After determining its overall marketing strategy, the company is ready to begin planning the details of the marketing mix, one of the major concepts in modern marketing. The marketing mix is the set of tactical marketing tools that the firm blends to produce the response it wants in the target market. The marketing mix consists of everything the firm can do to engage consumers and deliver customer value.
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The marketing mix, also known as the 4Ps, is a framework used by marketers to develop and implement effective marketing strategies. The 4Ps stand for product, price, place, and promotion.
By effectively managing the 4Ps, companies can create a marketing mix that meets the needs of their target market and achieves their business objectives.
References:
Kotler, P., & Armstrong, G. (2010). Principles of marketing. Pearson Education.
1. Product Decisions
The "Product" element refers to the tangible good or intangible service that the business offers to the target audience. It's all about what you're selling and how it meets customer needs. Key decisions here include:
Core Product vs. Augmented Product:
What is the fundamental benefit the customer is seeking (core product)? For example, for a car, it's transportation.
What additional features, benefits, and services will enhance the core product (augmented product)? This could include design, branding, packaging, warranties, after-sales service, etc.
Product Design and Features:
What specific features will the product have? How will these features benefit the customer?
What about the aesthetics and ergonomics of the product? How will it look and feel?
Quality:
What level of quality will be offered? This needs to align with the brand positioning and customer expectations.
How will quality be measured and maintained?
Branding:
What will be the brand name, logo, and overall brand identity?
How will we build brand equity (the value of the brand)?
Will we use individual product branding, family branding, or a combination?
Packaging:
What is the primary function of the packaging (e.g., protection, information, convenience, promotion)?
What materials will be used? Are there sustainability considerations?
How will the packaging design appeal to the target customer and stand out on the shelf?
Product Line and Product Mix:
How many product lines will the company offer? (Product mix breadth)
How many variations will be within each product line? (Product line depth)
How consistent are the product lines in terms of end-use, production requirements, or distribution channels? (Product mix consistency)
Services:
What accompanying services will be provided (e.g., customer support, installation, training, maintenance)?
New Product Development (NPD):
How will the company generate and screen new product ideas?
What is the process for developing, testing, and launching new products?
Product Life Cycle (PLC) Management:
How will strategies adapt as the product moves through introduction, growth, maturity, and decline stages?
2. Price Decisions
"Price" is the amount of money customers pay to obtain the product. It's the only P that generates revenue; all others represent costs. Pricing decisions are critical and have a direct impact on profitability and market perception. Key decisions include:
Pricing Objectives:
What does the company want to achieve with its pricing? (e.g., profit maximization, market share leadership, survival, quality leadership, deterring competition).
Determining Demand:
How sensitive is demand to changes in price (price elasticity of demand)?
What is the perceived value of the product by customers?
Estimating Costs:
What are the fixed costs (e.g., rent, salaries) and variable costs (e.g., materials, direct labour) associated with the product?
What is the break-even point?
Analysing Competitors' Costs, Prices, and Offers:
What are competitors charging for similar products?
How does our product's value compare to competitors?
Selecting a Pricing Method/Strategy:
Cost-plus pricing: Adding a standard markup to the cost of the product.
Value-based pricing: Setting the price based on the customer's perceived value.
Competition-based pricing: Setting prices based on what competitors are charging.
Penetration pricing: Setting a low initial price to attract a large number of buyers quickly and win market share.
Skimming pricing: Setting a high initial price for a new product to "skim" maximum revenues layer by layer from segments willing to pay the high price.
Dynamic pricing: Adjusting prices continually to meet the characteristics and needs of individual customers and situations.
Setting the Final Price:
Considering psychological pricing (e.g., €9.99 vs. €10.00).
The impact of other marketing mix elements.
Company pricing policies.
Price Adjustments and Discounts:
Will discounts (e.g., quantity, seasonal, cash) or allowances (e.g., trade-in) be offered?
How will the company react to price changes by competitors?
Geographical pricing considerations.
