This week we’d thought we’d bring out something vintage and go over the four P’s of marketing. One of the best ways to compartmentalize your marketing decisions is by classifying them into one of the four P’s: Product, Price, Place and Promotion. Also known as The Marketing Mix, this model was coined by Neil Borden in 1948 who saw the process of marketing as a mixer of ingredients. Depending on the circumstance a business might follow a recipe prepared by others or prepare their own recipe as they go along, adapting it as their business needs, inventing new recipes yet tested.
This is the good or service that a business promotes. The product may be a tangible object or a service/experience. Tangible objects are goods such as clothing. Examples of intangible objects would be service provided by tourism companies and ballet tickets. Either way, it is the item that creates your revenue. Ever product is goes through a life-cycle which includes a development and growth phase, followed by peaked performance with an eventual period of decline as sales fall.
Businesses can apply a product mix to boost sales. A product mix allows businesses to expand their product’s sales potential by creating a line of products that are all part of the business strategy.
For example, a ballet company can provide a product mix to its intangible product (the ballet performance) by creating different shows at different venues at different prices. By creating a product mix, a ballet company can expand its potential for sales. The following are some of the factors a business should look at when expanding their product:
This is the amount a customer is willing to pay for your product. The perceived value of a product must mirror the actual price, otherwise the product will be less likely to be purchased. Conversely, if the perceived value of the product is greater than the cost the product is much more likely to be purchased. Perceived value is not stagnant and can be altered through marketing endeavors. However, pricing is largely determined by price elasticity. Simply put, variables such as competition, necessity and the income of your consumers determines the price-range of your product.
If there is a lot of competitors, if your product is not necessary purchase and if your consumers are from a lower income bracket than the price of your product is extremely rigid. Nonetheless, there are price techniques to incentivize your consumers. The following factors are some ways in which you can market your product through pricing:
- List Price
- Credit terms
- Payment period
As the adage goes, “location, location, location.” Place refers to the distribution channels available to consumers who wish to purchase your product. Brick and mortar store and Internet sales are both defined as distribution channels.
There are certain distribution strategies that can compliment a business’s other marketing strategies. Exclusive distribution is appropriate for a business that can create arrangements with another business that is beneficial. So to continue using the ballet company example, ballet company X makes an exclusive distribution deal with ticket seller Y, who will take a lesser percentage of their sales if the ballet company only sells through them.
Intensive distribution refers a business that wants their product in as many outlets as possible. If a business has a line of foods or prints a magazine it wants to follow this model.
Selective distribution falls in between the other two models and is a good strategy for new companies that want to seek discounts with distributors but still be in as many places as possible.
The following are some factors a business needs to consider when deciding on the best way to place its product.
This is the different ways a business communicates its product to the public in order to increase its perceived value and popularity within its target audience. Promotion can be paid (i.e. advertising) or unpaid (viral marketing, word-of-mouth). Business cards, posters, commercials, media buys and print media are all types of paid-promotions.
- Sales promotion
- Public relations
- Direct marketing
- Online marketing
The 4 P’s have been expanded into the 7P’s. In addition to the four already mentioned there is Physical evidence, which refers to a business’s store (window design, interior design, etc.), People, which refers to employees who are in charge of a business’s customer service. Lastly, Process refers to in-house logistics that may affect how a business markets its product.