Marketing Mix

Marketing Mix

In order to convert marketing plans into action, the marketing manager needs to take concrete decisions regarding various marketing activities. These decisions relate to the marketing variables that the firm can control to influence the target market.

The set of marketing tools that the firm uses to pursue its marketing objectives in the target market is known as Marketing Mix.

According to E. Jerome McCarthy, the marketing mix is comprised of four main elements, often referred to as the Four Ps:

1. Product: Decisions relating to the product being offered.

2. Price: Decisions relating to the price of the product.

3. Place (Physical Distribution): Decisions relating to making the product available to customers.

4. Promotion: Decisions relating to informing and persuading customers about the product.

These four elements are interconnected, and decisions regarding one P often influence the others. A successful marketing mix requires coordinating these four elements effectively to satisfy the needs of the target market and achieve the firm's marketing objectives.

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Product

The Product is the fundamental element of the marketing mix. It refers to anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a need or want. In marketing, a product is more than just a physical object; it includes the tangible aspects, services, ideas, people, and places.

A product is a bundle of utilities or satisfactions that a customer receives. It encompasses not only the core benefit but also features, quality, design, brand name, packaging, labelling, and associated services.

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Classification Of Products

Products can be broadly classified into Consumer Products and Industrial Products.

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Consumer Products

Consumer Products are those purchased by the final consumers for personal consumption. They are bought to satisfy personal or household needs and are not generally used for further processing or resale.

Consumer products are often classified based on the shopping habits of consumers:

a) Convenience Products: Products that consumers buy frequently, immediately, and with minimum comparison and buying effort. Examples: Soap, toothpaste, bread, newspapers, packaged milk.

b) Shopping Products: Products that consumers compare on suitability, quality, price, and style during the selection and purchase process. Examples: Clothing, furniture, appliances, cars.

c) Speciality Products: Products with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort. Consumers often have strong brand preference and loyalty. Examples: Luxury cars (Mercedes, BMW), specific brands of cameras (Nikon, Canon), high-end jewellery.

d) Unsought Products: Products that consumers either do not know about or do not normally think of buying. Examples: Life insurance, funeral services, blood donations.

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Durability Of Products

Consumer products can also be classified based on their durability:

a) Non-Durable Products: Products consumed quickly in one or a few uses. Examples: Soap, toothpaste, beverages, food items.

b) Durable Products: Products that are used for a long period (many uses). Examples: Refrigerator, television, car, furniture.

c) Services: Intangible activities or benefits offered for sale. Examples: Haircut, banking, insurance, medical treatment.

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Industrial Products

Industrial Products are those products which are used as inputs in producing other products. They are purchased by individuals or organisations for further processing or for use in conducting a business.

Examples: Raw materials (cotton, iron ore), machinery, tools, components (car battery), operating supplies (lubricants, cleaning supplies), business services (consultancy, legal services).

Industrial products are generally purchased by professional buyers based on technical specifications, quality, reliability, and price.

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Branding

Branding is a crucial element of the product mix. It is the process of giving a name, term, sign, symbol, design, or a combination of these, to a product or service to identify it and differentiate it from competitors. A Brand is a name, symbol, or design intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors.

A brand can be a Brand Name (e.g., Tata, Bajaj, Nestle), a Brand Mark (a symbol, e.g., the Nike swoosh, the Mercedes star), or a Trade Mark (a brand or part of a brand that is given legal protection).

Advantages of Branding:

To Marketers: Enables product differentiation, helps in charging a premium price, aids in advertising and sales promotion, makes it easier to launch new products under the same brand name (brand extension).

To Customers: Helps in product identification, assures quality, provides status symbol (for prestigious brands), reduces purchase risk.

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Characteristics Of Good Brand Name

A good brand name should ideally possess the following characteristics:

1. Simple and Short: Easy to pronounce, spell, and remember (e.g., Bata, Tito's).

2. Suggestive: Should suggest the product's benefits or qualities (e.g., Boost, Fair & Lovely - though names like this are changing).

