Welcome to a brief review of what we call the marketing mix, the marketing mix also referred to as the four PS four product place. Prices as well as promotion, is one of the fundamental components of marketing. When businesses decide what it is that they’re going to produce how they’re going to sell it, how they’re going to price it and ultimately, how they’re going to communicate their product or service offerings, what they do is they consider the elements of the marketing mix or the Four PS and so we’re going to go through these four areas: one-by-one real briefly. Obviously we have the product the place price, as well as the promotion and of the fine individually what these are and how they and what kind of purpose they have. Essentially, what do companies have to consider when they’re choosing one particular category over another, now, first off with the product, what the product refers to is the tangible product or the actual service itself?
Now, obviously, the difference between a product or service is one is tangible products. You can hold, you can pick up, they have weight services. Typically, don’t services usually are also both provided and consumed at the same point in time. So, for example, if you were to go in and to get your car oil changed, for example, get oil change in your car. Your car would have to be present and you couldn’t store that service for a later date.
Okay, so not only would you have to take part in the delivery of the service, but you would also actually have to have it consumed at the point in time in which it’s delivered essentially. But the product not only refers to the actual good or service, but we also talk about the packaging, we’re also referring to things like the warranty, the brand name, your company’s image, as well as the service, that’s provided after the sale. Okay. Now the product piece is the first component of the marketing mix and that’s by design, and the reason is it’s very difficult to develop a pricing strategy or to determine where you’re going to sell the product or ultimately, how you’re going to promote it. Unless you know what the product is, and so this is why the product is the first component of the marketing mix, it is done first by design because very difficult to do the other remaining components of the marketing mix.
If you don’t know what the product is and as we know, products are purchased for a variety of different reasons. They mean many different things to different people. Products can be purchased for simply the benefits right. We kind of assess the cost versus the benefit. The the the price that we’re going to pay for the product compared to what are the the benefits I’m going to receive things like convenience and productivity, maybe even prestige, recognition status, are all examples of benefits, and we also have to consider what products mean to us.
There are certain products that maybe we don’t necessarily care, what the features and the benefits are we more of like them because of the fact of they mean something to us. It symbolizes a status symbol may be certain types of luxury vehicles may be homes in certain zip codes may mean something to us, so they’re more important for what they symbolize versus the actual features and the benefits that they provide there. Now, usually, what marketers will do in this process is they’ll engage in what we call product differentiation and what product differentiation is is markers will try and distinguish their product and service offerings from those or competitors? Okay, even if there really isn’t a significant difference. The big key here is perception and the perception is in the actual consumer.
If the consumer perceives there to be a difference in products, then the marketer has essentially done their job at that particular point in time. It does not matter if there isn’t an actual difference between two different products, and so examples of companies that have successfully differentiated their products, first of which is Apple Apple, has undoubtedly been able to differentiate their products and show that they are more innovative and show that Possibly they just seem to work much better with one of us. The hardware and the software seems to work together in a very kind of symbiotic relationship. All most products are very intuitive, very, very easy to use, and so what that allows was Apple to do is that allows them a little more leeway in terms of price. You look at their particular products and if you line up an Apple product with a comparable PC type product and if we’re talking strictly laptops, for example, you can have two products that are technically the same in terms of all the different technical specifications, but the Apple Product will sell for more and the reason that they sell for more is because of the fact that Apple has been able to successfully proved to the market that there is a difference.
Okay, the same thing goes with countless other different types of businesses. Starbucks, for example, has been able to differentiate their coffee as being better than most other competitors now, regardless, if it is better or not as a matter of personal opinion, but they’ve been able to at least change the perception that their coffee is better, that it’s more. It’S better consumed in that type of environment, so to speak, and so because there is such great competition, marketers will look to product differentiation as a way of making their product stand out as a way of almost putting it on a pedestal, above other products and services. Now also marketers have to consider what we call place place refers really to distribution. What we’re trying to do is we’re trying to make sure that our products are available when and where customers want them to be available.
So not only do we have to consider things like geography, right, location, making products available in convenient locations, but we also have to consider what are the convenient times. What are the times of the day that consumers are going to want readily run to have our products readily available? Okay, you also deal with the physical distribution of goods. Ultimately, how are we going to get the products is, or the products or the services that we provide ultimately to the end user? There’S a number of things that companies can do, for example, they can engage in what we call the direct distribution strategy and what that involves.
