Marketing is not the art of finding clever ways to dispose of what you make. It is the art of creating genuine customer value.
- Philip Kotler
What is one of the most commonly used marketing tools? The marketing mix! The marketing mix can be applied to all types of products and services and encompasses all key selling aspects. Let's explore how it can provide a basis for marketing strategy.
Marketing Mix Definition
Let's first take a look at the definition of the marketing mix. The marketing mix concept revolves around the 4Ps — product, price, place, and promotion (see Figure 1 below).
The marketing mix is a set of marketing tools a company employs to promote its products or services in the market. It includes the 4Ps, which stand for product, price, place, and promotion. In simple terms, the marketing mix helps businesses deliver the right product in the right place, at the right price, and at the right time.
The marketing mix is an insightful tool marketers use to deliver customer value. It also helps marketers ensure that all elements of their marketing activities are integrated, optimized, and cohesive. As a result, it helps drive marketing strategy and foster long-term customer relationships.
Fig. 1. The 4Ps of the Marketing Mix
4 Ps of the Marketing Mix
Now that we have a basic idea of the marketing mix let's look at all four elements individually. Each aspect involves its own decisions, helping marketers form an integrated marketing mix.
Marketing Mix: Product
The first element is 'product'. After segmenting the market and finding the target group of customers, marketers have to make numerous product decisions.
The product is the good or service a company produces that satisfies the customer's needs and wants.
Product decisions have to be made by marketers before producing and distributing a product. Important product decisions include:
Analyzing the value of the product portfolio,
Determining the position of the product on the product life cycle,
Evaluating the influences and importance of new product development.
Check out our Product explanation for a more detailed overview of the product element of the marketing mix.
Marketing Mix: Price
The following mix element is price. The three major pricing strategies include customer value-based pricing, cost-based pricing, and competition-based pricing.
Check out our explanation of pricing to learn more about the primary pricing strategies.
Price is the monetary value assigned to the sale of a product. It is also described as the customer's sacrifice of time and money to acquire a product.
To set a fair price, marketers should match the product's actual value with its perceived value by the market. They also need to consider the supply costs, competitors' prices, and the customer's willingness to pay.
Common new product pricing strategies include:
Price skimming - The pricing strategy where the company starts with a high price and then lowers it over time. The idea is to increase the product's perceived value and generate higher profit margins.
Price penetration - The price strategy where the company starts with a lower price, then increases it over time to attract price-conscious individuals.
Marketing Mix: Place
The following marketing mix element is place. Companies can distribute their products directly through their own stores, websites, e-commerce platforms, mail order, or door-to-door. For wider distribution, they can reach out to a third party like a retailer or wholesaler, who then resells the products to customers.
Place is the distribution method the company uses. What channels does the company use to deliver its products to its customers?
Another aspect of 'place' is market coverage, which refers to how far and wide a company wants to distribute its product or service.
There are three types of market coverage:
Intensive distribution,
Selective distribution,
Exclusive distribution.
Marketing Mix: Promotion
Companies can adopt various promotional tactics, both direct and indirect, to capture the audience's attention.
Promotion is the set of activities that raise awareness of a product. Promotion ensures that the product is sold to the target customers.
The five most common types of promotion are:
Personal selling,
Advertising,
PR,
Direct marketing,
Sales promotion.
Find out all about promotion in our promotion mix explanation.
Marketing Mix Examples
To see the marketing mix in action, let's consider the example of Starbucks, one of the most prestigious coffee brands in the world. Figure 2 below outlines the primary product, price, place, and promotion decisions that Starbucks has made to integrate its marketing mix.
Fig. 2. Starbucks Marketing Mix Example
Marketing Mix Strategy
The marketer's main goal is to create an integrated marketing mix. An integrated marketing mix combines and harmonizes different elements of the marketing mix. This is the foundation of a marketing mix strategy.
Here's an example to help you understand this better.
Low-price airline brands offer affordable tickets targeting price-conscious individuals (pricing). There are also numerous promotional campaigns with deep discounts to encourage more travel (promotion). The service is also kept basic to avoid the extra costs (product). Customers can book the ticket directly from the airline's website or travel agents; the latter tend to provide a lot of money-saving deals (place).
All elements of an integrated marketing mix blend in well with one another to provide the customer with an enticing offer. From the company's perspective, it also helps with planning and executing the marketing strategy properly to maximize financial gains. Furthermore, an integrated marketing mix ensures harmonious cooperation between different departments within the company, such as production, research and development (R&D), accounting, and marketing.
