What is meant by Marketing mix?

For any business to achieve its marketing objective it is always beneficial for the business to make a marketing plan. The plan should entail several important decisions about the four P’s of marketing, product, price, place and promotion. So, we can conclude that marketing mix is a systematic combination of four elements product, price, place and promotion which should satisfy the needs and wants of the target market and also help in reaching its marketing objective. The basic purpose is to satisfy the needs in the best manner possible.

Marketing mix is a dynamic process. As the needs of the consumers vary from time to time so should the marketing mix be changed in order to appeal to the changed needs. Marketing mix helps a firm to meet it present and future needs of the target market and helps the firm to generate revenue.

Marketing mix can play a key role in acquiring market share and earning higher profits. It is very important for the firm to get the combination of the four P’s right. Marketing mix is important for the following reasons:

It is decided by considering a specific target group whose wants are to be specified to generate revenue and profits for the firm.
It is supposed to maintain an appropriate balance between the various factors of marketing mix. These elements are to be inter-related and connected with each other in an efficient way.
Marketing is done by keeping the consumer in mind at all stages. It is consumer-oriented and acts as a link between the firm and the consumers.

Product

Product is one of the elements of the four P’s of marketing. Is stands for the tangible and intangible part of the marketing mix which is provided to the consumer in order to satisfy his needs. Product mix is basically a combination of many elements relating to the product or service offered for sale. The activities for a product are directed towards a specific target market. There are various different types of products:

Physical items
Services
Places of tourism
Ideas
Experiences
Information

Goods

Goods are tangible items that are generally consumed by a consumer in order to satisfy his needs and wants. These can also be used in further production of goods. The following are the main features of a good:

Goods are tangible. As in they have shape, size , color , weight etc.
There is usually a time gap between the goods when they are produced and when they reach the ultimate consumer. This allows us to separate goods from producers and sellers.
Some goods can be stored in warehouses for future sale as they will not lose their value or depreciate in the time.
Goods made at the factory are normally standardized and are of the same quality.

Goods can be classified into two main categories:

Consumer products: These are the goods which are made for the ultimate consumer and he is to consume it. These are for the personal use of the consumer. These can further be classified according to the time and effort spent by the consumer in order to acquire the goods. These are:
Convenience products: these are mostly fast-moving consumer goods. These are used in everyday life and are purchased frequently. They normally do not have a very long life. Minimum efforts are required to acquire it and are meant for personal convenience.
Shopping products: These products require some extra time and efforts than consumer products. These are normally purchased after a comparative analysis between the competitors for that product. The comparison is done on the basis of quality, size, price etc.
Specialty products: These products are mostly luxuries and have high prices. They are purchased with special efforts, which are to be made by the consumers. Due to their high prices they normally have low demand as not many people can afford to pay for them.

On the basis of durability of the product they can be classified as:

Durable products- These are used for a long period of time. They can be used over and over in the time.
Non-durable – these do not last very long. They are used by the consumer frequently.

2) Industrial products: these are the products which help in further production of goods. These are meant for use in producing other products. They can be classified as:

Raw materials
Operating supplies
Installations
Accessory equipment
Fabricated parts

Services

Services are the activities, satisfactions which can be offered for sale to a consumer. They normally cannot be separated from the person providing it. Services cannot be touched like products and do not last very long. Some types of services:

Personal services
Financial services
Courier services
Professional services

Branding

Branding is a process of giving a different name or symbol to a product, which allows a consumer to remember it by that name or symbol. This also allows the product to be differentiated from its competitors. Branding is thus the process by which efforts are made to differentiate the product in the market.

Labeling

Labeling means making a label that is to be put on the product to provide information about the product. It talks about its nature, content, maximum retail price, precautions, ingredients, etc.

Packing

Packing refers to covering and protecting the product from damage. It is to safely deliver the product to the ultimate consumer. A good packing should have resale value and should go hand in hand with the identity of the product. Package is also used for promotion, advertising and prestige. Packing thus plays an important role in the sale of the product and should appeal to the consumer.

