I. Developing the Marketing Mix
Marketing mix, more popularly referred to as the 4P’s of marketing, is a combination of marketing tools that us used to satisfy customers and company objectives. It is an integrated process through which companies build strong relationships to customers and creates value for their customers and for themselves.
A. Factors influencing Marketing Mix
1. product
The product is the physical product or services offered to the consumers. Its function is to satisfy the needs and wants of the consumers and their target market.
a. product decision
When placing a product within a market many factors and decisions have to be taken into consideration. These include:
1) Product design - Will the design be the selling point for the organization?
2) Product quality – Quality has consistent with other elements of the marketing mix. A premium based pricing strategy has to reflect the quality a product offers.
3) Product features – What features will you add that may increase the benefit offered to your target market?
4) Branding – One of the most important decisions a marketing manager can make. Brands have the power of instant sales; they convey a message of confidence, quality and reliability to their target market. It is a tool which is used by an organization to differentiate itself fro competitors.
2. price
Pricing is one of the most important elements of the marketing mix. Pricing is difficult and must reflect supply and demand relationship. Its function is to make the product affordable to the target market and reflect the value of benefits provided. Pricing should take into account the following factors: fixed and variable costs, competition, company objectives, prepared positioning strategy and target group and willingness to pay.
Price policies are those decisions that relate to the actual pricing of goods. These policies assume that it is easier to lower a price than to raise it. In economic theory, the forces of demand and supply set the price that the consumers pay. There are 3 approaches to pricing formula:
1) Cost Consideration
When a company pricing policies are actually reduced to writing, there will usually be a statement that the firm establishes prices of goods and services to permit a fair return over and above cost of production, an adequate return on investment and a covering of the risk involved.
2) Buyer Consideration in Pricing
Managers become increasingly aware of the importance of the buyer when making pricing decisions. Therefore, pricers must attempt to understand potential buyers’ reactions to various prices. Buyers’ reaction are systematically gathered and analyzed, the price influence is easily discernible.
3) Competitive Consideration in Pricing
Pricing is easy in an industry when a close approach to pure competition exists. In this situation, where there are many sellers offering products the market price will be the same for almost all the competitors since there is a little difference in the product. Buyers can purchase from a number of sellers, thus tending to establish a uniform market price.
a. Current Methods of Setting Prices
1) Cost-plus pricing
This begins with the determination of the physical asserts reduction plus a fixed mark-up. It is based on past rather than marginal costs.
2) Rate of return pricing
This involves the determination of full-allocated cost of processary to produce at a specified rate per day. Anticipated usage of all facilities is calculated for a long period of time. Average fixed and variables cost are then calculated and added to the average investment.
3) Intuitive Pricing
Intuitive prices are based on the executives feeling that they are correct. This is referred to as “playing it by car”. Subsequent adjustments are made as needed.
4) Administered Pricing
This concept usually applies to situations where sellers maintain the same selling price over a long period of time.
Price is one of the firms’ most important competitive weapons. Many companies operate with the policy of not changing their price unless absolutely forced to do so by the competition or costs.
5) Skimming the Market
Introductory price intended to take changes or advantages of appeal of a new product to recover the investment in a short tie before competition sets in.
6) Decreed Price
Pricing by government decree. The government usually provides subsidies. Certain commodities may be placed under government control during shortages and emergency situations. The government thru the Price Control Council may decree commodity prices.
3. Place (Distribution)
Place are those decisions associated with channels of distribution that serve as the means for getting the product to the target customers. Its function is to make the product conveniently available to the target market consistent with their purchasing patterns.
A channel of distribution is defined as a chain of intermediaries, each passing the product down to the next organization, before it finally reaches the consumer or end-user. The two problems of channel management are selecting the proper channel of the products and maintaining the effectivity of this channel. A number of alternate channels of distribution may be available:
· Distributor - who sells to retailer
· Retailer (also called dealer or seller) – who sells to end consumer or customers
a. Types of Channel Distribution
1) indirect distribution
It involves the distributing of your product by the use of intermediary for example a manufacturer selling to a wholesaler and then on to the retailer.
