Competition is becoming intensive for virtually all types of products and services and due to this tendency responsibilities of marketing department of companies have increased. Marketing mix can be specified as an effective framework that can be used to increase the overall value of products and services to customers.

This article contains analysis of each element of marketing mix by using a variety of secondary data sources. The notion of marketing mix refers to a balance of marketing methods needed to sell products and services. Marketing mix consists of four core elements – product, price, place and promotion that are jointly known as ‘four Ps’. Extended marketing mix contains additional ‘three Ps’ consisting of people, process and physical evidence.

 

Product element of marketing mix

Anything that has a potential to satisfy specific customer needs can be specified as product. In modern marketplace learning about customer needs and wants through marketing research precedes development of products and services. Product variables include but not limited to its design, durability, technical features and capabilities, ease of maintenance and others.

Businesses use branding in order to differentiate their products and services from other products and services offered in the market. For example, while there is a wide range of soft drinks offered in the market, Coca-Cola drink in particular has a large market share, partially due to successful branding strategy of the company.

Importantly, benefits of successful branding go beyond any particular single product to assist the sales of other products offered by the company as well. Positive image of Apple brand assists sales of MacBook desktop computers, as well as, other products offered by the company such as IPhone and IPad.

Benefits of products and services have tremendous on the levels of revenues and these benefits can be divided into three categories: core, tangible and augmented benefits. Core benefits are associated with core functions of the product. For example, a mobile phone offers a core benefit of facilitating a wireless phone communication.

Tangible benefit relates to tangible design, dimensions or functionalities of products, whereas augmented benefits relate to customer perceived value associated with the product. For a mobile phone, tangible benefits may include large screen size and dual-camera, and intangible benefits include a sense of being trendy and modern due to the ownership of the latest model of mobile phone.

 

Price element of marketing mix

Price can be simply defined as the amount of money received from customer in exchange to products and services. It has to be stressed that “pricing is an area of marketing with a tremendous potential for increasing short-term profits, but unfortunately if managed badly can quickly bring a business its knees” (Meldrum and McDonald, 2007, p.11).

Pricing strategies can be divided into two broad categories: skimming and penetration. Market skimming pricing strategy is associated with charging higher prices for advanced product functions and capabilities, but selling fewer products and services. For example, market skimming pricing strategy is employed by Bugatti, an automobile manufacturer to sell its products such as Bugatti Veyron and Bugatti Vetise.

Market penetration pricing strategy, on the other hand, is associated with setting competitive prices for products and services and increasing the volume of sales. For example, in automobile industry Tata Motors markets the majority of its products via market penetration pricing strategy.

An important distinctive characteristic of price element of marketing mix compared to other elements can be specified in a way that price impacts revenues in direct manner, whereas other marketing mix elements effect costs of production. Moreover, price is the easiest to manipulate with compared to other elements of marketing mix when attempting to impact competition in the market.

 

Place element of marketing mix

Place element of the marketing mix is associated with the distribution channels of products and services. According to rough estimations, about one fifth of cost of production is spent on distribution, although this figure may greatly vary due to industry-specific and company-specific differences.

Most popular distribution channels include retailers, wholesalers, selling through agents, and direct selling. Certain patterns of distribution channels such as franchising and licensing have enabled some brands sell their products in multiple markets in global scale. Case studies of McDonald’s and Starbucks Coffee can be mentioned to illustrate this point.

Advent of online sales channel a couple of decades ago had significant impact on place element of marketing mix in the global scale. Specifically, online sales channels offer businesses cost-saving advantages to a significant extent. Moreover, there are certain types of products that are sold exclusively via online channels.

 

Promotion element of marketing mix

It has been noted that “the promotion element of the marketing mix is concerned the ways of communicating with customers and potential customers” (Meldrum and McDonald, 2007, p. 12). Therefore, promotion is based on marketing message about product and the brand that needs to be able to communicate value to target customer segment in an efficient manner.

Promotion can be used for a wide range of purposes such as increasing the volume of sales, attracting new customers and retaining current customers, and communicating marketing message of the brand.

Promotion element of marketing mix can be divided into the following five groups: advertising, sales promotion, personal selling, public relations, and direct marketing (Kotler and Keller, 2011). Specific methods belonging to each of these groups are associated with advantages and disadvantages, therefore, the choice of promotional mix from the groups above depends on a set of factors such as the amount of promotional budget, unique specifications of target customer segment, and the behavior of competitors.

Viral marketing marks the latest trend in the field of marketing and viral marketing promotional technique offers a set of advantages such as the possibility to spread the marketing message across the globe in an engaging way in a short duration of time.

 

Additional elements of marketing mix

Traditional set of four Ps of marketing mix has been extended to comprise additional three Ps that are people, process and physical evidence.

People element of marketing mix primarily deals with the role of employees in achieving customer satisfaction. Importance of people element of marketing mix is usually greater in service industry compared to manufactured products due to intangible and perishable nature of services.

Processes related to customer services represent another important element of marketing mix. Such processes include but not limited to face-to-face interactions with customer, process of handling customer complaints, process of issuing refunds etc. Panda (2009) associates the level of effectiveness of processes element of marketing mix with people element.

In other words, despite high levels of technological integration in various business processes, the levels of competency of human resources in general, and customer services representatives of the firm in particular play important role in the formation of customer perception about processes with direct implications on customer satisfaction.

Physical evidence is associated with visual aspects of the brand such as factory or store layout, facilities, the quality and types of furniture used etc. This particular element of marketing mix greatly varies according to the nature of the business and its industry.

 

Summary

Competition in markets becoming ever-intensive further increases the importance of marketing mix in practical level. Not a single element of marketing mix can be specified as the most important because marketing products and services in an effective manner is associated with effective approach to be adopted towards each individual element of marketing mix.

In other words, while businesses can focus on one element of marketing mix to a greater extent as a primary source of competitive advantage compared to other elements, severe shortcomings in a particular element in a marketing mix can not be compensated by other elements.

For example, if a particular product has advanced features and capabilities and is offered at a competitive price, but the distribution channel is not organised in an appropriate manner chances to gain solid market share with the product would be compromised.

Alternatively, creative promotional techniques and effective distribution channel can not compensate flaws associated with a product and it will be difficult for the product to succeed.

To summarise discussions, business managers in general, and marketing managers in particular are required to be constantly exploring sources for competitive advantage in the market in relation to each individual segment of the marketing mix. Nevertheless, as it has been illustrated within the body of this article by referring to real-life case studies one particular element of marketing mix can be adopted as a primary source of competitive advantage according to the chosen business strategy of the firm.

 

References

Meldrum, M. & McDonald, M. (2007) “Marketing in a Nutshell: Key Concepts for Non-Specialists” Butterworth-Heinemann