BT 04 The State Of The Market

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The Marketing Mix and the 4Ps of Marketing

Understanding How to Position Your Market Offering

What Are the 4Ps of Marketing?

The 4Ps of marketing is a model for enhancing the components of your “marketing mix” – the way in which you take a new product or service to market. It helps you to define your marketing options in terms of price, product, promotion, and place so that your offering meets a specific customer need or demand.

What is marketing? The definition that many marketers learn as they start out in the industry is: putting the right product in the right place, at the right price, at the right time.

It’s simple! You just need to create a product that a particular group of people want, put it on sale some place that those same people visit regularly, and price it at a level which matches the value they feel they get out of it; and do all that at a time they want to buy. Then you’ve got it made!

There’s a lot of truth in this idea. However, a lot of hard work needs to go into finding out what customers want, and identifying where they do their shopping. Then you need to figure out how to produce the item at a price that represents value to them, and get it all to come together at the critical time.

But if you get just one element wrong, it can spell disaster. You could be left promoting a car with amazing fuel economy in a country where fuel is very cheap, or publishing a textbook after the start of the new school year, or selling an item at a price that’s too high – or too low – to attract the people you’re targeting.

The marketing mix is a good place to start when you are thinking through your plans for a product or service, and it helps you to avoid these kinds of mistakes. In this article and in the video, below, we’ll discover more about the marketing mix and the 4Ps, and how you can use them to develop a successful marketing strategy.

Click here to view a transcript of this video.

Understanding the Tool

The marketing mix and the 4Ps of marketing are often used as synonyms for one another. In fact, they are not necessarily the same thing.

“Marketing mix” is a general phrase used to describe the different kinds of choices organizations have to make in the whole process of bringing a product or service to market. The 4Ps is one way – probably the best-known way – of defining the marketing mix, and was first expressed in 1960 by E. J. McCarthy in his book, “Basic Marketing – A Managerial Approach.”

A good way to understand the 4Ps is by the questions that you need to ask to define your marketing mix. Here are some questions that will help you understand and define each of the four elements:

Product/Service

  • What does the customer want from the product /service? What needs does it satisfy?
  • What features does it have to meet these needs?
    • Are there any features you’ve missed out?
    • Are you including costly features that the customer won’t actually use?
  • How and where will the customer use it?
  • What does it look like? How will customers experience it?
  • What size(s), color(s), and so on, should it be?
  • What is it to be called?
  • How is it branded?
  • How is it differentiated versus your competitors?
  • What is the most it can cost to provide and still be sold sufficiently profitably? (See also Price, below.)

Place

  • Where do buyers look for your product or service?
  • If they look in a store, what kind? A specialist boutique or in a supermarket, or both? Or online? Or direct, via a catalog?
  • How can you access the right distribution channels?
  • Do you need to use a sales force? Or attend trade fairs? Or make online submissions? Or send samples to catalog companies?
  • What do your competitors do, and how can you learn from that and/or differentiate?

Price

  • What is the value of the product or service to the buyer?
  • Are there established price points for products or services in this area?
  • Is the customer price sensitive? Will a small decrease in price gain you extra market share? Or will a small increase be indiscernible, and so gain you extra profit margin?
  • What discounts should be offered to trade customers, or to other specific segments of your market?
  • How will your price compare with your competitors?

Promotion

  • Where and when can you get your marketing messages across to your target market?
  • Will you reach your audience by advertising online, in the press, on TV, on radio, or on billboards? By using direct marketing mailshots? Through PR? On the internet?
  • When is the best time to promote? Is there seasonality in the market? Are there any wider environmental issues that suggest or dictate the timing of your market launch or subsequent promotions?
  • How do your competitors do their promotions? And how does that influence your choice of promotional activity?

As the four Ps all need to be considered in relation to one another, it doesn’t really matter in what order you define them. This is why you may find them quoted in a different order from the one used above. In particular, they’re often referred to in the order “place, price, product, promotion.”

The 4Ps of marketing is just one of many lists that have been developed over the years. And, whilst the questions we have listed above are key, they are just a subset of the detailed probing that may be required to optimize your marketing mix.

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Amongst the other models that have been developed over the years is Boom and Bitner’s 7Ps, sometimes called the extended marketing mix, which include the first 4Ps, plus people, processes and physical layout decisions.

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Top 5 Things to Know in the Market on Wednesday, April 8th

By Geoffrey Smith

Investing.com — President Donald Trump wants to partially reopen the U.S. economy within four to eight weeks, but the Covid-19 outbreak is still showing only patchy signs of slowing down, as the number of U.S. cases doubled over the last week to 400,000. Bond spreads widened after another acrimonious meeting at which Germany and others refused to issue debt jointly with weaker eurozone members. Oil prices continued to vacillate ahead of the OPEC+ meeting on Thursday, and China finally lifted the lockdown of Wuhan, where the virus first emerged. Here’s what you need to know in financial markets on Wednesday, April 8th

1. Trump eyes partial restart of economy within weeks

U.S. President Donald Trump talked up the possibility of reopening parts of the U.S. economy, as the Covid-19 outbreak in the country showed mixed signs of slowing down. The number of U.S. cases has doubled to 400,000 in the last week, but grew only 8.1% on Tuesday, a fifth straight daily decline.

