Marketing mix means the combination of four basic elements which add up to the core of the marketing system of the company. These four basic elements are the price structure, the distribution system (place), the product, and the promotional activities.
These four Ps are closely interconnected as decisions made in one area have an impact on the actions in others. There are few elements in the marketing mix which must be remembered by amateur businessmen so as to get effective learning. These elements are as follows:
- Product Mix: The element of marketing mix shows the tangible and intangible elements which are offered to the customers for sale in order to satisfy his needs, is known as product. The combination of various features which are related to the product or service that is to be offered for sale, is known as product mix. It involves decisions concerning the size, package, label, services, quality, range, brand name and warranty. A product is considered to be a ‘bundle of satisfaction’ rather than as a physical term. For instance, the buyer of the washing machine wants comfort, speed and trouble-free operation rather than use a box of plastic, metal and electrical components. Product is offered to the customers for consumption, attention, acquisition or use by consumers. There are three layers of benefits in the product which must be remembered for effective learning. These are as follows:
- Core benefit: The fundamental or basic benefit that the customer seeks in a product or service is known as core benefit. For instance, transportation refers to the basic unit for which the car has been bought.
- Expected benefit: The benefit in terms of product attributes which are expected by the customer at the time of buying the product is known as expected benefit. For instance, a car buyer can expect the benefit of fuel efficiency.
- Augmented benefit: In order to exceed customer expectations, the marketer offers the additional features, these additional features are known as augmented benefits. In order to win a customer in highly competitive market, augmented benefits are offered. For instance, free insurance or interest-free loan might be offered by a car seller.
- Price Mix: The money value of a product or service is denoted by the term ‘price’. It refers to the amount of money which seller asks for the product or service he offers for sale or the amount which buyers are to pay for it. In the marketing mix of a firm, price is an important element which also affects other components of the marketing structure. The process in which we translate the value of a product or service in terms of money is known as pricing. Not only does it involve the determination of a base price but also the terms and conditions of sale such as, mode of payment, transportation cost, discounts and allowances, etc. There are some factors which determine the price of the product, which are a must to be noted in order to get knowledge. These factors are as follows:
- Objectives of the firm: The price of the product has its dependence upon the objective of the firm. A firm may decide on several objectives such as a specific level of profit, a particular share of the market, profit maximization, target level of sales, prevailing market price, etc.
- Cost of the product: Essentially, both the retail price and the profit margin are the cost of production and distribution. In the short run, price should cover variable cost while in the long run, price should cover the total cost per unit.
- Customer demand: Another important factor affecting price is the size and nature of demand in relation to the supply of an article. In pricing, price elasticity of demand is also an important factor.
- Place Mix: In order to make the product available to customers for purchase and consumption, a distribution of product is done, this process is known as place element of marketing mix. The customers would not buy the products when the products are not available to the customers at the right place, in the right quantity and at the right time. So, the distribution of the product is an important element of the marketing mix. Distribution element involves physical distribution which comprises of transportation and storage of goods, which are as follows:
- Warehousing: On a continuing basis, goods are produced in factories, but they are not sold immediately after they have been produced. Therefore, it is important to store finished goods until they are being sold. A company should establish their own warehouse for storage of products. Location of the warehouse will be dependent upon the nature of the product.
- Inventory control: Inventory refers to the finished goods and semi finished goods and stock of raw materials held in anticipation of use or sale. At periodic intervals, goods meant for sale are received from the factory/suppliers and then are added to the stock. Sales are made from time to time from this stock. To avoid loss of sales, it is always necessary to maintain adequate inventory.
- Order processing: The level of customer service is determined by the manner in which the customer orders are processed. The level of customer satisfaction will be greater if the orders are processed more quickly and accurately. Therefore, in order to enhance customer service and to make order processing faster, business firms are investing money in information technology systems.
- Promotion Mix: Promotion in marketing mix refers to the activities which are involved in persuading and informing the customers. Advertising, publicity, sales promotion and personal selling are used for promotion. Promotion is known as a vital element in the marketing mix. The product or service cannot be sold by the business firms to the customers without informing the people about its availability and without creating in them the desire to buy it.
Therefore, these were a few points on marketing that can easily provide guidance to newcomer entrepreneurs of Commerce.
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