MARKETING MIX
MARKETING MIX
1. Product: activities relating to the product, service or idea to be
offered.
2. Price: activities relating to the price to be charged for the product,
service or idea.
3. Promotion: activities relating to promotion (advertising, personal selling,
sales promotion and publicity, called promotional mix) of the product, service
or idea.
4. Place: activities relating to distribution of the product, service or
idea (physical distribution and channels of distribution).
Sometimes marketing research-the systematic gathering of
information to solve marketing problems, is also included in marketing mix.
McCarthy proposed this four-factor classification of different
marketing activities. Please note that this is not the only way of classifying
marketing activities but certainly the one which has caught our imagination
most. There are two other classifications which are worth mentioning here. One
of them is by Frey (1961). According to him all marketing decision variables
(i.e., activities) could be categorised into two factors, viz., the offering
consisting of product, packaging, brand, price and service and the methods and
tools comprising distribution channels, personal selling, advertising, sales
promotion and publicity. The other is by Lazer and Kelly (1962) who proposed a
three-factor classification, viz., goods and service mix, distribution
mix, and communication mix.
We will, however, use McCarthy's 4Ps
approach in our discussion of the marketing mix.
The subsequent four sub-sections describe each of these four
activities or Ps in greater detail.
1. Product Activities
A product, service or idea, may be defined as something which is
given to consumers in exchange for a price. Activities related to a product,
service or idea include the following:
- Quality
- Features
- Style
- brand name
- packaging
- sizes
- services
- warranties
- returns
The following are some
examples of product related activities:
-
Titan, a Tata company,
launches Titan Quartz Watches
for the Indian Market.
-
Atash Leasing and
Industries Ltd's Frooti Plant in Noida, Uttar Pradesh, launches a new era of fruit drinks in Tetra Brik cartons for Delhi, U.P. and
Rajasthan.
-
The Bank of Bahrain
and Kuwait announces the opening of its new totally computerised branch office in Bombay.
-
Housing Development
Finance Corporation introduces the Home Savings
Plan which starts as a saving and ends as a low
interest housing loan.
-
Dunlop introduces the
concepts of Tyre Service
Centres.
For example - Hero motor cycle
features of Splender Bike in an attempt to attract
the attention of customers:
"A phenomenal certified 75 kms per litre fuel efficiency
under test conditions" "Fully automatic gears"
"Powerful enough to carry two comfortably"
"Low maintenance"
"Dependable All-India Service network"
"Study, built to last years"
"International Styling"
2. Pricing Activities
You can define price as the amount of money that consumers must
pay in exchange for the product, service or idea. Generally, marketers consider
the following factors in setting prices:
Target customers: how much they will buy at various prices, in other words, price
elasticity of demand.
Cost: how much it costs to produce and market the product, i.e., both
production and distribution costs.
Competition: severe competition may indicate a lower price than when there is
monopoly or little competition.
The law: government authorities place numerous restrictions on pricing
activities.
Social responsibility: pricing affects many parties, including employees, shareholders
and the public at large. These should be considered in pricing.
There
are other factors as well, besides the ones listed above which a marketer has
to consider. For example, a television set manufacturer may have to determine
prices for the distributor, the dealer, and the ultimate consumer. Different
varieties of the product may have varying prices, e.g., a `deluxe' model may be
priced higher than a very basic model. Similarly, there are other factors which
a marketer has to consider like the granting of discounts and allowances or
location of the customer in determining prices. These are significant
questions, and how they are dealt with can make a real difference in the sales
volume of the organisation.
3. Promotional Activities
Promotional activities consist of various means of communicating
persuasively with the target audience. The important promotional methods are:
Advertising - where an identified
sponsor pays media (such as Doordarshan's National Network) to transmit
messages to target consumers.
Personal selling - where sales
representatives employed by the firm engage in interpersonal communications
with individual consumers and prospective customers.
Sales promotion - where the marketer
utilises displays, demonstrations, premiums, contests or similar devices to supplement
advertising and personal selling.
Publicity and public relations - where both publicity and public relations are used to stimulate
supportive news items about the firm and its products that have greater
credibility with the public than advertising.
