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The term "marketing-mix" was first coined by Neil Borden, the president of the American Marketing Association in 1953. It is still used today to make important decisions that lead to the execution of a marketing plan. The various approaches that are used have evolved over time, especially with the increased use of technology.
The marketing mix is a business tool used in marketing and by marketers. The marketing mix is often crucial when determining a product or brand's offer, and is often associated with the four P's: price, product, promotion, and place. In service marketing, however, the four Ps are expanded to the seven P's or Seven P's to address the different nature of services.
In the 1990s, the concept of four C's was introduced as a more customer-driven replacement of four P's. There are two theories based on four Cs: Lauterborn's four Cs (consumer, cost, communication, convenience), and Shimizu's four Cs (commodity, cost, communication, channel).
In 2012, a new four P's theory was proposed with people, processes, programs, and performance.
In his paper "The Concept of the Marketing Mix", Neil Borden reconstructed the history of the term "marketing mix". He started teaching the term after an associate, James Culliton, described the role of the marketing manager in 1948 as a "mixer of ingredients"; one who sometimes follows recipes prepared by others, sometimes prepares his own recipe as he goes along, sometimes adapts a recipe from immediately available ingredients, and at other times invents new ingredients no one else has tried.
McCarthy's four Ps
|Product||A product is seen as an item that satisfies what a consumer demands. It is a tangible good or an intangible service. Tangible products are those that have an independent physical existence. Typical examples of mass-produced, tangible objects are the motor car and the disposable razor. A less obvious but ubiquitous mass-produced service is a computer operating system.
Every product is subject to a life-cycle including a growth phase followed by a maturity phase and finally an eventual period of decline as sales fall. Marketers must do careful research on how long the life cycle of the product they are marketing is likely to be and focus their attention on different challenges that arise as the product moves.
The marketer must also consider the product mix. Marketers can expand the current product mix by increasing a certain product line's depth or by increasing the number of product lines. Marketers should consider how to position the product, how to exploit the brand, how to exploit the company's resources and how to configure the product mix so that each product complements the other. The marketer must also consider product development strategies.
|Price||The amount a customer pays for the product. The price is very important as it determines the company's profit and hence, survival. Adjusting the price has a profound impact on the marketing strategy and, depending on the price elasticity of the product, often it will affect the demand and sales as well. The marketer should set a price that complements the other elements of the marketing mix.
When setting a price, the marketer must be aware of the customer perceived value for the product. Three basic pricing strategies are: market skimming pricing, market penetration pricing and neutral pricing. The 'reference value' (where the consumer refers to the prices of competing products) and the 'differential value' (the consumer's view of this product's attributes versus the attributes of other products) must be taken into account.
|Promotion||All of the methods of communication that a marketer may use to provide information to different parties about the product. Promotion comprises elements such as: advertising, public relations, sales organisation and sales promotion.
Advertising covers any communication that is paid for, from cinema commercials, radio and Internet advertisements through print media and billboards. Public relations is where the communication is not directly paid for and includes press releases, sponsorship deals, exhibitions, conferences, seminars or trade fairs and events.
After web 2.0, the capacity of the customers tell about the products that they have bought, making reviews and testimonials related to their use experiences, are examples of public relation, as well. This kind of behavior takes the dissemination of the product information over the internet space and creates the phenomenon known as word-of-mouth.Word-of-mouth is any apparently informal communication about the product by ordinary individuals, satisfied customers or people specifically engaged to create word of mouth momentum. Sales staff often plays an important role in word of mouth and public relations (see 'product' above).
|Distribution (Place)||Refers to providing the product at a place which is convenient for consumers to access. Various strategies such as intensive distribution, selective distribution, exclusive distribution and franchising can be used by the marketer to complement the other aspects of the marketing mix.|
The "seven Ps" is a marketing model that adds to the aforementioned four Ps, including "physical evidence", "people", and "process": It is used when the relevant product is a service, not merely a physical good.
