Marketing mix

"4 P's" redirects here. For other uses, see 4P.

The 'marketing mix' (also known as the four Ps) is a foundation concept in marketing. The marketing mix has been defined as the "set of marketing tools that the firm uses to pursue its marketing objectives in the target market".[1] Thus the marketing mix refers to four broad levels of marketing decision, namely: product, price, promotion, and place.[2] Marketing the way most textbooks treat it today was introduced around 1960.[3] In services marketing, a modified and expanded marketing mix is used, typically comprising seven Ps made up of the original 4 Ps plus process, people, physical environment.[4] Occasionally service marketers will refer to eight Ps; comprising the 7 Ps plus performance.[5]

In the 1990s, the concept of four Cs was introduced as a more customer-driven replacement of the four Ps.[6] There are two theories based on four Cs: Lauterborn's four Cs (consumer, cost, communication, convenience), and Shimizu's four Cs (commodity, cost, communication, channel).

Emergence of the Marketing Mix: 4 Ps and 7 Ps Concepts

See also History of marketing, E. Jerome McCarthy and Neil H. Borden )

The origins of the four Ps can be traced to the late 1940s.[7][8] The first known mention of a mix has been attributed to a Professor of Marketing at Harvard University, Prof. James Culliton.[9] In 1948, Culliton published an article entitled, The Management of Marketing Costs [10] in which Culliton describes marketers as 'mixers of ingredients'. Some years later, Culliton's colleague, Professor Neil Borden, published a retrospective article detailing the early history of the marketing mix in which he claims that he was inspired by Culliton's idea of 'mixers', and credits himself with popularising the concept of the 'marketing mix'.[11] According to Borden's account, he used the term, 'marketing mix' consistently from the late 1940s. For instance, he is known to have used the term 'marketing mix' in his presidential address given to the American Marketing Association in 1953.[12]

Although the idea of marketers as 'mixers of ingredients' caught on, marketers could not reach any real consensus about what elements should be included in the mix until the 1960s.[13] The 4 Ps, in its modern form, was first proposed in 1960 by E. Jerome McCarthy in his text-book, Basic Marketing: A Managerial Approach.[14] McCarthy used the 4 Ps as an organising framework for the entire work with chapters devoted to each of the elements, contained within a managerial approach that also included chapters dedicated to analysis, consumer behavior, marketing research, market segmentation and planning to round out the managerial approach. Phillip Kotler, a prolific author, popularised the managerial approach and, and with it, spread the concept of the 4 Ps.[15] McCarthy's 4 Ps have been widely adopted by both marketing academics and practitioners.[16]

The prospect of expanding or modifying the marketing mix first took hold at the inaugural AMA Conference dedicated to Services Marketing in the early 1980s, and built on earlier theoretical works pointing to many important limitations of the 4 Ps concept.[17] Taken collectively, the papers presented at that conference indicate that service marketers were thinking about a revision to the general marketing mix based on an understanding that services were fundamentally different to products, and therefore required different tools and strategies. In 1981, Booms and Bitner proposed a model of 7 Ps, comprising the original 4 Ps plus process, people and physical evidence, as being more applicable for services marketing.[18] Since then there have been a number of different proposals for a service marketing mix (with various numbers of Ps - 6 Ps, 7 Ps, 8 Ps, 9 Ps and occasionally more).

McCarthy's Four Ps

See also Marketing and Marketing mix

The original marketing mix, or 4 Ps, as originally proposed by marketer and academic E. Jerome McCarthy, provides a framework for marketing decision-making.[6] McCarthy's marketing mix has since become one of the most enduring and widely accepted frameworks in marketing.[19]

Table 1: Brief Outline of 4 Ps[6]

Category Definition/ Explanation Typical Marketing Decisions
Product A product refers to an item that satisfies the consumer's needs or wants.

Products may be tangible (goods) or intangible (services, ideas or experiences).

  • Product design - features, quality
  • Product assortment - product range, product mix, product lines
  • Branding
  • Packaging and labeling
  • Services (complementary service, after-sales service, service level)
  • Guarantees and warranties
  • Returns
  • Managing products through the life-cycle [6]
Price Price refers to the amount a customer pays for a product.

Price may also refer to the sacrifice consumers are prepared to make to acquire a product.

(e.g. time or effort)

Price is the only variable that has implications for revenue.

