MARKETING// CHAPTER-4

TOPIC: FUNDAMENTALS OF MARKETING MIX

MEANING OF MARKETING MIX

Marketing mix is the combination of four elements
called the 4P’s-Product, Price, Promotion and
Place that every company has the option of adding,
subtracting or modifying in order to create a desired
marketing strategy

CHARACTERISTICS OF MARKETING MIX

Marketing mix is the core of marketing process

Marketing mix has to be reviewed constantly in order to meet the changing requirements

Changes in external environment facilitate alterations in the mix

Changes taking place within the firm also necessitate changes in marketing mix

Applicable to business and non-business organization

Helps to achieve organizational goals

Concentrates on customers

1. Marketing mix is the core of marketing process:

Marketing mix involves important decisions relating to each element of the
mix. The impact of the mix is best when proper weightage is allotted to
each element and they are combined for attaining best results.

2. Marketing mix has to be reviewed constantly in order to meet

the changing requirements:
The marketing manager has to constantly review the mix and the market
scenario and make necessary changes in the marketing mix according to
changes in the conditions and complexity of the market.
3. Changes in external environment facilitate alterations in the mix:
Changes keep on taking place in the external environment. For many
industries, the customer is the most fluctuating variable of environment.
Customers’ tastes and preferences change very fast. Brand loyalty and
purchasing power also change over a period. The marketing manager has to
carry out market analysis constantly to make necessary changes in the
marketing mix.

4. Changes taking place within the firm also necessitate changes in

marketing mix:
Changes within the firm may take place due to technology or product line or in
the size and scale of operation. All such changes call for corresponding
changes in the marketing mix.

5. Applicable to business and non-business organization:

Marketing mix is applicable not only to business organizations but also
to non-business organizations, such as clubs and educational institutions. For
example, an educational institution is expected to provide the right course
(product), charge the right fee (price), promote the institution and the
courses, and provide the course at the right place.

6. Helps to achieve organizational goals:

An application of an appropriate marketing mix helps to achieve
organizational goals like increased profits and market share.

7. Concentrates on customers:
A clear focus point of marketing mix is the customer, and the marketing
mix is expected to provide maximum customer satisfaction

FEATURES OF MARKETING MIX

Flexible Concept

Help Achieve Constant

Marketing Target Monitoring

Features of
Interdependent Customer as a
variables Marketing focal point
Mix
1. Interdependent variables The marketing mix is
made up of four unique variables product, price,
place and promotion. These four variables are
interdependent and need to be aligned.

2. Help Achieve Marketing Target The company aims

to achieve its marketing targets such as sales, profits,
customer retention and satisfaction through the use of
these variables.

3. Flexible Concept The marketing mix is a dynamic

concept and the focus on any one variable may be
either increased or decreased on the basis of existing
marketing conditions and customer requirements.

4. Constant Monitoring It is necessary to keep continuous watch on the

changing trends and requirements, within the company as well as in the
market to ensure that the marketing mix elements stay relevant and useful.
5. Customer as a focal point The customer is the focal point of all marketing
activity. The value of the product is determined by customer perception and
the goal is to achieve a satisfied and loyal customer.

STEPS IN DEVELOPING A MARKETING MIX

Step 1
The first step on the marketing manager’s list is to define the unique feature,
the product offers, the customer surveys or focus groups and identify the
importance of unique feature to consumers and whether they can increase the
sales of the product.

Step 2
The second step is to understand the consumer that would purchase the
product, what they need, what value they associate. All the other elements of
the marketing mix will be designed in accordance with the customer. This
understanding will enable the product offered be relevant and targeted.

Step 3
The next step is to understand the competition. The prices and related benefits
such as discounts, warranties and special offers need to be assessed. An
understanding of the subjective value of the product and a comparison with its
actual manufacturing distribution cost will help set an ideal price point.

Step 4
At this point the marketing manager needs to evaluate the options of place to
understand where the customer is most likely to make a purchase and the costs
associated with using this channel. Multiple channels may help target a wider
customer base and ensure easy access.

Step 5
Based on the target audience and the price identified the communication
strategy can be developed. The promotional methods need to appeal to the
customers and ensure that the key features and benefits of the product are
clearly communicated and understood.