|Physical evidence||The evidence which shows that a service was performed, such as the delivery packaging for the item delivered by a delivery service, or a scar left by a surgeon. This reminds or reassures the consumer that the service took place, positively or negatively.|
|People||The employees that execute the service, chiefly concerning the manner and skill in which they do so.|
|Process||The processes and systems within the organization that affect the execution of its service, such as job queuing or query handling.|
Lauterborn's four Cs
Robert F. Lauterborn proposed a four Cs classification in 1990 which is a more consumer-oriented version of the four Ps that attempts to better fit the movement from mass marketing to niche marketing:
|Four Ps||Four Cs||Definition|
Consumer wants and needs
|A company will only sell what the consumer specifically wants to buy. So, marketers should study consumer wants and needs in order to attract them one by one with something he/she wants to purchase.|
|Price is only a part of the total cost to satisfy a want or a need. The total cost will consider for example the cost of time in acquiring a good or a service, a cost of conscience by consuming that or even a cost of guilt "for not treating the kids". It reflects the total cost of ownership. Many factors affect cost, including but not limited to the customer's cost to change or implement the new product or service and the customer's cost for not selecting a competitor's product or service.|
|While promotion is "manipulative" and from the seller, communication is "cooperative" and from the buyer with the aim to create a dialogue with the potential customers based on their needs and lifestyles. It represents a broader focus. Communications can include advertising, public relations, personal selling, viral advertising, and any form of communication between the organization and the consumer.|
|In the era of Internet, catalogs, credit cards and phones people neither need to go anyplace to satisfy a want or a need nor are limited to a few places to satisfy them. Marketers should know how the target market prefers to buy, how to be there and be ubiquitous, in order to guarantee convenience to buy. With the rise of Internet and hybrid models of purchasing, Place is becoming less relevant. Convenience takes into account the ease of buying the product, finding the product, finding information about the product, and several other factors.|
Four Cs: in the 7Cs Compass Model
After Koichi Shimizu proposed a four Cs classification in 1973, it was expanded to the 7Cs Compass Model to provide a more complete picture of the nature of marketing in 1979. It attempts to explain the success or failure of a firm within a market and is somewhat analogous to Michael Porter's diamond model, which tries to explain the success and failure of different countries economically.
- The 7Cs Compass Model comprises:
(C1) Corporation – The core of four Cs is corporation (company and non profit organization). C-O-S (organization, competitor, stakeholder) within the corporation. The company has to think of compliance and accountability as important. The competition in the areas in which the company competes with other firms in its industry.
The four elements in the 7Cs Compass Model are:
A formal approach to this customer-focused marketing mix is known as "Four Cs" (commodity, cost, communication, channel) in the Seven Cs Compass Model. The four Cs model provides a demand/customer centric version alternative to the well-known four Ps supply side model (product, price, promotion, place) of marketing management.
|"P" category (narrow)||"C" category (broad)||"C" definition|
|Product||(C2) Commodity||(Latin derivation: commodus=convenient) : Co-creation.It is not "product out". The goods and services for the consumers or citizens. Steve Jobs has been making the goods with which people are pleased. It will not become commoditization if a commodity is built starting.|
|Price||(C3) Cost||(Latin derivation: constare= It makes sacrifices) : There is not only producing cost and selling cost but purchasing cost and social cost.|
|Promotion||(C4) Communication||(Latin derivation: communis=sharing of meaning) : marketing communication : Not only promotion but communication is important. Communications can include advertising, sales promotion, public relations, publicity, personal selling, corporate identity, internal communication, SNS, MIS.|
|Place||(C5) Channel||(Latin derivation: canal) : marketing channels. Flow of goods.|
The compass of consumers and circumstances (environment) are:
- (C6) Consumer – (Needle of compass to consumer)
- The factors related to consumers can be explained by the first character of four directions marked on the compass model. These can be remembered by the cardinal directions, hence the name compass model:
- (C7) circumstances – (Needle of compass to circumstances )
- In addition to the consumer, there are various uncontrollable external environmental factors encircling the companies. Here it can also be explained by the first character of the four directions marked on the compass model:
These can also be remembered by the cardinal directions marked on a compass. The 7Cs Compass Model is a framework in co-marketing (symbiotic marketing). It has been criticized for being little more than the four Ps with different points of emphasis. In particular, the seven Cs inclusion of consumers in the marketing mix is criticized, since they are a target of marketing, while the other elements of the marketing mix are tactics. The seven Cs also include numerous strategies for product development, distribution, and pricing, while assuming that consumers want two-way communications with companies.
An alternative approach has been suggested in a book called 'Service 7' by Australian Author, Peter Bowman. Bowman suggests a values based approach to service marketing activities. Bowman suggests implementing seven service marketing principles which include value, business development, reputation, customer service and service design. Service 7 has been widely distributed within Australia.
P's changing with digital age
With the advent of digital marketing, marketers are suggesting new P's, or are saying that digital marketing has changed the way these P's used to work.
The new P's:
But many, including Illinois University, suggest that the P's have only changed and there is no need for new P's. The way these P's have changed is discussed here by using the first two P's only. Product has new terms introduced. Now products are not developed by a company alone; the concept of co-creation and crowd sourcing have jumped in. Promotion is carried out with user created content.
- Marketing activation
- Real-time marketing
- Integrated marketing communications
- Market Value of particular product
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