In this article, you will learn that marketing mix is the setting of the firm’s marketing decision variables at a particular point in time. It is also, a schematic plan to guide analysis of marketing problems through utilisation of a list of the important forces emanating from the market which bear upon the marketing operation of an enterprise as well as the list of elements (procedures and policies) of marketing programme. Also, marketing mix is “the apportionment of efforts, the combination, the designing and the integration of the elements of the marketing into a program or “mix” which, on the basis of appraisal of the market forces, will best achieve the objectives of an enterprise at a given time.
Marketing Mix Elements
The marketing mix elements are the factors or variables that broadly defined marketing activities, they are often refer to as 4Ps of marketing. The marketing strategies are built around these four elements. They are:
i. Product
ii. Prices
iii. Place (distribution and availability)
iv. Promotion (personal selling, advertising, public relation, sales promotion, publicity)
However, each of the above 4Ps comprises series of other elements or sub-mixes and the extent and the exact nature of their make-up in a certain level is determined by the type of product or service and the market.
However, the inability of the traditional 4Ps of the marketing mix to explain the marketing activities in the service sector prompted Booms and Bitner as quoted by Kotler (2003) to suggest three additional elements: people, process and physical evidence (see the three additional Ps below).
The Product
This essentially involves product planning. The product actual size and image (quasi quality) can be varied through advertising and promotion. Modification also gives a distinctive image from the competing brands, for instance, the new Star Larger Beer or the new Volkswagen Beetle car or even with each model of the latest Japanese Toyota and Nissan cars. It essentially includes
What products should be added?
How well managed is the product line?
What are the product lines, particular strength and weaknesses?
How does the product compare with that of other competitors?.
The Price
This focuses on the value placed on the product. Price is the variable a marketer can change quickly to respond to actions of competitors.
It can be varied in order to stimulate or reduce demand as demonstrated by the price mechanism. According to Kotler, it is the amount of money that is charged for a product or service. It is also described as the value for what is exchanged.
It relates directly to the organisations’ revenue and a function of profit. The pricing policy of an organisation is affected by:
(i) Analysis of the competitor’s price
(ii) Company’s pricing policy formulation
(iii) Discounts given to different types of customers and conditions and terms of sales.
Place
This is the level of the availability of the products. It influences mode of distribution. It is the amount of effort the customers must sacrifice in order to obtain the product. This can be varied by distributing the product more or less widely or by varying the distribution channels employed.
The distribution action includes Analyzing the different types of distribution channels
Designing the appropriate distribution channels
Establishing distribution centres
Setting up inventory control methods
Analysing transportation methods in order to minimize cost of distribution
Determining possible location for plants and retail outlets
Promotion
Marketing promotion is the act of transmitting information for marketing purposes. It is the process of establishing communication relationship between a marketer and its public. It is aimed at informing and reminding customers of existence of specific products of service. In promotional activities, the number of field sales force may be varied depending on situation warranting the changes. Advertising expenditure may be increased decreased. Advertising theme may be changed, for instance “MTN: the better connection” was suddenly changed to THE BEST CONNECTION. Apart from changing the theme, advertising media employed may also be changed. Other promotional activities include:
Setting marketing promotion objectives
Development of advertising messages
Recruitment and training of sales personnel
Formulation of compensation for sales forces
Assessment of the performance of promotional activities
List the the marketing mix elements; Product, Pricing, Promotion and Place.
Price decision
Price is the amount of money for which a product is offered, sold or bought. It is expressed in various ways depending on where it is being applied. To some, it is fare, fee, rent, toll and, of course, interest. It is an element of marketing mix that is next to product. The money value or price of a product is based on its importance or the utility of the product to the buyer. There are some very complex ways of deciding on a price. It could be:
1. When repositioning old product in the existing market, price can be changed to attract old customers and retain loyal ones.
2. Prices are adjusted as a result of rising cost of production in an unfavourable business environment.
3. When a range of some product has differences in features, qualities and other product-related criteria, different prices are used by the different producers to separate different sizes, e.g. coke 25cl, 35cl as well as the Peugeot products.