Step 6
A last step needs to be taken at this point to see how all the elements
identified and planned relate to each other. All marketing mix variables are
interdependent and rely on each other for a strong strategy. It has to be seen
whether the selling channels strengthen the perceived value of the product
or the promotional material supports the selected distribution
channels.

IMPORTANCE OF MARKETING MIX

Marketing Approach
It contributes towards the formation of an effective marketing strategy
and its practical implementation. Integrates the essentials of effective
marketing, marketing and allows to analyse and asses the feasibility and role of
the product or service that the organization offers. Identifies appropriate
distribution channel for the proper placement of the product, sets a suitable
price for the value that is offered to the consumers and identifies and employs
suitable promotional media.

Value Creation
Marketing mix guides in identifying and assessing the diverse aspects of the
products or services in relation to their importance and utility to customers
and their preferences. Furthermore, it also provides direction for the selection
of a suitable distribution channel, where the target consumer is more likely to
look around for offered services or products. The platform may range from
being a retail store to an online shop.
 TYPES OF MARKETING MIX
Marketing mix is mainly of two types.
1) Product marketing mix – It comprises of Product, price, place and
promotions and is mainly used in case of tangible goods.

2) Service marketing mix – The service marketing mix has three more
variables included which are people, physical evidence and process.

MEANING AND CATEGORISATION OF PRODUCT

Categorisation of Product

Usage Durability Tangibility

Non-
Consumer Industrial Durable Tangible Intangible
Durable
Goods Goods Goods Goods Goods
Goods
Meaning of Product
A product is an item that is built or produced to satisfy the needs of a certain
group of people. Product can be tangible good or intangible service. It is defined
as anything that can be offered to a market to satisfy a want. It not only includes
physical objects and services but also the supporting services like packaging,
installation, after sales services etc

They can be categorized on the basis of

1. Usage
(a) Consumer Goods: They are meant for personal consumption by the
households or the final consumers like soaps, biscuits or books

(b) Industrial Goods: They are meant for consumption or use as inputs in
production of other products or provision of some service for example nuts and
bolts, machinery etc.

2. Durability
(a) Durable goods: Durable goods are products which are used for a long period
i.e., for months or years together like mobile handsets, pressure cookers etc

(b) Non-durable goods: Non-durable goods are products that are normally
consumed in one go or last for a few uses.
3. Tangibility:
(a) Tangible goods: They have a physical form and can be touched and seen.

(b) Intangible goods: Intangible goods refer to services provided to the

individual consumers or to the organisational buyers.

PRICE
The price of the product is basically the amount that a customer
pays for consuming it. Price is a very important component of
the marketing mix definition. When setting the product price,
marketers should consider the perceived value that the product
offers. Major pricing strategies followed are:

1. Market Penetration Pricing:

The objective of penetration
price strategy is to gain a
foothold in a highly competitive
market. The firm prices its
product lower than the others in
competition to achieve an early breakeven point and to maximise profits in a
shorter time span or seek profits from a niche.

2. Market Skimming Pricing: Most

commonly used strategy and refers to a
firm’s desire to skim the market by selling at
a premium price.

3. Differential Pricing: It involves in a firm

differentiate its price across different market
segments.

4. Geographic Pricing: It seeks to exploit

economies of scale by pricing the product
below the competitor’s in one market and
adopting a penetration strategy in another.
5. Product Line: These are a set of strategies which
a multi-product forms usually adopt.

PROMOTION
Promotion represents the different methods of communication that are used
by marketer to inform target audience about the product. It is an essential
component of marketing as it can boost brand recognition and sales. Promotion
is comprised of various elements like:

✓ Advertising
✓ Sales Promotion
✓ Personal Selling
✓ Public Relation
✓ Word of mouth communication

Advertising typically covers

communication methods that are paid for
like television advertisements, radio
commercials, print media, and internet
advertisements. In contemporary times,
there seems to be a shift in focus from offline
to the online world.

Sales Promotion comprises of tools used to promote sales in a given territory

and time. They are short term in nature and aim at
stimulating quick sales. Advertising aims at creating
awareness and also provides a rationale to buy a
product; sales promotion induces him/her to buy the
products. They include discount coupons, price offs,
prizes, lucky draws, free trials etc.

