markteing mix

The term 'marketing mix' is a foundation model for businesses, historically centered around product, price, place, and promotion (also known as the "4 Ps"). The marketing mix has been defined as the "set of marketing tools that the firm uses to pursue its marketing objectives in the target market".[1] Thus the marketing mix refers to four broad levels of marketing decision: product, price, place, and promotion.[2]

Marketing practice has been occurring for millennia, but marketing theory emerged in the early twentieth century. The contemporary marketing mix, or the 4 Ps, which has become the dominant framework for marketing management decisions, was first published in 1960.[3] In services marketing, an extended marketing mix is used, typically comprising 7 Ps, made up of the original 4 Ps extended by process, people, and physical evidence.[4] Occasionally service marketers will refer to 8 Ps, comprising these 7 Ps plus performance.[5]

In the 1990s, the model of 4 Cs was introduced as a more customer-driven replacement of the 4 Ps.[6] There are two theories based on 4 Cs: Lauterborn's 4 Cs (consumer, cost, convenience, and communication), and Shimizu's 4 Cs (commodity, cost, channel, and communication).

Given the valuation of customers towards potential product attributes (in any category, e.g. product, promotion, etc.) and the attributes of the products sold by other companies, the problem of selecting the attributes of a product to maximize the number of customers preferring it is a computationally intractable problem.[7]

The correct arrangement of marketing mix by enterprise marketing managers plays an important role in the success of a company's marketing:[8]

develop strengths and avoid weaknesses

strengthen the competitiveness and adaptability of enterprises

make the internal departments of the enterprise work closely together

Contents

1 Emergence and growth

2 McCarthy's 4 Ps

3 Modified and expanded marketing mix: 7 Ps

4 4 Cs

4.1 Lauterborn's 4 Cs (1990)

4.2 Shimizu's 4 Cs: in the 7Cs Compass Model

5 Digital Marketing Mix

6 Difficulty of computational methods

7 See also

8 References

8.1 Citations

8.2 Further reading

8.3 External links

Emergence and growth

See also: History of marketing, E. Jerome McCarthy, and Neil H. Borden

The origins of the 4 Ps can be traced to the late 1940s.[9][10] The first known mention of a mix has been attributed to a Professor of Marketing at Harvard University, Prof. James Culliton.[11] In 1948, Culliton published an article entitled, The Management of Marketing Costs[12] in which Culliton describes marketers as 'mixers of ingredients'. Some years later, Culliton's colleague, Professor Neil Borden, published a retrospective article detailing the early history of the marketing mix in which he claims that he was inspired by Culliton's idea of 'mixers', and credits himself with popularising the concept of the 'marketing mix'.[13] According to Borden's account, he used the term, 'marketing mix' consistently from the late 1940s. For instance, he is known to have used the term 'marketing mix' in his presidential address given to the American Marketing Association in 1953.[14]

Although the idea of marketers as 'mixers of ingredients' caught on, marketers could not reach any real consensus about what elements should be included in the mix until the 1960s.[15] The 4 Ps, in its modern form, was first proposed in 1960 by E. Jerome McCarthy; who presented them within a managerial approach that covered analysis, consumer behavior, market research, market segmentation, and planning.[16] Phillip Kotler, popularised this approach and helped spread the 4 Ps model.[17][1] McCarthy's 4 Ps have been widely adopted by both marketing academics and practitioners.[18]

The prospect of extending the marketing mix first took hold at the inaugural AMA Conference dedicated to Services Marketing in the early 1980s, and built on earlier theoretical works pointing to many important limitations of the 4 Ps model.[19] Taken collectively, the papers presented at that conference indicate that service marketers were thinking about a revision to the general marketing mix based on an understanding that services were fundamentally different from products, and therefore required different tools and strategies. In 1981, Booms and Bitner proposed a model of 7 Ps, comprising the original 4 Ps extended by process, people and physical evidence, as being more applicable for services marketing.[20]

Since then there have been a number of different proposals for a service marketing mix (with various numbers of Ps), most notably the 8 Ps, comprising the 7 Ps above extended by 'performance'[5].

McCarthy's 4 Ps

See also: Marketing

The original marketing mix, or 4 Ps, as originally proposed by marketer and academic E. Jerome McCarthy, provides a framework for marketing decision-making.[6] McCarthy's marketing mix has since become one of the most enduring and widely accepted frameworks in marketing.[21]

Table 1: Brief Outline of 4 Ps[6]

Category Definition/Explanation/Concept Typical Marketing Decisions

Product A product refers to an item that satisfies the consumer's needs or wants.

Products may be tangible (goods) or intangible (services, ideas or experiences).

Product design – features, quality

Product assortment – product range, product mix, product lines

Branding

Packaging and labeling

Services (complimentary service, after-sales service, service level)

Guarantees and warranties

Returns

Managing products through the life-cycle[6]

Price Price refers to the amount a customer pays for a product.

Price may also refer to the sacrifice consumers are prepared to make to acquire a product (e.g. time or effort).

Price is the only variable that has implications for revenue.

Price also includes considerations of customer perceived value.

