Developing An Effective Marketing Mix

  

Date Posted: 11/3/2012 1:37:20 PM

Posted By: sashoo  Membership Level: Silver  Total Points: 382

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The marketing mix consists of 4 major elements: product, price, promotion and place. These ‘4-Ps’ are the key decision areas that marketers must manage so that they satisfy or exceeded customer needs better than the competition. In other words, decisions regarding the marketing mix form a major aspect of marketing concept implementation. At this point, it’s useful to examine each element briefly so that we can understand the essence of marketing mix decision-making.

• Product

The product decision involves deciding what goods or services should be offered to a group of customers. An important element is new product development. As technology and tastes change, products become out of date and inferior to those of the competition. So companies must replace them with features that customers value. As new products are developed that give greater benefits than old ones market leadership can change. For example, the Sony Walkman was the leader in portable music players. Following its launch, The Apple iPod soon outsold the Walkman, however, as it had the advantages of being able to download music and hold thousands of songs on a much smaller device.

All products must give benefits that customers value. The advertisement for Lucozade Sport Hydro Active explains how, by replacing lost salts and fluid, the brand provides the benefit of getting the most out of exercise.

Product decisions also involve choices regarding brand names, guarantees, packaging and the services that should accompany the product offering. Guarantees can be an important component of the product of the product offering. For example, the operators of the AVE, Spain’s high-speed train, capable of traveling 300kmph, are so confident of its performance that they guarantee to give customers a full refund of their fare if they are more than five minutes late.

• Price

Price is the key element of the marketing mix because it represents on

a unit basis what the company receives for the product or service that is being marketed. All of the other elements represent costs—for example, expenditure on product design (products, advertising and salespeople (promotion), and transportation and distribution (place). Marketers, therefore, need to be very clear about pricing objectives, methods, and the factors that influence price setting. They must also take into account the necessity to discount and give allowances in some transactions. These requirements can influence the level of list price chosen, perhaps with an element of negotiation margin built in. Payment periods and credit terms also affect the real price received in any transaction. These kinds of decisions can affect the perceived value of a product.

Because price affects the value that customers perceive they get from buying a product, it can be an important element in the purchase decision. Some companies attempt to position themselves as offering lower prices than their rivals. For example, Supermarkets such as Asda (Wal-Mart) in the UK, Aldi in Germany, Netto in Denmark and Super de Boer in the Netherlands employ a low-price positioning strategy. Another strategy is to launch a low-price version of an existing product targeted at price-sensitive consumers. For example, Apple launched the Mac mini, a basic version of the Macintosh computer. With this low-priced machine, Apple believes it can tempt people who have bought an iPod (and become fans of the company) to ditch their Windows-based PCs and switch to the Mac mini.

• Promotion

Decisions have to be made with respect to the promotional mix: advertising, personal selling, sales promotions, public relations, direct marketing, and Internet and online promotion. By these means the target audience is made aware of the existence of a product or service, and the benefits (both economical and psychological) it confers to customers. Each element of the promotional mix has its own set of strengths and weaknesses. Advertising, for example, has the property of being able to reach wide audiences very quickly. Procter & Gambler used advertising to reach the emerging marketing of 290 million Russian consumers. It ran a 12-minute commercial on Russian television as its first promotional venture in order to introduce the company and its range of products. A growing form of promotion is the Internet as a promotional tool. A great advantage of the Internet is its global reach. This means that the companies that did not have the resources to promote overseas can reach consumers worldwide by creating a website. In business-to-business markets, suppliers and customers can communicate using the Internet and purchases can be made using e-marketplaces. The Internet has also proven to be a powerful communication tool, sometimes replacing traditional media. For example, the Arctic Monkeys, a UK rock band, build up their fan base online before signing a record deal, by placing demo tracks on their website and MySpace, a social networking site that allows downloading and sharing among music fans. The band’s popularity soared through viral word of mouth, resulting in number-one single and album hits.

• Place

Place involves decisions concerning the distribution channels to be used and their management, the locations of outlets, methods of transportation and inventory levels to be held. The objective is to ensure that products and services are available in the proper quantities, at the right time and place. Distribution channels consist of organizations such as retailers or wholesalers through which goods pass on their way to customers. Producers need to manage their relationships with these organizations well because they may provide the only cost-effective access to the marketplace. They also need to be aware of new methods of distribution that can create a competitive advantage. For example, Dell revolutionized the distribution of computers by selling direct to customers rather than using traditional computer outlets. Music, too, is increasingly being distributed by downloading from the Internet rather being bought at music shops.

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