Marketing: The Four P's

Marketing: The Four P's

• Product: The tangible good or service the company is offering to the market.
• Price: The amount of money customers pay for the product.
• Place: The distribution channels used to reach customers.
• Promotion: Efforts to communicate the value of the product to the target audience.

Factors that Determine Price

• Production Cost: The cost of manufacturing or producing the product.
• Competitor Analysis: Analyzing prices and strategies of competitors in the market.
• Utility and Demand: The level of demand for the product. Higher demand often allows for higher prices.
• Government and Legal Regulations: Specific rules and regulations set by government agencies regarding pricing, especially for essential goods.
• Marketing Methods: The cost and strategies used for promoting the product.
• Company Objectives: Whether the company prioritizes profit maximization, market share capture, or quality.

Channels of Distribution

• Direct Channel (Zero Level): The manufacturer directly distributes the product to customers without any intermediary.
  • This is often used for perishable goods, expensive items, or complex and customized products.
• Indirect Channel: The manufacturer uses intermediaries like wholesalers and retailers to reach customers. Different levels of intermediaries can be involved, with one, two, or three levels between the manufacturer and the final customer.
  • This is commonly used when targeting a wider market or selling non-perishable, non-customized products.

Components of Physical Distribution

• Order Processing: The speed and accuracy of fulfilling customer orders are crucial for customer satisfaction.
• Transportation: The method of transporting the product from the manufacturer to the customer, considering considerations like cost, speed, and product sensitivity.
• Warehousing: The storage facilities used to hold the product, considering the level of inventory needed for efficient customer service.
• Inventory Level: The quantity of product maintained in stock. Higher inventory levels allow for faster delivery, but require significant working capital.

Promotion Mix: Four Key Tools

• Advertising: Paid, impersonal communication through various media channels to promote products or services.
• Personal Selling: Direct, one-on-one interaction between a salesperson and a customer to establish a relationship and sell the product.
• Sales Promotion: Short-term incentives for purchasing and encouraging sales, like discounts, giveaways, bundle deals, or contests.
• Public Relations: Building positive relationships with the public and building a favorable image for the company and its products, through press releases, community involvement, and other public communications strategies.