CHAPTER 5: MARKETING MIX

Introduction:

In marketing planning, marketer has to use variety of marketing information to

design systematic marketing. Marketing mix is one of the important steps while
designing marketing programme.

Marketing mix can be defined as

“A set of marketing tools that the firm uses to perceive/ achieve its marketing objectives
in the selected target segment”

It is an indication of number of activities into single marketing programme.

Designing marketing mix is one of the international system followed by marketing
manager.

Prof. Jerome McCarthy has classified these tools into 4 broad categories, which he
called as Four P’s of marketing i.e. product, price, place & promotion

These are also called as Marketing Variables which are used to design marketing
plan. Marketing mix decisions must be made for influencing trade channels as well as
final consumers.

4 P’s represent sellers point of view of marketing. From the buyers’ point of view
each tool is designed to deliver customer satisfaction keeping this into consideration,
Robert Lauterborn gave concept of four correspondences to four P’s.

McCarthy (Sellers 4P’s) Robert Lauterborn (Buyers 4C’s)

Product Concept/Customer Solution

Price Cost

Place Convenience

Promotion Communication

Marketing manager is a person who mixes all above ingredients to derive a proper
combination of marketing tools to satisfy customer needs and wants. These four elements
are co-equal interdependent. Marketing mix acts as an integrated marketing strategy.
Therefore, a marketer has to blend a proper mix of these marketing variables. This
decision must be coordinated & well balanced so as to result in efficiency of marketing.

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Elements of Marketing Mix:

Product
Physical
Price
Evidence

Target
Market
Process Place

People Promotion

A) PRODUCT MIX:

“Product is the bundle of satisfaction / utilities offered by marketer to the

customer in the view of satisfying needs and wants.” It is a solution to the customer
queries. The marketer has responsibilities to offer best product with help of product mix.
It includes:

1) Product form: Many Products can be differentiated as per their form, size, shape,
external appearance, colour, design, most of them are offered with differentiating
feature that supplement to basic functions of Product (peripheral). Therefore a
marketer has to look after the different components of product form.

2) Quality: It is the element that customer expects from product. Performance

quality results in customer satisfaction, further in customer delights. They are
ready to pay any amount with exchange of pay any amount with exchange of
quality product. Most of the products are established according to four levels of
performance low, high, average, superior. These are the quality levels. The
manager has to offer the product with offering quality as per demanded in market.

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 3) Product durability: Durability is a measure of expected operating life of product.
Its an advanced attribute for certain product. Eg: buyers will generally buy and pay
more for vehicles and kitchen appliances that have reputation for longer life.

4) Product style: Style describes product looks and feel to the buyer. Style has the
advantage of creating distinctiveness in product which is difficult to copy by
competitor but a strong style does not always mean high performance.

5) Warranty & guarantee (After sale services): All sellers are legally responsible for
fulfilling buyer’s normal/reasonable expectations. Warranty is a formal statement
of expected product performance by manufacturer. Product under warranty can be
returned to manufacturer for repair, replacement or refund. Warranty is legally
enforceable and for the betterment of customer.
Guarantee reduces the buyer perceived risk. Guarantee is the assurance of
product quality and performance. It suggests that a Product and its services are
dependable/reliable. The company can offer superior customer response by
offering guarantee & warrantee services under after sale service with the product.

6) Product branding: brand offers identity to the product. Customers buy brand not
only product. It is a sign, term, symbol, logo to give identification to a product.
Branding develops Product impression in customers mind. In today’s era, without
brand identity it’s difficult to sell product in market.

7) Product packaging & labeling :

Physical products need Packaging & labeling. Eg: coke bottles are
world famous hence, marketer call Packaging as fifth “P” along with other p’s of
marketing mix. Its even considered as an important element of product strategy.

DEFENATION of Packaging: “Packaging includes all activities of designing

and producing the container for a product”

Packaging includes three levels

1) Primary package: cool water cologne comes in a bottle which is primary package.
2) Secondary Package: In a cardboard box which is secondary package.
3) Shipping package: In a corrugated box containing six dozen boxes in a shipping
pack.

