3-d year student of “Marketing” Scientific adviser - Pankiv O.E. CHTEI KNTEU Chernivtsi
MARKETING MIX - PRODUCT, PRICE|, PROMOTION AND PLACE
Marketing mix is one of the major concepts in modern marketing. It is the combination of various elements which constitutes the marketing system of the company. It is the set of controllable marketing variables that the firm combines to find a response in the target market. Though there are many basic marketing variables, and four factors are the most important. These four elements are known as the marketing mix or the 4Ps. The four elements should be considered as one unit and structured to support each other. Otherwise a firm's marketing strategy will be confusing and uncoordinated. The marketing mix refers to the set of actions, or tactics, that a company uses to promote its brand or product in the market. However, the 4Ps have been expanded to the 7Ps with the addition of process, physical evidence and people, recently. The term “marketing mix” became popular after Neil H. Borden had published his article “The Concepts of the Marketing Mix” in 1964. Borden explains there how he first began to use this term in the late 1940's, after James Culliton described the marketing manager as a “mix of ingredients”. These ingredients, in Borden's doctrine, include product, planning, price, branding, distribution channels, personal selling, advertising, promotions, packaging, display, service, physical processing, and fact analysis. Later, these ingredients were grouped, by E. Jerome McCarthy, into four categories which are called the 4Ps of marketing. The 4Ps of marketing make up the marketing mix, which is probably best known from among the marketing terms. Its elements are the basic, tactical components of a marketing plan. The elements of the marketing mix are the following: • Product (or Service); • Price; • Promotion; • Place (Placement). These four elements create the marketing mix which impacts the development of any organization marketing strategies and tactics. The first of the marketing 4Ps is product. The product is the physical product or service offered to the consumer. In marketing, a product is anything that can be offered in a market that might satisfy wants or needs. In retailing, products are called merchandise. In manufacturing industry, products are bought as raw materials and sold as finished goods. In economics and commerce, products belong to a broader category of goods. The economic meaning of a product was first used by political economist Adam Smith. The most important aspects of the product are quality, appearance, packaging, brand, and support. A product can be divided into three parts: the core product, the augmented product and the tertiary product. A product can be classified as tangible or intangible. A tangible product is a physical object that can be touched such as a building, vehicle, gadget, or clothing. An intangible product is a product that can be taken only indirectly such as an insurance policy. All products have their certain life cycles during which they pass different identification stages: introduction, growth, maturity and decline. It is the responsibility of the company to identify the stage which the product will pass. Brands help to identify the product and differentiate the product from those of competitors. It is an indicator of product quality. Further, brands increase the success of advertising and personal selling. Once the manufacturer succeeds in creating a brand for the products, then it would be easier to introduce a new product in the market The second element in the marketing mix is place. Place (or placement) is associated with channels of distribution that serve as the means of getting the product to the target customers. It includes not only the location where the product is placed, but all those activities performed by the company to ensure the availability of the product to the targeted customers. The availability of the product at the right place, at the right time and with the right quantity is crucial in making placement decisions. Place has a huge affect on the profitability of a product. If a product is a consumer product, it must be available as far and wide as possible. On the other hand, if the product is a premium consumer product, it will be available only in some stores. Similarly, if the product is a business product, you need a team who interacts with businesses and makes the product available to them. Thus, the place where the product is distributed depends on the product and pricing decisions. Place (Placement) includes: • Placement • Distribution channels • Logistics • Inventory • Order processing • Market coverage • Channel distribution selection The third element of the marketing mix is price. The price of the product does not always mean the specific price but more often refers to the price policy. The price of the product is typically determined by the quality of the product and the target consumers. In modern economies, prices are generally expressed in units of some form of currency, (for commodities, they are expressed as a currency per unit weight of the commodity, e.g. euro per kilogram.). Although prices could be quoted as quantities of other goods or services and such kind of barter exchange can be rarely seen. Economic theory confirms that in a free market economy the market price reflects interaction between supply and demand: the price is set so as to equate the quantity being supplied and that being demanded. In its turn, these values define the marginal utility of the asset for different buyers and different sellers. When a commodity is sold at different places, the law of one price is generally valid. This essentially states that the cost difference between the locations cannot be greater than the shipping, taxes, other distribution costs and etc. In most cases of the majority of consumer goods and services, the distribution costs are high enough in the overall price, so the law may not be very useful. Pricing of a product depends on a lot of different variables and hence it is constantly updating. The important point in pricing is the cost of production calculation, the advertising and marketing expenses, any price fluctuations in the market, distribution costs, etc. Many of these factors can be changed differently. Thus, the prices have to bear the brunt of changes over a definite period of time. The final element of the marketing mix is promotion. Promotion depends a lot on the product and pricing decision. What is the budget for marketing and advertising? What stage is the product at? If the product is completely new in the market, it needs a brand; whereas if the product already exists in the market then it will need brand recall promotions. Promotion represents all of the communication methods that a marketer may use to provide information to different parties about the product. Promotion comprises elements such as: advertising, public relations, personal selling and sales promotion. There are different ways to promote a product in different areas of media. Promoters use internet advertisement, special events, endorsements, newspapers to advertise their products, incentives like discounts, free items, or a contest. This is a sales increase of a given product. The term "promotion" is usually used for internal marketing targets of the company, but, as a rule, not for the public; whereas the special phrase like “special offer” is more common. Thus, all the four variables of marketing mix are interrelated and affect each other. By increasing the value of the product, the demand of the product might deviate, and less distribution might be observed. The marketing mix is often crucial when determining a product or brand offer.