7 P's of Marketing Mix: Product

The 7 P's of Marketing Mix

• Offer multiple frameworks for marketing products and services
• The "7 P's of Marketing" framework includes product, place, price, promotion, people, packaging, and positioning

Product

• The first P in the Marketing Mix
• Strategy typically starts with the product
• Refers to any goods or services produced to meet consumers' wants, tastes, and preferences
• Goods are categorized into business goods or consumer goods
• Services divided into consumer services and professional services
• Consumer goods have a 'direct demand', and business goods have a 'derived demand'
• Consumer goods have more buyers scattered across the country or world
• Business goods have a limited number of buyers concentrated in specific regions
• Consumer goods purchases are generally of small value, while business goods involve a very high amount
• Buying consumer goods is influenced by emotions, while buying business goods is not
• After-sale service is important for consumer durables but of paramount importance for all business goods
• There are middlemen in the consumer goods market, but manufacturers of industrial goods supply directly to customers
• Consumer goods buyers may not have thorough knowledge, while industrial goods buyers must have complete knowledge
• The reputation of the seller is less important for consumer goods but always important for industrial goods
• Inducements are common in marketing consumer goods but not in industrial goods
• The consumer goods market is affected by fashion and style changes, while the industrial goods market is affected by technological changes

Place

• Second P in the Marketing Mix
• Represents the location where buyer and seller exchange goods or services, known as the distribution channel
• Distribution channel a crucial part of the marketing mix that links production and consumption
• Channel 1 contains two stages between producer and consumer, a wholesaler and a retailer
• A wholesaler buys and stores large quantities of several producers' goods, then breaks into bulk deliveries to supply retailers
• Channel 2 contains one intermediary, typically a retailer in consumer markets
• retailer is a company that buys products from a manufacturer or wholesaler and sells them to end users or customers
• Channel 3 is a direct-marketing channel, since it has no intermediary levels

Price

• Third P in the Marketing Mix
• The value of money in exchange for a product or service
• Price is the amount or value that a customer gives up to enjoy the benefits of a product or service
• Determined by what a buyer is willing to pay, what a seller is willing to accept, and what the competition is allowing to be charged
• One example of pricing strategy is the penetration pricing, when the price charged for products and services is set artificially low in order to gain market share

Different Pricing Strategies and Its Definition

• Penetration Pricing entails setting prices artificially low to gain market share, then increasing them
• Skimming Pricing sets a high initial price, then lowers it to make the product available to a wider market
• Competition Pricing uses competitor prices as a benchmark instead of own costs or demand, and prices may be lower, same, or higher
• Product Line Pricing reviews and sets prices for multiple products in coordination to maximize sales
• Bundle Pricing places several products or services together in a single package and sells them for a lower price
• Premium Pricing sets a higher price than similar products to create the perception of higher value
• Psychological Pricing sets prices slightly lower than rounded numbers, in the belief that customers do not round up
• Optional Pricing earns more through cross-selling products along with a basic core product
• Cost Plus Pricing adds a markup to the cost of goods and services to arrive at a selling price
• Cost Based Pricing adds a fixed sum or a percentage of the total cost to the cost of the product to arrive at its selling price
• Value Based Pricing sets prices primarily on consumers' perceived value of the product or service

Promotion

• Fourth P in the Marketing Mix
• The Promotion refers to the complete set of activities, which communicate the product, brand or service to the user

Promotional Mix

• Advertising includes Radio, Television, Print and Electronic
• Radio advertising gives advantage of selecting territory and audience and is cheaper than TV advertising
• Television advertising is effective with sound and sight
• Print media carry messages through visual mode
• Electronic advertising through company website or email
• Public Relations (PR) involves sharing information with the public using platforms that do not require a payment
• Personal Selling occurs when an individual salesperson sells a product, service or solution to a client through sales process
  • Prospecting
• Making first contact
• The sales call
• Objection handling
• Closing the sale
• Sales Promotions are initiatives undertaken by an organization to promote an increase in sales, usage or trial of product
  • Free gifts
  • Free samples
  • Free trial
  • Customer contests
  • Special pricing
• Direct Marketing is a promotional method that involves presenting information about company, product, or service to your target customer without use of an advertising middleman

People

• Fifth P in the Marketing mix
• Your team, the staff that makes it happen for you, audience, and advertisers are the people in marketing
• People are one of the most important elements of the marketing mix today
• The marketing efforts of people are to create customer awareness, to arouse customer interest, to educate customers, to close the sale and to deliver the product
• The right people are essential in marketing mix

Packaging

• Sixth P in the Marketing Mix
• Refers to the outside appearance of a product and how it is presented to customers
• The best packaging should be attractive enough and cost efficient

Five Basic Functions of Packaging

• Protection provides for effects of time and environment for natural and manufactured products
• Natural deterioration caused by the interaction of products with water, gases and fumes, microbiologic organisms like bacteria, yeasts and molds, heat, cold, dryness, contaminants and insects and rodents
• Physical protection improves shock protection, internal product protection and reducing shock damage caused from vibration, snagging, friction and impact
• Safety required for products that are deemed harmful to those who transport them or use them
• Waste reduction serves to reduce the amount of waste especially in case of food distribution
• Containment merging of unit loads for shipping
• Information conveys necessary information to the consumers
• Utility of use convenience packaging includes dispensing devices, prepackaged hot metals, and disposable medical packaging
• Promotion using attractive colors, logos, symbols and captions to promote the product that can influence customer purchase decision

Packaging Decisions

• Packaging concept defines what the package should be or do for the particular product
• Engineering tests that the package stands up under normal conditions
• Visual tests ensure that the script is legible and colors are harmonious
• Dealer tests ensure dealers find attract and easy to handle
• Consumer tests ensure favorable consumer response

Positioning

• Seventh P in the Marketing Mix
• The positioning is a process to create an image in minds of target markets
• Solid positioning will allow single product to attract different customers
• Functional Positions deal with solving a problem, providing benefits and getting a favorable perception from investors, stockholders and consumers
• Symbolic Positions deal with self-image enhancement, ego identification, belongingness, social meaningfulness and affective fulfilment and Experiential Positions deal with providing sensory or cognitive stimulation

Steps of Positioning Process

• Confirm your understanding of market dynamics and questions
• Identify your competitive advantages
• Price, features and benefits
• Choose competitive advantages that define your market
• Create a positioning statement to identify your business and how to be perceived by consumers
  • Determine company uniqueness by comparing to competitors
  • Identify current market position
  • Competitor positioning analysis
• Develop a positioning strategy