Overview: Marketing Mix: Product, Price, Place, Promotion
Overview: Marketing Mix: Product, Price, Place, Promotion
What It Means
“Marketing mix” is a term used by marketing professionals to describe the different factors that affect a company’s attempt to reach customers. To sell a product successfully, a company must do many things in addition to developing the product. Chief among these tasks is determining a target market (the segment of the population likely to buy the product under consideration) and understanding that target market’s needs and wants. Based on this understanding, a company must determine the appropriate marketing tactics for the product. The details about how to encourage people to buy a product can be broken down into decisions regarding the four factors that together make up the marketing mix. These factors, often referred to as the “four Ps of marketing,” are product, price, place, and promotion.
A product is any good, service, or mixture of goods and services that is being offered to consumers. Price is, of course, the amount of money that the company asks consumers to pay for its product. Place refers to the location where the product will be available to consumers, relative to its channel of distribution (the path the product follows between manufacturing and final purchase). Promotion, finally, is the term used to describe all the methods a company has of communicating with its customers.
A company must consider each decision regarding the four Ps as it relates to the target market. If the company accurately understands the needs and wants of the target market and mixes its decisions regarding each of the four Ps accordingly, it has a solid chance of connecting with customers.
When Did It Begin
The Harvard Business School professor Neil H. Borden first devised the concept of the marketing mix in the late 1940s. Borden, however, conceived of a mix of 12 or more factors that companies needed to blend together successfully in order to satisfy the needs and wants of consumers. It was another marketing academic, E. Jerome McCarthy of Michigan State University, who refined the idea of the marketing mix by breaking it down into the four basic elements that he called the four Ps. The concept became well known as a result of McCarthy’s 1960 textbook Basic Marketing: A Global Management Approach. Since its initial publication, when it was the first textbook to outline the four Ps, Basic Marketing has been updated more than a dozen times (with the help of coauthor William D. Perrault), and it remains one of the most popular marketing texts in the world.
More Detailed Information
When devising a marketing strategy, a company has four basic variables, the four Ps, to work with. When making decisions in each category, the company should keep the target market’s needs and wants in mind. The resulting blend of decisions regarding the four Ps results in the marketing mix: the overall set of actions that the company will pursue as it tries to reach the target market effectively. Generally, a company crafts a different marketing mix for each of its products. Likewise, if one product appeals to different target markets, a company will likely devise a separate marketing mix for each market.
The first element of the marketing mix is the product. A product can be a physical object or group of objects, such as a tennis racquet or a home theater system. A product can also be something that cannot be held or touched, such as a haircut or janitorial services. In the past products were created prior to any marketing efforts, and marketers simply worked with what they were given. In recent decades the marketing process has become integrated into the production process. For instance, automotive engineers base their designs on company research that tells them what consumers are looking for in a new car. Other decisions that marketers make prior to manufacturing include those having to do with styling, safety, packaging, and naming of the product. Each of these decisions will have a significant effect on who might want to buy the product.
Price is the second major factor marketers must consider when launching a product. The basic way that a company determines a price is by taking into account the quality of its product and determining how much people are generally willing to pay for a product of its type and quality. But the pricing of a good or service sends numerous messages to consumers, and marketers must make sure that they have tailored these messages to the target market. For instance, some goods, such as high-quality Swiss watches, send a message of status because of their exorbitant prices. One of the reasons Rolex watches appeal to their target market is that the high prices they command appear to be evidence of their quality. If Rolexes were to become cheaper, the target market might not want them anymore. In other cases, a company might intentionally price a product lower than people might expect it to be priced. This so-called market-penetration style of pricing allows the product to find an immediate niche, but it costs the company profits. Alternately, a company might price an item high when introducing it in order to recoup the costs it incurred while researching and developing the product. This is called a price-skimming strategy, and its downside is that the company risks lower sales in the attempt to recoup its investment.
The third P, place, refers to the location(s) at which the product will be sold to consumers. No matter how good the company’s other strategy elements are, the product must be in the right place at the right time to capitalize on its target market’s attention. This involves making numerous decisions about how and where the product will be manufactured, how and where the product will be stored after it is made, how and where wholesalers will obtain the product, and how and where retailers will obtain the product from wholesalers. All elements of this interdependent channel of distribution must function effectively together, minimizing conflict and allowing the product to be ready for purchase when members of the target market are ready to buy it. In some cases marketers might decide to avoid the limitations of normal channels of distribution by going directly to consumers through direct mail (offers to buy products sent directly to consumers via the mail system), factory outlets (retail stores owned by the company that produces the product), or television shopping networks.
The fourth P that marketers must manage is promotion. Promotion refers to all the methods a company has of communicating with consumers. Typically, promotion centers on four different methods of communication. One of these is a company sales force. Salespeople are often the most effective form of promotion, since they can tailor their sales pitches to individual consumers. Salespeople are an expensive way to reach consumers, however, so companies cannot rely on them exclusively.
Another chief way of communicating with customers is advertising. By using the various media (television, radio, newspapers and magazines, the Internet), a company can build desire for its products among the target market through emotional and intellectual appeals. Advertising has disadvantages, too, however. One is that it is very difficult to tell when an advertisement is effective or not. Another is that the lack of personal contact with the consumer means that the company sometimes has no way of closing a sale, even when it has created a desire for the product.
Sales promotion is another form of promotion. Sales promotion simply consists of the lowering of prices and the publicizing of these lowered prices through the same media as advertisements (for example, 30-second television commercials and Internet pop-up ads). The difference between advertising and sales promotion is that advertising tries to give people reasons to buy a product, whereas sales promotion simply uses the lure of low prices, independent of the product’s quality or image, to convince people to buy. Sales promotion can be very effective, but its effects are not usually long-lasting, since it provides no reason other than price to buy a product.
The last form of promotion is public relations, which involves maintaining good relations with the media and with influential groups. Public relations does not always result directly in sales or consumer interest, but it can be used effectively in combination with other aspects of the marketing process.
Some people claim that the four Ps approach to marketing worked best in earlier eras, when the economy was simpler and more exclusively devoted to tangible products, as opposed to intangible services. In recent decades marketing professionals have proposed numerous additional Ps, such as people, physical evidence, and process, but none of the additional Ps has achieved the wide acceptance of the first four.
Others criticize the marketing mix approach for promoting inefficiency, since it leads to companies that have specialized departments for various elements of the marketing mix. For instance, companies frequently have separate departments for new product development, advertising, public relations, and sales. If these different tasks were more integrated, according to these critics of the marketing-mix approach, companies would save time and money.
In spite of these additions and criticisms, the prevailing approach to the marketing mix remains the one based on the four Ps.