Price

Price is the value of the product in monetary terms. it is the amount of money the producer is asking from the consumer in exchange of the product. He will only offer the product or service to the consumer if the buyer is able to pay the price. Price is defined as the amount of money which is required to acquire a product in money terms. Pricing is a process of finding the actual value of a good or service in the terms of money.

The price does not only consider the base price but also the terms and conditions for sale. Pricing is thus an important process as if the prices are set too high the consumer may not buy the product at all and the firm will incur a heavy loss. On the other hand, if the prices are set too low then it may be thought of as poor quality and a consumer being rational would not want to buy lower quality products. Thus, the price of the product should be set according to the company’s objectives.

The price of the product may change as the objectives do like from profit maximization to capturing more market share, they may be required to reduce prices as to make it affordable to many more consumers.

Many factors determine the price of the product. Some of them are the quality of the product, the aftersales service, the channel of distribution used to supply goods, the cost of the production of the good and the promotional efforts put in by the company. Price is fundamental to all marketing efforts. It is a regulatory mechanism that allows the buyer and the seller to come to an understanding and exchange goods and services.

The importance of price for a consumer is that it determines the purchasing power of the consumer and also gives an idea about his standard of living. The higher priced products he buys higher is the purchasing power, the lower price products he buys the lower is the purchasing power. The prices of different goods and services act as a base for the consumer to take their buying decisions and the manner in which they allocate their income.

The sale of a good and service can only take place when both the consumer and the seller mutually agree to strike the deal at the same price. If this does not happen there can be no sale and the whole concept of price is meaningless. Price also broadly determines the revenue a firm can generate by selling its goods in the market.

Factors determining price

Objective of the firm:

As earlier discussed, the price at which the product is decided to enter into the market should be in line with the broad objective of the company. A firm may have several objectives like profit maximization, target level of sales, higher dividends, more market shares etc. different objectives may require prices to be set differently in order to achieve those objectives.

Cost of the product:

Cost of the product may be comprised of fixed cost and variable cost. In most of the cases the cost of the product are the manufacturing price plus a profit margin. The cost of the product cannot be below the cost of making it or else the business would incur losses and would not be able to survive in the market.

Competition in the market:

Often there are substitutes goods available in the market. If a producer charges higher prices for his goods, the consumers will in no time shift to a substitute good which costs less and satisfies the same desire. Thus, the prices charged by the competitors should be close to each other unless the quality of the good is superior to the competitors. For example the price charged by Coke and Pepsi are similar.

Promotional strategy:

Due to the intense competition in the market the firms are bound to promote their product to get an upper hand over their competitors. They may use various promotional techniques to do this. This is basically an attempt by the firm to differentiate their products from that of their competitors.

Quality and service:

If the quality of the product is higher than its competitors then it can be priced higher and the consumers may still purchase it. This can also be done if the product provides high value service which is enjoyed by the consumers. On the other hand, if the quality is very poor it may not be able to fetch consumers even at a lower price.

Place

Place element of the marketing mix is concerned with the distribution of products and to make them available to the ultimate consumer at the right time. This process creates place utility. This is an important element as the product will not be sold and the company will not generate revenue from the products are not made available at the right place at the right time.

The place element serves two functions:

It requires the producer to choose a channel of distribution among the various available from which the goods may flow from the producer to the ultimate consumer. Further in the project, the various channels of distributions are highlighted.
The physical distribution of goods may involve some activities like transportation and storage of goods.

The channel of distribution is also called as trade channel. It is basically the route from which the products flow from the producer to the ultimate consumer. It is therefore a link between the two entities.

The channel of distribution serves the following functions:

Sorting – middlemen sort the products into homogeneous groups.

Accumulation – middlemen build up stock to cater to a sudden change in demand as they do not want to break the continuous flow of goods and services.

Allocation – middlemen usually by in bulk from the producer and then distribute them in small lots and appropriate sizes.

Assorting – the middlemen procure and deliver goods of different types in combinations desired by the consumers.

Promotion middlemen promote sales through personal selling and word of mouth publicly

Alternative channels of distribution

Manufacturer – consumer (direct channel):

This is the most short and simple way to distribute the goods. It involves direct sale of goods and services from the producer to the consumer. No use of middlemen is needed in this channel. This channel is also the most economical channel. The producer Is the main in charge here and has direct contact with the consumer. This also allows direct feedback to be received to the producer.

