0.6 The Marketing Mix: From 4Ps to 7Ps
Throughout this book, you will see occasional references to “the marketing mix” or the “4 Ps of the marketing mix.” So what exactly is a marketing mix? It is a framework used by marketing managers to develop a comprehensive marketing plan by focusing on the essentials. When the term was introduced in the 1970s, the marketing mix was framed around businesses that marketed products, hence its focus rested on the ‘4 Ps’ i.e. Product (or Service), Placement, Promotion, and Price. Over time, three other Ps were added to the framework to account for the intangible factors in the service industry: People, Packaging / Physical Evidence, and Process1. Marketing managers in a service industry focus on creating and delivering the perfect combination of the 7Ps to satisfy consumer needs.
The first P, Product, is the way the firm answers the question, “What should we offer consumers?” Product-related questions include not just the types of goods and services that a firm will offer, but also the various combinations of features and options that will be included.
Product decisions are often the result of competing forces. For instance, companies often want to satisfy customers (and keep them away from competitors!) by offering a wide range of options. However, they may later find that providing too many unique offerings can become an unwelcome distraction for suppliers, employees, and even the customers themselves.
Ambitious CEOs naturally seek to expand their firms’ territory and market share. However, a firm that overextends itself into new areas without the proper resources and strategy may soon regret its decision, wishing it had stayed truer to the “core competencies” that made the firm successful in the first place. Companies are constantly making, refining, and revising decisions regarding product offerings. As evidence of this, you can thumb through the financial pages of any major newspaper, on any given day, and be nearly certain to find stories about companies either expanding, or contracting, their product lines.
The second P, Placement, involves decisions about where the firm’s goods or services should be made available to consumers. Should they be offered online, in-person, or in both formats? Once those questions are answered, the firm still has many other questions to consider – should online sales be made directly by the company, through third-party retailers, or in both formats? For offline sales, which types of stores should carry the company’s goods?
Placement decisions are often made with a brand image in mind. Customers would not expect to see a high-end brand on the shelves of a discount retailer such as Dollar Tree or Family Dollar. Conversely, makers of mass-market retail goods would be very eager to see their products sold by major discount retailers, as that would likely translate to high revenues and widespread exposure.
The third P, Promotion, relates to the way that products are presented to consumers. Should they be advertised on billboards? Social media pages? Or, if the firm is very budget-conscious, is there some completely different approach that it can take, such as incentivizing existing consumers to sign their friends up for the service?
The fourth P, Price, is unique among the 4Ps in that it directly impacts business revenue. A business’s pricing strategy needs to work together with the rest of the marketing strategy because it influences consumer perception of a brand. Pricing questions start at the most basic level (how much to charge?) but can grow much more complex from there – how aggressively should discounts be offered to particular consumers? Should certain products be bundled with others? Should the company set prices in a way that maximizes revenue, or profit? We will look into some of these issues in Chapter 10.
The fifth P, People, is an area of special emphasis for service organizations, because their brands are judged on the quality of service that their staff provide. Successful marketing mixes include nurturing company culture, training employees well, motivating employees, and encouraging them to function as a team.2
The sixth P, Physical Evidence, refers to the physical presentation of a service provider. Customers would walk away from a hotel that had cobwebs on the ceiling, carpet stains, and dirty towels. No amount of exceptional service can possibly save the hotel’s reputation in this instance.
The seventh and final P, Process, refers to the systematic manner in which a service is provided.3 While a business should try to make the customer experience as smooth as possible, it is rarely possible for a customer-facing enterprise to synchronize activities for maximum efficiency in the way a manufacturer would do for a production line. For instance, if a hotel guest seeks an early room check-in, the front desk may be able to handle this without a problem, but may also need to coordinate with operations staff, bellhops, and housekeeping. Coordinating each of those elements in order to meet a special customer request involves a much greater degree of complexity, compared with a repetitive, controlled process. Furthermore, any unpleasant interactions between customers and service staff could damage a brand’s reputation and/or drive those customers towards a competitor.
1 University of Waterloo (n.d.). ‘7Ps of service’. https://contensis.uwaterloo.ca/sites/courses-archive/1191/ECON-344-ARBUS-302/lecture-content/module-2/week-8-1.aspx
2 Ibid.
3 Ibid.