Thursday, June 13, 2024

Redefining the ‘Marketing Mix’

Share

By Henry Kyambalesa

1. Introduction

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.

2.2 Pricing:

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.

2.3 Promotion:

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.

2.4 Distribution:

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).

Read more

Local News

Discover more from Lusaka Times-Zambia's Leading Online News Site - LusakaTimes.com

Subscribe now to keep reading and get access to the full archive.

Continue reading