2) direct distribution
It involves the distributing direct from a manufacturer to the consumer. The advantage of it is that it gives a manufacturer complete control over their product.
b. Distribution Strategy
Depending on the type of product being distributed there are three common distribution strategies available:
1) intensive distribution
It is commonly used to distribute low priced or impulse purchase products.
2) exclusive distribution
It involves limiting distribution to a single outlet. The product is usually highly priced and requires the intermediary to place much detail in its sell.
3) selective contribution
A small number of retail stores are chosen to distribute the product. Selective distribution is common with the products such as computers, television, household appliances, where consumers are willing to shop around and where manufacturers want a large geographical spread.
4. Promotion
Promotion is the communication link between sellers and buyers for the purpose of influencing, informing, or persuading a potential buyers purchasing decision. Its function is to build and improve consumer demand. Promotion has four components called the promotion mix as follows:
a. Advertising
Advertising is a form of communication which business directs through paid media to prospective customers, to people who influence the buying decisions of others and to opinion leaders. It is conditioned by marketing or communication goals and by the characteristics of potential customers.
As part of the marketing process, advertising is related to sales. It has become the communication arm of a mass production system, which has helped to raise living standards for millions of people around the world.
Advertisers depend on media for their means of communicating with the consumers; media depend on advertising to pay most of their cost. Advertising can build an image of a product as mild, durable, fashionable, or delicious. It can help build an image of a corporation as forward-looking, imaginative, creative or respectable.
Several other forces must be blended with advertising to consume a sale. The most important force is the product itself – its appearance, quality, and performance. The other forces are:
1) Point of purchase – The product must be conveniently available through channels of distribution.
2) Package design – In some cases, the design of the package creates a solid impression and impact on the buyer.
3) Personal selling – At the manufacturer, distributors and retail levels.
4) Promotion or Sales aids
The purpose of advertising is to bring about change in the state of mind toward the purchase of a product.
All commercial communication that aim at the ultimate objective of sale must carry a prospect through four levels of understanding, acronym AIDA:
1. Attraction. The prospect must first be aware of the existence of a brand or company.
2. Interest. He must have a comprehension of what product is and what it will do for him.
3. Desire. He must arrive at a mental disposition or conviction to buy the product.
4. Action. Finally, he must stir himself to action.
a. sales promotion
Sales promotion involves the use of special short-term techniques, often in the form of incentives, to encourage customers or undertake some activity.
Sales promotion can be directed at customer, staff or distribution channel members (such as retailer). Sales promotion targeted at the customer are called consumer sales promotion; while sales promotion targeted at retailers and wholesale are called trade sales promotion.
b. personal selling
Personal selling is a process of helping and persuading one or more prospects to purchase a good or services or to act an any idea though the use of oral presentation.
c. public relations
Also referred to as publicity, this type of promotion uses news media to offer a favorable mention of the marketer’s company or product without direct payment to the publisher of the information. These activities promote a positive image; generate publicity, and goodwill with the intent of increasing sales.
d. direct marketing
Direct marketing is a form of advertising aimed at target customers (usually in their homes or offices) that asks to receiver to take action, such as ordering a product, clipping, clipping a toll-fee number of visiting a store. Catalogs and letters are common forms of direct marketing.
B. Extended Marketing Mix
1. people
All people involved with consumption of a service are important. Knowledge workers, employees, management and consumers often add significant value to the total product or service offering.
An essential ingredient to any service provision is the use of appropriate staff and people. Recruiting the right staff and training them in the delivery of their services is essential if the organization wants to obtain a form of competition advantage.
Consumers make judgments and deliver perceptions of the service based on the employees they interact with.
2. process
Procedure, mechanism and flow activities by which services are consumed. Processes are basically systems used to assist the organizations in delivering the service. It also include the procedure how the product will reach the end-user.
3. physical evidence
The ability and environment in which the service is delivered. Physical evidence is the element of the service ix which allows the consumer again to make judgments on the organizations. Consumers will make perceptions based on their sight of the services provision which will have an impact on the organizations plan of the services.
Each of the 4P’s must coherent to the others and no single element of the marketing mix must be decided independently of the other elements in the marketing mix.