Is the company actually sells them directly to the consumer? Maybe they sell through a website of some sort and will ship products directly to consumers that might be conducive depending upon what the company is trying to achieve. Another option is, they can engage in the traditional retail model in which they partner with a particular retailer may be. A Walmart Target Best Buy something the equivalent thereof and they actually will sell their products through the retailer. Now, of course, the retailer is going to increase the price somewhat when they sell them to the end-user.
So that’s ultimately going to increase the price for the consumer, which may not be ideal, but a lot of retailers, most notably Target and Walmart have a very wide following, and so there are a lot of companies that think of if I can get on the shelves Of an actual Walmart store, just because of the sheer number of them, then that’s a significant market that I have would have access to and a lot of companies. You simply make it their goal to get on the Shelf of an actual Walmart store, simply because of the amount of traffic that goes through those stores, the amount of sales that they do on an annual basis there. In addition, there are other strategies: there are export strategies. There are independent agent strategies, you can work with a wholesaler. There are a number of different avenues that that companies have at their disposal to ultimately aid in the distribution of their actual product, but outside of how that’s going to be sold right either a retail or a direct strategy.
You also have to consider. How are we going to get them there right the means to transport the product? There are certain benefits or advantages and disadvantages of different types of distribution. So you talk about maybe flying products from point A to point B. Well, that would be very fast, but it’s also relatively expensive.
Okay, you can do things like put it on a train which you can track them to an extent. It is somewhat fast, but you are restricted by the actual railroads in which way that they go and you can transport them be a truck that provides certain advantages relatively fast. You can track your actual products, not as fast as flying, but a little less expensive. Okay, and so business is off to consider that as well, because, depending upon how you distribute the products, how you get them to, where the end consumer can purchase them, that is going to indicate some type of cost, and what that will do is that will potentially Make it so that your products may be, you have to charge a little more to justify that increase cost there. The next thing we have is our price and price is essentially the the price that company, or that a customer will pay it’s.
What a buyer or consumer must give up in order to actually obtain your particular product or service. Okay, now price is the most flexible of all the elements. The reason is, you can manipulate it fairly easily right companies can go in and change the price and then instantly have an effect at the store level or on the website, or, however, else they’re selling their particular products – okay, so very flexible, but that doesn’t mean that It necessarily should be manipulated very often, and one of the things that companies consider is that price is often a gauge for product quality. When consumers don’t have a some type of fundamental background of the product itself, they will typically rely on price as a way of signaling to them. What is good versus what is a brat bad product, and so usually, let’s say, for example, if you go into a store and you’re looking at, I don’t know, maybe blu-ray players and you don’t have much of a background in blu-ray players, so you’re instantly.
Looking for price – and you see, the Sony model is obviously probably the higher end and you see the kind of low end equivalent, something that is priced very cheap compared to other products, and you think well, it’s not very expensive and you probably get what you pay For so I don’t want to go with that one. I don’t necessarily want to pay as much as this other product, though this Sony products, maybe I’ll, go with the middle of the road. It’S it’s priced, pretty fair! It’S going to have a pretty good features and benefits incorporated into it, but at the same point in time, I’m not paying that much for it, and so price has to be considered for that regard, because if you have people that don’t have an understanding about your Particular product or service, they will usually rely on price as a gauge for certain product quality. Okay, there was a lot of concern and criticism over Apple, actually dropping the price of the iPhone to $ 200, which they currently sell it out on now, and there was an indication that people were going to view price synonymous with quality.
So if Apple was going to lower the actual price of the product, it was going to lose some of its luster. It was going to lose some of its shine and the reason for that was because now it’s easily attainable right, $ 200, isn’t a very significant barrier to entry versus the five to six hundred that originally it was before, and so now you deal with the aspect. Well, people think you know what it’s easy to obtain. You see them everywhere. Is it as trendy?
Is it as good as people say it is you know that was a criticism at that point in time you would argue based upon sales and how the iPhone has sold that that probably is a criticism that did not come to fruition. It did not come to pass so to speak, but it certainly was a concern at that particular point in time, and so when pricing products, not only do, companies have to be aware of ultimately what it costs them to make right. What are our expenses, but we also have to consider what is competition doing, particularly if we’re in a very competitive industry now, because, obviously, in a competitive industry, it’s very difficult to change price to too much, especially if the products and services are very, very similar. And so there may be some constraints there that have to be dealt with, but ultimately price is simply the dollar amount that buyers must provide or give up in order to obtain your product or service. And lastly, we have promotion.