Personal Selling is a direct display of the product

to the consumers or prospective buyers. It refers
to the use of salespersons to persuade the
buyers to act favourably and buy the product.
Public relations, on the other hand, are
communications that are typically not paid for. This
includes press releases, exhibitions, sponsorship
deals, seminars, conferences, and events.

Word of mouth is an informal

communication about the benefits of the
product by satisfied customers and ordinary
individuals. Word of mouth can also
circulate on the internet. When effectively
used it has the potential to be one of the
most valuable assets we have in boosting the
profits online. An extremely good example of
this is online social media and managing a firm’s online social media presence.

PLACE
Place or distribution refers to making the product available for customers at
convenient and accessible places. The
distribution structure refers to the channel
design and structure, and management of
channels while logistics refers to the physical
aspect of distribution. Organizations can
employ distribution alternatives on the
basis of their products and they, include:
Intensive distribution: It involves making the product available at all
possible outlets, example of soft drinks which are available through
multiple outlets to ensure easy availability to the customer.
Exclusive distribution: The firm decides to distribute through one or two
major outlets, example of designer wear or high priced automobiles.
Selective distribution: This is the middle path approach to distribution as
the firm selects some outlets to distribute its products thereby enabling
the manufacturer gain optimum market coverage and more control.

4C'S - CONSUMER-ORIENTED MODEL OF MARKETING MIX

Consumer - In this model the Product is replaced by Consumer. Marketers
focus more on the needs, wants and demands of consumer. The product is
designed and produced considering the requirements of consumer.

Cost - Price is replaced by Cost. The cost refers to the total cost of owning a
product. It includes cost to use the product, cost to change the product, and
cost of not choosing the competitor's product.

Communication - Promotion is replaced by Communication. According to

Lauterborn promotion is manipulative while communication is cooperative.
Communication includes advertising, public relation, personal selling, and any
method that can be used to encourage proper, timely, and accurate
communication between marketer and consumer.

Convenience - Place is replaced by Convenience. It focuses on the

convenience in getting product information, convenience in reaching to the
store/product, and ease of buying.

MARKETING MIX FOR SERVICE SECTOR

7 P’s OF THE SERVICE MARKETING MIX

1. Product
Most of the services are not visible
because they are performances
rather than objects, specific
manufacturing procession
concerning uniform quality can
rarely be set. Because of this
intangibility, the firm may find it
difficult to understand how
consumers perceive their services. To
develop a good customer service, the
service marketer should focus on
tangible cues and also create a
strong organisational image.

2. Price
Due to the intangible nature of the service–price becomes an important
quality indicator in conditions where other information is unavailable. It is
essential that the service firm provide competitive pricing, thereby get an edge
over competitors. In the case of services, like medical or legal services, price is
the deciding factor because the customer makes a final choice among several
competing service organizations on the basis of price at which the service is
offered.
3. Place
Services are performances which cannot be stored; hence businesses offering
services find it difficult to balance between the supply and demand. A service
firm must make simultaneous adjustments in demand and capacity to achieve
a closer match between the two. The firm could choose to use multisite
locations to make the service more reachable to the users as a service
regardless of the numerous advantages might not be selected if it is focused in
far off places.

4. Promotion
The service marketer should constantly work towards developing word-
of-mouth communications apart from using the regular advertising.
Communication involves informing the customers in a language they can best
understand, especially in the case of services, post-purchase communication is
very important, because retaining existing customers is as important, or even
more important than attracting new customers.

5. Physical Evidence
Physical evidence, like the environmental surroundings greatly affect the
customer’s expectations of the service. As services cannot be readily displayed, a
conducive environment should be created so as to help the customers develop a
positive opinion of the service. People would not like to wait if the surroundings
of the place they are made to wait are unpleasant.

6. People
Most of the services are labour intensive; the behaviour of the staff providing
the service and the customers involved in production (due to the inseparable
nature of services), have an effect on providing efficient customer service.
Dissatisfied customers affect employees and similarly untrained staff
reduce customer satisfaction. This mutual dependence influences the
customer’s perception of the service.

7. Process
The quality, or the ‘how’ of service delivery is more important in the case of
service industries, as it is difficult to separate the technical quality, or the
‘what’ of service delivery. It is essential in service sector to train the front line
employees, whose actions and behaviour influence the customer’s opinions of
the organisation and the actual service provided.

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