Essential Marketing Mix: Product, Price, Placement & Promotion
Marketing Mix Essentials
The Marketing Mix (MM) is determined by four key variables: product, price, placement (marketing), and promotion (communication). These are internal, controllable factors that companies adjust to meet market demands and achieve their objectives.
Product/Service
Every company offers a product or service. Its features, packaging, and overall presentation add or detract value. In today’s market, where production often exceeds demand, fostering customer loyalty is crucial. Key considerations include:
- Target Customer: Who is buying the product?
- Usage: How and where is it used?
- Complementary Products: Does it enhance or diminish the value of other offerings?
- Product Assortment: Are there high-demand items and others just to fill out the range?
- Branding: How is the product identified and differentiated?
For tourism products, factors like infrastructure, service, and timing are vital. The product lifecycle (introduction, launch, growth, decline) must also be considered.
Price
Price is the only marketing variable that generates revenue. Pricing strategies consider:
- Cost-Plus Pricing: (Cost + Profit) / Number of Products
- Customer Willingness to Pay: What will the market bear?
- Competition: What are others charging?
- Demand Elasticity: How does price affect demand?
- Elastic Demand: Demand changes proportionally more than price.
- Inelastic Demand: Demand changes proportionally less than price.
- Competitive Pricing:
- Above Average: Premium pricing.
- Average: Matching the market.
- Below Average: Undercutting competitors.
- Perceived Value: Customers weigh price against their perceived value of the product.
- Price Adjustments: Changes are easier after an initial price is established.
- Yield Management (YM): Selling the right product to the right customer at the right time and price. YM = (Actual Sales / Potential Sales) x 100. YM is used when supply exceeds demand, allowing for dynamic pricing.
Placement (Marketing)
In services, especially those like restaurants where products can’t be stored, effective placement is crucial. This involves choosing distribution channels:
- Direct Channels: Service providers interact directly with customers.
- Advantages: Cost savings, greater control.
- Disadvantages: Limited market reach, higher risk.
- Indirect Channels: Intermediaries connect producers and customers. Channel choice depends on company characteristics, customer needs, and accessibility.
Promotion (Communication)
Communication is vital in the service sector. It involves transmitting a coded message from sender to receiver. Key aspects include:
- Message: Information conveyed by the company.
- Corporate Identity: The organization’s attributes, values, and beliefs. It should align with:
- Company Culture: Shared behaviors, values, and beliefs.
- Target Audience: The intended market segment.
- Company Positioning: The public’s perception of the company.
- Brand Image: Consumer perception of a company or product.
- Advertising: Paid communication to influence consumers. It should be accurate and targeted.
- Public Relations: Building awareness through unpaid media coverage (publicity), articles, and interviews.