3. Distinctive: Should be unique and stand out from competitors' names (e.g., Kodak - though generic now, was unique).

4. Adaptable: Should be adaptable to different advertising media, languages, and packaging requirements.

5. Versatile: Should be versatile enough to be used for new products if the company expands its product line.

6. Legal Protection: Should be capable of being registered and legally protected.

7. Staying Power: Should not become outdated over time.

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Packaging

Packaging is the act of designing and producing the container or wrapper for a product. It is an important marketing tool.

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Levels Of Packaging

A product can have several levels of packaging:

1. Primary Package: The product's immediate container (e.g., the tube for toothpaste, the wrapper for a chocolate bar).

2. Secondary Package: The wrapper or container that protects the primary package and is discarded when the product is about to be used (e.g., the cardboard box holding the toothpaste tube).

3. Transportation Package: The packaging needed to store and transport the product (e.g., a corrugated box containing multiple units of secondary packaging, used for shipping).

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Importance Of Packaging

Packaging has become increasingly important due to:

1. Rising Standards of Health and Sanitation: Ensures product purity and cleanliness.

2. Self-Service Outlets: Good packaging attracts customers in self-service stores where there is no salesperson.

3. Innovational Opportunities: Creative packaging can provide a competitive advantage.

4. Product Differentiation: Packaging is a key factor in differentiating a product from competitors.

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Functions Of Packaging

Packaging performs several functions:

1. Product Identification: Helps in easy identification of the product.

2. Product Protection: Protects the product from damage, spoilage, pests, etc.

3. Facilitating Use of the Product: Packaging can make the product easier to use (e.g., squeeze bottles, re-sealable packs).

4. Promoting the Product: Attractive and informative packaging can attract attention and persuade customers to buy.

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Labelling

Labelling is the process of putting a label on the package. A Label is a simple tag or a complex graphic printed on or attached to the package. It is an informative component of the product.

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Functions Performed By A Label

A label performs several functions:

1. Describes the Product and Specifies its Contents: Provides information about the product (e.g., ingredients, material used).

2. Identifies the Product or Brand: Helps customers recognise the product or brand.

3. Grading of Products: Some labels assign grades to the product (e.g., ISI mark, FPO mark, Agmark in India).

4. Helps in Promotion of Products: Catchy slogans or graphics on labels can attract buyers.

5. Provides Information Required by Law: Mandatory information like maximum retail price (MRP), date of manufacture, expiry date, weight, statutory warnings (e.g., for cigarettes) must be included.

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Pricing

Pricing is the process of setting the price for a product or service. Price is the amount of money paid by a buyer in exchange for a product or service. It is a critical component of the marketing mix as it directly affects the revenue and profitability of the firm.

Pricing decisions require careful consideration because price is the only element of the marketing mix that generates revenue; all others involve costs.

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Factors Affecting Price Determination

Several factors influence the price-setting decision:

1. Product Cost: The cost of producing, distributing, and selling the product provides the floor (minimum level) for the price. Price must cover costs in the long run.

2. The Utility and Demand: The price is influenced by the utility of the product to the customer and the intensity of demand. Products with higher utility or high demand can command a higher price. The law of demand states that consumers usually buy more at a lower price.$$ P \uparrow \implies Q_D \downarrow $$. Price sensitivity varies for different products.

3. The Extent of Competition in the Market: In a competitive market, firms have less flexibility in setting prices. Prices are often close to competitor prices. In less competitive markets or monopolies, firms have more control over pricing.

4. Government and Legal Regulations: Government can intervene and regulate prices for certain essential commodities or in specific industries to protect public interest (e.g., price controls on medicines, essential food items).

5. Pricing Objectives: The specific objectives of the company (e.g., profit maximisation, achieving market share leadership, survival, product quality leadership) influence the pricing strategy.

