sales promotion (e.g. free sample, reduced price, free gift etc.) could influence human psychology and buying decisions, which means sales promotional trials are significant to shape consumer attitude towards purchase (Asghar, Abbasi, &Zafarullah, 2015). In more specific terms, promotion can be divided into advertisement, public relations, personal selling, sales promotion and direct marketing. The advertisement includes newspapers, magazines and flyers, which stimulate positive publicity about a sales promotion during short periods of time. Otherwise, personal selling plays a key role in promotion. Personal selling within stores will maintain a favorable atmosphere and remove barriers to wanting. In this situation, personal selling will improve the situation immediately (Waterschoot & Van Den Bulte, n.d.). Sales promotions involve placing a deal or offer on a product for a limited time (such as 'buy one burger get one free' or '20% off when you buy 2 burgers', for example) so that the decreased cost persuades more consumers to try the product, thereby increasing exposure. The final part is direct and online marketing. Nowadays, the society is time of network information, people cannot live without the social media for large proportion of younger people. For instance, Facebook is the one of popular social media in the world. Facebook gives product the opportunity to connect with customers on a personal level. Customers can use Facebook’s messaging tool as a platform for communicate promotion message (Slack, 2014). Also social media will affect more potential consumers by online promotion through electronic word of mouth.

Communication in marketing mix become an important role in 4P’s. For the product, passing a consistent message to customers, which persuade people understand the product, whereas communication is a two-channel process involving feedback from customers to suppliers (Dennis, Fenech, &Merrilees, 2015). The communication in price and promotion, communication may not only advertising, through traditional media, but also including the social media, E-mail, Internet and business to business (B2B). The Newsletter and social marketing are the 21-century marketing mode. Newsletter could now more promotion deals and new product in the first time, social marketing including Amazon, Facebook and more online shopping. Increasingly people prefer to go shopping at home instead of going shopping mall. People could buy second hands on trademe or find the flatmate on Facebook. Otherwise, the companies in order to build up profitable relationship, long term with customer through new social media to send email, newsletter. The newsletter or email content may including the good deals, new shop open or the free gift. However, someone probably do not accept the kind of emails. Not each customer may have look through the emails, which means needs more customers group. Marketers need to align their communication channels appropriately with preferences consumers (Flynn, 2012). Therefore, the marketers in the company aim is to stimulate the customer repurchase.

Distribution (Place) Refers to providing the product at a place which is convenient for consumers to access. Various strategies such as intensive distribution, selective distribution, exclusive distribution and franchising can be used by the marketer to complement the other aspects of the marketing mix.[4][9] The last P is place, the distribution channel which is the location where the delivery the value. The role of the marketing channels is not only focus on the participate in demand satisfaction by offering goods, but also need to stimulate demand through information, creating proximity and promotion by customer (Balasecu, 2014). In other words, distribution channels for the product is a system process. Generally, majority of the product need a retail shop. But place also can be a telephone call center or a website. For example, Nike Air Force 1 designers were determined to let Air Force 1 from hardwood floors to solid concrete, from basketball court to block. They planned to start a revolution. Along the I-95 highway corridor between New York, Philadelphia and Baltimore, Air Force 1 transmitting the information of sports and culture, sending itself to every field and blocks of the cities (Jennifer, 2006). Hence, the place turn into another major element in marketing mix.

The "seven Ps" is a marketing model that adds to the aforementioned four Ps, including "physical evidence", "people", and "process":[10] It is used when the relevant product is a service, not merely a physical good.

Category Definition
Physical evidence The evidence which shows that a service was performed, such as the delivery packaging for the item delivered by a delivery service, or a scar left by a surgeon. This reminds or reassures the consumer that the service took place, positively or negatively.
People The employees that execute the service, chiefly concerning the manner and skill in which they do so.
Process The processes and systems within the organization that affect the execution of its service, such as job queuing or query handling.

