The Marketing Mix represents a foundation for companies, centered around product, price, place and promotion ( The 4 P’s ). Basically, it’s a set of marketing tools a business uses to achieve their marketing goals in their target market.
Appropriately combined, these controlable instruments allow them to scale their businesses.
Nowadays, the term has evolved into more P’s.
- Physical evidence
The concept of product
The terminology of a product refers to anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need.
Types of products
When we say a product is tangible, we call it a good. On the other side, if the product is intangible, we call it a service.
Services are very important to the world economy and add up an important share of the market. This is why we give special attention to them. Basically, services are a form of product, that consists of activities, benefits or satisfactions offered for sale that are essentially intangible and do not result in the ownership of anything.
Companies can offer both, goods and services, or simply focus on offering a specific product. It depends solely on them.
Product classifications and types of consumers
Products fall into two broad classes;
- Consumer Products
- Industrial Products
These refer to products directed to final consumers, this is for personal consumption.
There are 3 major types of consumer products;
The convenience products are usually acquired by customers frequently, immediately, with minimal comparison and buying effort. Thus, these products are low priced.
These products are less frequently bought.Additionally compared carefully between other alternatives on suitability, quality, price and style. Consumers usually spend time and effort in gathering information about the product before making a purchase decision.
Refer to products and services with unique characteristics and / or brand recognition for whom a specific group of buyers is willing to make a special buying effort.
These refer to products directed to other intermediaries, for further processing or use in conducting a business.
Beyond deciding which segments of the market it will target, the company must decide on a value proposition; that is, how it will create differentiated value for targeted segments and what positions it want to occupy in those segments.
- More for more:
Providing the most upscale product or service and charging a higher price ( Rolex ).
- More for the same:
Introducing a brand offering comparable quality at a similar price. When Toyota first introduced Lexus.
- More for less:
Introducing a brand offering comparable quality at a lower price. Home Depot when it first opened.
- The same for less:
It’s the strategy used by discount stores such as Walmart, and some ”category killers”, such as Mediamarkt.
- Less for much less:
Some hotel chains, such as Holiday Inn Express, have suppressed amenities and, accordingly, they charge less.
The concept of price
The price is the amount of money charged for a product or a service. More broadly, the price is the sum of the values that customers exchange for the benefits of having or using the product or service.
The three major pricing methods are:
- Customer value-based pricing
- Cost-based pricing
- Competition-based pricing
New-product pricing strategies
Pricing strategies usually change as the product passes through its life cycle, and the introduction stage is especially challenging.
Setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price.
It only makes sense under certain conditions:
The product’s quality and image must support its higher price. The cost of producing a smaller volume cannot be so high that they cancel the advantage of charging more. Competitors should not be able to enter the market easily and undercut the higher price.
Setting a low price for a new product to attract a large number of buyers and get a large market share.
It can be done under certain conditions:
The market must be highly price sensitive so that a low price produces more growth. Production and distribution costs must decrease as sales volume increases. The low price must help keep out the comp
Product mix pricing strategies
The strategy for setting a product’s price often has to be changed when the product is part of a product mix. In this case, the firm looks for a set of prices that maximizes its profits on the total product mix.
Product line pricing
Setting the price steps between various products in a product line based on cost differences between the products, customer evaluations of different features, and competitors’ prices.
Optional product pricing
Offering to sell optional or accessory products along with the main product. For example, the optional accessories of cars.
Captive product pricing
Setting a price for products that must be used along with a main product. For example, blades for a razor or games for a console.
Product bundle pricing
Combining several products and offer the bundle at a reduced price. For example, combo (burger+fries+drink) prices at Burger King.
Companies usually adjust their basic prices to account for various customer differences and changing situations.
Discount and allowance pricing
Reducing prices to reward customer responses, such as paying early or promoting the product. For example, quantity discounts when buying large volumes.
Adjusting prices to allow for differences in customers, products, or locations. For example, customer-segment pricing when museums charge a lower admission to students or senior citizens.
Adjusting prices for psychological effect. For example, consumers usually perceive higher priced products as having higher quality.
Temporarily reducing prices to increase short-run sales. For example, sales periods in January and July in Spain.
Adjusting prices to account for the geographic location of customers.
Adjusting prices continually to meet the characteristics and needs of individual customers and situations. For example, many airlines adjust the prices of their tickets based on the immediate demand.
Adjusting prices for international markets. For example, Unilever has developed smaller and more affordable packages that put the company’s premier brands within the reach of the cash-strapped customers in some countries (like Greece).
The marketing channels
What is a marketing channel?
A marketing channel is a set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user.
Which are their members?
Channel behavior and organization
Conventional distribution channels
They consist of one or more independent producers, wholesalers, and retailers, each a separate business seeking to maximize its own profit, even at the expense of profits for the system as a whole.
Vertical marketing systems
Distribution channel structures in which producers, wholesalers, and retailers act as a unified system. One channel member owns the others, has contracts with them, or has so much power that they all cooperate.
Horizontal marketing systems
A channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity.
Multichannel distribution systems
A single firm sets up two or more marketing channels to reach one or more customer segments.
The role of promotion in the Marketing Mix
At the end, not only communication communicates, but price, product and distribution (place) do too.
The IMC (Integrated Marketing Communications) is the search on the consistency of the company’s brand communication in order to more efficiently establish a coherent brand perception.
Usually, when talking about commercial communication we think exclusively about advertising, but advertising is not the only tool, even though it’s the one that traditionally received more investment from companies.