Marketing is the lifeblood of any business, as it helps to attract customers and boost sales. It encompasses a wide range of activities, from advertising and logistics to pricing and distribution. Every aspect of the business model contributes to the overall marketing strategy and its success.
As the market and consumer preferences change, marketing also adapts to new challenges and opportunities. To achieve their goals, businesses use a set of tools called the marketing mix, which helps them collect and analyse data, and optimise their processes.
In this article, you will discover the basics of marketing mix, how it works and what are its variations and applications in today’s business world.
What is the Marketing Mix and Why is it Important?
The marketing mix is a set of tools that businesses use to achieve their objectives, such as increasing their market share, reaching more customers and enhancing their loyalty. It helps them design and deliver products and services that meet the needs and wants of their target market.
The Origin and Evolution of the Marketing Mix Concept
The term marketing mix was first coined by Harvard professor J. James Culliton in 1948, who described marketers as mixers of ingredients and costs to grow the business in his book “The Management of Marketing Costs”. However, it took more than a decade for the concept to be developed into a coherent framework. In 1960, E. Jerome McCarthy proposed the 4P model, which became the most widely accepted and used version of the marketing mix.
The 4P’s consist of four main categories:
Product: This category covers everything related to the product or service, such as its features, benefits, design, packaging, branding, quality, variety and customer service.
Price: This category involves setting the right price for the product or service, taking into account factors such as costs, demand, competition, value and profit margins. It also includes strategies such as discounts, promotions and pricing methods.
Place: This category refers to the distribution channels and locations where the product or service is available to the customers. It involves decisions such as logistics, inventory management, transportation, warehousing, retailing and online platforms.
Promotion: This category encompasses all the communication and persuasion activities that aim to inform, persuade and remind customers about the product or service. It includes tools such as advertising, public relations, sales promotion, social media and word-of-mouth.
In the early 1980s, some marketers argued that the 4P model was too limited and product-oriented, especially for service industries. They suggested adding three more categories to the marketing mix: people, process and physical evidence. This resulted in the 7P extension, which was proposed by Booms and Bitner in 1981. The additional categories are:
People: This category refers to all the people who can affect the customer’s perception and satisfaction with the product or service. It includes employees, customers, influencers, reviewers and other stakeholders. This category requires managing aspects such as recruitment, training, motivation, rewards and customer relations.
Process: This category focuses on the procedures and systems that deliver the product or service to the customer. It involves designing and optimising processes that ensure efficiency, quality, consistency and convenience for the customer.
Physical evidence: This category relates to the tangible and intangible elements that create the environment where the product or service is delivered. It includes aspects such as facilities, equipment, layout, décor, ambiance, signage and online presence.
The 7P extension became more popular and relevant in the service sector and other industries that require more customer interaction and involvement. However, it was not the only modification of the marketing mix concept. Other variations emerged over time, such as the 4C and even the 12P model. These models aim to address different aspects and perspectives of marketing in different contexts. You can find more details about these models in the following sections.
The Purpose of the Marketing Mix
The marketing mix model helps you craft a competitive offer that appeals to your target customers, captures and maintains market share and optimises your resources. By using integrated marketing, you can enhance your performance, boost your sales, increase your brand awareness and avoid wasting money on ineffective strategies. Moreover, you can build a loyal and engaged community around your brand.
The model consists of specific categories that make it easy to understand and apply, even for a beginner marketer. By following each category step by step, you can ensure that you cover all the essential aspects of your marketing plan and identify and improve any weak areas.
The Basics of the 4P Model
Let’s start with the 4P model, which is the foundation of any marketing plan. It consists of four categories: product, price, place and promotion.
Product
That is the product or service that you offer to your customers. This is where you define what problem you are solving and what value you are providing. The product decisions include:
Features — the technical specifications and the benefits of the product.
Quality — the level of excellence that meets or exceeds the expectations of your customers. Quality can be judged by various criteria, such as appearance, composition, smell, sound, components, assembly, etc.
Design — the external attributes of the product, such as colour, style, interface, packaging and materials.
Variety — the range of products that you offer to suit different customer needs and preferences. For example, iPhone models: iPhone 13, iPhone 13 mini, iPhone 13 Pro.
Support — the availability and quality of service and warranty. This includes the ease, speed and convenience of getting customer support.
Branding — the name, logo and corporate style that distinguish your product from competitors.
Price
Price determines how much profit you can make, how accessible your product is to your customers, how your brand is perceived in the market and how much value your product delivers. Price also depends on your production costs and your competitors’ prices. The price decisions include:
Pricing strategy — the initial price that you set for your product to establish your image and position in the market. For example, Xiaomi used to sell low-cost Android smartphones to gain market share. Later, they started to offer premium models as well.
Retail price — the price that customers pay for your product at the point of sale. This depends on your desired profit margin, dealer markups, taxes, duties, certificates and other factors. You need to calculate and negotiate the optimal price with your dealers.
Pricing policy — the different prices that you charge for different customers and partners based on their volume or other arrangements. This can help you incentivize them to buy more or collaborate with you.