To the marketers, the interacting 4P’s attempt to influence the buying decision-making process of customers at a profit-maximization level, given the competitive 4P’s as well as the customers background and their previous experience with the product or similar products.
II. Assembling Marketing Mix
A definition of target customers must first be arrived at before defining what product the target customers wish to “own”. The stage of adoption preparedness the target market is in must also be considered at all times. These shape the general characteristic of the firm’s marketing mix. Note that the word “own” was used instead of “buy”. This is because in satisfying customers, marketers must consider the more complex decision making units (DMA’S ) that are usually involved in decision-making process for most products and services.
Products may either be superior at parity with (the same) or inferior to those of competition. A superior product satisfies more needs and wants of customers while an inferior product satisfy lesser needs. Same products, on the other hand, satisfy the same customers’ needs as competition.
There is nothing wrong with the companies producing lower quality products to benefit those with lower needs so long as it is consistent with their product-positioning claim.
The new definition of “quality”, is that which conforms to the customer’s specifications, measured through indicators of customers satisfaction, rather than indicators of self-gratification. The customers are the one who decides on quality and not the company. The company simply produces the products catering to the needs and wants of their chosen market segments. To be able to compete among the other companies, however, higher quality of the products must be produced at a competitive price.
The purchasing power of the consumers should always be taken into consideration in any marketing planning. However, it remains a challenge as well as a social responsibility not only for marketers but for everybody to be proactive in devising ways to formulate and launch affordable products that can help satisfy the physiological needs for food, clothing, and shelter of those with less in life.
After product quality is defined, the remaining marketing mix elements are the assembled by identifying which of them (price, product, promotion, place) should be the logical main strategy and which should be the support strategy.
How do you assemble the 4P’s of marketing mix? All of them are equally important but which one do you start with – product. Place (distribution), price or promotion?
First, you have a product or a service. It could be better than, the same as, or inferior to those of competition, so long as it is consistent with your product are superior, parity, or inferior.
Next, you develop the marketing mix by asking which of the remaining P’s will be the main strategy in convincing your customers to own your products or services. Is it distribution-driven? Price-driven? Advertising-driven? Or Promotion-driven? And which would be the supporting marketing mix? It must be emphasized that marketing mix must have a horizontal coherence, or the need for consistency among the various elements of the marketing mix.
Distribution-driven Strategy
Electrolux, backed up by its superior vacuum cleaner features and its close to 1000 sales representative going door-to-door nationwide, would be an example of a selling and distribution-driven company. Even its supporting advertisement asking housewives to open their doors to the “Friendly Electrolux Man” supports its distribution-driven strategy. Since its prices are rather prohibitive. Electrolux offers 24onth installment terms as an added support for their salesmen to sell its product easier. Sometimes it gives customers promotion like free umbrella for every purchase.
Example: Electrolux
main strategy support strategy
advertising 
distribution pricing
promotions Another example of a distribution-driven strategy is Andok’s. Selling a basic food item like chicken cooked like lechon neds superior location for buyers to take notice and buy.
Promotion-driven Strategy
An example for this is “Pepsi-let your taste decide challenge” in the 1980’s in which consumers were asked to decide which of the two different softdrinks brand they preferred. Its objective is to ask consumer to participate in the test. The supporting strategies for these promotions are advertisement (to announce the on-going promotions and to plug favorable findings), distribution (to ensure that when customers liked what they have tasted, they could go to the nearest supermarkets ad buy the company’s product) and price (ensuring they are competitive).
Price-driven Strategy
Secondary or fighting brands with cheaper price but lower quality to protect overall company’s market shares make use of price as their principal weapon.
There are some secondary or fighting brands that , despite having enough production capacity, sell at lower price than other similar brands because of inadequate marketing mix such as in the area of advertising.
Advertising-driven Strategy
Coca-cola and San Miguel beer, two of the dominant quality products in the country, make use of advertising as a principal strategy. This is because of high frequency of consumer purchase and the non-essential nature of their products which is need to obtain brand loyalty.
I. Developing the Marketing Mix
Marketing mix, more popularly referred to as the 4P’s of marketing, is a combination of marketing tools that us used to satisfy customers and company objectives. It is an integrated process through which companies build strong relationships to customers and creates value for their customers and for themselves.