Price also includes considerations of customer perceived value.
  • Price strategy
  • Price tactics
  • Price-setting
  • Allowances - e.g. rebates for distributors
  • Discounts - for customers
  • Payment terms - credit, payment methods
Promotion Promotion refers to marketing communications

May comprise elements such as: advertising, PR, direct marketing and sales promotion.
  • Promotional mix - appropriate balance of advertising, PR, direct marketing and sales promotion
  • Message strategy - what is to be communicated
  • Channel/ media strategy - how to reach the target audience
  • Message Frequency - how often to communicate
Distribution (Place) Refers to providing customer access

Considers providing convenience for consumer.

  • Strategies such as intensive distribution, selective distribution, exclusive distribution
  • Franchising;[20]
  • Market coverage
  • Channel member selection and channel member relationships
  • Assortment
  • Location decisions
  • Inventory
  • Transport, warehousing and logistics
The 4Ps have been the cornerstone of the managerial approach to marketing since the 1960s

Product refers to what the business offers for sale and may include products or services. Product decisions include the "quality, features, benefits, style, design, branding, packaging, services, warranties, guarantees, life cycles, investments and returns".[21]

Price refers to decisions surrounding "list pricing, discount pricing, special offer pricing, credit payment or credit terms". Price refers to the is the total cost to customer to acquire the product, and may involve both monetary and psychological costs such as the time and effort expended in acquisition.[21]

Place is defined as the "direct or indirect channels to market, geographical distribution, territorial coverage, retail outlet, market location, catalogues, inventory, logistics and order fulfilment". Place refers either to the physical location where a business carries out business or the distribution channels used to reach markets. Place may refer to a retail outlet, but increasingly refers to virtual stores such as "a mail order catalogue, a telephone call centre or a website [21]".

Promotion refers to "the marketing communication used to make the offer known to potential customers and persuade them to investigate it further [21]". Promotion elements include "advertising, public relations, direct selling and sales promotions.

Modified and Expanded Marketing Mix: 7 Ps

By the 1980s, a number of theorists were calling for an expanded and modified framework that would be more useful to service marketers. The "seven Ps", which added "physical evidence", "people", and "process" to the original marketing mix, was proposed by Booms and Bitner in 1981.[22]

Table 2: Outline of the Modified and Expanded Marketing Mix

Category Definition/ Explanation Typical Marketing Decisions
Physical evidence The environment in which service occurs.

The space where customers and service personnel interact.

Tangible commodities (e.g. equipment, furniture) that facilitate service performance.

Artifacts that remind customers of a service performance.[23]
  • Facilities (e.g. furniture, equipment, access)
  • Spatial layout (e.g. functionality, efficiency)
  • Signage (e.g. directional signage, symbols, other signage)
  • Interior design (e.g. furniture, color schemes)
  • Ambient conditions (e.g. noise, air, temperature)
  • Design of livery (e.g. stationery, brochures, menus, etc.)
  • Artifacts: (e.g. souvenirs, mementos, etc.)
People Human actors who participate in service delivery.[24]

Service personnel who represent the company's values to customers.

Interactions between customers.

Interactions between employees and customers.[25]
  • Staff recruitment and training
  • Uniforms
  • Scripting
  • Queuing systems, managing waits
  • Handling complaints, service failures
  • Managing social interactions
Process The procedures, mechanisms and flow of activities by which service is delivered.
  • Process design
  • Blueprinting (i.e. flowcharting) service processes [26]
  • Standardization vs customization decisions
  • Diagnosing fail-points, critical incidents and system failures
  • Monitoring and tracking service performance
  • Analysis of resource requirements and allocation
  • Creation and measurement of key performance indicators (KPIs)
  • Alignment with Best Practices
  • Preparation of operations manuals

Booms and Bitner are responsible for the creation of the extended marketing mix, featuring 7P's. To E. Jerome McCarthy's original 4P's of product, price, promotion, and place were added people, process and physical evidence.[27][28]

The 7 Ps of services marketing

People are essential in the marketing of any product or service. In the professional, financial or hospitality service industry, people are not producers, but rather the products themselves.[29] When people are the product, they impact public perception of an organization as much as any tangible consumer goods. From a marketing management perspective, it is important to ensure that employees represent the company in alignment with broader messaging strategies.[30] This is easier to ensure when people feel as though they have been treated fairly and earn wages sufficient enough to support their daily lives.

