7 P's of Marketing Mix
Here we study about 7 P’s Marketing Mix (Previously 4 P’s
of Marketing Mix), but before studying about 7 P’s of Marketing Mix, let us
understand about What is Marketing Mix?
Basically, Marketing Mix consists of different combination
of factors or elements that an entrepreneur controls to influence or persuade
its customers to buy products or services.
Why we say 7 P’s of Marketing Mix
Since all of these seven factors including in Marketing Mix
start from the alphabet “P”, so these are known as 7 P’s of Marketing Mix.
Marketing Mix depends on the way the entrepreneur does
business. For Example, an entrepreneur can sell the products or services offline
or online, sell Homogeneous Products or Heterogeneous Products, etc.
Let us now discuss one by one each of these seven factors
of Marketing Mix.
1. Product
The first factor of Marketing Mix is Product. It has two
types: Goods And Services that are offered by an entrepreneur to its target
customers.
Goods have physical existence like IPODs, Computers And
Laptops, Furniture, Ice Creams, etc. Services have not physical existence and
we cannot touch these services. Examples are SEO Services, Article Writing
Services, Web Development Services, Hair Cutting Services, etc.
New Start-ups must decide which type of product they are
willing to sell in the target market and this decision decides the marketing
strategy of the Entrepreneurs. For Example, if the entrepreneurs are willing to
sell IT Products, then marketing strategy is launched on those ways that
effectively promote IT Products. Like Use of Internet, Video Conferences,
Webinars, and other useful methods are used to sell the products.
Those products that add value in the minds of customers are
the best profitable products for the new and existing business.
When selling products to the target markets, an
entrepreneur must consider three levels of products.
(i). Actual Product
Actual Products are those product which a buyer actually
buys from the company. For Example, Purchasing of Car, Mobile Phones, Computer
Laptop, etc.
(ii). Core Product
It is the benefit associated with the actual product. In
case of purchasing of car, Speed, Designing, etc. In case of Mobile Phones,
Memory Car, FM Radio, Mobile Wifi Network are the benefits associated with that
Mobile Phones. In case of Computer Laptop, HardDrive of Massive Volume, USB
Ports, Graphics And Sound Cards are some of the benefits attached with computer
laptop.
(iii). Argumented Product
It is the benefit for which customers doesn't pay the
price. It includes Customer Service facilities that provide guidance during
selling the products, Warranty Services, and other services for which customers
get informed about the products and services and willing to buy the products or
services.
Start-Ups face the challenges that they are new and unknown
to the target market, so it is very difficult for them to make their first time
purchase from targeted customers. The person who makes the first purchase from
the new Start-Ups can be used as a Reference Account. This reference account shows
testimonials and personal sales experience of that person with the new
Start-Ups as a record so that any other customers are encouraged to buy the
products from this new Start-Ups.
For Existing Entrepreneurs, reference accounts are prepared
when they launch new products. These Entrepreneurs encourage customers to test
the new product free of cost so that customers give their feedback about the quality
of products.
2. Price
Price is the revenue for the entrepreneur, which is
actually received from the buyers when is paid by buyers when they have willing
to buy the products or services of the business. The more the sales of the
products will be, the more the revenues of the business will be. The charges
rates of the products determine the worth and value of the products and
services but this cost must satisfy customers and fulfill their set quality
standards for which customers are willing to buy the products or services.
Two methods are very important in determining the value the
price of products or services:
(i) Cost-Based Pricing
(ii) Value-Based Pricing
Now let us study about Cost-Base Pricing Method:
(i) Cost Based Pricing Method
Under this method, the list price is determined when the
company adds a certain percentage of profit to the cost of production.
This method is simple and straightforward and the
entrepreneurs can easily determine the value of products and services. Also the
value is determined itself by the entrepreneur and it is not on Market Basis.
When the cost price is set, then the customers can compare the cost price of a
product with the cost price of other companies selling similar products. If the
customers find the product of excellent quality with cheaper price rates, then
they will be satisfied and they will be more willing to buy the products.
(ii) Value-Based Pricing Method
Under this method,
the list price is determined by considering the Perceived Value of the
customers willing to buy the products or services of the company. The Perceived
Value depends upon various opportunities available in the target market.