Factors Influencing Pricing Decision
Many factors are usually considered before setting price for a given product. These factors are made up of external and internal factors and they include:
1. Stage in product life cycle
The degree of changes in the price level of a product is largely a function of the product’s stages in its life cycle. At the introduction stage, the product price could be high or low. Also, when competitors enter the market with different brands, the company is forced to change its price to reduce the impact of the competition. At maturity stage especially when the products have been rendered ordinary by competitors, price can be reduced or stabilized to boost sales of the product while sporadic price reduction is commenced at decline stage.
2. Product differentiation
Product brand with marked differences from other brands command high value and price. Customers become more loyal due to the uniqueness of the
product. For example, BAGCO bag is water proof, leak proof, re-useable and re-sellable.
3. Customers buying patterns
The degree of consumption and quantity purchased is justified in price level, convenience products have higher turnover than shopping goods, and hence they attract low prices e.g. salt. Also, wholesale or larger quantity attracts reduction in prices.
4. Price elasticity
Price elasticity is the reaction of consumers or buyers to any slight change in price or quantity demanded of the product. Price inelastic of product like luxury items or non-necessities can carry high price without rapid fall in demand as consumers are not sensitive to such changes.
5. Marketing channel and distribution policy
The scope of marketing functions performed by the intermediaries affect the prices of goods. Producers tend to charge low price on the middle-men that perform special money-consuming marketing functions like advertising, credit facilities and franchising services. On the other hand, when middlemen perform ordinary functions like distribution, they enjoy normal pricing conditions.
6. Promotion strategy
Goods that involve intensive promotional campaigns carry high prices. An example is the soft drink industry.
7. Competition
Firms respond positively to competitors pricing strategy. They give low prices and high prices as the case may be. However, no-price competition is more ofter evolved to attract and retain customers.
8. Government policy
The government of any nation tends to protect its citizens but in most cases they use fiscal and monetary policies to discourage consumption of some products. These instruments force the producer to adjust his price to the level compatible with government legislation. Luxury items are often expensive while low prices are encouraged for basic products,
Classification of Pricing Techniques
Pricing techniques may be divided into three groups
(i) Cost oriented
(ii) Demand oriented
(iii) Competition oriented
The cost oriented technique of pricing is made up of cost plus, mark-up, target and break. even pricing methods. Cost plus involves calculating the full unit cost including overhead and add agreed percentage to give the required price. Mark-up is the term usually used in the retail trades, and it varies inversely with the unit cost as well as turnover. It is usually higher on private brands rather than manufacturer’s brands.
Product decisions and product policy
A product is anything that is offered for attention, acquisition or use. It can be an object, idea, person, services, etc. that a seller offers to the consumers. It is a set of tangible and intangible attributes that the seller offers to the consumer.
This includes packaging, colour, price as well as the retailer prices that the consumer may view as offering want- satisfaction. Kotler (2003) defines the product as: “A bundle of physical services and symbolic particulars expected to yield satisfaction or benefit to the buyer.” This definition presupposes that product should be viewed from the customer’s point. The customer does not just buy the physical product; he buys the services associated with it.
In another form, a product is a bundle of utilities consisting of various product features and accompanied services. It gives physical and psychological satisfaction to the buyer, hence anything that is m capable of satisfying customers’ m needs or wants is called a product.
Product mix
This is the range of company’s product presented to meet all available target market and segments.
Product line
This is a range of product provided for one target market set of customers e.g. Amstel Malta, Maltina (Classic and Exotic fruits, etc.). It is a group of products closely related by either:
Associated usage
Common usage
Common distribution channels
Given price range
Product width
This is the number of product lines contained in the product mix.
Product mix depth
The number of products in a product line is called the depth.
Product Concepts
Product concept is the interpretation in the technical terms given to the product by the customer. Product concepts are what make any item to be viewed as a bundle of utilities. This could be seen from three different perspectives and they are:
(i) Formal product: This consists the physical features of an item offered for sale. It includes the quality, colour, package, design, brand names, trademark and other physical parts of the given item.
(ii) Core product: This is the essential function or performance for which the item is made. For example, the core product of Panadol is its ability to stop pains of the buyer. It is the essential benefit or utility sold to the buyer. The formal product serves as the package which houses the core product.
