Marketing Mix I – SS1 Marketing Lesson Note (First Term)

The marketing mix is the set of choices a business makes in bringing a product or service to market, often described as the four Ps: product, price, place and promotion.

Behavioural objectives

By the end of the lesson, students should be able to:

1. explain the meaning of marketing mix;
2. state the conditions a business must meet to create the right marketing mix;
3. list the four Ps of marketing;
4. describe each of the four Ps;
5. name the three basic pricing strategies.

What is the marketing mix?

The marketing mix is the combination of decisions an organisation makes to bring a product or service to market.

• Other name: it is often linked with the four Ps: product, price, place and promotion.
• Aim: to put the right product in the right place, at the right price, at the right time.
• Who decides: marketing managers, who control these variables to satisfy customers in the target market.
• Target market: the group of customers a business aims to serve with its product.

What conditions must a business meet to create the right marketing mix?

A business must meet four conditions to create the right marketing mix.

1. Right product: the product must have the right features. For example, it must look good and work well.
2. Right price: the price must let consumers buy in large numbers, so that the firm makes a healthy profit.
3. Right place and time: goods must arrive when and where customers want them. This is an important operation.
4. Right promotion: the target group must learn that the product exists and is available. Successful promotion helps a firm spread costs over a larger output.

What are the four Ps of marketing?

The four Ps of marketing are product, price, place (distribution) and promotion.

1. Product: what the business sells.
2. Price: what the customer pays.
3. Place (distribution): how and where the customer gets the product.
4. Promotion: how the business communicates with customers.

• Major marketing management decisions fall into one of these four groups.
• Marketing managers can control these variables to satisfy customers in the target market.

What is the product element?

The product is the item or service sold to the customer, the thing that brings in money.

• Features and design: these need careful thought, because they must appeal to the target market.
• Made or bought: the firm may make the product or buy it for resale. In both cases it must decide which features will appeal to customers.
• Central point: marketing effort focuses on the product.
• Not marketing’s job: setting up the production line, providing finance and manufacturing belong to other functions.
• Marketing’s concern: what the product means to the customer.

Marketing helps decide these aspects of the product:

• Appearance: the look of the product line must match the requirements of the market.
• Function: the product must meet customer needs found through market research.

What is the price element?

Price is the amount a customer pays for a product.

• Profit and survival: price decides the company’s profit and so its survival.
• Effect on strategy: changing the price has a strong effect on the marketing strategy.
• Demand and sales: price often affects demand and sales, depending on the price elasticity of the product.
• Price elasticity: how much the quantity demanded changes when the price changes.
• Fit with the mix: the price should complement the other three Ps.
• Perceived value: the marketer must know how much value the customer thinks the product has.

What are the three basic pricing strategies?

The three basic pricing strategies are market skimming pricing, market penetration pricing and neutral pricing.

What else must the marketer consider when setting a price?

• Reference value: the customer compares the price with the prices of competing products.
• Differential value: the customer’s view of this product’s attributes compared with those of other products.

What is the place element?

Place is concerned with the methods of transporting and storing goods and making them available to the customer.

• Aim: to get the right product to the right place at the right time.
• Distribution system: the network of transport, storage and sellers that moves goods to customers.
• Choice of method: it depends on the circumstances of the business and its product.

Common ways to distribute goods:

1. Manufacturer to wholesaler to retailer to customer: convenient for some manufacturers.
2. Manufacturer to retailer to customer: the manufacturer sells directly to retailers.
3. Manufacturer to customer: the manufacturer sells directly to the customer.

What is the promotion element?

Promotion is the business of communicating with customers to help them decide whether to buy a product or service.

Promotion has four elements:

Evaluation

1. What is meant by marketing mix?
2. List the four Ps of marketing.
3. State the four conditions a business must meet to create the right marketing mix.
4. Name the three basic pricing strategies.
5. List the elements of promotion.

Assignment

Explain the place element of the marketing mix, and state two ways a manufacturer can make goods available to customers.