Marketing Mix (the 4 Ps of Marketing)

The “Dictionary of Economics” gives the following definition of marketing – the functions of sales, distribution, advertising and sales promotion, product planning and market research. The aim of the “market conception” is to find wants and fill them. In other words, not to sell that is made but to make what will be bought. As well as satisfying the existing needs, marketers can anticipate and create new ones. For example, the markets for the notebook, PC, video games and so on were largely created rather than identified.

In order to produce what will be bought and not to launch a risk companies carry out market research. They gather and analyze information on markets, products and consumers’ reaction to a product. Sales representatives who interact with consumers are another important source of information.

Once the product concept has been identified, the company begins to think about the marketing mix. It includes four important components – the 4 P’s of marketing:

Product – goods and services to be sold

Place – means of getting the product or service to the customer

Price – cost of the product

Promotion – means of informing people about the product or service.

Product. It is of paramount importance that the product is right. There is a history of “white elephants” – products that were developed and launched which provided to have little or no demand.

There are two main types of product – consumer and industrial product. Consumer goods are products that are bought by the final user. There are two categories of consumer goods – fast moving consumer goods which are bought and consumer quickly (food, cleaning materials, magazines and so on) and durable goods which are bought rarely and last longer (washing machines, cookers, hi-fi, TV and so on). Industrial goods are those products that are used in industrial processes and are usually processed further (such as raw materials, parts, accessories, machines etc.).

Place. Place refers to the target market for the product. The modern business must have a good idea of the consumer type that the product will be aimed at. The total market with a certain type of customer is known as a segment. So by the term place we don’t mean physical location. The potential market is segmented according to such factors as sex, age, family income, type of residence, education as well as the way of life and personal traits. Many products are aimed at a certain age group (for example toys are aimed at children). Possible examples of sex segmented products are clothes, jewelry, magazines etc.

Price. The price set for the product will depend on several considerations. As the company has many costs dealing with making, distribution and selling a product, the recovery of these costs compose the primary level of price. In addition, the

organization will also charge a price in excess if the costs of the product are high. Price also has other additional purposes. Among the most important is that price gives a signal as to the quality of the product and will attract the buyers. “High class” restaurants attract customers simply by being expensive. The “cash only” supermarkets have low prices due to their cost structure, but the low prices also serve to attract their target market.

The simplest pricing model is cost plus. This is when the accountant will calculate the total cost of the product, including its production, transportation and overheads, and then add on a profit figure. The disadvantage of this approach is that it ignores market conditions, and the company will either under- or over-price its products.

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