(iii) Augmented product: This is the aggregate or the totality of the formal and other services rendered by the product but which the customer is not fully aware of but helps in satisfying their physical and psychological needs. Such additional attributes to product include delivery and storage of the product, credit facilities attached to its purchase, advertising, transportation, fuel, etc, that go into provision of the product for the user.
Product Branding
Product branding is the act of naming or establishing brand name, brand mark or trade mark for a product in order to make customers identify the product from that of the competitors in the market.
Brand: This refers to the name, term, sign, the letter, words, symbol, design, number, color, etc. or the combination of all the above used to identify a product.
Trade Mark: This refers to that part of the brand that has been registered and authorized by the Registrar of Companies for the exclusive use of the company. This implies that the company is legally allowed as the only firm that can use the mark. Sometimes, the user embosses the letter or writes registered so that it is shown that the company is legally protected by the mark.
Features of a good brand: When choosing branding, marketers consider these factors:
1. It should be short, easy to spell, pronounce and remembered e.g. Sharp television, Bic biro etc.
2. It can use non-sense of unfamiliar name e.g. Richoco, Isuzu, etc.
3. It should suggest something about the features of the product e.g. Lucozade boost Legend extra stout, or Milky brand of powdered milk etc.
4. It must be legally protected or registered
5. It should be adaptable to new products.
Objectives of Branding: The following are the objectives of branding.
1. To gain strong control of the market by making consumers have interest in the product and go for it at the expense of other products,
2. To reach a selected target market with unique brand that suits their taste,
3. To serve as a means of promoting the product.
4. To build brand preference in the market.
Product design, colour, quality and design
Product design is the orderly arrangement of elements that collectively form a good product or service.
Good product design is one way of satisfying customers and gain differential advantage.
It can also improve the marketability of a product making such product;
(i) easier to operate;
(ii) have a high quality;
(iii) have a good appearance;
(iv) reduce production cost.
Other reasons for an organisation paying increasing attention to product costs are:
(a) Advancing technological knowledge: This aids production and generation of new ideas.
(b) Growing competition: the increasing numbers of firms have made it very important for organisations to look into their production cost in order to turn out cheaper but good product that can withstand the market.
(c) Differential advantage: Distinctive product feature often comes to be the feature that makes the product to stand out.
(d) Cost involved: The cost involved in good product designed has been found out to be significant that, where such design hits with customers’ desire, it can produce a giant return e.g. the odd shape of the Volkswagen beetle of decades ago.
Product colour: Colour forms part of the package of a product. Like design, colour often forms a determining factor in customers’ acceptance or rejection of a product. The Supreme court of the USA (1995) defines colour as what “identifies and distinguishes particular brand and thus indicates its source.” The colour of a product can at times qualify as part of its trade mark eg white building housing FCMB, yellow block in big red block of GT Bank.
Also with other marketing mix elements, a differential advantage might be gained by identifying the most pleasing colour for a product e.g. the Maclean’s tooth paste.
Product quality: As important as product quality is, there has not been any agreeable definition for it. American Marketing Association (AMA), in 1993 defines it as: “the set of features and characteristics of a good or service that determines its ability to satisfy needs.” However, consumers often disagree on what constitute quality in a product.
Personal tastes are deeply involved in such assessment. What a person likes, another person may dislike, hence like beauty, quality, may also be said to be in the eyes of the beholder.” Other considerations for determining quality include
Consumer expectations.
Experience of the consumers.
Existence of competing product as a base for comparison.
It is said that quality forms the single most critical factor for businesses to survive in the ever expanding and competing global market. In the same vein, organisations have quality control departments to monitor the quality of their production to make sure that the required or recommended standards are met.
Explain product branding to your friend and tell him/her four features of a good brand.
Product branding is the act of naming or establishing brand name, brand mark or trade mark for a product in order to make customers identify the product from that of the competitors in the market.
Four features of a good brand
i. The name should be short and easy to spell, pronounce and remembered e.g. LG television, Bic biro etc.
ii. It can be a non-sense of unfamiliar name e.g. Richoco, Isuzu, etc.
iii. The name should suggest something about the features of the product e.g. Lucozade boost, Milky brand of powdered milk, Legend extra stout, etc.
iv. It must be legally protected or registered.