A. Factors influencing Marketing Mix
1. product
The product is the physical product or services offered to the consumers. Its function is to satisfy the needs and wants of the consumers and their target market.
a. product decision
When placing a product within a market many factors and decisions have to be taken into consideration. These include:
1) Product design - Will the design be the selling point for the organization?
2) Product quality – Quality has consistent with other elements of the marketing mix. A premium based pricing strategy has to reflect the quality a product offers.
3) Product features – What features will you add that may increase the benefit offered to your target market?
4) Branding – One of the most important decisions a marketing manager can make. Brands have the power of instant sales; they convey a message of confidence, quality and reliability to their target market. It is a tool which is used by an organization to differentiate itself fro competitors.
2. price
Pricing is one of the most important elements of the marketing mix. Pricing is difficult and must reflect supply and demand relationship. Its function is to make the product affordable to the target market and reflect the value of benefits provided. Pricing should take into account the following factors: fixed and variable costs, competition, company objectives, prepared positioning strategy and target group and willingness to pay.
Price policies are those decisions that relate to the actual pricing of goods. These policies assume that it is easier to lower a price than to raise it. In economic theory, the forces of demand and supply set the price that the consumers pay. There are 3 approaches to pricing formula:
1) Cost Consideration
When a company pricing policies are actually reduced to writing, there will usually be a statement that the firm establishes prices of goods and services to permit a fair return over and above cost of production, an adequate return on investment and a covering of the risk involved.
2) Buyer Consideration in Pricing
Managers become increasingly aware of the importance of the buyer when making pricing decisions. Therefore, pricers must attempt to understand potential buyers’ reactions to various prices. Buyers’ reaction are systematically gathered and analyzed, the price influence is easily discernible.
3) Competitive Consideration in Pricing
Pricing is easy in an industry when a close approach to pure competition exists. In this situation, where there are many sellers offering products the market price will be the same for almost all the competitors since there is a little difference in the product. Buyers can purchase from a number of sellers, thus tending to establish a uniform market price.
a. Current Methods of Setting Prices
1) Cost-plus pricing
This begins with the determination of the physical asserts reduction plus a fixed mark-up. It is based on past rather than marginal costs.
2) Rate of return pricing
This involves the determination of full-allocated cost of processary to produce at a specified rate per day. Anticipated usage of all facilities is calculated for a long period of time. Average fixed and variables cost are then calculated and added to the average investment.
3) Intuitive Pricing
Intuitive prices are based on the executives feeling that they are correct. This is referred to as “playing it by car”. Subsequent adjustments are made as needed.
4) Administered Pricing
This concept usually applies to situations where sellers maintain the same selling price over a long period of time.
Price is one of the firms’ most important competitive weapons. Many companies operate with the policy of not changing their price unless absolutely forced to do so by the competition or costs.
5) Skimming the Market
Introductory price intended to take changes or advantages of appeal of a new product to recover the investment in a short tie before competition sets in.
6) Decreed Price
Pricing by government decree. The government usually provides subsidies. Certain commodities may be placed under government control during shortages and emergency situations. The government thru the Price Control Council may decree commodity prices.
3. Place (Distribution)
Place are those decisions associated with channels of distribution that serve as the means for getting the product to the target customers. Its function is to make the product conveniently available to the target market consistent with their purchasing patterns.
A channel of distribution is defined as a chain of intermediaries, each passing the product down to the next organization, before it finally reaches the consumer or end-user. The two problems of channel management are selecting the proper channel of the products and maintaining the effectivity of this channel. A number of alternate channels of distribution may be available:
· Distributor - who sells to retailer
· Retailer (also called dealer or seller) – who sells to end consumer or customers
a. Types of Channel Distribution
1) indirect distribution
It involves the distributing of your product by the use of intermediary for example a manufacturer selling to a wholesaler and then on to the retailer.
2) direct distribution
It involves the distributing direct from a manufacturer to the consumer. The advantage of it is that it gives a manufacturer complete control over their product.
b. Distribution Strategy
Depending on the type of product being distributed there are three common distribution strategies available:
1) intensive distribution
It is commonly used to distribute low priced or impulse purchase products.