Manufacturer – retailer – consumer:

This is the most commonly channel used by manufacturers. This implies that the producer sells his goods to many retailers which sell it to the ultimate consumer. This is mainly used in departmental stores.

Manufacturer – wholesaler – retailer - consumer:

This involves considerable use of middlemen. The producer sells in large numbers to the wholesaler, the wholesaler buys in bulk. Then the wholesaler sells it to various retailers who deliver the products to the consumer. This channel allows a wider distribution of goods and services. The use of more middlemen also leads the cost of the product to increase which increases the price.

Manufacturer – agent – wholesaler- retailer- consumer:

This is the longest chin of distribution and is used by the producer when he wants to be total excluded from the distribution process. The manufacturer gives all the supply to the agent who then distributes it to the wholesaler and the cycle continues. The agent may also charge a fee for his services.

Promotion

The various activities which are required for informing the consumer about the product are included in promotion. It may also include persuading the consumer to buy that very product. Some of the main methods of promotion are sales promotion, advertising, personal selling and publicity. Promotion requires a medium of communication whether it be personal or impersonal. Promotion is an important function as if a firm does not promote the product the consumers might not be aware about the product and hence will not buy it.

Some main functions of promotion are:

To provide information:

Promotion informs the buyers about the product, its features, qualities, size etc. it highlights the utility of the product and differentiates it from its competitors.

To differentiate the product:

Promotion differentiates that particular product from its competitors. This also helps in creating brand loyalty. This function is important as it tells the consumer why is should buy that good and not its substitute.

To highlight the utility of the product:

It should tell the buyer why is that product so valuable. This should be done by highlighting its special features. This would also allow the producers to charge a higher price for their product as consumer would be aware about the importance of the product.

To build an image:

Public relations, advertising and other promotional activities are often used to build a favorable brand image for the firm. This also encourages the customers to be true to the brand and uphold customer loyalty.

Advertising

There are four basic tools of promotion:

Advertising:

It includes any paid form of non-personal presentation. It is used to promote goods and services in the eyes of the consumers. The message with is delivered by the process of advertising is called as advertisement. There are various mediums which can be employed to advertise like posters, television advertisements etc.

Sales promotion:

Sales promotion all the other activities except for advertisement and personal selling. It is used to increase consumer demand and help the firm generate more revenue. They mostly include activities which are temporary and do not occur very often. The examples of this are free samples, discounts etc.

Personal selling:

Personal selling is also referred to as salesmanship. It is the process of persuading people to buy the product through direct personal contact. It involves the consumer physically meeting the buyer. This allows a two-way communications and instant feedback can be received.

Publicity:

This form of advertisement is not paid by the firm advertising it. It communicates significant news about ideas, products or institutions. This requires no additional cost from the company and can be both positive and negative. The consumers are generally more influenced by publicity than advertisement.

Factors affecting promotion

While determining the promotion mix of a business the following factors should be considered.

Nature of the product:

Different kinds of products may find that different tools may be more suitable and effective for them. In case of industrial products personal selling is most suited as the machinery involves a lot of technologies. In the case of consumer products advertising and sales promotion might play a bigger role as the consumer products cater to a larger group of consumers.

Nature of the market:

The number of customers, the location of the consumers lay an important influence in promotion mix. In case the consumers are large and are geographically scattered advertisement is the best technique. If the population is less than they could all be individually reached out through personal selling. Therefore, the promotion mix depends on the size of the population.

Availability of funds:

Advertisement incurs cost for the firm. If the firm is running low on money it has to careful while choosing the promotion technique. It would have to compare the various costs of various method and then make a decision of which method to go ahead with. It should choose the least expensive method if does not have the appropriate finance.

Effectiveness:

Different tools of promotion may have different amount of effectiveness. It also depends on the stages of buying process. Advertising and publicity play a good rale in creating consumer awareness about the product. It informs the consumer about the product which is there in the market. Personal selling and sales promotion play a vital role in converting demand into sales. They persuade the consumer to buy the product at the given price.