Marketingmix (4 P's)
The marketing mix of McCarthy is the best-known marketing model to determine the positioning of a product. The marketing mix is also called the 4 P's. The 4 P’s of the marketing mix stands for:
- Place - where are you going to sell the product
- Price - what price do you give the product
- Product - what properties does the product have
- Promotion - how are you going to promote the product
Where a layman in marketing often only thinks of advertising (Promotion), the marketing mix assumes that this is only one of the 4 pillars of marketing. The other 3 P’s are just as important and ultimately determine whether a product is successful or not.
We deal with the 4 P’s from the marketing mix below individually:
Place in the marketing mix
Place is perhaps the least known P of the 4 P's in the marketing mix. Place is about the place where you sell a product. For many brands, the place is the most important of the 4 P’s. You can still advertise so much for your great skin cream, the cream with the most prominent place in the supermarket will sell the most. For many fast-moving consumer goods, space is, therefore, the most important P in the marketing mix.
Some brands opt for selective distribution. This means that not everyone can sell the product. Many luxury brands work this way. Because Hugo Boss jeans are only available in chic boutiques and department stores, the value of the brand increases and they can ask for a higher price for the jeans.
Price in the marketing mix
Price is of course also an important part of the purchasing decision. An expensive product may sell less than a cheaper product. This does not always apply to luxury goods, where price stands for exclusivity, which can actually increase demand. Marketers will look at the price elasticity of a product. If the price doubles, does the demand also decrease by 50 percent? If this is less than 50%, then it could be that you make more profit at a higher price. The same applies to a lower price. If a product becomes 10 percent cheaper, do you sell more than 10 percent extra? Naturally, issues such as demand and competition also influence the price elasticity of a product. An exclusive, innovative product with patents (like medicines) are much less price-elastic than a commodity. Price is, therefore, a more important part of the marketing mix for some companies than for others.
An important factor in determining the right price is, of course, the cost of a product. Price, and in particular discounts, can be an important incentive for consumers to buy more than usual. An example of a company that often works with temporary price reductions (promotions) is grocery store Albert Heijn. A counterpart to this is Jumbo, which does not take action, but structurally uses a lower price. A disadvantage of stunts with prices is that you also get a lot of fluctuations in demand. This can cause logistical problems.
Product in the marketing mix
In the marketing mix, Product stands for the characteristics of a product or service. Here too, this part of the marketing mix is more important for one company than for another. For companies that spend a lot on research & development, the product will be a more important part of the marketing mix than a company that trades in commodities. Marketing can achieve a lot of profit by differentiating apparently homogeneous products. Think of the 'renewed formulas' with shampoo, but also winter and summer tires instead of one type of tire. Packaging can also be seen as part of a product and should therefore also be treated in this part of the marketing mix.
Promotion in the marketing mix
Promotion is the last of the 4 P’s in the marketing mix that we discuss here. There are countless ways on how a product can be promoted. We distinguish two types of promotion in marketing. 1 above the line marketing 2 below the line marketing. With above the line marketing you have to think of mass communication such as advertising in different media. This type of advertising is primarily aimed at increasing brand awareness of a product (also known as branding).
Below the line marketing is the promotion that is primarily focused on more sales. Think of special promotions, in-store promotion, flyers, direct mailings. For niche products, marketing will mainly be applied below the line.
The 7P marketing mix for services from Booms & Bitner
We have just discussed the 4 P’s from the McCarthy marketing mix. McCarthy invented the 4P’s in 1960. Since that time, many marketers have devised variants of the 4P’s. One of the best-known additions to McCarthy's marketing mix is Booms & Bitner's 7P model from 1981. Booms & Bitner felt that the 4 P's needed to be expanded because the service sector was not taken into account. Booms & Bitner added the following three P’s to the marketing mix:
- Physical evidence
Booms & Bitner added People to the marketing mix. People, of course, stands for Personnel. A very large part of the Western economy revolves around services, with personnel playing a very important role in the perception of the service and the price that a consumer has to pay to use a service. Furthermore, personnel can add value to a product through service.
Physical evidence as a service is not tangible and it is difficult to prove the value of the service. A company that offers services will, therefore, try to provide physical proof that the service represents a certain value. The most concrete example of physical proof is a reference from a satisfied customer.
Where in the marketing mix with 4 P’s the product itself is the physical proof of the quality of a product, you obviously do not have that with a service. That is why Booms & Bitner believed that physical proof is a very important part of the marketing mix of services.
The third extra P from Booms & Bitner stands for Process. With process Booms & Bitner aim on Customer relationship management (CRM) and the entire process concerning the purchase of a service. The process gives the customer a certain feeling about the service. A good process increases customer satisfaction and therefore adds value. This is the reason that Booms & Bitner added ‘process’ as 7th P to the marketing mix.