Of all marketing mix elements, 'product' is often said to be the most important; if a product doesn't meet the customer's need, it doesn't matter if the company has the best price, promotional campaigns, or location in town.
Influences on an integrated marketing mix
It is essential to understand the various factors that impact a marketing mix. These include:
The product's life cycle
A product life cycle is the amount of time a product exists on the market, from the moment it is introduced to the end of life. There are four stages in a product life cycle: introduction, growth, maturity, and decline (see Figure 3 below). Knowing where it is on the product life cycle can help the business to implement the right marketing strategy at the right time.
Check out our explanation of the Product Life Cycle to learn more.
Fig. 3. The Product Life Cycle
The Boston Matrix
This model allows a business to develop its product portfolio and branding. The matrix includes four categories of products: dogs, stars, cash cows, and question marks. Figure 4 below represents the Boston Matrix.
To learn more about the Boston Matrix, take a look at our explanation of the Business Portfolio.
Fig. 4. The Boston Matrix
Product Marketing
Product marketing is a business function that bridges the gap between product management and communications. It is the foundation for an integrated marketing mix.
Marketing objectives
Marketers cannot make decisions about the product or its pricing, promotion, and distribution without an overall marketing objective.
The target market
Understanding the customer's needs and wants is crucial to designing a compelling marketing mix. Many businesses nowadays direct different products in their product portfolio to different customer segments to maximize revenues.
Competition
The market competition level can determine a company's marketing strategy. For example, in a highly competitive market, the business should focus more on differentiating itself through unique branding, original product ideas, and continuous innovation.
Brand positioning
The product's value proposition determines its pricing, promotional strategies, and distribution methods which form the marketing mix. It is one of the first steps to developing an integrated marketing strategy.
Extending the Marketing Mix – 7Ps
In service marketing, the 4Ps of the marketing mix are extended into the 7Ps. These comprise the original 4Ps, in addition to the process, people, and physical evidence elements.
Check out our Services Marketing explanation to learn more about the service industry.
Marketing Mix: People
The first addition to the 4Ps includes 'people'.
The people element refers to anyone who engages in marketing activities in a company, either directly or indirectly.
It includes the staff, customer service team, salespeople, and even customers. They not only help with selling the product but also contribute to the company's positive image. For example, customer service has a direct influence on customer satisfaction. If the customer service is positive, it will leave a good impression on the customer and entice them to return. Customers can also act as brand ambassadors who spread the word about the business and win referrals.
Marketing Mix: Processes
The next addition includes processes. Processes may include elements like service design or operational efficiency.
Processes are activities that help the company deliver the promised product or service.
The standard process is developed to ensure customers receive the same quality product. The right processes also increase your business efficiency, thus saving time and money.
Marketing Mix: Physical evidence
The seventh P is physical evidence, which is especially important in the service sector.
Physical evidence is what the customer sees while interacting with the business.
This includes the business layout, interior design, branding, staff, uniform, etc. The physical evidence should convince the customer to invest their time and money in the service. It's also crucial to match reality with your promise to ensure high customer satisfaction.
Digital Marketing Mix
Due to the widespread use of digital technologies, marketers have begun adopting digital marketing strategies. For digital strategies to be successful, marketers must also adapt the marketing mix to a digital one. The good news is that the digital marketing mix is structured exactly the same as a traditional marketing mix, the only difference being its digital focus. In the digital world, almost all 4 Ps of the marketing mix can be digital. A business could have a digital product (e.g., software), a digital promotion (e.g., search ads), and a digital place like a website for distribution (e.g., e-commerce). As a result, the marketing mix has to be slightly adjusted to meet the wants and needs of customers browsing and purchasing online.
Marketing Mix - Key takeaways
- The marketing mix is a set of marketing tools a company employs to promote its products or services in the market. It includes the 4Ps, which stand for product, price, place, and promotion.
- The product is the good or service a company produces that satisfies the customer's needs and wants.
- Price is the amount customers pay for a product. Two popular new product pricing strategies are price skimming and price penetration.
- Place is the distribution method the company uses. What channels does the company use to deliver its products to its customers?
- Promotion is the set of activities that raise awareness of a product. Promotion ensures that the product is sold to the target customers.
- In service marketing, the 4Ps of the marketing mix are extended into the 7Ps. These comprise the original 4Ps, in addition to the process, people, and physical evidence elements.
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