“We’re looking at the concept where we open sections of the country and we’re also looking at the concept where you open up everything,” Trump told Sean Hannity of Fox News on Tuesday.

Trump’s top economic advisor Larry Kudlow told Fox earlier that parts of the economy may reopen within four to eight weeks, although it isn’t clear what degree of support the plans could count on among governors and mayors across the country.

Trump’s comments came after another press conference plagued by mixed messaging, in which he first announced, then walked back, a suspension of U.S. contributions to the World Health Organization. The president had criticized the WHO earlier for its “China centric” communication, implying that it helped the Chinese government cover up the true scale of the Covid-19 disaster.

2. Euro zone fails to agree on crisis response funding as recession hits hard

European sovereign bond spreads widened to the most in three weeks after eurozone finance ministers again failed to agree on how to fund the currency union’s fiscal response to the Covid-19 crisis. The meeting was suspended until Thursday, after talks broke down over demands – led by Italy, Spain and France – for joint debt issuance, known as ‘coronabonds’.

German Finance Minister Olaf Scholz, one of those opposed to coronabonds, told reporters nonetheless that a deal is near.

The news came amid clear evidence of the recession hitting Europe. The Bank of France estimated that French GDP shrank by some 6% in the first quarter, while Germany’s leading economic research institutes forecast that German GDP will shrink by 9.8% in the second quarter, after a 1.9% contraction in the first three months of the year.

The virus, meanwhile, claimed its highest number of victims in Spain in four days, frustrating hopes for a clearer sign of peaking.

3. Stocks set to open mostly higher

U.S. stock markets are set to open mostly higher after a two-day rally ran out of steam in late trading on Tuesday to leave benchmark indices marginally lower on the day.

By 6:35 AM ET (1035 GMT), the Dow Jones 30 Futures contract was up 85 points or 0.4%, while the S&P 500 Futures contract was up 0.4% and the Nasdaq 100 Futures contract was up 0.5%.

The dollar index was 0.2% higher at 100.14, thanks largely to gains against the euro after the Eurogroup’s failure and the alarming GDP headlines from France and Germany. European stock markets were also mostly lower, with the Stoxx 600 falling 1.1%.

4. Oil prices perk up on fresh hope ahead of OPEC+ meeting

Oil prices stayed volatile a day ahead of the OPEC+ meeting at which Russia, Saudi Arabia and others are aiming to agree a cut of around 10 million barrels a day in output. U.S. crude futures were up 3.6% at $24.48 a barrel while Brent futures were up 0.6% at $32.05.

Crude futures had tumbled late on Tuesday amid pessimism that even a 10 million barrel-a-day cut would not fix an oversupply problem, given that global demand has fallen by even more.

The U.S. government’s weekly report on oil stocks is due at 10:30 AM ET and is likely to corroborate – broadly – another huge rise in stocks reported on Tuesday by the American Petroleum Institute. The 11.9 million barrel rise reported by the API was above market forecast for a 9.3 million barrel increase in official stocks.

Separately on Tuesday, the Energy Information Administration cut its forecast for U.S. oil output by 1.2 million barrels a day for 2020, and by 1.6 million barrels a day for 2021. The U.S. government will likely argue that the projections are proof that it is sharing the burden of output discipline, when G20 energy ministers attempt to wrap up a binding deal on Friday.

5. And finally, China lifts Wuhan lockdown; mass exodus expected

After 10 weeks, China ended the lockdown on Wuhan, the city where the virus first emerged. Reports suggested a mass exodus from the city was likely in the near term.

Elsewhere in Asia, Japan finally declared a state of emergency after an interrupted debate in its parliament, something that paves the way for bigger economic support packages from Tokyo.

South Korea, meanwhile, unveiled economic support measures worth some $45 billion, including cheap loans for exporters. The dollar rose 0.1% against the yen and 0.5% against the won.

BT 04: The State Of The Market

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Marketing Mix – The 4 p’s of marketing

Dictionary Definition: The marketing mix refers to the set of actions, or tactics, that a company uses to promote its brand or product in the market. The 4Ps make up a typical marketing mix – Price, Product, Promotion and Place.

The Marketing mix is a set of four decisions which needs to be taken before launching any new product. These variables are also known as the 4 P’s of marketing. These four variables help the firm in making strategic decisions necessary for the smooth running of any product / organization.

If you ask What is the marketing mix?

Then in summary these 4 variables comprise the Marketing-mix.

  1. Product – What the company is manufacturing?
  2. Price – What is the pricingstrategy used by the company?
  3. Place – Where is the company selling?
  4. Promotions – How is the company promoting the product?

What are the two types of Marketing mix?

1) Product marketing-mix – Comprised of Product, price, place and promotions. This marketing-mix is mainly used in case of Tangible goods.

