The Marketing Mix is a model that is used at the basic level in all marketing decisions (one way or another). The Marketing Mix involves 4Ps. These are:
The product is the item that is offered by the company. The product does not necessarily mean a physical item, but it can mean a line of products e.g. a style of footwear or a new range of football boots. A product can also be an intangible item such as software, for example the marketing of apps on Android and iOS systems. A product can also be a service. In fact anything that the company in question exchanges for monetary reimbursement (or some other exchange of value) is their product. Consider an accountant offering a package where they prepare books, create accounts, submit tax returns and provide payroll services for one fee. The ideal concept is that the best product for a specific customer needs to be placed in the best market to fulfill that customers’ requirements. For example an all inclusive product can sound amazing, but if it cannot be delivered, promoted or exchanged for an amount that the customer perceives as good value, the product will not be successful.
The place is where the product needs to be shown (advertised/promoted) and delivered in order to provide maximum perceived value. An all-inclusive accounting package may not be suitable to a self employed trader with a small turnover. In this instance, a smaller, more economical package may be more suitable. All possible sectors would be appropriate to place the product. This is because a small manual trader may not require their accountant to have specific industry knowledge and experience. The place in which a small or larger package is promoted will be very different. Think about where the smaller trader will look. This may be trade fairs, industry specific publications (magazines, websites etc.). This is different to the larger trader. They are going to seek something different and perhaps do more due diligence and look for reviews and experiences to ensure that the company they choose offers the most effective tax advantages. The place in this situation could be very different and a direct approach may be better or adverts in every publication within a specific sector i.e. sector specific placement to prove that they have the necessary experience to provide off-shore tax savings, audits etc. They would also need to demonstrate that their staff had the correct skills to understand the industry sector of their clients.
The price of a product is extremely important as it can have a direct effect with the company’s profits, the selling price adopted will need to cover the costs incurred and the profit that the company needs, or wants to generate.
There are numerous pricing strategies which a company may adopt, which one will be dependent on the objectives that the business is trying to achieve. Some of the common objectives a company may try and achieve through pricing are maximizing profits, short or long term, increasing sales volumes, meeting a target rate of return or to match or undercut a competitor.
The pricing strategy can also be influenced by external market factors and the price sensitivity of a product.
Whilst pricing decisions will be determined initially by the company’s approach to costing and profit margins, pricing may need to be adjusted throughout the lifecycle of a product in response to market conditions or competitors.
Promotion is essentially the market communication, with the primary aim to convert a potential customer into an actual customer.
Promotion can take many forms and typically a company will use a combination of methods. These can include paid advertising, PR campaign, email marketing or money off or discount vouchers used as an incentive to purchase. The promotion decision will focus on the best methods of introducing the product to potential customers. Depending on your target market you may find certain types of promotion more successful, if you are an accountant offering your services to a particular industry, you may choose an advert placed in industry literature. Alternatively, with a mass market product you may opt for a televised advert to reach a wider audience.
The costs a company may incur in promoting a product or service can be proportionately high when compared to the price of the product so the chosen method will need to be evaluated to ensure that the benefits are not outweighed by the costs.
This model was first suggested by McCarthy in 1960 and has been used ever since. The model is expanded upon and other models and systems bolted on to each ‘P’ in order to create an effective marketing strategy.
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