By Henry Kyambalesa
This article is intended for Marketing students, instructors, researchers, theorists, practitioners, as well as casual readers who may have an interest in gaining an understanding of the nitty-gritty of the elements of what is commonly referred to as the “marketing mix.”
It is devoted to a cursory description of the following: (a) the four elements of the classical or traditional marketing mix; (b) an organization’s personnel, decision makers or the group of executives who make and/or implement decisions relating to the traditional elements of the marketing mix; and (c) the nature of marketing decisions associated with each of the elements of the marketing mix.
The article is designed to introduce “marketing personnel” or the group of marketing executives who make and/or implement decisions relating to the elements of the traditional marketing mix as an additional and important element of the marketing mix.
2. The Traditional Marketing Mix
This consists of the following four elements: (a) the product; (b) pricing; (c) promotion; and (d) distribution, which is sometimes referred to simply as “place” by scholars who desire to designate the elements of the traditional marketing mix as “the 4Ps” of marketing.
The four elements of the traditional marketing mix are described in a nutshell in the remainder of this section.
2.1 The Product:
The “product” is the most important element of the marketing mix because it is at the core of a business entity’s marketing efforts. A product may be described as anything that an organization can offer to a given market for attention, acquisition, use, or consumption that might satisfy a need or want. It includes physical objects, services, persons, places, organizations, and ideas.
When developing a product, marketing executives and other organizational members who may be involved in product planning, design and development need to think about the product at three levels; namely, the core product, the tangible product, and the augmented product.
The most fundamental level is the core product level, which refers to the benefits or services (and not the features) associated with the product. For example, consider a vehicle’s rear-view mirror. The core product (safety on the road) has to be converted into a tangible product (rear-view mirror), which may have as many as five characteristics: features, styling, quality level, packaging, and a brand name.
Finally, an organization may offer additional services and benefits (a one-month guarantee, for example), which make up the augmented product. This augmentation may be used as a competitive tool to differentiate the organization’s product offerings.
In theory, products generally go through a number of stages in their life spans; each set of stages constituting any given product’s life span is commonly referred to as the product life cycle. The life cycle for any given product normally consists of four distinct stages; these are: (1) introduction, which may sometimes follow the test-marketing of a product; (2) growth; (3) maturity; and (4) decline.
This means that an organization’s profitable products will not remain so forever, hence the need to monitor products continuously in order to decide when it is appropriate to modify or phase out those which may have reached the decline stage.
Thus, marketers should always be on the lookout for new product ideas and be positively involved in product development in order to have new products ready to replace those which are not doing well and those which are designated to be phased out.
The “price” is the only element in the marketing mix that generates revenue; the other three elements represent costs. Prices take many forms, such as fees, fares, tuition, rent, rates, premium, interest, and so on.
There are several important elements that should be taken into account when making pricing decisions: the firm’s costs of production, the market’s perception of the value of the product, customers’ sensitivity to changes in prices, the competition which the firm faces, and any governmental price legislation.
The price of the product does not necessarily reflect the cost of producing it, although cost information is an important aspect of price setting.
Ordinarily, setting a price for a good or service involves the following six sequential steps:
(a) Selecting the pricing objective. This involves the organization deciding what it wants to accomplish with a given product. Some of the objectives may be the following: survival, profit maximization, market share leadership, and product quality leadership.
(b) Determination of demand. Each price leads to a different level of demand and, therefore, affects marketing objectives differently. This relationship is captured in the demand schedule, which may be described as a list of quantities of a product bought and the corresponding prices.
Normally, price and demand are inversely related, meaning that at higher prices, the demand is lower, and vice-versa (except for prestige goods). Demand sets the ceiling to the price.
(c) Estimation of costs. The business entity or non-business organization has to set a price that has the potential to lead to the recovery of all the costs of producing, promoting, and distributing the product, as well as yield a fair return on investment. The total costs associated with the production, promotion, and distribution of a particular product should, suggestively, be the minimum price for an organization that wishes to break-even.
(d) Analysis of competitors’ prices. The organization needs to know the prices charged by competitors and possible reactions to competitors’ prices by buyers in order for it to decide on its own pricing. If the organization considers its package to be very similar to that of competitors, then it will have to price its product or products close to existing competitors’ prices.
(e) Selection of a pricing method. Organizations may decide on the pricing method by referring to the four elements cited earlier, namely, costs of production, the market’s perception of the quality and value of the product offering, buyers’ sensitivity to changes in prices, competitors’ prices, and any prevailing government legislation on pricing.
Some methods that may be used are cost-plus pricing, perceived-value pricing, and going-rate pricing. For definitions of these pricing methods, see Kyambalesa, Henry, A Fresh Look at Marketing (LAP Lambert Academic Publishing, 2022), Glossary.
