7 P's of Marketing - Marketing Mix

Marketing Mix

According to Kotler “McCarthy's (1960) traditional marketing mix consists of Product, Price, Place and Promotion” 

The particular marketing concept under each P are shown in fig. Marketing Mix decision must be made for influencing the trade channels as well as the final consumers. The 4p’s represents the sellers view of the marketing tools available for influencing buyers. From a buyer’s point of view, each marketing tool is designed to deliver a customer benefits.

Product/Service

It is a Tangible goods or Intangible Services that is produced or manufactured. To retain its competitiveness in the market, product differentiation is required and is one of the strategies to differentiate a product from its competitors. This strategy involves asking questions and searching answer for it.

• What does the customer want from the product/service? What needs does it satisfy?
• What features does it have to meet these needs?
• Are there any features you've missed out?
• Are you including costly features that the customer won't actually use?
• How and where will the customer use it?
• What does it look like? How will customers experience it?
• What size(s), color(s), and so on, should it be?
• What is it to be called?
• How is it branded?
• How is it differentiated versus your competitors?
• What is the most it can cost to provide, and still be sold sufficiently profitably? (See also Price, below).

Price

The second P in the formula is price. The price is the amount a customer pays for the product. The business may increase or decrease the price of product if other stores have the same product. Continually examining and reexamining the prices of the products and services to make sure they're still appropriate to the realities of the current market. Sometimes it leads to lower prices. At other times, it may be appropriate to raise prices. Many companies have found that the profitability of certain products or services doesn't justify the amount of effort and resources that go into producing them. By raising their prices, they may lose a percentage of their customers, but the remaining percentage generates a profit on every sale. Revising the prices, if necessary, to remain competitive, to survive and thrive in a fast-changing marketplace is must and below are the question an company ask during the pricing strategy.

• What is the value of the product or service to the buyer?
• Are there established price points for products or services in this area?
• Is the customer price sensitive? Will a small decrease in price gain you extra market share? Or will a small increase be indiscernible, and so gain you extra profit margin?
• What discounts should be offered to trade customers, or to other specific segments of your market?
• How will your price compare with your competitors?

Place

The Third P in the marketing mix is the place where product or service is actually sold. Sometimes a change in place can lead to a rapid increase in sales. Some companies use direct selling, sending their salespeople out to personally meet and talk with the prospect. Some sell by telemarketing. Some sell through catalogs or mail order. Some sell at trade shows or in retail establishments. Some sell in joint ventures with other similar products or services. Some companies use manufacturers' representatives or distributors. Many companies use a combination of one or more of these methods.

In each case, the entrepreneur must make the right choice about the very best location or place for the customer to receive essential buying information on the product or service needed to make a buying decision.

• Where do buyers look for your product or service?
• If they look in a store, what kind? A specialist boutique or in a supermarket, or both? Or online? Or direct, via a catalogue?
• How can you access the right distribution channels?
• Do you need to use a sales force? Or attend trade fairs? Or make online submissions? Or send samples to catalogue companies?
• What do you competitors do, and how can you learn from that and/or differentiate?

Promotion

The Fourth P in marketing and sales is to think in terms of promotion all the time. Promotion includes all the ways company can tell its customers about products or services and how its going to be marketed and sell.

Small changes in the way company promote and sell its products can lead to dramatic changes. Even small changes in advertising can lead immediately to higher sales. Experienced copywriters can often increase the response rate from advertising by 500 percent by simply changing the headline on an advertisement.

Large and small companies in every industry continually experiment with different ways of advertising, promoting, and selling their products and services. And here is the rule: Whatever method of marketing and sales you're using today will, sooner or later, stop working. Reasons Company knows, and sometimes it will be for reasons don't know. In either case, methods of marketing and sales will eventually stop working, and you'll have to develop new sales, marketing and advertising approaches, offerings, and strategies.

• Where and when can you get across your marketing messages to your target market?
• Will you reach your audience by advertising in the press, or on TV, or radio, or on billboards? By using direct marketing mail shot? Through PR? On the Internet?
• When is the best time to promote? Is there seasonality in the market? Are there any wider environmental issues that suggest or dictate the timing of your market launch, or the timing of subsequent promotions?
• How do your competitors do their promotions? And how does that influence your choice of promotional activity?

Magrath proposed another 3 more Ps to meet the needs for marketing in service-based industries - People, Physical evidence and Process

Services marketing is the marketing based on relationship and value. It may be used to market a service or a product. Marketing a service-based business is different from marketing, a goods-based business. There are several major differences, including:

·         The buyer purchases are intangible

·         The service may be based on the reputation of a single person

·         It's more difficult to compare the quality of similar services

·         The buyer cannot return the service.

The major difference in the education of services marketing versus regular marketing is that apart from the traditional "4 P's,"Product, Price, Place, Promotion, there are three additional "P's"

consisting of People, Physical evidence, and Process.

 People

The fifth P of the marketing mix is people. People inside and outside of the business who are responsible for every element of sales and marketing strategy and activities.