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Well designed package can built brand equity and drive huge sales for a company.
Packaging is a buyers first encounter that is first impression product have on customers
hence a Packaging is capable of turning buyer on or off. Packaging even affects
customer’s later product experiences.

Below are the factors contributing to the growing use of packaging as marketing tools:

1) Self service: An increasing number of products are sold on self service basis i.e.
supermarkets, hypermarkets, or malls where a shopper passes by 300 items per minute.
Package must perform many of sales task like attract attention of customers, describing
product features, creat5ing consumer confidence and make a favorable overall
impression.

2) Consumer affluence: Rising consumer affluence means consumers are willing to

pay a little more for the convenience, appearance, dependability and prestige of better
packages.

3) Company and brand image: Package reflects the instant recognition of the
company or brand. In a store, packages for a brand can create a visible billboard effect
such as Garnier fructis its bright green attractive packaging attract numerous
customers.

4) Innovative opportunity: Innovative Packaging brings large benefits to consumers

and profits to producers. Companies are incorporating unique materials and features
such as reusable i.e. resalable spouts and openings. Eg: Calcium Sandoz bottle targeted
ate children and women have been made to make them attractive to target customers.

From the prospective of both firm and customers, Packaging must achieve number
of objectives:

1) Identify the brand

2) Convey descriptive and persuasive information
3) Facility product transportation and protection
4) Assist at home storage
5) Aid (help) product consumption.

Choosing the aesthetic and functionality components of Packaging is most important.

Aesthetic considerations related to Packaging are

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  Size and shape
 Material
 Colour
 Text and
 Graphic

Meaning and interpretation of colours is influenced as per the culture. In India green
means freshness and saffron reflects divinity. Structural design for Packaging is most
critical. For eg: Poor design Packaging causes high loss while transporting and storing
fruits and vegetables in many countries. Innovative Packaging solutions with proper
structural design is needed to reduce damages and ensure longevity of fruits and
vegetables.

The Packaging elements must harmonize with each other and with
pricing, advertising and other parts of marketing pragramme. Eg: Ready to eat Indian
food on strength of product and Packaging.

Packaging has direct impact on sales like book publishing industry

where customers often buy books specially novels by its cover. Another example is
Haldiram the brand for namkeens bought international standard Packaging by investing
in advanced Packaging unit.

Although developing Packaging may cost a company high cost of

money and even take several months to complete but companies must even pay attention
towards growing environmental concerns about Packaging. In India there are
increasing concerns on the environmental degradation caused by excess use of plastics in
Packaging. Some state governments have even banned use of plastic shopping bags.
Some companies are focusing on eco-friendly alternatives and Packaging materials to
save environmental harms.

Companies must pay attention, however to the growing environmental

and safety concerns, about Packaging. Shortages of paper, aluminum and other materials
suggest that marketers should try to reduce their Packaging.

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B) PRICE MIX:

Price is the economic value of the product that customer pays in

exchange of product. Price of the product should be competitive for market and
affordable to customers. So, pricing decisions are complex in nature. The process
for deciding prices is called as pricing strategy. It includes the basic cost, profit
margin, competition, customers and so objectives. Product decisions must be in
consistent with prices of product. Various strategies are used while deciding the
Price like cost + pricing, competitive pricing, demand based Pricing etc.

The Price mix includes following factors to be considered

1) Cost: cost is basic expenditure incurred in organization in production and delivery
of goods and services. It forms a basis for calculating price for product. Cost
differs in type as fixed and variable, direct and indirect. The marketer has to
calculate basic cost for further calculations