2) Service marketing-mix – The service marketing-mix has three further variables included which are people, physical evidence and process. They are discussed in detail in the article on service marketing-mix.

The term marketing-mix was first coined by Neil H Borden back in 1964 in his article “The concept of marketing-mix”. Several strategic analysts over the years believe that the marketing-mix can make or break the firm. Having the right marketing-mix at the start of the marketing plan is absolutely essential. Over time the concept of marketing-mix has provided a steady platform for the launch of a new product or business.

As mentioned before, the marketing-mix is characterized by four different but equally important variables. These variables are never constant and may be changed over time. However, a change in one of the variables may cause a change in all the other variables as well.

The Variables of Marketing-mix are as follows

1) Product in the Market mix

The first thing you need, if you want to start a business, is a product. Therefore Product is also the first variable in the marketing-mix. Product decisions are the first decisions you need to take before making any marketing plan. A product can be divided into three parts. The core product, the augmented product and the tertiary product. Before deciding on the product component there are some questions which you need to ask yourself.

    • What product are you selling?
    • What would be the quality of your product?
    • Which features are different from the market?
    • What is the USP of the product?
    • Whether the product will be branded as sub brand or completely new?
    • What are the secondary products which can be sold along with primary (Warranty, services)

Based on these questions, several product decisions have to be made. These product decisions will in turn affect the other variables of the mix. For example – You plan on launching a car which will have the highest quality. Thus the pricing, promotions and placing would have to be altered accordingly. Thus as long as you dont know your product, you cannot decide any other variable of the marketing-mix. However, if the product features are not fitting in the mix, you can alter the product such that it finds a place for itself in the marketing-mix.

2) Pricing in the Marketing mix

Pricing of a product depends on a lot of different variables and hence it is constantly updated. Major consideration in pricing is the costing of the product, the advertising and marketing expenses, any price fluctuations in the market, distribution costs etc. Many of these factors can change separately. Thus the pricing has to be such that it can bear the brunt of changes for a certain period of time. However, if all these variables change, then the pricing of a product has to be increased and decreased accordingly.

Along with the above factors, there are also other things which have to be taken in consideration when deciding on a pricing strategy. Competition can be the best example. Similarly, pricing also affects the targeting and positioning of a product. Pricing is used for sales promotions in the form of trade discounts. Thus based on these factors there are several pricing strategies, one of which is implemented for the marketing-mix.

3) Place in the Marketing-mix

Place refers to the distribution channel of a product. If a product is a consumer product, it needs to be available as far and wide as possible. On the other hand, if the product is a Premium consumer product, it will be available only in select stores. Similarly, if the product is a business product, you need a team which interacts with businesses and makes the product available to them. Thus the place where the product is distributed, depends on the product and pricing decisions, as well as any STP decisions taken by a firm.

Distribution has a huge affect on the profitability of a product. Consider a FMCG company which has national distribution for its product. An increase in petrol rates by 10 rs will in fact bring about drastic changes in the profitability of the company. Thus supply chain and logistics decisions are considered as very important costing decisions of the firm. The firm needs to have a full proof logistics and supply chain plan for its distribution.

4) Promotions in the Marketing-mix

Promotions in the marketing-mix includes the complete integrated marketing communications which in turn includes ATL and BTL advertising as well as sales promotions. Promotions are dependent a lot on the product and pricing decision. What is the budget for marketing and advertising? What stage is the product in? If the product is completely new in the market, it needs brand / product awareness promotions, whereas if the product is already existing then it will need brand recall promotions.

Promotions also decide the segmentation targeting and positioning of the product. The right kind of promotions affect all the other three variables – the product, price and place. If the promotions are effective, you might have to increase distribution points, you might get to increase the price because of the rising brand equity of the product, and the profitability might support you in launching even more products. However, the budget required for extensive promotions is also high. Promotions is considered as marketing expenses and the same needs to be taken in consideration while deciding the costing of the product.

Thus as we see from the above diagram, all the four variables of marketing-mix are inter related and affect each other. By increasing the pricing of the product, demand of the product might lessen, and lesser distribution points might be needed.

On the other hand, the product USP can be such that maximum concentration is on creating brand awareness, thereby increasing need of better pricing and more promotions. Finally, the overall marketing-mix can result in your customer base asking for some improvement in the product, and the same can be launched as the upgraded product.

Video on the Marketing-Mix

The role of Marketing-mix in Strategy

Marketing-mix plays a crucial role while deciding the strategy of an organization. It is the first step even when a marketing plan or a business plan is being made. This is because, your marketing-mix decision will also affect segmentation, targeting and positioning decisions. Based on products, segmentation and targeting will be done. Based on the price, positioning can be decided. And these decisions will likely affect the place and promotion decisions. Thus, the marketing-mix strategy goes hand in hand with segmentation targeting and positioning.

The above four P’s of marketing give you an overall look at the product marketing-mix. If your product is a service offering then there are 3 further P’s taken into consideration namely – people, physical evidence and process. For the same, you can refer the Service marketing-mix.

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