6. Marketing Methods Used: The pricing decision is also affected by other elements of the marketing mix, such as the quality of the product, type of distribution channel, advertising and sales promotion efforts, and customer service provided. A premium product with extensive promotion and distribution may command a higher price.

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Physical Distribution

Physical Distribution is concerned with making the goods and services available at the right place, at the right time, and in the right quantity. It is a critical element of the marketing mix, also known as 'Place'.

It involves all the activities required to move products from the point of production to the point of consumption. An efficient distribution system ensures customer satisfaction and contributes to profitability.

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Components Of Physical Distribution

The main components of physical distribution are:

1. Channels of Distribution (Intermediaries): The path through which ownership of goods is transferred from producer to consumer. This involves intermediaries like wholesalers, retailers, agents, etc. (e.g., Manufacturer $$ \rightarrow $$ Wholesaler $$ \rightarrow $$ Retailer $$ \rightarrow $$ Consumer).

2. Physical Movement of Goods (Transportation): The actual movement of goods from source to destination using various modes of transport.

3. Storage and Warehousing: Holding goods in stock at various points in the distribution channel to ensure timely availability.

4. Inventory Control: Managing the level of stock to meet customer demand while minimising holding costs.

5. Order Processing: The system for receiving, processing, and fulfilling customer orders efficiently and accurately.

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Promotion

Promotion is the function of informing potential customers about the product and persuading them to buy it. It is a crucial element of the marketing mix aimed at stimulating demand.

It involves communicating with the target market to build awareness, create interest, generate desire, and ultimately lead to action (purchase).

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Promotion Mix

The Promotion Mix refers to the combination of promotional tools used by an organisation to achieve its communication objectives. The most common tools are:

1. Advertising

2. Personal Selling

3. Sales Promotion

4. Public Relations

5. Digital Marketing (often considered part of others or a separate element now)

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Advertising

Advertising is an impersonal form of communication through paid media, where the cost is borne by the identified sponsor. It is a widely used tool for promoting products and services.

Examples: TV commercials, radio ads, newspaper and magazine ads, billboards, online display ads, social media ads.

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Merits Of Advertising

1. Mass Reach: Advertising can reach a large number of people across a wide geographical area.

2. Enhancing Customer Satisfaction and Confidence: By creating a brand image and assuring quality, advertising can enhance customer satisfaction and confidence in the product.

3. Expressiveness: Advertising allows for developing the message with graphics, visuals, and audio to make it attractive and appealing.

4. Economy: Although the total cost of advertising may be high, the cost per person reached is very low, especially for mass media.

5. Informativeness: Provides information about the product, its features, price, etc.

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Objections To Advertising

Despite its merits, advertising faces some objections:

1. Adds to Cost: Advertising expenses increase the cost of the product, which may be passed on to the consumers in the form of higher prices.

2. Undermines Social Values: Advertising sometimes promotes materialism and encourages people to buy products they don't need.

3. Confuses the Buyers: A large number of advertisements using similar claims can confuse buyers.

4. Encourages Sale of Inferior Products: Some argue that advertising can be used to promote and sell inferior quality products by creating a positive image.

5. Some Advertisements are Bad in Taste: Some advertisements are criticised for being vulgar, indecent, or offensive.

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Personal Selling

Personal Selling is the direct face-to-face interaction between a salesperson and a prospective customer for the purpose of making a sale. It involves developing personal relationships with customers.

Example: A salesperson demonstrating a washing machine to a customer in a retail store, an insurance agent explaining policy details to a client, a B2B salesperson selling industrial equipment.