Price strategy

Price tactics

Price-setting

Allowances – e.g. rebates for distributors

Discounts – for customers

Payment terms – credit, payment methods

Place Refers to providing customer access

Considers providing convenience for consumer.

Strategies such as intensive distribution, selective distribution, exclusive distribution [22]

Franchising;[23]

Market coverage

Channel member selection and channel member relationships

Assortment

Location decisions

Inventory

Transport, warehousing and logistics

Promotion Promotion refers to marketing communications

May comprise elements such as: advertising, PR, direct marketing and sales promotion.

Promotional mix - appropriate balance of advertising, PR, direct marketing and sales promotion

Message strategy - what is to be communicated

Channel/ media strategy - how to reach the target audience

Message Frequency - how often to communicate

The 4Ps have been the cornerstone of the managerial approach to marketing since the 1960s

Product refers to what the business offers for sale and may include products or marketing mix services. Product decisions include the "quality, features, benefits, style, design, branding, packaging, services, warranties, guarantees, life cycles, investments and returns".[24]

Price refers to decisions surrounding "list pricing, discount pricing, special offer pricing, credit payment or credit terms". Price refers to the total cost to customer to acquire the product, and may involve both monetary and psychological costs such as the time and effort spent in acquisition.[24]

Place is defined as the "direct or indirect channels to market, geographical distribution, territorial coverage, retail outlet, market location, catalogues, inventory, logistics and order fulfilment". Place refers either to the physical location where a business carries out business or the distribution channels used to reach markets. Place may refer to a retail outlet, but increasingly refers to virtual stores such as "a mail order catalogue, a telephone call centre or a website. Example, firms that produce luxury goods like Louis Vuitton employ an intensive placement strategy by making their products available at only a few exclusive retailers. In contrast, lower priced consumer goods like toothpaste and shampoo, typically employ an extensive placement strategy by making their products available to as many different retailers as possible. ".[24]

Promotion refers to "the marketing communication used to make the offer known to potential customers and persuade them to investigate it further".[24] Promotion elements include "advertising, public relations, direct selling and sales promotions."

Modified and expanded marketing mix: 7 Ps

See also: Services marketing, Service blueprint, and Servicescape

By the 1980s, a number of theorists were calling for an expanded and modified framework that would be more useful to service marketers. The prospect of expanding or modifying the marketing mix for services was a core discussion topic at the inaugural AMA Conference dedicated to Services Marketing in the early 1980s, and built on earlier theoretical works pointing to many important problems and limitations of the 4 Ps model.[19] Taken collectively, the papers presented at that conference indicate that service marketers were thinking about a revision to the general marketing mix based on an understanding that services were fundamentally different from products, and therefore required different tools and strategies. In 1981, Booms and Bitner proposed a model of 7 Ps, comprising the original 4 Ps plus process, people and physical evidence, as being more applicable for services marketing.[20][25]

Table 2: Outline of the Modified and Expanded Marketing Mix

Category Definition/ Explanation Typical Marketing Decisions

People Human factors who participate in service delivery.[26]

Service personnel who represent the company's values to customers.

Interactions between customers.

Interactions between employees and customers.[27]

Staff recruitment and training

Uniforms

Scripting

Queuing systems, managing waits

Handling complaints, service failures

Managing social interactions

Process The procedures, mechanisms and flow of activities by which service is delivered.

Process design

Blueprinting (i.e. flowcharting) service processes[28]

Standardization vs customization decisions

Diagnosing fail-points, critical incidents and system failures

Monitoring and tracking service performance

Analysis of resource requirements and allocation

Creation and measurement of key performance indicators (KPIs)

Alignment with Best Practices

Preparation of operations manuals

Physical evidence The environment in which service occurs.

The space where customers and service personnel interact.

Tangible commodities (e.g. equipment, furniture) that facilitate service performance.

Artifacts that remind customers of a service performance.[29]

Facilities (e.g. furniture, equipment, access)

Spatial layout (e.g. functionality, efficiency)

Signage (e.g. directional signage, symbols, other signage)

Interior design (e.g. furniture, color schemes)

Ambient conditions (e.g. noise, air, temperature)

Design of livery (e.g. stationery, brochures, menus, etc.)

Artifacts: (e.g. souvenirs, mementos, etc.)

People are essential in the marketing of any product or service. Personnel stand for the service. In the professional, financial or hospitality service industry, people are not producers, but rather the products themselves.[30] When people are the product, they impact public perception of an organization as much as any tangible consumer goods. From a marketing management perspective, it is important to ensure that employees represent the company in alignment with broader messaging strategies.[31] This is easier to ensure when people feel as though they have been treated fairly and earn wages sufficient to support their daily lives.