Lauterborn's four Cs

Robert F. Lauterborn proposed a four Cs classification in 1990[11] which is a more consumer-orientated version of the four Ps[12] that attempts to better fit the movement from mass marketing to niche marketing:

Four Ps Four Cs Definition
Consumer wants and needs
 A company will only sell what the consumer specifically wants to buy. So, marketers should study consumer wants and needs in order to attract them one by one with something he/she wants to purchase.[11][13]
Price is only a part of the total cost to satisfy a want or a need. The total cost will consider for example the cost of time in acquiring a good or a service, a cost of conscience by consuming that or even a cost of guilt "for not treating the kids".[11] It reflects the total cost of ownership. Many factors affect cost, including but not limited to the customer's cost to change or implement the new product or service and the customer's cost for not selecting a competitor's product or service.[14]
While promotion is "manipulative" and from the seller, communication is "cooperative" and from the buyer[11] with the aim to create a dialogue with the potential customers based on their needs and lifestyles.[15] It represents a broader focus. Communications can include advertising, public relations, personal selling, viral advertising, and any form of communication between the organization and the consumer.
In the era of Internet,[13] catalogues, credit cards and phones people neither need to go anywhere to satisfy a want or a need nor are limited to a few places to satisfy them. Marketers should know how the target market prefers to buy, how to be there and be ubiquitous, in order to guarantee convenience to buy.[11][15] With the rise of Internet and hybrid models of purchasing, Place is becoming less relevant. Convenience takes into account the ease of buying the product, finding the product, finding information about the product, and several other factors.

Four Cs: in the 7Cs Compass Model

After Koichi Shimizu proposed a four Cs classification in 1973, it was expanded to the 7Cs Compass Model to provide a more complete picture of the nature of marketing in 1979.[16][17][18][19] It attempts to explain the success or failure of a firm within a market and is somewhat analogous to Michael Porter's diamond model, which tries to explain the success and failure of different countries economically.

(C1) Corporation – The core of four Cs is corporation (company and non profit organization). C-O-S (organization, competitor, stakeholder) within the corporation. The company has to think of compliance and accountability as important. The competition in the areas in which the company competes with other firms in its industry.

The four elements in the 7Cs Compass Model are:

A formal approach to this customer-focused marketing mix is known as "Four Cs" (commodity, cost, communication, channel) in the Seven Cs Compass Model. The four Cs model provides a demand/customer centric version alternative to the well-known four Ps supply side model (product, price, promotion, place) of marketing management.[20]

"P" category (narrow) "C" category (broad) "C" definition
Product (C2) Commodity (Latin derivation: commodus=convenient) : Co-creation.It is not "product out". The goods and services for the consumers or citizens. Steve Jobs has been making the goods with which people are pleased. It will not become commoditization if a commodity is built starting.
Price (C3) Cost (Latin derivation: constare= It makes sacrifices) : There is not only producing cost and selling cost but purchasing cost and social cost.
Promotion (C4) Communication (Latin derivation: communis=sharing of meaning) : marketing communication : Not only promotion but communication is important. Communications can include advertising, sales promotion, public relations, publicity, personal selling, corporate identity, internal communication, SNS, MIS.
Place (C5) Channel (Latin derivation: canal) : marketing channels. Flow of goods.

The compass of consumers and circumstances (environment) are:

The factors related to consumers can be explained by the first character of four directions marked on the compass model. These can be remembered by the cardinal directions, hence the name compass model:
In addition to the consumer, there are various uncontrollable external environmental factors encircling the companies. Here it can also be explained by the first character of the four directions marked on the compass model:

These can also be remembered by the cardinal directions marked on a compass. The 7Cs Compass Model is a framework in co-marketing (symbiotic marketing). It has been criticized for being little more than the four Ps with different points of emphasis. In particular, the seven Cs inclusion of consumers in the marketing mix is criticized, since they are a target of marketing, while the other elements of the marketing mix are tactics. The seven Cs also include numerous strategies for product development, distribution, and pricing, while assuming that consumers want two-way communications with companies.

An alternative approach has been suggested in a book called 'Service 7' by Australian Author, Peter Bowman. Bowman suggests a values based approach to service marketing activities. Bowman suggests implementing seven service marketing principles which include value, business development, reputation, customer service and service design. Service 7 has been widely distributed within Australia.

Ps changing with digital age

With the advent of digital marketing, marketers are suggesting new P's, or are saying that digital marketing has changed the way these Ps used to work.

