So if tomorrow Jack Ma wish to implement a new business model, he would go forth in deciding about the 4P’s these are the product, price, place, promotion. These are the elements of marketing and together constitute what is called the marketing mix. Coming back to Jack Ma, by the business plan, will first propose the product or the service to satisfy the unmet demand of the market. He would then analyse the marketplace and devise strategies to enter the marketplace; this may be local markets or global markets.
Post to deciding the place of service to deliver he would determine the price to offer for generating the revenue as well as the price.
To bring it to the notice of the potential market and to communicate values through different channels of marketing, there is a requirement of promotion. An effective balance of all the 4P’s is the key to success. By understanding the marketing mix, we would familiarise ourselves with the concept of the marketing mix. We must be able to explain the meaning of product and its classification. Determine the factors that affect the pricing decisions. Understand the channels of distribution and should be in a position to understand what suits best in the business model.
The marketing mix is the driver of the bus to control the overall marketing strategy and attract the passengers who are the target market in our case. Every firm to be successful strives hard to balance the 4P’s and deliver highest customer value. Let us know deep dive into the classification of the product.
Based on the usage these are
Let us get into the details of each of them. Consumer goods are intended for consumption at a personal level. These are further classified as
Convenience goods are the goods which are bought on a regular basis. They meet the basic necessity and serves no special utility. These goods are readily and easily available upon demand. Examples could be soap, butter, milk etc.
Shopping goods are the goods purchased not frequently unlike convenience goods. Some of these can be clothes, electric and home appliances.
Speciality goods as the name suggests serves particular purpose and utility which is unique. These are the goods which help unique purpose utility in consumption. An example in this category of goods is TV, microwave, Refrigerator.
Industrial goods are the goods used in the manufacturing of other goods. This is a case of producing the commercial goods. Examples of these goods can be any machinery, raw materials etc.
Based on the durability the goods are classified as
Durable goods are those goods which are used for a longer duration. These goods require more efforts in marketing and involve a high margin in the profit.
Non-durable goods are the goods which extinguish in one go or subsequent use. The example of this type of goods are soaps, pen, salt, sugar etc.
Based on the tangibility the goods the products may be classified as
Tangible goods are those goods which can be touch, felt and seen. These include all the product with physical properties such as consumer goods, industrial goods, durable and non-durable goods. Examples can be a soap, sugar, refrigerator, washing machine etc.
Intangible goods possess the property to be abstract. These can be touch and felt. They are mostly services in nature. This can be IT service, hospitality etc.
Pricing is another element in the marketing mix. It is the monetary measure of the value derived from the goods and services. Price can be high, low and fixed. If the prices are fixed, it will highly impact the sales volume. If the prices are low, it will impact the profitability of the company. If the prices are soaring high, it will be a hurdle for all the market to purchase the product or avail for the services if they are offered by the competitors at a low price with the same specification.
The factors taken into consideration while deciding the price are
Cost: The cost can be at a different level in the value chain. This can be starting from the production to the delivery stage. Cost and the price of the product assume proportional relationship unless the brand is a luxury and premium brand. This means that as the cost of production goes up, the price of the product goes up.
Demand: Demand is the want with the ability of purchasing power. Demand facilitates the pricing decisions. This is the reason when a product is launched say for instance a new iPhone; the demand to use it is high. In turn, the price to make it available goes up.
At the later stages when the demand starts to die, the prices start falling. This in management term is called as price elasticity which refers to the sensitivity in demand concerning the price.
Competition: The competitor price would influence the other sellers selling the same product. At the initial stages of introduction, the product is highly priced. When there are other suppliers of the same product, then the price has to be offered to keep all other sellers price in mind. Failing to do so would lose the business.
Marketing goals: Firm’s marketing goals must align with the strategy of the company. The marketing goals can speak the language of profitability, revenue etc.
Regulation and policies: The pricing decisions must comply with the procedures set for the category of the good. For instance, a commercial good cannot be sold at the price of the intangible asset as it the utility derived from each of them is different.
“Place” which refers to the channels of distribution. A channel of distribution is the path adapted to deliver the product end to end from the manufacturer to the customer. There are different types of the channel of distribution based on the number of stakeholders. These are Zero stage channel of distribution: This involves a single manufacturer and a customer. This happens in case of e-commerce model. Dell is another example of this distribution.
One stage channel of distribution: in addition to the manufacturer and the customer there is an additional stakeholder which is the retailer. For instance, HUL manufactures Dove soap, and Walmart who is the retailer purchases this. From Walmart, we as customers would buy the Dove soap.
The two-stage channel of distribution: a most common and renowned channel of distribution is the two-stage channel of distribution. This involves manufacturers, wholesaler, retailer and consumer.
Three stage channel of distribution: This involves manufacturers, agents, wholesaler, wholesaler, retailer and finally the consumer. The role of the agent is to maintain the communication and compliance between the manufacturer and the wholesaler. This applies to big business.
The 4th P in the marketing mix is the promotion. Promotion refers to the communication of value that is delivered upon the utility of the product. This involves providing appealing and persuasive information to the potential market. The promotional activities include the following