Process refers to a "set of activities that results in delivery of the product benefits". A process could be a sequential order of tasks that an employee undertakes as a part of their job. It can represent sequential steps taken by a number of various employees while attempting to complete a task. Some people are responsible for managing multiple processes at once. For example, a restaurant manager should monitor the performance of employees, ensuring that processes are followed. They are also expected to supervise while customers are promptly greeted, seated, fed, and led out so that the next customer can begin this process.[31]

Physical evidence refers to the non-human elements of the service encounter, including equipment, furniture and facilities. It may also refer to the more abstract components of the environment in which the service encounter occurs including interior design, colour schemes and layout. Some aspects of physical evidence provide lasting proof that the service has occurred, such as souvenirs, mementos, invoices and other livery of artifacts.[30] According to Booms and Bitner's framework, the physical evidence is "the service delivered and any tangible goods that facilitate the performance and communication of the service".[31] Physical evidence is important to customers because the tangible goods are evidence that the seller has (or has not) provided what the customer was expecting.

4 Cs

Lauterborn's 4 Cs (1990)

Robert F. Lauterborn proposed a 4 Cs classification in 1990.[32] His classification is a more consumer-orientated version of the 4 Ps[33] that attempts to better fit the movement from mass marketing to niche marketing:[32]

4 Ps 4 Cs Definition

Product

Consumer wants and needs

A company will only sell what the consumer specifically wants to buy. So, marketers should study consumer wants and needs in order to attract them one by one with something they want to purchase.[32][34]

Price

Cost

Price is only a part of the total cost to satisfy a want or a need. The total cost will consider for example the cost of time in acquiring a good or a service, a cost of conscience by consuming that or even a cost of guilt "for not treating the kids".[32] It reflects the total cost of ownership. Many factors affect cost, including but not limited to the customer's cost to change or implement the new product or service and the customer's cost for not selecting a competitor's product or service.[35]

Place

Convenience

In the era of Internet,[34] catalogues, credit cards and phones, consumers neither need to go anywhere to satisfy a want or a need nor are they limited to a few places to satisfy them. Marketers should know how the target market prefers to buy, how to be there and be ubiquitous, in order to guarantee convenience to buy.[32][36] With the rise of Internet and hybrid models of purchasing, Place is becoming less relevant. Convenience takes into account the ease of buying the product, finding the product, finding information about the product, and several other factors.[37]

Promotion

Communication

While promotion is "manipulative" and from the seller, communication is "cooperative" and from the buyer[32] with the aim to create a dialogue with the potential customers based on their needs and lifestyles.[36] It represents a broader focus. Communications can include advertising, public relations, personal selling, viral advertising, and any form of communication between the organization and the consumer[citation needed].

Shimizu's 4 Cs: in the 7Cs Compass Model

After Koichi Shimizu proposed a 4 Cs classification in 1973, it was expanded to the 7Cs Compass Model to provide a more complete picture of the nature of marketing in 1979. The 7Cs Compass Model is a framework of co-marketing (commensal marketing or Symbiotic marketing). Also the Co-creative marketing of a company and consumers are contained in the co-marketing. Co-marketing (collaborate marketing) is a marketing practice where two companies cooperate with separate distribution channels, sometimes including profit sharing. It is frequently confused with co-promotion. Also commensal (symbiotic) marketing is a marketing on which both corporation and a corporation, a corporation and a consumer, country and a country, human and nature can live.[38][39][40][41][42]

The 7Cs Compass Model comprises:

(C1) Corporation – The core of 4 Cs is corporation (company and non profit organization). C-O-S (competitor, organization, stakeholder) within the corporation. The company has to think of compliance and accountability as important. The competition in the areas in which the company competes with other firms in its industry.

The 4 elements in the 7Cs Compass Model are:

A formal approach to this customer-focused marketing mix is known as 4 Cs (commodity, cost, channel, communication) in the 7 Cs Compass Model. The 4 Cs model provides a demand/customer centric version alternative to the well-known 4 Ps supply side model (product, price, place, promotion) of marketing management.[43]

Product → Commodity

Price → Cost

Place → Channel

Promotion → Communication

"P" category (narrow) "C" category (broad) "C" definition

Product (C2) Commodity (Latin derivation: commodus=convenience, happiness) : Co-creation. The goods and services for consumers or citizens.

Price (C3) Cost (Latin derivation: constare= It makes sacrifices) : There is not only producing cost and selling cost but purchasing cost and social cost.

Place (C5) Channel (Latin derivation: canal) : marketing channels. Flow of goods.

Promotion (C4) Communication (Latin derivation: communis=sharing of meaning) : marketing communication : Not only promotion but communication is important. Communications can include advertising, sales promotion, public relations, publicity, personal selling, corporate identity, internal communication, SNS, MIS.

The compass of consumers and circumstances (environment) are:

(C6) Consumer – (Needle of compass to consumer)

The factors related to consumers can be explained by the first character of four directions marked on the compass model. These can be remembered by the cardinal directions, hence the name compass model:

N = Needs

S = Security

E = Education: (consumer education)

W = Wants

(C7) Circumstances – (Needle of compass to circumstances )

In addition to the consumer, there are various uncontrollable external environmental factors encircling the companies. Here it can also be explained by the first character of the four directions marked on the compass model:

N = National and International (Political, legal and ethical) environment

S = Social and cultural

E = Economic

W = Weather

EXIBIT:7Cs Compass model(1979) in Japan(Courtesy: © Koichi Shimizu, Japan)

These can also be remembered by the cardinal directions marked on a compass. The 7 Cs Compass Model is a framework in co-marketing (symbiotic