2) Discounts and allowances: These are Price concessions offered to traders or

buyers in the form of deduction from the price or amount of bill or invoice
following are the types :

a) Trade discounts: It’s a kind of functional discounts offered to traders

(wholesalers & retailers) It’s given for the functions they are performing
therefore it’s called as functional discount.
b) Cash Discount: It’s a motivation for the trader and consumer for making
cash payment is prompt payment. It is deducted from the total cash of
transaction. The period for cash payment is usually 10 days. Generally, in
cash discount “2/10 net 30” is the term of payment followed which means
if the amount is paid within 10 days customer will get 2 % cash discount on
amount for the credit period of 30 days.
c) Quantity Discount: In order to encourage customers to make bulk or large
purchase at a time , quantity discount is offered. It can reduce the price for
bulk purchase order.
d) Seasonal discount: This is a type of deduction on price offered during slack
season which will ensure better use of plant and production facilities.
 Allowances: The manufacturer may offer promotional allowance
like advertisement allowances, window display allowance, free
samples, free display material, etc

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 3) Terms of credit: It’s the time period given to customers for making payment of
credit business. Longer the term for credit, larger the effect on price of product.
Therefore, this decision needs critical concentration. The decision of this also
affects working capital requirement for business.

4) Pricing Methods: This factor deals with different methods decide the price. It is
a long term or strategic decision of top level management directly affecting
profitability of business.

Following are the methods.

 Cost based method
 Demand based method
 Competition based method (at, above & below)

5) Pricing strategy: It’s the decision with the art of deciding price for the products.
Strategy has wider scope than methods where these are broken down into methods.
 Price skimming strategy (high price & high promotion )
 Penetration price strategy (low price & high promotion)
Therefore, price mix is a combination of above all factors which results in
profitability for organization and affordability for customers. Hence, Price plays
an important role in marketing mix as it is the only “P” generating revenue for
organization.

C) PLACE MIX:
The place mix includes factors related to availability and accessibility
of goods and services to the customers. Place mix decisions has the responsibility
to make available goods and services within time & in proper quantity. This “ p”
includes marketing channels or marketing intermediaries and their functions.
Marketing channels are the set of interdependent systems that involves
in the process of making products available to the place of customer. It includes
transportation of goods from place of production to place of consumption.
Following are the factors to be considered in place mix:
1) Wholesaling: It includes all the activities involved in selling the goods and
services to those customers who buy in bulk quantity and for resell business.
Wholesaling excludes manufacturers or farmers. They are also called as
distributors. A wholesaler has to perform following functions
 Selling
 Promotion

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  Risk bearing
 Ware housing
 Transportation
 Financing and managing marketing information

Wholesalers has to maintain good relationship with retailers. Wholesalers can be

merchant wholesaler or in some cases they are brokers in chain of distribution.

2) Retailing: It can be defined as “A group of all the activities involved in selling

goods and services directly to the final consumers for personal use” Retailers are the
customers. Retailing includes that decision regarding the type of retail format to be
undertaken. Retailing is the business whose sales volume comes primarily from retailing
activities, department stores, catalogues showroom, shopping malls are some of the major
types of retail formats.

3) Order processing: Most of companies are prime to shorter the order processing
cycle. This process includes the time involved between the receipt of order, delivery of
order and its payment. This cycle involves many steps including order taken by salesmen
i.e. Entry of the order, credit period for customer, checking the inventory, Order shipment
and its payment.

4) Warehousing: Every company has to store finished goods until they are sold
because production and consumption rarely matches each other. The storage function
helps to smoother the difference between the production and its quantity demanded by
market. The company must decide the number of inventory stocking locations. These
locations are called as warehouses. It can be of following types:
 Storage warehouse
 Distribution warehouse
 Automated warehouse

5) Inventory management: Inventory means goods at all the stages that are raw
materials, semi–finished goods and finished goods. Inventory management represents a
major cost. Every company would like to carry enough stock so as to fulfill any uncertain
demand, but it requires proper Inventory management. Inventory decision involves
knowledge regarding when to order and how much to order. It requires a balance between
ordering cost and carrying cost various new techniques are used for Inventory
management i.e. EOQ, JIT, ABC analysis. Companies are having responsibility to
maintain sufficient level of inventory for proper distribution.