The
general role of publicity is similar to advertising, but public relations (PR) usually
addresses itself to a wider public than the firm's customers. In PR
there is recognition that all actions taken by the firm communicate something
to someone.
The
press release, news conference and the offer of some exclusive feature are
typical ways of seeking publicity. The weakness of both PR and publicity is
that the firm does not pay the piper and so does not call the tune.
Of
particular importance is the composition of the promotion mix. The promotion mix is
the particular combination of advertising, personal selling and sales promotion
that is used in communicating with consumers. Generally, advertising is
employed to reach large groups of consumers at a low price per contact. It-is
widely used by firms selling consumer durables as well as by selling
consumption items like toiletries to serve a mass market. Personal selling has
a higher cost per contact, but is an intense form of communication - consumers usually
find it more difficult to ignore or refute the arguments of a sales person than
the persuasive appeals of an advertisement.
Firms
selling items like computers, home products, etc. utilize personal selling
extensively. For example, Eureka Forbes utilizes its salesmen for door to door
selling of its home-products, viz., Euroclean (the all-purpose cleaning system)
and Aquaguard (on-line electronic water-purifier). Finally, sales promotion
aids advertising and personal selling in achieving the communications mission,
it tends to accomplish tasks the other two are not capable of attaining, but is
generally supplementary to them. Sales persons demonstrating the use of
particular items in stores can considerably enhance the effect of advertising
upon consumers.
Like
other elements of the marketing mix, promotion should be aimed at the target
audience rather than at consumers at large. If target consumers are in
upper-income groups, promotional messages for, say, colour television sets
might highlight motives such as status and prestige associated with owing a
colour television, whereas if they are in lower-income groups, the price of a
model might be emphasised. If target consumers tend to be highly educated,
promotion messages should be more sophisticated than when target consumers have
low levels of education. Failure to consider the unique characteristics of the
target consumer can result in ineffective promotional efforts.
4. Place or Distribution related Activities
Basically,
place or distribution activities are used to transfer ownership to consumers
and to place products, services and ideas at the right time and place.
Distribution is made up of two components:
(1) Physical distribution, and (2) Channels of distribution.
Physical distribution consists of the
activities involved in moving products or services from producer to consumer.
Examples include:
1. Transportation
2. Warehousing and Storage
3. Order Processing
4. Inventory Control
5. Locations
Often,
the objective of physical distribution is to move goods to consumers at minimum
cost. This can frequently be accomplished through cost trade-offs, as and when
an organisation shifts from railways to air transportation, thereby increasing
transportation costs but possibly decreasing total costs because of substantial
decline in the cost of inventory. Sometimes, management considers the cost of
lost sales in its cost trade-off analysis. The cost of lost sales is that cost
which results when goods are not available at the time, place, and in the
condition desired by consumers. Thus, if air freight moves goods to consumers
faster than trucks, the cost of lost sales can be reduced.
The
physical distribution network should be oriented towards the needs and desires
of target consumers. Thus, the target consumers for cut flowers may require
very rapid, fresh and damage-free transportation, thereby necessitating air
freighting. (e.g., sending roses from Bangalore or Nasik to Bombay by air). On
the other hand, target consumers of an item like steel or cement may look for
reliability in delivery schedules but relatively' unconcerned with speed of
delivery suggesting the use of rail transportation.
The
channels of distribution are those routes
through which the ownership of goods, services and ideas flows on the way from
producer to consumer. Thus, a rather typical channel for consumer goods such as
grocery items is from producer to wholesaler to retailer to ultimate consumer.
In
establishing channels of distribution, the marketer decides which marketing
functions are needed in order to satisfy target consumers, then determines
which institutions (such as wholesalers and retailers or the manufacturer
himself) can best perform these functions. Some manufacturers such as Kinetic
Honda may find that independent dealers are better equipped to serve target
consumers, and as a result decide to distribute their product (scooter) through
dealers. Another producer such as the Hindustan, Lever may decide to move its
products through a suitable permutation of clearing and forwarding agents,
stockists and wholesalers depending upon the region, accessibility, time of the
year, and so on. The overall objectives of such decisions is to maximise
service to the consumer at a profit to the marketer.
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