Recruiting the right staff and training them appropriately in the delivery of their service is essential if the organization wants to obtain a form of competitive advantage. Consumers make judgments and deliver perceptions of the service based on the employees they interact with. Staff should have the appropriate interpersonal skills, attitude, and service knowledge to provide the service that consumers are paying for.

In his best-selling book, “Good to Great”, Jim Collins discovered the most important factor applied by the best companies was that they first of all "got the right people on the bus, and the wrong people off the bus." Once these companies had hired the right people, the second step was to "get the right people in the right seats on the bus."

In many cases, it's not possible to move forward until one can attract and put the right person into the right position. Many of the best business plans ever developed sit on shelves today because the [people who created them] could not find the key people who could execute those plans.

Physical Evidence

Where is the service being delivered? Physical Evidence is the element of the service mix which allows the consumer again to make judgments on the organization. Physical evidence is an essential ingredient of the service mix, consumers will make perceptions based on their sight of the service provision which will have an impact on the organizations perceptual plan of the service.

Most services cannot be offered without the support of tangibles. Customers cannot see the service provided, but they can definitely see the tangibles that accompany. For example, a passenger transport organization promises for a safe, comfortable and timely journey from one place to another. Now this is examined on the bases of transport vehicle’s condition, seating facilities and other physical facilities and also the way in which the employees are responding to the customers. All these physical factors are used as evidence by the customer to evaluate and expect the service from the provider. As, a result physical evidence plays a crucial role in shaping the consumers perception as well as expectations. 

Process

 The process is a functional activity that assures service availability and quality. The way of physical setting is designed technically and the functions are scheduled and routed to provide promised services to the customers. In simple terms, the management process is to manage the service encounters effectively. Gronroos who was a marketing specialist has described process as interactive marketing wherein moments of truth occur. The challenge of process management is to improve moment of truth.

Refers to the systems used to assist the organization in delivering the service. Imagine you walk into Burger King and you order a Whopper Meal and you get it delivered within 2 minutes. What was the process that allowed you to obtain an efficient service delivery? Banks that send out Credit Cards automatically when their customer’s old one has expired again require an efficient process to identify expiry dates and renewal. An efficient service that replaces old credit cards will foster consumer loyalty and confidence in the company.

Kotler (1984:1986) added 2 more Ps - Public relations and Political Power

According to Kotler (1984; 1986), when organizations attempt to enter markets abroad, they need to master the art of satisfying parties other than the target clients alone. These other parties include governments, trade unions and other interested groups who act as gatekeepers to their own market. Upon recognizing the political nature of this new marketing environment, Kotler introduced two further Ps, Public Relations and Political Power, which in marketing terms are known as "mega marketing". Kotler (1984) also advocated the importance of power to win the influential support of industrial officials, legislators and governments so as to enter and operate in the targeted market. To attain this objective, Kotler (1984) added that marketers should possess good negotiating skills with the relevant authorities.

Public Relations (PR)

According to Kotler” PR consists of many tools, which I call the PENCILS of PR: publications, events, news, community involvement, identity tools, lobbying, and social investments.

Public relations involves the cultivation of favorable relations for organizations and products with its key publics through the use of a variety of communications channels and tools. Traditionally, this meant public relations professionals would work with members of the news media to build a favorable image by publicizing the organization or product through stories in print and broadcast media. But today the role of public relations is much broader and includes:

• building awareness and a favorable image for a company or client within stories and articles found in relevant media outlets
• closely monitoring numerous media channels for public comment about a company and its products
• managing crises that threaten company or product image
• building goodwill among an organization’s target market through community, philanthropic and special programs and events

Political Power

The Political power includes formal legal constraints on a firm’s operations and informal constraints in the form of organized political pressure on public opinion such as that exerted by rights activists.

Y.S.Chin believes that Packaging should be considered another P in the marketing mix

Packaging

Packaging as all the activities of designing & producing the containers for a product. Developing an effective package require a number of decision from the perspective of both the firm & consumers.

Packaging must achieve a number of objective:

·         Identify the Brand.

·         Convey descriptive & persuasive information.

·         Facilitate product transportation & Protection.

·         Assist at home storage.

·         Aid product consumption.

Small improvements in the packaging or external appearance of product or service can often lead to completely different reactions from customers.

Packaging refers to the way product or service appears from the outside. Packaging also refers to your people and how they dress and groom. It refers to your offices, your waiting rooms, your brochures, your correspondence and every single visual element about your company. Everything counts. Everything helps or hurts. Everything affects your customer's confidence about dealing with you.

When IBM started under the guidance of Thomas J. Watson, Sr., he very early concluded that fully 99 percent of the visual contact a customer would have with his company, at least initially, would be represented by IBM salespeople. Because IBM was selling relatively sophisticated high-tech equipment, Watson knew customers would have to have a high level of confidence in the credibility of the salesperson. He therefore instituted a dress and grooming code that became an inflexible set of rules and regulations within IBM.

As a result, every salesperson was required to look like a professional in every respect. Every element of their clothing-including dark suits, dark ties, white shirts, conservative hairstyles, shined shoes, clean fingernails-and every other feature gave off the message of professionalism and competence. One of the highest compliments a person could receive was, "You look like someone from IBM."

 7 P's of marketing