Bundle pricing — the discounts that you offer for customers who buy a set of products or multiple items at once. This can help you increase your sales volume and revenue.
Seasonal pricing — the adjustments that you make to your prices based on seasonal demand and supply. For example, you can offer seasonal discounts and promotions for some products.
Promotion policy — the rules and limits that you set for giving discounts to your partners. You need to specify the conditions and amounts of discounts for different situations.
Price discrimination — the practice of charging lower prices than your competitors to quickly capture a part of the market and drive them out of business. This is also known as dumping.
Place
Place refers to the distribution model of the product in the market, the geographical locations and the points of sale where your customers can see and buy your product. The place decisions include:
Market coverage — the selection of the geographic markets where you will launch and distribute your product.
Distribution channels — the intermediaries that help you deliver your product to your customers, such as wholesalers, retailers, online platforms, etc.
Distribution intensity — the level of availability and exclusivity of your product in each market. You can choose to sell your product through a few selected outlets, through many outlets or through all possible outlets.
Distribution terms — the standards and requirements that you set for your own stores, website and partners. This includes the display, penalties, discounts, promotions and bonuses that they can offer to customers.
Merchandising — the arrangement and presentation of your product at the point of sale. This includes the shelf level, location, assortment, branding and promotional materials.
Inventory management — the control and optimization of your stock levels, logistics and delivery processes. This includes the management of your warehouses, their occupancy, availability of safety stock, logistics, expiration dates, delivery speed for each link in your distribution chain. Inventory management helps you reduce costs, avoid stockouts and ensure customer satisfaction.
Promotion
Promotion includes any activities that aim to inform and persuade your customers about your product, its features and benefits. It also helps you create awareness, interest, desire and action among your customers. Promotion methods involve SEO, SMM, PR, advertising campaigns, organic traffic, in-store promotions, influencer marketing, etc. The promotion decisions include:
Promotion strategy — the overall plan and objectives of your promotion activities in the market.
Promotion budget — the amount of money that you allocate for your promotion activities.
Promotion awareness — the measurement and analysis of how well your customers know your product.
Promotion geography — the selection of the geographic areas where you will conduct your promotion activities.
Promotion calendar — the schedule and timing of your promotion activities for the year ahead.
Media strategy — the choice and mix of media channels that you will use to reach your customers, such as TV, radio, print, online, etc.
Influencer strategy — the selection and collaboration of influencers who can endorse or recommend your product to their followers.
Communication strategy — the tone, style and message that you use to communicate with your customers.
PR strategy — the creation and management of your public image and reputation.
Beyond the 4P model
The 4P model is not the only way to think about marketing. There are other models that put more emphasis on the customer’s perspective. Here are two examples:
4C
This model was proposed by Robert Lauterborn in the 1990s as a customer-oriented alternative to the 4P model. It consists of four categories:
Cost — the total cost of owning and using a product or service, not just the price. This includes money, time, effort and risk.
Convenience — the ease and accessibility of buying and using a product or service. This is similar to Place in the 4P model, but more focused on the customer’s comfort and convenience.
Communication — the two-way interaction between the company and the customer, not just one-way promotion. This includes informing, educating, persuading and listening to the customer.
Customer’s needs and wants — the core value proposition of a product or service, based on what the customer needs and wants. This is different from Product in the 4P model, which is based on what the company offers.
SIVA
This model was introduced by Chekitan Dev and Don Schultz in 2005 as a way to simplify and clarify the marketing mix. It also consists of four elements:
Solution — the product or service as a solution to the customer’s problem or pain point.
Information — the communication of the solution to the customer, through various channels and media. This is similar to Promotion in the 4P model, but more focused on providing relevant and useful information.
Value — the balance between the benefits and costs of the solution for the customer, both tangible and intangible. This is broader than price in the 4P model, which only considers monetary costs.
Access — the availability and distribution of the solution for the customer, in terms of time, place and manner. This is similar to Place in the 4P model, but more focused on meeting the customer’s preferences and expectations.
These models can be used together with the 4P model to gain a better understanding of your product from the customer’s point of view.
How the Extended Models Work
Marketing is not limited to the 4P model. There are other approaches that introduce new elements to make it more up-to-date and complete, especially for the B2B market and the service sector. These models can be useful for all types of businesses, once the basic elements are well-defined. Let’s discuss some of these extended models in more detail.
5P (People)
The 5P model extends the basic 4P model by adding people as a new component. People are not only potential customers, but also sources of information that can influence how the product or the company is perceived by others. People include:
Employees of the business who represent the product to partners, suppliers, distributors, customers, etc.
Sales staff, online store managers, traffic generators, etc.
Influencers who can give reviews or feedback on the product.
Manufacturers, delivery service providers, etc. who affect the cost, quality, speed and delivery time of the product.
Key customer groups that generate significant sales volume.
People have a significant impact on sales, through word-of-mouth, online articles, reviews, testimonials, reactions, etc. Therefore, people have become part of the marketing mix. The people decisions include:
Training and motivation programs for staff and sales personnel.
Strategies and methods for working with influencers, bloggers and opinion leaders.
Methods for collecting and processing feedback.