Process refers a "the set of activities that results in delivery of the product benefits". A process could be a sequential order of tasks that an employee undertakes as a part of their job. It can represent sequential steps taken by a number of various employees while attempting to complete a task. Some people are responsible for managing multiple processes at once. For example, a restaurant manager should monitor the performance of employees, ensuring that processes are followed. (S)he is also expected to supervise while customers are promptly greeted, seated, fed, and led out so that the next customer can begin this process.[30]

Physical evidence is the lasting proof that the service has happened.[29] In terms of buying a physical product, the physical evidence is the product itself. According to Booms and Bitner's framework, "physical evidence is the service is delivered and any tangible goods that facilitate the performance and communication of the service.[30] Physical evidence is important to customers because the tangible goods are evidence that the seller has (or has not) provided what the customer was expecting . The more inviting the physical environment that surrounds a product when it is sold, the more people are willing to pay for said good or service. Anyone who does not understand how important the physical environment is in business, need only to compare the price of a 4-star and a 2-star hotel.

Lauterborn's four Cs (1990)

Robert F. Lauterborn proposed a four Cs classification in 1990.[31] His classification is a more consumer-orientated version of the four Ps[32] that attempts to better fit the movement from mass marketing to niche marketing:[31]

Four Ps Four Cs Definition
Consumer wants and needs
 A company will only sell what the consumer specifically wants to buy. So, marketers should study consumer wants and needs in order to attract them one by one with something he/she wants to purchase.[31][33]
Price is only a part of the total cost to satisfy a want or a need. The total cost will consider for example the cost of time in acquiring a good or a service, a cost of conscience by consuming that or even a cost of guilt "for not treating the kids".[31] It reflects the total cost of ownership. Many factors affect cost, including but not limited to the customer's cost to change or implement the new product or service and the customer's cost for not selecting a competitor's product or service.[34]
While promotion is "manipulative" and from the seller, communication is "cooperative" and from the buyer[31] with the aim to create a dialogue with the potential customers based on their needs and lifestyles.[35] It represents a broader focus. Communications can include advertising, public relations, personal selling, viral advertising, and any form of communication between the organization and the consumer.
In the era of Internet,[33] catalogues, credit cards and phones people neither need to go anywhere to satisfy a want or a need nor are limited to a few places to satisfy them. Marketers should know how the target market prefers to buy, how to be there and be ubiquitous, in order to guarantee convenience to buy.[31][35] With the rise of Internet and hybrid models of purchasing, Place is becoming less relevant. Convenience takes into account the ease of buying the product, finding the product, finding information about the product, and several other factors.

Shimizu's Four Cs: in the 7Cs Compass Model (1973-, 2010)

After Koichi Shimizu proposed a four Cs classification in 1973, it was expanded to the 7Cs Compass Model to provide a more complete picture of the nature of marketing in 1979. The ７Cs Compass Model is a framework of Co-marketing (Commensal marketing or Symbiotic marketing). Also the Co-creative marketing of a company and consumers are contained in the co-marketing. Co-marketing (Collaborate marketing) is a marketing practice where two companies cooperate with separate distribution channels, sometimes including profit sharing. It is frequently confused with co-promotion. Also Commensal (symbiotic) marketing is a marketing on which both corporation and a corporation, a corporation and a consumer, country and a country, human and nature can live.[36][37][38][39][40]

(C1) Corporation – The core of four Cs is corporation (company and non profit organization). C-O-S (organization, competitor, stakeholder) within the corporation. The company has to think of compliance and accountability as important. The competition in the areas in which the company competes with other firms in its industry.

The four elements in the 7Cs Compass Model are:

A formal approach to this customer-focused marketing mix is known as "Four Cs" (commodity, cost, communication, channel) in the Seven Cs Compass Model. The four Cs model provides a demand/customer centric version alternative to the well-known four Ps supply side model (product, price, promotion, place) of marketing management.[41]

"P" category (narrow) "C" category (broad) "C" definition
Product (C2) Commodity (Latin derivation: commodus=convenient) : Co-creation.It is not "product out". The goods and services for the consumers or citizens. Steve Jobs has been making the goods with which people are pleased. It will not become commoditization if a commodity is built starting.
Price (C3) Cost (Latin derivation: constare= It makes sacrifices) : There is not only producing cost and selling cost but purchasing cost and social cost.
Promotion (C4) Communication (Latin derivation: communis=sharing of meaning) : marketing communication : Not only promotion but communication is important. Communications can include advertising, sales promotion, public relations, publicity, personal selling, corporate identity, internal communication, SNS, MIS.
Place (C5) Channel (Latin derivation: canal) : marketing channels. Flow of goods.