3. Communication (Promotion) Decisions
"Communication," or "Promotion," involves all the activities a company undertakes to communicate and promote its products to the target market. The goal is to inform, persuade, and remind consumers. Key decisions include:
Communication Objectives:
What do we want to achieve with our communication? (e.g., build awareness, create interest, generate desire, prompt action – the AIDA model).
Are we trying to build brand preference or encourage brand switching?
Identifying the Target Audience:
Who are we trying to reach? Understanding their demographics, psychographics, and media habits is crucial.
Designing the Message:
Message Content (What to say): What is the key appeal or theme (rational, emotional, moral)? What is the unique selling proposition (USP)?
Message Structure (How to say it logically): How will the arguments be presented?
Message Format (How to say it symbolically): What visuals, headlines, copy, sounds, and body language will be used?
Selecting Communication Channels/The Promotional Mix:
This involves choosing the right blend of tools:
Advertising: Paid, non-personal presentation of ideas, goods, or services (e.g., TV, radio, print, online ads, billboards). Decisions: Media selection, budget, frequency, reach.
Sales Promotion: Short-term incentives to encourage purchase or sale (e.g., discounts, coupons, samples, contests, loyalty programs). Decisions: Type of promotion, duration, budget.
Public Relations (PR): Building good relations with various publics by obtaining favourable publicity, building a good corporate image, and handling unfavourable rumours or events (e.g., press releases, sponsorships, events). Decisions: Target publics, PR tools, crisis management.
Personal Selling: Personal presentation by the firm's sales force for the purpose of making sales and building customer relationships (e.g., sales presentations, trade shows). Decisions: Sales force size, structure, training, compensation.
Direct and Digital Marketing: Engaging directly with carefully targeted individual consumers and customer communities to both obtain an immediate response and build lasting customer relationships (e.g., email marketing, social media marketing, content marketing, SEO, mobile marketing). Decisions: Platforms, content strategy, data management.
Setting the Communication Budget:
How much will be spent on promotional activities? Methods include: affordable method, percentage-of-sales method, competitive-parity method, and objective-and-task method.
Measuring Communication Results:
How will the effectiveness of the communication campaign be evaluated? (e.g., reach, frequency, engagement, sales impact, brand awareness changes).
4. Distribution (Place) Decisions
"Distribution," or "Place," refers to making the product available to the target customer at the right time and in the right location. It involves decisions about channels of distribution and physical distribution (logistics). Key decisions include:
Channel Design and Structure:
Direct vs. Indirect Channels: Will the company sell directly to consumers (e.g., own stores, e-commerce site) or use intermediaries (e.g., wholesalers, retailers, agents, brokers)?
Channel Length: How many intermediary levels will there be?
Channel Breadth (Intensity of Distribution):
Intensive distribution: Stocking the product in as many outlets as possible (e.g., convenience goods like soft drinks).
Selective distribution: The use of more than one but fewer than all of the intermediaries who are willing to carry the company’s products (e.g., appliances, some clothing brands).
Exclusive distribution: Giving a limited number of dealers the exclusive right to distribute the company’s products in their territories (e.g., luxury cars, high-end fashion).
Channel Management:
How will channel members be selected, trained, motivated, and evaluated?
How will channel conflicts be managed?
Building strong partnerships with channel members.
Logistics and Supply Chain Management:
Order Processing: How will orders be handled efficiently?
Warehousing: Where will inventory be stored? How many warehouses are needed?
Inventory Management: How much stock should be held at each level? Balancing costs of holding inventory with risks of stockouts.
Transportation: How will products be shipped (e.g., truck, rail, air, water, pipeline)? Choosing the most cost-effective and timely modes.
Retailing and Wholesaling (if using intermediaries):
What types of retailers or wholesalers will be used?
Decisions about store location, layout, atmosphere, and services for retailers.
Market Coverage:
Ensuring the product is available where and when target customers want to buy it.
E-commerce and Omnichannel Strategy:
Will the company sell online? How will online and offline channels be integrated to provide a seamless customer experience?
These four elements are not independent. They are all interconnected and must be coordinated to create a cohesive and effective marketing strategy. A change in one "P" often necessitates changes in the others. The key is to create a mix that delivers value to your target customers and achieves your company's marketing objectives.
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