Promotion is what we use or what companies use to either inform, educate, persuade and even remind customers that their products and services are better or remind them about the different benefits and features of their products and services. This includes more common things. Here we have what we call advertising, which is paid impersonal. Communication typically done to a in a mass setting, it’s not personal, meaning that it’s not specifically tailored to one particular person, but it’s impersonal. We also have public relations, which typically incorporates publicity, obviously being pressed that you cannot necessarily control about your particular company.
You have no ability to control the message to tailor the message and make it favorable to yourself also incorporates simply the public relations aspect where you can produce things like press releases and put those out to the media, showing all the good things that your particular company Is doing so it’s shown in a positive light. Next thing we have sales promotions which typically take the form of discounts and coupons and different things. Sales promotions are designed to get people to make an immediate purchase, they’re designed to get them from the stage in which they were evaluating products, and they maybe have settled on one or two to the point to which they’re actually buying something. And so it’s meant to bridge that gap to kind of get that person over that hump, so to speak, so they actually purchase your product and then lastly, we have personal selling personal selling involves salespeople right, involves kind of a one-on-one communication very expensive, the oldest form Of promotion obviously widely used back 50 60 years ago, not so much anymore right when people come and knock on our doors. Now, at least in the United States, a lot of people don’t even answer anymore right and so personal selling has kind of gone away.
A little bit, but it is relatively expensive on a per person basis, because you’re paying one person, salary they’re, only reaching one person. However, it is generally more effective because impersonal selling the salesperson can tailor the message to the person they’re interacting with right. They can get feedback, they can look at things like the nonverbal communication and then make adjustments to the message as a way to kind of tailor it to that particular person with advertising. When you see advertisements on the internet or you see them on the television or on radio, it’s not tailored to you, and also you have to deal with all the different noise. That’S around right.
If you’re listening to an advertisement on in the car on the radio, then you have to deal with well you’re, probably distracted, because you’re probably trying to drive okay. There are different things going on right, you’re thinking about what you have to do for the day. You’Re thinking about work, if you’re traveling to work you’re thinking about an argument, you got it in with your spouse on before you left for work. You know those are things that you’re, considering all the while you’re canceling out. The message is being communicated via radio with personal selling, it’s much more effective, because you essentially have the person’s undivided attention, but it is more expensive now.
One of the things that you want to highlight here with regards to the marketing mix is that all of these individual components need to work together as a way of complementing one another, and the reason they need to is you do not want to send mixed signals Right if your product is a luxury type product, okay, it’s got a great design very expensive to manufacture. You obviously want the packaging to reflect that you want the packaging to be reflecting of. This is a very, very high quality product, so you want to spend money on the packaging. You would want to price it in a way that complements this being a quality product. You don’t want it price middle-of-the-road.
You don’t want it priced on the low end. You want a priced on the higher end, because that will signal to people that it is a quality product. Okay, in terms of how you distribute it, you want to be careful for how you distribute your product. You don’t want to attach or sell your product in areas or with retailers that don’t have the same brand as you do. That aren’t communicating the same message.
I will give you an example of this, with Apple related to them selling the iPhone in Walmart. Okay, there was a lot of criticism of this at this point in time as well, because once again you deal with the the image that Apple is trying to convey with that type of product, and then is that the same as the image that a Walmart is Conveying and the argument at least among investors was that we are selling a product, that’s designed to be not necessarily a luxury good, but it is a higher-end product. It’S designed for people who are technologically savvy, even though it is very easy to use mind you but design for the technologically savvy and the more trendy, more upbeat consumer and that’s just not characteristic of the average typical Walmart consumer. And so there might be a little bit of a disconnect there, which could be an issue okay and the same thing with promotion. Okay, if you deal with products like high-end purses, handbags and different things like that perfumes, you typically don’t see them advertised a whole lot right.
You usually see them advertised and things like fashion magazines, high-end fashion, magazines, mind you, okay, because they’re trying to be consistent with ultimately what their brand is, what they’re trying to communicate it wouldn’t make sense for companies like Coach and Louie Vuitton to advertise their their actual Products and you know a more basic consumer magazine right because once again, that’s not their market, that’s not who they’re targeting they don’t want to be viewed the same as certain periodicals and certain magazines. They want to be synonymous with luxury and with status and those different things, which is why they will kind of line up with those higher-end fashion type magazines. So it’s very important not only to consider each and every one of the areas, but also to consider how they interact with one another. Are we sending mixed signals to the market by changing certain things? Are we trying to sell a high luxury product and communicate status and success, but it’s priced very, very low?
You know those are things that should be looked at on an individual basis in order to determine if we have any opportunities there to bridge those particular gaps.