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 6) Transportation: It’s the movement of goods from one place to another that is
from source to destination respectively. There are four modes of transportation- Road,
Rail, Air and Water. The marketer need to be concern with transport decision as it affects
final price of the product, on time delivery, condition of goods when they arrived. All
these decisions results in customer satisfaction. While shipping the goods from their
warehouses to wholesalers, dealers, retailers or Customers Company can choose any of
the transportation mode including roadways, railways, airways and waterways. The
factors to be considered are speed, frequency, availability, dependability and cost of the
mode of transport.

The combination of the decisions of warehousing, inventory management and

transportations are called market logistics. It involves planning the infrastructure to meet
the demand then implementing further controlling the physical flow of material and final
goods to the destination. In this way place mix decisions results in proper distribution of
products.

D) PROMOTION MIX:

Promotion can be defined as “ the process of marketing communication

to perform, persuade, to remind and to influence customers in the favor of companies
products” Its required to make them aware about the availability of product in market.
Promotion helps the organization to explain companies various products and services for
the people. It includes trails for new product. The objective of promotion is to increase
the preference among the people for particular product. The proper promotion mix
requires a mixture of Promotional tools which is prescribed as below

1. Advertisement
2. Sales promotion
3. Personal selling
4. Publicity
5. Direct marketing
1) Advertising: It’s a paid form of non personal communication it is also called as
mass communication, as it reaches to the people at a time. It can be build up long
term image for a product and attain the quick sale. It can effectively reach to the
geographically spread consumers. Marketer has the responsibility to give correct
information about the product to the target customers. Different Medias are used
for effective marketing.

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 Medias Of Advertisement:

A) Print media
 Newspapers  Broachers
 Magazines  Pamphlets
 Journals &
periodicals
B) Electronic media
 T.V  Films
 Internet  Digital Boards
C) Broadcast media
 Radio
D) Outdoor media
 Poster  Display
 Hoardings  Railways
 Sky adv.  Buses
 Sandwich man  Auto
 Neon signs  Subways
E) Others F) Direct mail
 Window display  Circulars
 POP materials  Price lists
 Exhibitions  Catalogues

2) Sales promotion: The marketer can increase its sales within its specified period. With
different sales promotional activities which includes coupons, trial offers, contests, lucky
draw, cash discounts, free samples, premium quantity, discount, seasonal offers, etc. It’s
all used to draw stronger and quicker response of the customer. Sales promotion can be
used to have short term effect such as highlighting the new launch or boost the sale.

3) Personal selling: It’s the most effective tool of promotion as it is face to face
interaction or two way communications between the marketer is called salesmen.
Therefore this promotion is also referred as salesmanship or door to door selling. The
person interacting with customer communicates with the help of presentation and

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demonstration of the product. The person should have proper communication ability and
product knowledge. He should be able to convince the customer and handle their
queries. Therefore the organization should recruit, select, and train the employees in the
said manner.

4) Publicity: This is non personal communication as well s non paid form of promotion.
Marketer tends to use public relation as a well thought-out programme coordinated with
other communication mix. Marketer doesn’t spend on publicity. The PRD (Public
relation officer) has the responsibility to look after publicity through medias. Proper
publicity requires three basic things:
 High creditability
 Ability to catch the attention
 Availability of potential customers.

5) Direct marketing: Here there is direct communication between the organization

and target customers. Different forms of direct marketing such as direct mail, tele
marketing, fax, SMS are used under this type. Direct marketing has three distinct
characteristics
 The message to be communicated should have the appeal to address the
customers.
 The message should be up to date.
 The message can be changed depending on customer’s response. Therefore,
marketing organizations has to carefully take the decision of promotional tools as
its effects and costs vary from each other. Promotion mix is the most expensive
“p” of the marketing mix.

E) PEOPLE MIX:
People mix is required mainly for service marketing as services are
intangible & inseparable in nature i.e its production & consumption happen
simultaneously. In marketing mix people include two categories
 Employees
 Customers
People carry importance. The importance is attached to the people for
improving quality and customer satisfaction. People mix is a trio among three
entities i.e. organization, employee and customer.