2) exclusive distribution
It involves limiting distribution to a single outlet. The product is usually highly priced and requires the intermediary to place much detail in its sell.
3) selective contribution
A small number of retail stores are chosen to distribute the product. Selective distribution is common with the products such as computers, television, household appliances, where consumers are willing to shop around and where manufacturers want a large geographical spread.
4. Promotion
Promotion is the communication link between sellers and buyers for the purpose of influencing, informing, or persuading a potential buyers purchasing decision. Its function is to build and improve consumer demand. Promotion has four components called the promotion mix as follows:
a. Advertising
Advertising is a form of communication which business directs through paid media to prospective customers, to people who influence the buying decisions of others and to opinion leaders. It is conditioned by marketing or communication goals and by the characteristics of potential customers.
As part of the marketing process, advertising is related to sales. It has become the communication arm of a mass production system, which has helped to raise living standards for millions of people around the world.
Advertisers depend on media for their means of communicating with the consumers; media depend on advertising to pay most of their cost. Advertising can build an image of a product as mild, durable, fashionable, or delicious. It can help build an image of a corporation as forward-looking, imaginative, creative or respectable.
Several other forces must be blended with advertising to consume a sale. The most important force is the product itself – its appearance, quality, and performance. The other forces are:
1) Point of purchase – The product must be conveniently available through channels of distribution.
2) Package design – In some cases, the design of the package creates a solid impression and impact on the buyer.
3) Personal selling – At the manufacturer, distributors and retail levels.
4) Promotion or Sales aids
The purpose of advertising is to bring about change in the state of mind toward the purchase of a product.
All commercial communication that aim at the ultimate objective of sale must carry a prospect through four levels of understanding, acronym AIDA:
1. Attraction. The prospect must first be aware of the existence of a brand or company.
2. Interest. He must have a comprehension of what product is and what it will do for him.
3. Desire. He must arrive at a mental disposition or conviction to buy the product.
4. Action. Finally, he must stir himself to action.
a. sales promotion
Sales promotion involves the use of special short-term techniques, often in the form of incentives, to encourage customers or undertake some activity.
Sales promotion can be directed at customer, staff or distribution channel members (such as retailer). Sales promotion targeted at the customer are called consumer sales promotion; while sales promotion targeted at retailers and wholesale are called trade sales promotion.
b. personal selling
Personal selling is a process of helping and persuading one or more prospects to purchase a good or services or to act an any idea though the use of oral presentation.
c. public relations
Also referred to as publicity, this type of promotion uses news media to offer a favorable mention of the marketer’s company or product without direct payment to the publisher of the information. These activities promote a positive image; generate publicity, and goodwill with the intent of increasing sales.
d. direct marketing
Direct marketing is a form of advertising aimed at target customers (usually in their homes or offices) that asks to receiver to take action, such as ordering a product, clipping, clipping a toll-fee number of visiting a store. Catalogs and letters are common forms of direct marketing.
B. Extended Marketing Mix
1. people
All people involved with consumption of a service are important. Knowledge workers, employees, management and consumers often add significant value to the total product or service offering.
An essential ingredient to any service provision is the use of appropriate staff and people. Recruiting the right staff and training them in the delivery of their services is essential if the organization wants to obtain a form of competition advantage.
Consumers make judgments and deliver perceptions of the service based on the employees they interact with.
2. process
Procedure, mechanism and flow activities by which services are consumed. Processes are basically systems used to assist the organizations in delivering the service. It also include the procedure how the product will reach the end-user.
3. physical evidence
The ability and environment in which the service is delivered. Physical evidence is the element of the service ix which allows the consumer again to make judgments on the organizations. Consumers will make perceptions based on their sight of the services provision which will have an impact on the organizations plan of the services.
Each of the 4P’s must coherent to the others and no single element of the marketing mix must be decided independently of the other elements in the marketing mix.
To the marketers, the interacting 4P’s attempt to influence the buying decision-making process of customers at a profit-maximization level, given the competitive 4P’s as well as the customers background and their previous experience with the product or similar products.