The compass of consumers and circumstances (environment) are:

The factors related to consumers can be explained by the first character of four directions marked on the compass model. These can be remembered by the cardinal directions, hence the name compass model:
In addition to the consumer, there are various uncontrollable external environmental factors encircling the companies. Here it can also be explained by the first character of the four directions marked on the compass model:


EXHIBIT: Shimizu's 7Cs Compass Model (Courtesy: © Koichi Shimizu, Japan)

These can also be remembered by the cardinal directions marked on a compass. The 7Cs Compass Model is a framework in co-marketing (symbiotic marketing). It has been criticized for being little more than the four Ps with different points of emphasis. In particular, the seven Cs inclusion of consumers in the marketing mix is criticized, since they are a target of marketing, while the other elements of the marketing mix are tactics. The seven Cs also include numerous strategies for product development, distribution, and pricing, while assuming that consumers want two-way communications with companies.

An alternative approach has been suggested in a book called 'Service 7' by Australian Author, Peter Bowman. Bowman suggests a values based approach to service marketing activities. Bowman suggests implementing seven service marketing principles which include value, business development, reputation, customer service and service design. Service 7 has been widely distributed within Australia.

See also

References

  1. ↑ Kotler, P., Marketing Management, (Millennium Edition), Custom Edition for University of Pheonix, Prentice Hall, 2000, p. 9
  2. ↑ McCarthy, Jerome E. (1964). Basic Marketing. A Managerial Approach. Homewood, IL: Irwin.
  3. ↑ Grönroos, Christian. "From marketing mix to relationship marketing: towards a paradigm shift in marketing." Management decision 32.2 (1994): 4-20.
  4. ↑ Booms, Bernard H.; Bitner, Mary Jo (1981). "Marketing Strategies and Organization Structures for Service Firms". Marketing of Services. American Marketing Association: 47–51.
  5. ↑ Kotler, Philip (2012). Marketing Management. Pearson Education. p. 25.
  6. 1 2 3 4 Needham, Dave (1996). Business for Higher Awards. Oxford, England: Heinemann.
  7. ↑ Groucutt, J. and Leadley, p., Marketing: Essential Principles, New Realities,https://books.google.com/books?id=cd6Sjxu2lesC&pg=PA17, Kogan Page, 2004 ISBN 978-0-7494-4114-2, p.17.
  8. ↑ Hunt, S.F. and Goolsby, J., "The Rise and Fall of the Functional Approach to Marketing: A Paradigm Displacement Perspective," (originally published in 1988), reprinted in: Review of Marketing Research: Special Issue - Marketing Legends, Vol. 1, Naresh K. Malhotra,(ed), Bingley, UK, Emerald, 2011
  9. ↑ Banting, P.M. & Ross, R.E., "The marketing mix: A Canadian perspective," Journal of the Academy of Marketing Science, vol. 1, no. 1, 1973, doi:10.1007/BF02729310
  10. ↑ Culliton, J. The Management of Marketing Costs, [Research Bulletin] Harvard University, 1948).
  11. ↑ Borden, N.H., "The Concept of the Marketing Mix," Journal of Advertising Research, 1964, pp 2-7 and reprinted in: Baker, M.J. (ed), Marketing: Critical Perspectives on Business and Management, Vol. 5, Routledge, 2001, pp 3-4 and available online at Google Books
  12. ↑ Dominici, G., "From Marketing Mix to E-Marketing Mix: A Literature Review," International Journal of Business and Management, vol. 9, no. 4. 2009, pp 17-24
  13. ↑ W. Waterschoo; C. van den Bulte (1992). "The 4P Classification of the Marketing Mix Revisited". Journal of Marketing. 56 (4): 83–93.
  14. ↑ McCarthy, E.J., Basic Marketing: A Managerial Approach Irwin, Homewood, Ill., 1960
  15. ↑ Keelson, S.A>, "The Evolution of the Marketing Concepts: Theoretically Different Roads Leading to Practically the Same Destination!" in Global Conference on Business and Finance Proceedings, Volume 7, Number 1, 2012, ISSN 1941-9589
