Marketing Mix

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The marketing mix is generally accepted as the use and specification of the 4 Ps describing the strategic position of a product in the marketplace. One version of the origins of the marketing mix starts in 1948 when Culliton said that a marketing decision should be a result of something similar to a recipe. This version continues in 1953 when Neil Borden, in his American Marketing Association presidential address, took the recipe idea one step further and coined the term 'Marketing-Mix'. A prominent person to take centre stage was E. Jerome McCarthy in 1960; he proposed a four-P classification which was popularised. Philip Kotler describes the concept well in his Marketing Management book (see references below)

Definition Although some marketers have added other Ps, such as personnel and packaging, the fundamental dogma of marketing typically identifies the four Ps of the marketing mix as referring to:

Product - An object or a service that is mass produced or manufactured on a large scale with a specific volume of units. A typical example of a mass produced service is the hotel industry. A less obvious but ubiquitous mass produced service is a computer operating system. Typical examples of a mass produced objects are the motor car and the disposable razor.
Price – The price is the amount a customer pays for a product. It is determined by a number of factors including market share, competition, material costs, product identity and the customer's perceived value of the product. The business may increase or decrease the product if other stores have the same product.
Place – Place represents the location where a product can be purchased. It is often referred to as the distribution channel. It can include any physical store as well as virtual stores on the Internet.
Promotion – Promotion represents all of the communications that a marketer may use in the marketplace. Promotion has four distinct elements - advertising, public relations, word of mouth and point of sale. A certain amount of crossover occurs when promotion uses the four principle elements together, which is common in film promotion. Advertising covers any communication that is paid for, from television and cinema commercials, radio and Internet adverts through print media and billboards. One of the most notable means of promotion today is the Promotional Product, as in useful items distributed to targeted audiences with no obligation attached. This category has grown each year for the past decade while most other forms have suffered. It is the only form of advertising that targets all five senses and has the recipient thanking the giver. Public relations are where the communication is not directly paid for and includes press releases, sponsorship deals, exhibitions, conferences, seminars or trade fairs and events. Word of mouth is any apparently informal communication about the product by ordinary individuals, satisfied customers or people specifically engaged to create word of mouth momentum. Sales staff often plays an important role in word of mouth and Public Relations (see Product above).

Broadly defined, optimizing the marketing mix is the primary responsibility of marketing. By offering the product with the right combination of the four Ps marketers can improve their results and marketing effectiveness. Making small changes in the marketing mix is typically considered to be a tactical change. Making large changes in any of the four Ps can be considered strategic. For example, a large change in the price, say from $129.00 to $39.00 would be considered a strategic change in the position of the product. However a change of $129.00 to $131.00 would be considered a tactical change, potentially related to a promotional offer.

Criticisms Peter Doyle (Doyle, P. 2000) claims that the marketing mix approach leads to unprofitable decisions because it is not grounded in financial objectives such as increasing shareholder value. According to Doyle it has never been clear what criteria to use in determining an optimum marketing mix. Objectives such as providing solutions for customers at low cost have not generated adequate profit margins. Doyle claims that developing marketing based objectives while ignoring profitability has resulted in the dot-com crash and the Japanese economic collapse. He also claims that pursuing a ROI approach while ignoring marketing objectives is just as problematic. He argues that a net present value approach maximizing shareholder value provides a "rational framework" for managing the marketing mix.

Against the four P's, some claim that they are too strongly oriented towards consumer markets and do not offer an appropriate model for industrial product marketing. Others claim it has too strong of a product market perspective and is not appropriate for the marketing of services.

See Also

Client Path Marketing
Marketing
Marketing Strategy
Marketing management
Marketing Plan
Marketing Mix Modeling
Strategic Management
Strategic Planning
Marketing Effectiveness
Return on Marketing Investment

category:Marketingcategory:Strategic management

References

Kotler, Philip, Keller, Lane (2005) "Marketing Management", Prentice Hall, ISBN 0131457578.
Barlon, K. (2006) "The concept of the marketing mix" Presentation on marketing management, vol 1, September, 2006, pp 2-7-Oulu university -Finland - The same article can also be found in: Schwartz, G. (ed), Science in Marketing, John Wiley, New York, 1965, pp 386-397 - and also in: Enis, B. and Cox, K. (1991) Marketing Classics, A selection of influential articles, Allyn and Brown, Boston, 1991, pp 361-369.
Bitner, J. and Booms, B. (1981) Marketing strategies and organizational structures for service firms, in Donnelly, J. and George, W. Marketing, American Marketing Association, Chicago, 1981.
Borden, N. H. (1964), “The Concept of the Marketing Mix”, Journal of Advertising Research, June, Vol. 4, pp. 2-7. Available in Schwartz G. Science in Marketing. John Wiley & Sons, NY 386-97
Culliton, J. W. (1948), The Management of Marketing Costs, Graduate School of Business Administration, Boston, Mass: Harvard University.
Doyle, P. (2000) Value based marketing, Wiley, Chichester, 2000.
Frey, A. (1961) Advertising, 3rd ed., Ronald Press, New York, 1961.
Hammer, M. and Champy, J. (1993) Reengineering the Corporation: A Manifesto for Business Revolution, Harper Business Books, New York, 1993, ISBN 0-06-662112-7
Hughes, M. (2005) "Buzzmarketing: Get People To Talk About Your Stuff", Penguin/Portfolio, New York, 2005 Website
Lauterborn, R (1990) "New Marketing Litany: 4 Ps Passe; C words take over", Advertising Age, October 1, 1990, pg 26.
McCarthy EJ (1960) Basic Marketing: A Managerial Approach. Homewood IL: Irwin.
McCarthy, J. (1960 1st ed.), Basic Marketing: A managerial approach, 13th ed., Irwin, Homewood Il, 2001.

External links

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Marketing Mix Optimization Case Study by Fractal Analytics

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