II. Assembling Marketing Mix
A definition of target customers must first be arrived at before defining what product the target customers wish to “own”. The stage of adoption preparedness the target market is in must also be considered at all times. These shape the general characteristic of the firm’s marketing mix. Note that the word “own” was used instead of “buy”. This is because in satisfying customers, marketers must consider the more complex decision making units (DMA’S ) that are usually involved in decision-making process for most products and services.
Products may either be superior at parity with (the same) or inferior to those of competition. A superior product satisfies more needs and wants of customers while an inferior product satisfy lesser needs. Same products, on the other hand, satisfy the same customers’ needs as competition.
There is nothing wrong with the companies producing lower quality products to benefit those with lower needs so long as it is consistent with their product-positioning claim.
The new definition of “quality”, is that which conforms to the customer’s specifications, measured through indicators of customers satisfaction, rather than indicators of self-gratification. The customers are the one who decides on quality and not the company. The company simply produces the products catering to the needs and wants of their chosen market segments. To be able to compete among the other companies, however, higher quality of the products must be produced at a competitive price.
The purchasing power of the consumers should always be taken into consideration in any marketing planning. However, it remains a challenge as well as a social responsibility not only for marketers but for everybody to be proactive in devising ways to formulate and launch affordable products that can help satisfy the physiological needs for food, clothing, and shelter of those with less in life.
After product quality is defined, the remaining marketing mix elements are the assembled by identifying which of them (price, product, promotion, place) should be the logical main strategy and which should be the support strategy.
How do you assemble the 4P’s of marketing mix? All of them are equally important but which one do you start with – product. Place (distribution), price or promotion?
First, you have a product or a service. It could be better than, the same as, or inferior to those of competition, so long as it is consistent with your product are superior, parity, or inferior.
Next, you develop the marketing mix by asking which of the remaining P’s will be the main strategy in convincing your customers to own your products or services. Is it distribution-driven? Price-driven? Advertising-driven? Or Promotion-driven? And which would be the supporting marketing mix? It must be emphasized that marketing mix must have a horizontal coherence, or the need for consistency among the various elements of the marketing mix.
Distribution-driven Strategy
Electrolux, backed up by its superior vacuum cleaner features and its close to 1000 sales representative going door-to-door nationwide, would be an example of a selling and distribution-driven company. Even its supporting advertisement asking housewives to open their doors to the “Friendly Electrolux Man” supports its distribution-driven strategy. Since its prices are rather prohibitive. Electrolux offers 24onth installment terms as an added support for their salesmen to sell its product easier. Sometimes it gives customers promotion like free umbrella for every purchase.
Example: Electrolux
main strategy support strategy
advertising distribution pricing promotions Another example of a distribution-driven strategy is Andok’s. Selling a basic food item like chicken cooked like lechon neds superior location for buyers to take notice and buy.
Promotion-driven Strategy
An example for this is “Pepsi-let your taste decide challenge” in the 1980’s in which consumers were asked to decide which of the two different softdrinks brand they preferred. Its objective is to ask consumer to participate in the test. The supporting strategies for these promotions are advertisement (to announce the on-going promotions and to plug favorable findings), distribution (to ensure that when customers liked what they have tasted, they could go to the nearest supermarkets ad buy the company’s product) and price (ensuring they are competitive).
Price-driven Strategy
Secondary or fighting brands with cheaper price but lower quality to protect overall company’s market shares make use of price as their principal weapon.
There are some secondary or fighting brands that , despite having enough production capacity, sell at lower price than other similar brands because of inadequate marketing mix such as in the area of advertising.
Advertising-driven Strategy
Coca-cola and San Miguel beer, two of the dominant quality products in the country, make use of advertising as a principal strategy. This is because of high frequency of consumer purchase and the non-essential nature of their products which is need to obtain brand loyalty.
Go, Josiah. (1996). Contemporary Marketing Strategy in the Philippine
Setting. Metro Manila , Philippines
Go, Josiah. (1992). Marketing Mix Strategy in the Philippine Setting. Metro
Young, Felix C. & Pagoso, Cristobal M. (2008). Principles of Marketing.
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