The seven Ps of the marketing mix.

Marketin

Marketin

What are the seven Ps?

Product, Price, Promotion, Place, People, processes and Physical evidence

Product

A product is any good or service that is offered to the market with the aim of satisfying consumer wants or needs. 

Product life cycle

A product life cycle is the course a product passes through from its development to its decline in the market:

Stage 1: Development

Stage 2: Introduction

Stage 3: Growth

Stage 4: Maturity

Stage 5: Saturation

Stage 6: Decline

Extension strategies

Extension strategies are plans by firms to stop sales from falling by lengthening the product’s life cycle. Done at the maturity or saturation stages.

Product profile

A product profile includes all the products or services provided by an organisation. It is used for businesses to make decisions regarding their overall product offerings

Boston Consulting Group (BCG) matrix.

It is a growth share matrix that measures the market growth rate on the vertical axis and relative market share on the horizontal axis. 

Stars

Products with high market growth and high market share. Successful and generate high amounts of income. Requires investment to sustain their rapid growth. 

Cash cows

Products with low market growth and high market share. Well established products in a mature market. Businesses invest less but it's still very profitable. 

Problem children or question marks

High market growth but low market share. Concern to businesses due to the large amount of money needed to increase their market share. It means there's a lot of competition too. 

Dogs

Low market share and low market growth. Operates in markets not growing and generates low income. Poor future aspects and may need to be replaced. 

Different matrix strategies

• Holding strategy: Focus on products with a high market share to maintain current position in the market. 

• Building strategy: Turning problem children into stars.

• Harvesting strategy: Milking the benefits of products with positive cash flows.

• Divesting strategy: poor performing dogs are phased out or sold off. 

Brand

A brand is defined as a name, symbol, sign or design that differentiates a firm’s products from its competitors.

Aspects of branding

• Brand awareness:

  • The ability of consumers to recognise the existence and availability of a firm’s goods or services.

• Brand development:

  • Any plan to improve or strengthen the image of a product in the market.

  • Example is taste testing. 

• Brand loyalty: 

  • When consumers become committed to a firm’s brand and are willing to make repeat purchases over time. 

  • Result of brand preference. 

  • Brand ambassadors are consumers who will market a particular brand positively amongst people they know. 

• Brand value: 

  • How much a brand is worth in terms of its reputation, potential income and market value. 

  • Extra money it can make from its products because of its brand name. 

  • Can be brand's “personality” on its values and beliefs that it stands by.

Cost plus pricing (mark up pricing)

Adding markup to the average cost of producing a product. 

It is a percentage of the profit a firm wishes to gain for every product that it sells.

Penetration pricing

Setting a low initial price for a product with the aim of attracting a large number of customers quickly and gaining a high market share. 

Loss leader

Businesses that charge a low price of a product usually below its average cost. 

Predatory pricing

A firm deliberately sets a very low price on its good or service with the aim of driving its competitors out of the market. When all competition is gone, they increase their prices.

Premium pricing

Strategy where a firm sets a high price for its product. 

Gives the impression that the firm’s product is superior. 

Dynamic pricing

Strategy where firms charge different prices for their products depending on which customers are buying them or when the products sell. 

Competitive pricing

Market oriented strategy. A firm sets the price of its product relative to the competitors’ price. 

Contribution pricing

The calculation of the variable cost of production of a firm’s product, after which the product’s price is set.

Price elasticity of demand

A measurement of how the quantity demanded of a good is affected by changes in its price.

Price discrimination

Charging different prices to different groups of consumers for the same product. 

Promotion

Promotion is concerned with communicating information about a firm’s products to consumers.

Above the line promotion

A paid form of communication that uses independent mass media to promote a firm’s products. 

• Informative advertising: provide information about a product’s features, price or other specifications to consumers. 

• Persuasive advertising: aims to convince consumers to buy one firm’s products over their competitors. It persuades consumers that they need a product even if they don’t. 

• Reassuring advertising: focuses on existing consumers to remind them that they made the right decision. 

Below the line promotion

Form of communication that gives a business direct control over its promotional activities so that it is not reliant on the use of independent media. 

• Direct marketing: ensures that the product is aimed directly to consumers. Such as flyers, consumers may regard this as junk. 

• Personal selling: involves the sale of a firm’s product through personal contact. It is quite expensive to use sales representatives. 

• Public relations: promotional activities aimed at enhancing the image of a business and its products. 

• Sales promotions: short term incentives provided by a business with the aim of increasing sales. 

Through the line of promotion

A form of promotion that uses an integrated approach of combining both above the line and below the line promotion strategies. 

• 360 degree marketing: marketing carried out by integrating both above the line and below the line activities to maximum advantages. 

• Digital marketing: involves offering above the line marketing benefits while at the same time acting as a below the line communication to the consumer. 

Social media marketing (SMM)

A marketing approach that uses social networking websites to market a firm’s products. 

Place

Place is how the product reaches the intended user (distribution methods).

Different types of distribution channels

• Channel of distribution is the path taken by a product from the producer or manufacturer to the final consumer. 

• Some use intermediaries (middle people such as wholesalers, agents and retailers that lie in the product’s path between producer and consumer). 

Zero intermediaries

• Product is sold directly from the producer to the consumer. 

• Vegetables straight from the farmer. 

• Airline tickets.

One intermediary channel

• Involves the use of one intermediary. 

• Such as Walmart which is used to sell various household products. 

Two intermediaries

Two intermediaries are used to sell the product to the consumer. 

Good when selling goods over a large geographical distance. 

People

People are the human capital in terms of skills, attitudes and abilities necessary in the production of goods or the provision of services.

Customer relationship management (CRM)

Customer relationship management (CRM) ensures that staff are trained to deliver good customer service. 

Processes

Processes are the procedures and policies pertaining to how an organisation’s product is provided and delivered.

Physical evidence

Physical evidence is the tangible or visible touch points that are observable to customers in businesses. For example, private schools have nice classrooms to show how much better they are than their competitors (public schools/government schools).