Lesson The Marketing Mix (7P’s) in Relation to

1 the Business Opportunity

What is It
Whatever you sell or offer you must outline your marketing mix. Marketing mix has
been around as early as trade existed and that is quite long already. The only
difference is that today everything is well outlined and keeps evolving even further.
To get to the point, marketing mix is a business mechanism used for effective
marketing of the products. There is no hesitation that anyone would benefit from a
powerful 7Ps. Marketing Mix is a set of controllable and connected variables that a
company gathers to satisfy a customer better than its competitor. It is also known as
the “Ps” in marketing. Originally, there were only 4Ps but the model has been
continually modified until it became 7P’s. The original 4 P’s stands for product,
place, price and promotion. Eventually, three elements have been added, namely:
people, packaging and positioning to comprise the 7 P’s.

The 7 P’s of Marketing Mix

There are several important frameworks which you can utilize for the purpose of
marketing your product and services. A very crucial structure among these is the “7
P’s of Marketing. The framework of “7 Ps of marketing” includes product, place,
price, promotion people, packaging and positioning. Realizing these P’s in the most
ideal manner can turn out to be very profitable, however, you should totally see each
description of the 7 P’s first.

1. PRODUCT
The first P in the Marketing Mix is the Product. Marketing strategy typically starts
with the product. Marketers can’t plan a distribution system or set a price if they don’t
know exactly what the product will be offered to the market.

Product refers to any goods or services that is produced to meet the consumers’
wants, tastes and preferences. Examples of goods include tires, MP3 players,
clothing and etc. Goods can be categorized into business goods or consumer goods.
A buyer of consumer goods may not have thorough knowledge of the goods he buys
and uses. Examples of services include hair salons and accounting firms. Services
can be divided into consumer services, such as hair styling or professional services,
such as engineering and accounting.

GOODS
A. CONSUMER GOODS
B.BUSINESS GOODS

PRODUCT

SERVICES
• A. CONSUMER SERVICES
• LAWN CARE
• HAIR STYLING
• B. PROFESSIONAL
SERVICES
• ENGINEERING
• ACCOUNTING
• CONSULTANCY

The two (2) types of products

There are 2 types of goods. Consumer Goods and Business Goods. The table
below shows the comparison between the 2 types of goods.
Consumer Goods Business Goods

The demand for consumer goods is a The demand for business goods is a
'direct demand'. 'derived demand'. It is derived from the
demand for consumer goods, which are
made using the business goods.
The number of buyers is great. Business goods have only limited number
of buyers.
The buyers are found scattered in The buyers are found to be concentrating
different parts of the country / world. in certain regions only.
 Each purchase will generally be of Each purchase involves a very high
small value. amount (in money terms).
Buying is much influenced by Buying cannot be influenced by emotions.
emotions.
After-sale service is important in the After-sale service is of paramount
case of consumer durables. importance in the case of all business
goods.
There are a number of middlemen in The manufacturers of industrial goods
the market. supply directly to their customers.
A buyer of consumer goods may not A buyer of industrial goods must have
have thorough knowledge of the complete knowledge of the goods he buys
goods he buys and uses. and uses.
The reputation of the seller or The reputation of the manufacturer is
manufacturer may not always be always important in buying industrial
given importance in buying consumer goods.
goods.
Inducements to the buyers in the Such inducements may not be common in
form of cash discounts, free gifts, etc. the marketing of industrial goods.
are made always by those marketing
consumer goods.
The market for consumer goods is The market for industrial goods is affected
affected by fashion and style by technological changes.
changes.