The new Ps:

But many, including Illinois University, suggest that the Ps have only changed and there is no need for new P's. The way these P's have changed is discussed here by using the first two Ps only. Product has new terms introduced. Now products are not developed by a company alone; the concept of co-creation and crowd sourcing have jumped in. Promotion is carried out with user created content.

To sum up, the main aim of the assignment is to gain a better understanding of the 4 Ps –product, price, place, promotion constitute the marketing mix and communication in marketing strategy. Every “P “has become an indispensable marketing part. Product is the commodity for customers. Price is the value of the cost in marketing mix. Moreover, place determines the marketing distribution channels. Promotion will like a communication toolkit between customers and suppliers. Communication in marketing strategy is a tools to encourage people to purchase, especially in modern times, social marketing has turn into a strong product distribution pattern. In terms of the understanding 4P’s and communication, and its importance in relation to the market, it is necessary to encourage people to continually purchase.

See also

References

  1. ↑ "Marketing Mix Definition". Investopedia.com. Retrieved 9 April 2015.
  2. ↑ McCarthy, Jerome E. (1964). Basic Marketing. A Managerial Approach. Homewood, IL: Irwin.
  3. ↑ Booms, Bernard H.; Bitner, Mary Jo (1981). "Marketing Strategies and Organization Structures for Service Firms". Marketing of Services. American Marketing Association: 47–51.
  4. 1 2 3 4 5 6 7 8 Needham, Dave (1996). Business for Higher Awards. Oxford, England: Heinemann.
  5. ↑ Kotler, Philip (2012). Marketing Management. Pearson Education. p. 25.
  6. ↑ Borden, Neil. "The Concept of the Marketing Mix" (PDF). Suman Thapa. Retrieved 24 April 2013.
  7. ↑ Borden, Neil H. (1965). "The Concept of the Marketing Mix". In Schwartz, George. Science in marketing. Wiley marketing series. Wiley. p. 286ff. Retrieved 2013-11-04.
  8. ↑ Banting, Peter; Ross, Randolph E. "The marketing mix: A Canadian perspective". Journal of the Academy of Marketing Science (Springer Link) 1 (1). Retrieved 2010-11-12.
  9. ↑ Kerin, Hartley and Rudelius "Marketing, The Core," 4th Edition, McGraw Hill Publishing 2001.
  10. ↑ "The 7 Ps of Marketing". Retrieved 2011-11-12.
  11. 1 2 3 4 5 Lauterborn, B. (1990). New Marketing Litany: Four Ps Passé: C-Words Take Over. Advertising Age, 61(41), 26.
  12. ↑ Kotler, P. and Keller, K. (2006), Marketing and Management, Pearson Prentice Hall, Upper Saddle River, NJ, USA
  13. 1 2 McLean, R. (October 19, 2002). The 4 C's versus the 4 P's of marketing. Custom Fit Online. Retrieved from http://www.customfitonline.com/news/2012/10/19/4-cs-versus-the-4-ps-of-marketing/
  14. ↑ Marketing, Marketing.
  15. 1 2 Schultz, Don E; Tannenbaum, Stanley I; Lauterborn, Robert F (1993), Integrated marketing communications, NTC Business Books, ISBN 978-0-8442-3363-5
  16. ↑ Shimizu, Koichi(1989) "Advertising Theory and Strategies," (Japanese) first edition, Souseisha Book Company in Tokyo. (ISBN 4-7944-2030-7) pp.63-102.
  17. ↑ Shimizu, Koichi (2014) "Advertising Theory and Strategies,"(Japanese) 18th edition, Souseisha Book Company (ISBN 4-7944-2132-X) pp.63-102.
  18. ↑ Shimizu, Koichi (2003)"Symbiotic Marketing Strategy,"(Japanese) 4th edition, Souseisha Book Company (ISBN 4-7944-2158-3) pp.25-62.
  19. ↑ Solis, Brian (2011) Engage!: The Complete Guide for Brands and Businesses to Build, Cultivate, and Measure Success in the New Web, John Wiley & Sons, Inc. pp. 201–202.
  20. ↑ McCarthy, Jerome E. (1975)”Basic Marketing: A Managerial Approach," fifth edition, Richard D. Irwin, Inc., p. 37.

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