(f) Determination of the final price. To decide on the final price, further considerations must be taken into account. These considerations include psychological pricing, the organization’s pricing policies, and the impact on other parties, such as distributors, sales personnel, competitors, and the host government.
Product pricing for new products is especially challenging for marketers. They have a choice of using either market skimming or market penetration pricing. The first technique means that a high price is charged in order to reap profits as quickly as possible. It is, therefore, a risk-reducing technique intended to benefit the innovator before competition sets in and prompts a reduction in prices.
The second technique—that is, market penetration pricing—involves the setting of very low prices in order to attract a large segment of the market and make it difficult for competitors with higher production and/or operational costs to enter the market. This technique’s major advantage is the increased sales volume that may generally be facilitated by the attractively low prices which an organization may set for its product offerings.
One of the most visible aspects of marketing is “promotion,” which includes all of the activities carried out by business and/or non-business organizations in order to communicate with potential and existing customers or clients. There are different means of promotion or marketing communication. These are collectively referred to as the promotional mix for any given organization.
The four major tools in the “traditional” promotional mix are advertising, sales promotion, publicity, and personal selling. Within these four tools of promotion, there are numerous other tools that are more specific. The four promotional tools, as well as new ones, are discussed in Kyambalesa, Henry, A Fresh Look at Marketing (LAP Lambert Academic Publishing, 2022), Appendix 1.1.
The distribution of products may involve wholesalers, retailers, transporters, and agents, in addition to the manufacturer, who together comprise what is commonly referred to as the marketing channel. By and large, marketing channels may take different forms depending on whether a supplier is distributing “consumer products” or “industrial products.”
But regardless of the nature of products involved, suppliers often have several channel alternatives: selling directly to final users or industrial buyers, or through one or more intermediaries. Therefore, the decision regarding which alternative to use will usually be influenced by the nature of the product involved, as well as the availability of ‘middlemen’ or marketing intermediaries.
It is important to note that marketing channel members may be independent and, therefore, their aims may conflict with those of the manufacturer. Channel decisions are crucial because they affect all the other marketing decisions of an organization, particularly because they establish the necessary link between an organization and its existing and/or potential customers.
3. Marketing Personnel
There is an additional and important element of the marketing mix that is neither expressly considered nor overtly acknowledged in existing literature. This element consists of individuals and/or groups of individuals who make product-related, price-related, promotion-related, and distribution-related decisions, as well as individuals and/or groups of individuals who implement such decisions.
We may provisionally refer to such individuals and/or groups of individuals as marketing executives, personnel or decision makers.
There should perhaps be no disputing the fact that marketing “personnel,” “executives” or “decision makers” constitute an important and active element of the marketing mix, but one that is neither expressly considered nor overtly acknowledged in existing literature.
Accordingly, we can define the “marketing mix” in shorthand as comprising the following “5Ps”: (a) the product; (b) pricing; (c) promotion; (d) place; and (e) personnel.
4. Marketing Decisions
The following summary describes the nature of decisions associated with each of the four traditional elements of the marketing mix, and the group or groups of executives, personnel or decision makers in any given organization who make and/or implement marketing mix decisions:
(a) Product decisions: Making changes to existing products, branding, packaging, labeling, adding new products, phasing out unprofitable products, and so on.
(b) Pricing / costing decisions: Determining marketing costs and setting prices (which may be in the form of fees, charges, fares, rent, premiums, rates, interest, commissions, and the like) that will yield returns consistent with the overall goals of the organization, while considering such factors as the following: (i) customers’ sensitivity to changes in prices; (ii) costs of production; (iii) prices of competing products, if any; and (iv) government policy pertaining to pricing, if any.
(c) Promotional decisions: Determining the appropriate promotional mix of advertising, publicity, sales talk, bait promotion, shop garnishment, extensive exposure, customer relations, impulsive mail, and emissary-style promotion. All these promotional tools are discussed in Kyambalesa, Henry, A Fresh Look at Marketing (LAP Lambert Academic Publishing, 2022), Appendix 1.1.
(d) Distribution decisions: Making decisions regarding distribution channels (selling directly to ultimate users or through agents, wholesalers, and/or retailers), warehousing or storage, transportation methods, and the like.
(e) Staffing decisions: Making personnel-related decisions relating to the recruitment, hiring and retention of both line personnel and staff personnel for an organization’s marketing unit or department in collaboration with the organization’s human resource unit or department.
Excerpted and adapted from Kyambalesa, Henry, A Fresh Look at Marketing (LAP Lambert Academic Publishing, 2022).