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Features Of Personal Selling

1. Face-to-Face Interaction: Involves direct interaction between the salesperson and the customer.

2. Development of Relationships: Can lead to long-term relationships with customers.

3. Two-Way Communication: Allows for immediate feedback and clarification of doubts.

4. Persuasion: Involves persuading the customer to buy.

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Merits Of Personal Selling

1. Flexibility: The message can be adjusted according to the customer's needs and responses.

2. Direct Feedback: Salesperson gets immediate feedback from the customer.

3. Minimum Wastage of Effort: Efforts are directed towards potential buyers.

4. Customer Attention: Ensures the customer's attention.

5. Builds Relationships: Helps in developing lasting relationships with customers.

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Role Of Personal Selling

Personal selling plays a crucial role for:

To Business: Effective tool for sales, flexible, provides feedback, minimises wastage, builds relationships, aids in launching new products, reduces competition (through relationships).

To Customers: Helps in identifying needs, provides information, acts as an advisor, helps in making the best choice.

To Society: Converts needs into demand, generates employment, career opportunities, mobility of salespeople, income for salespeople, product standardisation.

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Sales Promotion

Sales Promotion consists of short-term incentives offered to encourage immediate purchase of a product or service. While advertising pulls the product by creating demand, sales promotion pushes the product by offering incentives.

Example: Discounts, rebates, free samples, contests, buy-one-get-one-free offers, lucky draws.

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Merits Of Sales Promotion

1. Attention Value: Incentives attract customer attention.

2. Lures the Buyer: Incentives act as an inducement to buy.

3. Useful in New Product Launch: Helps in attracting initial customers and creating trial.

4. Synergy with Other Tools: Supplements advertising and personal selling.

5. Encourages Off-Season Sales: Can help boost sales during lean periods.

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Limitation Of Sales Promotion

1. Reflects Crisis: Frequent use may indicate that the company is facing sales problems.

2. Damages Product Image: Too many promotions, especially price reductions, might give the impression of low quality.

3. Short-Lived Results: Provides only short-term boost in sales.

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Commonly Used Sales Promotion Activities

Various activities are used:

1. Rebate: Offering a discount on the price of the product for a specific period (e.g., ₹50 off on a pack of biscuits).

2. Discount: Offering products at a price less than the list price (e.g., 20% off on clothes).

3. Refunds: Refunding a part or full price paid by the consumer on presenting proof of purchase (e.g., money back guarantee).

4. Product Combinations: Offering another product as a gift with the purchase of the main product (e.g., free small shampoo with a large conditioner).

5. Quantity Gift: Offering extra quantity of the product (e.g., 20% extra toothpaste).

6. Instant Draws and Assigned Gift: Scratch cards, coupons offering gifts or discounts instantly.

7. Lucky Draw: Offering a chance to win a prize based on a draw.

8. Usable Benefit: Offering a utility product as a gift (e.g., a pen with a notebook).

9. Full Finance @ 0%: Zero interest finance scheme, usually for durable goods (e.g., buying a refrigerator on EMI without interest).

10. Sampling: Offering a free sample of the product to potential customers (e.g., small sachets of shampoo or coffee).

11. Contests: Organising competitive events involving skill or application of mind (e.g., quiz contests, slogan writing competitions).

12. Fair and Exhibitions: Participating in trade fairs to showcase and sell products.

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Public Relations

Public Relations (PR) is the deliberate, planned, and sustained effort to establish and maintain mutual understanding between an organisation and its public. Publics include customers, employees, shareholders, government, media, and the general community.

PR focuses on managing the flow of information between the organisation and its publics. It aims to build a positive image and handle negative publicity.

PR tools include press releases, media relations, corporate communication, lobbying, public appearances, sponsorships, websites, social media, and handling crises.

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Role Of Public Relations

Public relations plays a vital role for the organisation:

1. Building Credibility: PR messages (e.g., news articles, endorsements) are often perceived as more credible than advertisements.

2. Encouraging the Public: PR helps in creating a positive image and goodwill among the public.

3. Achieving Marketing Objectives: PR can support marketing efforts by building awareness, creating interest, and influencing public opinion.

4. Cutting Promotional Cost: Effective PR can sometimes achieve promotional objectives at a lower cost than advertising.

5. Handling Crises: PR is crucial for managing reputation during crises or negative events.

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