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Marketing Mix

This lecture presents the overview of the 7ps of the marketing mix, along with informing the student of the importance of segmentation, targeting and positioning when forming a successful marketing strategy.

Product

Product is the most important element of the marketing mix and need to be well designed, otherwise the other Ps will also not be meaningful in terms of creating value for customers. The development of a product concept is the first step in the marketing process, which will provide a value added offering to customers in a unique way than the organisation’s competitors.

In contemporary organisations, a mere product offering, marketed in an attractive way is not sufficient. In the highly competitive business environment where customers are highly influenced by incredible customer service, organisations need to do much more than just designing a unique product. This has given rise to the concepts of core product, actual product and augmented product.

Price

Product suppliers specifically consider price as an important source of income generation, as they retrieve their production costs through these payments to earn profits. Quite often, price is treated as a dynamic element, which needs revision and adjustment based on various factors, including the customer types, distribution channels, emerging trends in the industry, demand status, innovation and technological advancements.

According to Lovelock, Wirtz and Chatterjee (2010), similar to product value, “the value inherent in payments is central to marketing’s role in facilitating a value exchange between the firm and its customers.”

Customers view price as a cost, which depicts the money they need to spend in order to get the required benefits. In their evaluation of the actual ‘worth’ of a specific product or service, customers sometimes go beyond the monetary price they pay, by giving due consideration to the time and effort they put it to purchase the said product offering.

Place

Marketers need to take care of the product delivery to customers, wherein they need to decide the mode and channels of distribution used in the process. Based on the type of product or service, an organisation needs to decide whether it should use physical or electronic distribution channels. For example, an organisation dealing in preparing paid reports for its clients may consider electronic channels sufficient, whereas a company dealing in beauty products would need to involve physical channels, which may also be used in combination with some electronic mediums.

Promotion

Promotion decisions in the marketing environment may be made by answering the question ‘What should the customers know about our product or service offering?’ Effective communication is important to enhance the value of any marketing programmes. The role of promotional communication in marketing serves one or more of the following three purposes;

  • Provide information to new customers about the company’s product
  • Persuade new and existing customers to purchase the product
  • Remind previous customers to repurchase the company’s product

People

Many types of services involve direct interaction of the customers with the organisation’s employees. In such cases, customers’ perception of the organisation and its services is greatly dependent on their interaction with the service personnel. For example, the level of satisfaction of a customer visiting a restaurant is greatly reliant upon the way he is greeted and served by the staff.

Process

The process of producing and delivering a service is often considered important by service providers, as customers are interested in how the service is delivered, beyond what is delivered. This element is particularly important in organisations who deal in highly competitive markets. Contemporary service providers tend to use process as a promotional scheme by depicting a unique image in front of the customers. For example, many salons and spas mention the little details about their services in their promotions in order to attract more customers.

Physical Evidence

Ambiance of the physical service locations of organisations creates a lasting impression in the minds of customers. The physical evidence element includes the building, location, office furniture, office layout and odour etc. which either enhance or ruin the customer’s experience. For example, the signage on the main office floor with effective branding incorporated in equipment, furniture etc. may make the customer perceive that the office environment is professional.

Segmentation, Targeting and Positioning

Within market segmentation there are four types to consider which include:

Geographic Segmentation

Geographical segmentation is used to classify the consumers based on their locational characteristics, such as countries, provinces, regions, cities or localities. Depending on its dynamics and product offering, an organisation can choose to serve one or more locations. It may cater to all areas, but focus on more profitable ones. Undertaking this approach, the company would need to introduce tailored marketing programs for specific consumer segments in order to fulfil their needs and expectations.

Demographic Segmentation

Demographic segmentation makes the measurement easier and are usually associated with the needs and expectations of customers.

Even when marketers define the market segments using behavioural factors, they need to refer to the demographic attributes again so that the market size can be effectively gauged and the promotion mediums can be selected. Demographic segmentation is done by considering the following major characteristics including age, life stage, gender and income.

Psychographic Segmentation

When customers are grouped together into subdivisions on the basis of their personality attributes, lifestyle or values and motives, it is understood as psychographic segmentation. Quite often people falling in the same demographic segments may be placed in different groups based on their personality traits.

Consumer lifestyles are an important consideration while dividing them into different groups. For example, Saga initiated by offering travel packages to customers aged over 50 and later extended its product portfolio by introducing a variety of financial services for the aged population. The reason behind this strategy is the company’s motivation to cater to customers with varied lifestyles, in terms of peoples’ travel intentions, and desire to incorporate thrill and excitement in their old age.

Behavioural Segmentation

When marketers need to divide consumer groups on the basis of their product knowledge, attitude towards it, usage patterns and response to it, they involve in behavioural segmentation. Many professional marketers tend to initiate the segmentation process by considering the behavioural variables.

Targeting

After dividing the market into segments based on one or more of the mentioned segmentation criteria, an organisation ‘must decide how many and which ones to target’ (Kotler and Keller, 2016, p. 284). This process is known as market targeting. Modern day marketing professionals tend to use a combination of different variables in anticipation to classify their customers in clearly defined target segments.

Positioning

After effectively segmenting the market and targeting the right customer segments, an organisation needs to determine as to how it wants to be perceived by the selected consumer groups. This process is known as positioning, which is ‘the act of designing a company’s offering and image to occupy a distinctive place in the minds of the target market’ (Kotler and Keller, 2016, p. 297).

The aim of product positioning is to place the product in the minds of customers in such a way that optimum benefit can be derived from its usage. An effective positioning strategy is the one which recognises the significance of a brand, highlighting the customers’ objectives behind purchasing the product, and depicting how it does so innovatively.

Positioning Maps

An important element of positioning strategy is perceptual positioning map, which is developed by marketing experts to compare the customers’ perception of their product with that of the competitors, based on the buying dimensions most essential for consumer decision-making in that product category.


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