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 Between organization and employees is internal marketing; between organization
and customers is external marketing & employees and customers lies interactive
marketing.
Employees are the internal customers of organization. Therefore, It requires
firstly to market the product to own employees. It requires the functions of HRM
which are
i. Recruitment
ii. Selection
iii. Training
iv. Performance appraisal & Motivation

These employee acts as an representation or agent of the organization. They

carry the name and image of the company. It is important to have people with skills,
commitment, positive attitude and ability to deal with customers. The employees or
personnel are of two types:

o Contact Personnel / Front Line staff: These are the people who are in direct
contact with customers.
o Back Office Staff or Support Personnel: These are the people who are supporting
front office and are involved in the production of service.
Customers play an important role as its buyers market. Service provider
should concentrate on quality of service provided to the customer. External

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 marketing includes promotion done by organization for getting the response from
customers. The interaction between employees and customer results in interactive
marketing.

F) PROCESS MIX

Process is the set of activities or various steps, methods, procedure, used for
producing and delivering the services. Process can be defined as “The manner in which
services are delivered to customers” It is the flow of activities which result in qualitative
services There are two types of process such as

1) Standardized Process: which means same steps, similar activities are

performed for all customers.

2) Customized Process: Where it vary from person to person as per their

demand.

Process can be categorized in two ways as per its complexity:

1) Complex Process: Which consists of many steps and require more time for
completion. It also results in dissatisfaction of the customers.

2) Simple Process: having few steps which offer convenience to the customer
as well as organization.
Service provider should simplify the complex process so as to satisfy
customers at maximum extent. The service process should be consistent in
nature.

G) PHYSICAL EVIDENCE

Services are intangible in nature. They don’t have physical existence.

Therefore, it makes the job for service marketer very difficult. Hence it’s important for
marketer to give tangible physical clues which makes customers to evaluate the service.
So such clues give an evidence of presence of best service. Physical evidence tangiblises
the services. It helps the service provider to offer tangibility and existence for various
services.

Physical evidence consists of those things which help on giving proof of

production and delivery of best services. It can be defined as “The environment in which
services are offered, where the firm and customers interact with each other”

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 Following clues are used in Physical evidence

a) Facility design: It consists of availability of various facilities, infrastructure and

sequence of activities. It includes:
 Aesthetics: It means the external look of location or firm. It deals with size, look of
building, rooms or proper design will be made then it offers comfort to customers.
 Functionality: This means availability or functions in services. Eg : in hotels there
are different functions like enquiry, accommodation (lodging), food, entertainment,
personal care, etc.
 Ambient conditions: It covers the climate conditions like temperature, music,
ventilation, themes top display, color of walls etc. Correct ambient conditions help
to please and delight the customers and offer comfort while enjoying services.

b) Equipments: various equipments can be used for providing and delivering services. It
creates an impression on the customers about excellence and accuracy about service. Eg:
computers, notes counting machine, token system, ATM machines, security checking
machines, CCTV cameras, etc are the equipments used in banks.

c) Signage: This means various boards showing names of company, and other related
details. Departmental boards are also used to show directions to services like washbasin
in hotels, ways to cash counter in banks, enquiry or reception. Hence signage offers more
information to customers.

d) Employee dress/Uniform: Service provider can use uniforms for employees. It

becomes easy for customers to identify person related to particular activity. Eg: uniform
for waiters in hotels, for managers, for chefs etc. In hospitals uniforms for nurses,
doctors, ward boys, cleaners, etc for identification.

e) Reports: These are statements giving information and details of transaction giving
services. Eg: Bills of hotels, bank pass books, ATM slips, monthly statements, Insurance
policies, etc

f) Business cards: These cards can be circulated by service provider where name,
address, contact no, email id, etc is written. It acts as a mode of communication to
customers.

In this way, above are the tools used in physical evidence to tangiblise the
services.

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Conclusion:

In this way, the marketer has to mix all the variables of marketing mix so
as to have superior customer response and their satisfaction.

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