  16. ↑ Constantinides, ., "The Marketing Mix Revisited: Towards the 21st Century Marketing," Journal of Marketing Management, vol. 22, 2006 pp 407-438 Online: http://intranet.fucape.br/uploads/MATERIAIS_AULAS/25112-8.pdf
  17. ↑ Fisk, R.P., Brown, W. and Bitner, M.J., "Tracking the Evolution of Services Marketing Literature, Journal of Retailing, vol. 41, (April), 1993
  18. ↑ Booms, B. and Bitner, M. J. "Marketing Strategies and Organizational Structures for Service Firms" in James H. Donnelly and William R. George, (eds), Marketing of Services, Chicago: American Marketing Association, 47-51.
  19. ↑ Bitner, M.J., "The Evolution of the Services Marketing Mix and its Relationship to Service Quality," in Service Quality: Multidisciplinary and Multinational Perspectives, Brown, S.W., Gummeson, E., Edvardson, B. and Gustavsson, B. (eds), Lexington, Canada, 1991,pp 23-37
  20. ↑ Hartley, K. and Rudelius, W., Marketing, The Core, 4th Ed., McGraw-Hill, 2001.
  21. 1 2 3 4 Blythe, Jim (2009). Key Concepts in Marketing. Los Angeles: SAGE Publications Ltd.
  22. ↑ "The 7 Ps of Marketing". Retrieved 2011-11-12.
  23. ↑ Bitner, M.J., "Servicescapes: The Impact of Physical Surroundings on Customers and Employees, Journal of Marketing, vol. 60, no. 2, 1992, pp 56-71
  24. ↑ Hoffman, D., Bateson, J.E.G., Elliot, G. and Birch, S., Services Marketing: Concepts, Strategies and Cases, (Asia-Pacific ed.), Cengage, 2010, pp 226-274
  25. ↑ Zeithaml, V. Bitner, M.J. and Gremler, D.D., Services Marketing: Integrating Customer Focus Across the Firm, (6th ed), New York: McGraw-Hill, 2013.
  26. ↑ Shostack, G. L.. "Designing Services that Deliver", Harvard Business Review , vol. 62, no. 1, 1984, pp. 133–139
  27. ↑ https://blog.udemy.com/extended-marketing-mix/
  28. ↑ name=mclean McLean, R. (October 19, 2002)
  29. 1 2 McLean, R. (October 19, 2002). The 4 C's versus the 4 P's of marketing. Custom Fit Online. Retrieved from http://www.customfitonline.com/news/2012/10/19/4-cs-versus-the-4-ps-of-marketing
  30. 1 2 3 Rafiq, Mohammed (March 31, 2016). "Using the 7Ps as a generic marketing mix: an exploratory survey of UK and European marketing academics". Marketing Intelligence & Planning. 13 (9): 4. doi:10.1108/02634509510097793.
  31. 1 2 3 4 5 6 Lauterborn, B. (1990). New Marketing Litany: Four Ps Passé: C-Words Take Over. Advertising Age, 61(41), 26.
  32. ↑ Kotler, P. and Keller, K. (2006), Marketing and Management, Pearson Prentice Hall, Upper Saddle River, NJ, USA
  33. 1 2 McLean, R. (October 19, 2002). The 4 C's versus the 4 P's of marketing. Custom Fit Online. Retrieved from http://www.customfitonline.com/news/2012/10/19/4-cs-versus-the-4-ps-of-marketing/
  34. ↑ Marketing, Marketing.
  35. 1 2 Schultz, Don E; Tannenbaum, Stanley I; Lauterborn, Robert F (1993), Integrated marketing communications, NTC Business Books, ISBN 978-0-8442-3363-5
  36. ↑ Shimizu, Koichi(1989) "Advertising Theory and Strategies," (Japanese) first edition, Souseisha Book Company in Tokyo. (ISBN 4-7944-2030-7) pp.63-102.
  37. ↑ Shimizu, Koichi (2014) "Advertising Theory and Strategies,"(Japanese) 18th edition, Souseisha Book Company (ISBN 4-7944-2132-X) pp.63-102.
  38. ↑ Shimizu, Koichi (2016)"Co-marketing (Symbiotic Marketing) Strategis,"(Japanese) 5th edition, Souseisha Book Company (ISBN 978-4-7944-2482-2) pp.25-62.
  39. ↑ Solis, Brian (2011) Engage!: The Complete Guide for Brands and Businesses to Build, Cultivate, and Measure Success in the New Web, John Wiley & Sons, Inc. pp. 201–202.
  40. ↑ French, Jeff and Ross Gordon (2015)"Strategic Social Marketing,"SAGE Publications Inc.,p.90.
  41. ↑ McCarthy, Jerome E. (1975)”Basic Marketing: A Managerial Approach," fifth edition, Richard D. Irwin, Inc., p. 37.

Further reading

McCarthy's 4Ps

External links

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