Loyalty programs for VIPs and regular customers.
Let’s take Starbucks as an example. This coffee giant is known for its extensive training and development programs for its employees, especially its baristas and store managers. They offer a variety of online and in-person courses, workshops and seminars on topics such as coffee knowledge, customer service, leadership, communication and teamwork. Starbucks also provides incentives and recognition for its employees, such as free drinks, discounts, stock options, health benefits, tuition reimbursement and career advancement opportunities. These programs help Starbucks maintain a high level of employee engagement, satisfaction and retention.
6P (Process)
The process refers to the interaction between the business and the customer during the service delivery. It should be convenient for the customer and aligned with the business goals. For example, to provide full information support to the customer and not to delay the queue, increasing the traffic and, consequently, the profit. As part of the marketing plan, the process is constantly improved and refined at each point of contact: at the point of sale, on the website, in marketplaces, at dealers, in interaction with the delivery service. Each business will have its own set of actions under the process, which can be expanded over time.
As an example, let’s look at the process of a McDonald’s fast-food restaurant. The service is fast and efficient, because most of the food is already prepared and only needs to be heated up. The layout of the kitchen unit helps to reduce the time to assemble and serve an order. The dispensing windows help to save time as well.
7P (Physical environment)
The physical environment is the tangible and intangible aspects of the service setting that influence the customer’s perception and experience. It includes the design, layout, ambiance, cleanliness, equipment, etc. of the service location. The physical environment should match the company’s image and objectives. Continuing with the McDonald’s example, we can see that the tables are arranged in a fairly tight group, and there are no partitions between them, blocking the view from other people. The large crowds of people are not conducive to long conversations or relaxation. Customers prefer to eat quickly or take their food with them, so tables are quickly cleared for new customers. Part of the kitchen is visible from the hall, the restaurant is always clean and the floor is regularly cleaned, tables are wiped down and garbage is removed. This increases customer confidence in the quality of the establishment and the company.
8P
The 8P model builds on the 7P model while ignoring the larger scale additions. It adds productivity and quality as a new component. This component focuses on improving the efficiency and effectiveness of the service delivery, as well as enhancing the customer satisfaction and loyalty. The productivity and quality decisions include developing relationships in the form of flowcharts to link Product, People, Process and Physical environment elements into a complementary system.
9P
The 9P model takes the 7P model as its foundation. It adds two more components that are related to the marketer’s tools:
Public relations — the management of the public image and reputation of the company and the product. This includes handling inquiries, feedback, controversies, scandals, etc. in the public domain.
Personal selling — the stimulation of sales through monetary incentives. This includes giving commissions or bonuses to employees, store salespeople, traffic generators, etc. for each transaction.
12P
The 12P model is the newest and most comprehensive model. It complements the 9P model with three more components that are related to the customer’s engagement and values:
Participation — the development of methods to increase feedback from customers, to improve the quality of products, services, service and all other elements responsible for user interaction. This niche is directly handled by community managers in close connection with marketers.
Loyalty programs — the creation of schemes to retain the customers and encourage them to consume more of the brand’s products. Loyalty programs can also attract new customers, but this is a secondary goal. Through loyalty programs, it is possible to form a strong bond with customers, make the business more resilient to shocks and make the demand more predictable.
Social responsibility — the demonstration of the company’s commitment to social and environmental causes that resonate with the customers’ values. This helps to connect the business even more strongly with customers on an ideological level and strengthens brand reputation. Social responsibility can be implemented by reforming internal company processes, such as establishing an anti-harassment department or cooperating with a labour union. It can also be implemented by external actions, such as donating money to foundations or fighting global warming. For example, PornHub is a company that uses social responsibility as a marketing tool, by buying equipment to clean the streets, planting trees for part of its profits, etc., thus changing society’s attitude towards the porn industry in general and video hosting in particular.
How to Develop an Effective Marketing Mix: Examples
To apply the marketing mix, you can start with the basic 4P model and then add other components that are relevant for your business. You can use a table to organise your analysis, such as this one:
Sometimes, especially at the start of a business, you may need to break down each component into more specific categories. For example, for the Product component, you can describe branding, features, design and support in separate rows.
For each component or category, describe the current state of your business. You can gather information from sales data, competitor analysis, expert opinions, managers’ feedback, customer reviews, etc. Then, formulate the desired state for each item: product quality, product features, prices, sales volume, etc. The goals that you set should be specific, measurable, achievable, relevant and time-bound.
Now you can see the gap between the current and desired states. Based on that, you can prescribe a set of actions that will help you achieve your goals. When planning your actions, consider your available budget and resources. For each action, assign a priority level and a deadline.
Conclusion
The marketing mix models can help you analyse and adjust the different aspects of your product or service that affect your customers’ decisions and behaviours. By using these models, you can gain a deeper and broader understanding of your product from the customer’s perspective. You can also identify and improve any weak or missing elements in your marketing strategy. This way, you can create a more competitive and appealing offer that meets or exceeds your customers’ needs and wants.
We hope this article has helped you to learn more about the marketing mix models and how to apply them to your business. Good luck and success in your marketing endeavours!
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