Introduction to Marketing Mix
Already Done in Class 8 - Marketing Mix
Types of Marketing Mix
Marketing mix is of two types.
1) Product marketing mix: There are four elements - Product, Price, Place and Promotions. It is mainly used in case of Tangible goods.
2) Service marketing mix: It has seven elements - Product, Price, Place, Promotions and additional three - People, Physical environment and Process.
Importance of Marketing Mix
Following are the main benefits of a proper marketing mix, to the organization:
- Marketing mix helps in pursuing consumer-oriented marketing as it focuses on the satisfaction of the customers. It helps in increasing the sales and earning higher profits.
- Balanced relation between the 4 Ps as the marketing mix gives consideration to the various elements of marketing system.
- Marketing mix facilitates the satisfaction of the customers. Product design, pricing, promotion and distribution depends upon the needs and purchasing power of the customers.
- It shows that its four elements are closely inter-related. Changes in one element usually bring changes in the other.
Marketer E. Jerome McCarthy proposed a four Ps classification in 1960, which has since been used by marketers throughout the world.
4 Ps of Marketing Mix
Product/Service
The product is either a tangible good or an intangible service that satisfies customers. The marketers must understand the benefits offered by the product, its features and the unique selling proposition of the product.
Some of the important decision areas related to product are Customer’s want from the product / service, its features, how and where to use it, its look, size, color, its name, brand, how it is different from that of your competitors, its cost etc.
Place/Distribution
Place includes the distribution channels, the extent of market coverage, managing inventories, transportation and logistics. Important decision areas are availability of the product to the customers at the right time, right place and in the right quantity.
The placement strategy will help assess what channel is the most suited. Distribution is of two types:
Direct distribution: Sale of products directly to customers through channels such as retail stores, markets, the internet, direct mail orders, door to door sales and catalogues.
Indirect distribution: Sale of product through some form of middleman who sells the product on behalf of the business, through retailers, wholesalers, agents or a distributor.
Price
Price covers the actual amount the customer is expected to pay for a product. It directly affects the sale. Price is related to the customer value of the product. Price is also affected by distribution channels, margin of the middlemen, competitors’ price etc.
Some important decision areas are the value of the product or service to the buyer, nature and elasticity of demand, discounts to trade customers etc.
Popular pricing techniques are:
- Cost-plus pricing:
A common practice is to add a profit margin to the cost of the product known as mark-up.
- Hour-based pricing:
Costs on the basis of every hour of work e.g. for gardening, sign writing, photography, etc. The business owner is then able to charge a standard rate per hour.
- Penetration pricing:
In case of a new product, offering the product at a low price in the beginning, then raising the price when the company has captured some market share.
- Skimming:
In case of a new product, charging quite a high price. Later on, the product is made available at low prices.
Promotion
Promotion includes the marketing communication strategies and techniques of an organization. These further include advertising, sales promotions, public relations, direct mail, personal selling and internet promotion.
- Advertising:
Advertising is non-personal paid form of communication using any form of mass media e.g. TV, Radio, Billboard, Newspaper.
- Sales Promotion:
Sales promotion means to obtain an increase in short term sales like using money off coupons or special offers, loyalty cards, coupons, price promotions.
- Public Relations:
It means developing positive relationships and image building for the company. It aims at not only building positive image but also handling negative attention.
- Direct Mail:
It is sending of publicity material to a named person from an organization for creating one to one relationship in target market. Post, e-mail, telephone calls and mail order come under this.
- Personal Selling:
Selling a product service one to one, either done face- to-face (door to door) or over the phone.
- Internet Marketing:
It means using web for the promotion of products or services and can be the firm using banner ads, flash videos, or Google keywords.
Some key decision areas are: Where and when to send the marketing message, reach to audience by advertising online, in the press, or on TV, or radio, the best time to promote, the best season, any environmental issues, competitors’ strategy etc.
All elements of Marketing mix are interrelated and interdependent.Â
Marketing Mix can be summarized as:
Product: Features, quality, design, variety, brand name, packaging, services.
Price: Price, discount, allowances, credit period, other terms
Place: Channel, coverage, location, inventory, transportation, logistics, assortments.
Promotion: Advertising, sales promotion, personal selling, public relations, direct marketing.