The marketing mix, also called the 4 Ps of marketing, is one of the major concepts in marketing. What is it and how is it composed?
The marketing mix is the set of tactical marketing tools that the firm uses to actually implement its marketing strategy. The strategy tells us how the firm want to create customer value, build profitable customer relations, and capture value back in return. The marketing mix consists of the tactical marketing tools used to actually produce the response the company wants in the target market.
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The 4 Ps of the Marketing Mix
What does the marketing mix consist of? It is composed of everything the firm can do to take influence on the demand for its offering. The many possibilities can be summarized and collected into four groups of variables: the four Ps. The 4 Ps stand for Product, Price, Place (Distribution) and Promotion. Let’s examine each of these elements more closely.
Product – 1st element of the Marketing Mix
The product is the realisation of the customers’ needs and wants. It is the base of the value created for the customer. Product means the goods-and-services combination the firm offers to the target market. A product consists of all the elements it is composed of. Thus, a car is more than the car itself – it is the nuts and bolts, the spark plugs, and thousands of other parts. Also, the car does not come alone – it comes along with optional features, full after-sales service package, warranty and other components that are as much part of the product as the exhaust. Thus, the product is far more than the core product that you would think of – it is the complete package which surrounds the product.
Price – 2nd element of the Marketing Mix
The price is a part of the value exchange that occurs between the company and the customer. It is the amount of money customers must pay to obtain the product. However, the price is more than just the list price. It may be adjusted by discounts, negotiations, allowances or credit terms. These actions adjust the price to present competitive and economic conditions and bring the price in line with the customer’s perception of the value of the product. The customer’s value of the product should receive special consideration in setting the price. If the gap between customers’ perceptions and the price they have to pay for the product is too high, the entire marketing mix may prove useless.
Place (Distribution) – 3rd element of the Marketing Mix
The place must be thought of as distribution. Place, or distribution, refers to all company activities that make the product available to target consumers. That may happen through retailers, own dealers or any other distribution network. In the case of a car manufacturer, place refers to the large number of independently owned dealerships that sell the company’s models. These dealers keep an adequate inventory of cars, demonstrate and present them to potential customers, are responsible for negotiations, closing sales, as well as for after-sales service.
Promotion – 4th element of the Marketing Mix
The company can create as much value for the target customers as it wants to. As long as this value is not communicated to these target customers they will never become actual customers. Thus, promotion refers to the activities that communicate the superior value and benefits of the product to target customers. Also, these activities aim to persuade target customers to buy the product.
However, promotion is more than advertising and sales. Companies may spend millions each year on advertising to tell consumers about the firm, its brands and its products. They may train sales staff to persuade potential buyers of the product, and they may rely on special promotion tactics, such as cash discounts and low financing rates. But especially nowadays, promotion must be understood as communication. Particularly in times of social media and modern technologies, exchange of information between consumers and the company as well as among consumers has become a crucial issue for any organization. Communication is more open and online than ever before and it has never been easier to step into peoples’ social life. The company should aim to become part of peoples’ lives, by communicating value with them instead of just to them. In a two-sided relationship, the firm should actively engage in exchanging value between itself and the customer instead of presenting that value only to the consumer. This view is incorporated in the alternative view on the Marketing Mix described below – the 4 Cs.
An integrated Marketing Mix
An effective and healthy marketing mix blends each element of the marketing mix into an integrated marketing programme. This programme should be designed to achieve the firm’s objectives by delivering value to consumers. It should put the formulated marketing strategy into practice. Each of the 4 Ps contributes to the integrated marketing programme. Consequently, they all need to work together. If one element fails, the whole marketing mix will be lopsided and eventually fail.
The 4 Cs – An alternative view on the Marketing Mix
An alternative, contemporary model of the marketing programme suggests that the 4 Ps of the marketing mix do only take the seller’s view of the market. However, it fails to take the buyer’s view into consideration. From that viewpoint, the 4 Ps should better be described as the four Cs. The Product can be translated into the Customer solution. The Price can be seen as the Customer cost. Further, the Place is the customer’s Convenience. Finally, Promotion is Communication. This view also implies that where marketers understand themselves as selling products, customers see themselves as buying solutions to their problems. Taking these aspects into consideration, it is an advisable approach for any marketer to start by thinking through the 4 Cs first and only then build the 4 Ps based on that platform.