The Company makes estimation about the Cost Price of the
products and services for which the customers are willing to pay the price.
Generally, the higher the quality of a product, the more
the price is charged by the entrepreneurs from the customers and these products
and services give higher price due to the quality and higher demand in the market.
For Example, in case of Intel Company, the Chip which is a part of personal
computer, has more perceived value in the target market, eventhough, the cost
price of chip is very low in the market. The Customers’ minds perceive more
value for chip than the cost price of the chip in the target market.
Here, you must note that if an entrepreneur charges
reasonable price for higher quality products, then it is a win-win situation
for both entrepreneur and customers because it increases the sales growth of
the business and also the business earns good valid profit in the market. On
the other hand, the customers are also getting benefits by purchasing quality
products at reasonable discount price and save their money. If quality products
are available at higher prices, then customers that are financially weak can
not afford to buy the higher value products in the target market.
In this example, the value-based pricing model is more
suitable for Intel as it has greater value in customers’ minds and more
profitable for the business.
3. Promotion
Promotion Tool is used to highlights the features of
products and services to target customers through various means, including
Advertisements, Press Releases, Teleconferences, Blogging, Video Conferences
and other effective Marketing Strategies.
Start-Ups And Established Entrepreneurs need different
promotion tools to promote their products and services to target customers.
Advertising is expensive but it helps to promote the products and if some of
the buyers purchase the products, then it will benefit the entrepreneur and may
be other buyers come to test the quality of product or services.
Press Release is an announcement of important new events of
company. Mostly it is released to public when the company gives new offers to
buyers, launches new product or service, etc.
4. Place
Place means how to distribute a product from its origin to
the ultimate customers. It shows the route through which a Product reaches to
ultimately end customers. The Entrepreneurs can sell the Products directly or indirectly.
When the Entrepreneurs sell from the place of its manufacturing to the target
customers without any intermediaries then they sell the products directly but
when they sell through intermediaries like Wholesalers and Retailers, etc. then
we can say that they sell indirectly.
If the entrepreneur sells the products directly, then it
avoids costs of distribution and generates better profits as compared to the
case of indirect selling. For Example, if the T-Shirts are selling though
E-Commerce Website, then it can be easily sell and an expense of Distributors
can be reduced. But if T-Shirts are distributed through intermediaries, then
The Cost of T-Shirt plus the cost of distribution reduce the overall profits of
the business.
If it is better to sell directly, then direct selling is
good choice but if indirect way is the best choice as in case of supplying of
T-Shirts in High-Demanding Areas, where customers like T-Shirts of Sports or
when there is a season of Sports, then supplying of T-Shirts through
intermediaries is better choice and get more profit to the business.
5. Packaging
Packaging shows that
how well you present your products or services in front of your target
customers to influence them to buy or test your products or services. If an
entrepreneur makes good package of ice-cream, then it will surely attract the
customers. They will find it easy to taste it and hold it with hands due to
firm stick.
Package also creates innovation of the products and
services and can attract new customers. A company can change the package and
shape of Ice-Cream Item and can influence the new and old customers in a better
way if it is attractable to targeted customers.
Package is not limited to your products and services. In
fact, it includes your building design, Decorations, Office Furniture,
Equipment and any other visual elements of the company.
6. Positioning
Positioning means how effectively you as an entrepreneur
place your position in the minds of customers. Whether, they love your products
and willing to buy because they find your products quality wise excellent that
meets their demands or they avoid to buy your costly products at higher rates
that can not fulfill their demands. The more effectively your position your
brand in customers’ minds, the more effectively they become their regular
customers and even become your loyal customers.
7. People
An entrepreneur not only gives values to people inside its
organization but also to those who give valuable benefits to business in order
to make sales, to improve marketing strategies, to maintain the sales budgets,
etc. These People are valuable for effective marketing strategies of the
business.
8 P's of Marketing Mix
8. Productivity & Quality
Another P is added in Marketing Mix that is "Productivity And Quality". What an Entrepreneur produces at minimum cost, it must be delivered to customers at Good
Quality. The entrepreneurship should improve quality alongwith the Productivity of Products and Services, otherwise, the customers will not be satisfied with the products or services delivered to them and find other company that provides
the same product or service with good quality.
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