LECTURE 24

THE MARKETING MIX

A firm’s marketing mix (often called the four Ps) consists of product, place (or
distribution), price, and promotion.

a. Product: The good, service, or idea that is marketed to fill consumer wants
and needs. Improving existing products and developing new products are
among the marketer's most important tasks.

i. Product differentiation: Creation of a product or product image

that differs enough from existing products to attract consumers.
Differentiation is a source of competitive advantage.
Combinations of physical goods and services can also be sources
of differentiation.
b. Pricing: Selecting the most appropriate price at which to sell a product.
Lower prices generally lead to higher sales volume, while higher prices
generally lead to higher profits per unit. Prices must support a variety of
costs, such as the organization’s operating, administrative, and research
costs, and marketing cost like advertising and sales salaries

c. Place (distribution): Determining the most effective and efficient way to get
products from producers to consumers. Distribution also involves choosing
which channels of distribution are most appropriate.

d. Promotion: All of the activities a firm undertakes to communicate and

promote its products to the target market. This is clearly the most visible
element of the marketing mix.

TARGET MARKETING AND MARKET SEGMENTATION

A market contains all the customers or businesses that might be interested in a product
and can pay for it.

Identifying Market Segments: Companies subdivide the market into market segments,
homogeneous groups of customers within a market that are significantly different from
one another. The goal of the market segmentation process is to group customers with
similar characteristics, behavior and needs. These target markets can then be offered
products that are priced, distributed, and promoted differently. Four factors marketers
frequently use to identify market segments are:
Geographic segmentation divides markets into certain areas such as regions, cities,
counties, or neighborhoods to customize and sell products that meet the needs of
specific markets.

i. Demographics use statistical analysis to subdivide the population

according to characteristics such as age, gender, income, race,
occupation, and ethnic group.

ii. Psychographics is the analysis of people by psychological makeup,

including activities, interests, opinions, and lifestyles (e.g. fashion-
consciousness, thrill-seeking).

iii. Behavioral segmentation divides markets according to customers’

knowledge of, attitude toward, use of, or response to products or
their characteristics.