Marketing Mix and the 7Ps

Marketing Mix

• The marketing mix combines the 4Ps (product, place, price, promotion) with 3 extra Ps (people, packaging, process) to form effective marketing strategies.
• These 7Ps are used until the entrepreneur finds the right combination to serve customer needs.
• Product: A tangible good, service, or idea, created by an entrepreneur, that can be perceived by senses.
• Place: Physical location considerations involve population, traffic patterns, customer behavior, and preference for the location. Cyber locations need web analytics to understand visitor behavior.
• Price: The assigned value of a product or service, considering costs, competition, objectives, positioning, and target market. It is the only P that generates revenue.
• Variable Costs: Directly proportional to the number of products or services.
• Fixed Costs: Not directly proportional to production/service, examples include equipment, employee costs, rent, and utilities.

Most Common Pricing Strategies

• Bundling: Combining two or more products or services in one reduced price.
• Penetration Pricing: Setting a low price to gain market share, followed by increasing prices.
• Skimming: Initially high prices, decreasing over time, to reach a broader market.
• Competitive Pricing: Benchmarking prices against competitors.
• Product Line Pricing: Various price points for products in a product line.
• Psychological Pricing: Utilizing pricing strategies that affect consumer psychology and perception.
• Premium Pricing: High prices to reflect exclusivity and superior quality.

Promotion

• Promotion: Creates product awareness and desire to buy. Media choices should reach the target consumer base.
• Advertising: Can include television, radio, print, online, and other formats.
• Public Relations/Publicity: Use media coverage, press conferences, events, strong media relations, public relations as strategies.
• Personal Selling: Direct contact with customers by a salesperson.
• Sales Promotion: Short-term promotional gimmicks to influence quick purchases.

Packaging and Physical Environment

• Physical Environment: The overall ambiance of the service area, or "servicescape", to enhance customer experience.

Process

• The internal and external operations, workflow to serve customers better.
• Internal process refers to the back office operations.
• External process refers to the actual interaction (servicing) with customers.

Manpower, Materials, Method, Machine

• Manpower: Appropriate human resources to manage business operations.
• Materials: Inputs used to produce products or deliver services.
• Method: Procedure or technique for completing a task.
• Machine: Tools or equipment for manufacturing or service delivery.

Forecasting Revenues and Costs

• Forecasting: Estimating future revenues and costs, based on past or current data, to adapt to uncertainties.
• Revenue: Earned when sales exceed production/service costs. Factors include economic conditions, competition, community changes and business specifics.
• Sales/Service Income: Revenue from selling goods or services.

Computation of Gross Profit

• Gross Profit: Revenue from sales less cost of goods sold. Gross profit margin calculation (rate).
• Operating Profit Margin: Gross profit less operating expenses, rate of calculation.
• Net Profit Margin: Final level of profitability calculation for the revenue earned.

Analyzing Liquidity Status

• Liquidity Ratios: Assessing the ability to meet short-term obligations using current assets, and quick ratios.
• Return on Investment (ROI): Measuring net income per invested peso in the business.