Mastering the Marketing Mix: The 4Ps of Marketing
The Operational Marketing 4Ps (Marketing Mix)
The 4Ps of marketing, also known as the marketing mix, are essential for a successful business strategy. These elements are Product, Price, Place (Distribution), and Promotion.
Product
Product refers to the services, events, and activities offered by a company. Key characteristics include:
- Intangibility: Services are variable, produced, and consumed simultaneously, without resulting in ownership.
- Target Audience: Aimed at individuals (health, beauty) and organizations (consulting), or both (repairs).
- Experiences: Some companies create experiences beyond products and services (e.g., Disney, Abercrombie & Fitch).
A product is anything offered to the market for acquisition, use, or consumption to satisfy a need or desire.
Industrial Goods
- Raw Materials, Parts, and Equipment
- Supplies & Services
Price
Price is a critical element that determines the profitability of the business. It has immediate effects on sales and influences demand (elasticity) and consumer perception.
- Profitability: Determines the profitability of the business.
- Sales Impact: Has immediate effects on sales and influences demand (elasticity).
- Consumer Perception: Influences the consumer’s global perception.
- Strategic Compatibility: Must be compatible with the rest of the marketing strategic variables.
Price is the only marketing mix element that provides income; the rest represent expenses.
Pricing Policy Objectives
- Income-Oriented:
- Current profit maximization: Requires knowledge of demand and cost functions.
- Investment or economic profitability.
- Sales-Oriented:
- Absolute value or market share growth (Market-share leadership: in a highly price-sensitive market, prices are set as low as possible to stimulate market growth).
- Competition-Oriented
Factors determining pricing are based on value, costs, competitor pricing, market conditions, and demand.
Price = F(value, cost, benefit, competition)
Distribution (Place)
Distribution encompasses all activities needed to have the product available for the consumer at the right time, quantity, and place.
Most companies use distribution channels (a set of companies or intermediary organizations) to make the “placement” process easier, cheaper, and more efficient.
Added Value of Distribution Channels
- Specialization of the offer
- Reduction in the number of contacts
- Sales efficiency
- Proximity to the end customer
- Matching between demand and offer
- Physical distribution of the product: transport and storage
- Services delivery and development of marketing activities
Promotion
Promotion involves various communication methods to inform, persuade, and remind customers about a product or service.
- Advertising/Publicity
- Sales promotion and merchandising
- Public relations-sponsorship
- Direct Marketing
- Personal sales
Key Promotional Activities
- Advertising/Publicity: Form of non-personal communication to present and promote ideas, products, or services.
- Public Relations-Sponsorship: Actions aimed to build good relationships with customers to gain notoriety and a good image.
- Direct Marketing: Direct contacts with specific customers (telephone, internet) to cultivate a good individualized and lasting relationship.
- Personal Sales: Sales force of the company that deals with establishing customer relationships in order to close sales.
Branding
The brand is an essential element of the image.
- Logos:
- Symbols: Nike
- Names: Armani
- Name & Symbol
- Initials: IBM, BMW
- Pictorial images: Pepecar
Manufacturer Brands
- Single brand, corporate: Movistar
- Multiple brands under an individual brand: Danone
- Umbrella brand: Ford, Ford Mondeo
- Family brand: Big Mac, Mac Chicken
- Second brands: Seiko-Pulsar, Omega-Tissot
Retail (White) Brands
ECI-Boomerang
The sales function can be considered a strategic business function. It is no longer “one aspect” of communication but an organizational area of the company.
The sales force represents the link between the company and its customers.