Marketing Is the process of analyzing and identifying customer’s needs and wants and then satisfying them profitably using the appropriate marketing mix. Marketing mix consists of 4Ps mainly; Product, Price, Promotion and Place. Almost anyone who has basic knowledge of Business studies would already have come across similar definitions and explanations of Marketing mix.
It is only a sterotype that Marketing mix and 4ps is a very simple idea. In reality, implementing it can be a very tough job. To understand this, let us separate the 4Ps and treat them as separate entities.
The first P, which is the Product is fairly simple. It talks about the type of product we have, a good or a service? An innovation or renovation? Cash Cow, Dog, Star or problem child? And most importantly, what part of the life cycle is it on.
Above is an example of a regular product and the 4 stages it goes through. Although at the time of Decline, the entrepreneur has 2 options. Either to let the product fall into decline and end. In which case he will introduce a new product and restart on the product life cycle. The second option can be to apply an “Extension strategy”. Rebranding the product, improving the product, changing the packaging could be some of the ways to let the product stay in the market for a while longer but eventually it will have to retire.
The second P is the Price. The pricing strategy is one of the most important aspects. Price penetration, price skimming, competitive pricing and predatory pricing are some of the options. Price not only acts as a means of revenue but also is a signal for the customers about the quality of the product. The most important thing to be considered when choosing a pricing strategy is the stage of the product. It is better to charge a lower price if the product is at “Introduction” In order to create a market. In contrast if the product is on “Maturity” a higher price can be charged because the price elasticity of demand is likely to be inelastic and thus the customers will be willing to pay a higher price.
The third P is the Promotion. Promotion does not necessarily refer to Advertisement on TV, Radio or a small poster on a wall. Promotion can start from Above the line to below the line and can be both persuasive and informative. Often when a business is in trouble due to e.g. misconception about its product, then the business can improve its reputation by doing a persuasive promotion. On the other hand, when a new product is about to be introduced, informative promotion can be used to raise awareness. Again, in order to choose the type of promotion the entrepreneur will have to consider the Product and Price. Is the product on appropriate stage of life cycle to be promoted by our current method? Is the promotion supporting the price of the product?
The last P stands for Place. This refers mainly to the distribution channel. The Product can be delivered from Producer to Customer, Producer to Retailer to Customer, Producer to wholesaler to retailer to customer and so on.
For all 4Ps to work and for the business to succeed in the implementation of its Marketing Mix, Product, Price, Promotion and Placement should be decided in relation to each other. They should all support each other’s cause in order to make sense and to generate profit.