2. PLACE
Place is the second P in the Marketing Mix. Place represents the location where the
buyer and seller exchange goods or services. It is also called as the distribution
channel. It can include any physical store as well as virtual stores or online shops on
the Internet.
It is one thing having a great product, sold at an attractive price. But what if:
• Customers are not near a retailer that is selling the product?
• A competing product is stocked by a much wider range of outlets?
• A competitor is winning because it has a team of trained distributors or sales
agents who are out there meeting customers and closing the sale?
Place matters for a business of any size. It is a crucial part of the marketing mix. The
main function of a distribution channel is to provide a link between production and
consumption.
STAGES OF DISTRIBUTION CHANNEL
Channel 1 contains two stages between producer and consumer - a wholesaler and
a retailer. A wholesaler typically buys and stores large quantities of several
producers' goods and then breaks into bulk deliveries to supply retailers with smaller
quantities. For small retailers with limited order quantities, the use of wholesalers
makes economic sense.
Channel 2 contains one intermediary. In consumer markets, this is typically a retailer.
A retailer is a company that buys products from a manufacturer or wholesaler and
sells them to end users or customers. In a sense, a retailer is an intermediary or
middleman that customers use to get products from the manufacturers.
Channel 3 is called a "direct-marketing" channel, since it has no intermediary levels.
In this case the manufacturer sells directly to customers.
3. PRICE
The third P in the Marketing Mix is price. The price is a serious component of the
marketing mix. What do you think is the meaning of Price?
In the narrowest sense, price is the value of money in exchange for a product or
service. Generally speaking, the price is the amount or value that a customer gives
up to enjoy the benefits of having or using a product or service. Thus, customers
exchange a certain value for having or using the product – a value we call price. In
commerce, price is determined by what (1) a buyer is willing to pay, (2) a seller is
willing to accept, and (3) the competition is allowing to be charged. With product,
promotion, and place of marketing mix, it is one of the business variables over which
organizations can exercise some degree of control. One example of a pricing
strategy is the penetration pricing. It is when the price charged for products and
services is set artificially low in order to gain market share. Once this is attained, the
price can be higher than before. For example, if you are going to open a Beauty
Salon, you need to set your prices lower than those of your competitors so that you
can penetrate the market. If you already have a good number of market share then
you can slowly increase your price.
There are several factors that affect a small business’ revenue potential. One of the
most important is the pricing strategy utilized by you as the owner of the business. A
right pricing strategy helps you define the particular price at which you can maximize
profits on sales of your product or service. You need to consider a wide range of
factors when setting prices of your offerings. The different pricing strategies with its
definition can be found in the table below.
The Different Pricing Strategies and Its Definition

Pricing Definition
Strategies

Penetration The price charged for products and services is set artificially low in order
Pricing to gain market share. Once this is achieved, the price is increased.
Skimming A company charges a higher price then slowly lowers the price to make
Pricing the product available to a wider market because it has a considerable
competitive advantage. However, the advantage tends not to be
sustainable. The high price attracts new competitors into the market, and
the price inevitably falls due to increased supply.
Competition A pricing method in which a seller uses prices of competing products as
Pricing a benchmark instead of considering own costs or the customer demand.
In reality a firm has three options and these are to price lower, price the
same or price higher than competitors
Product Line The practice of reviewing and setting prices for multiple products that a
Pricing company offers in coordination with one another. Rather than looking at
each product separately and setting its price, product-line pricing
strategies aim to maximize the sales of different products by creating
more complementary, rather than competitive, products. If you offer
more than one product or service, consider the impact that one product's
or service's price will have on the others.
Bundle The act of placing several products or services together in a single
Pricing package and selling for a lower price than would be charged if the items
were sold separately.
Premium Setting the price of a product higher than similar products. The goal is to
Pricing create the perception that the products must have a higher value than
competing products because the prices are higher.
Psychological Psychological pricing is the practice of setting prices slightly lower than
Pricing rounded numbers, in the belief that customers do not round up these
prices, and so will treat them as lower prices than they really are. This
practice is based on the belief that customers tend to process a price
from the left-most digit to the right, and so will tend to ignore the last few
digits of a price.
Optional The company earns more through cross-selling products along with a
Pricing basic core product. The main product does not have many features (and
is priced low) which can be enhanced through optional or accessory
products which are sold at premium by the same company.
Cost Plus Cost plus pricing involves adding a markup to the cost of goods and
Pricing services to arrive at a selling price. Under this approach, you add
together the direct material cost, direct labor cost, and overhead costs
for a product, and add to it a markup percentage in order to derive the
 price of the product.
Cost Based A pricing method in which a fixed sum or a percentage of the total cost is
Pricing added (as income or profit) to the cost of the product to arrive at its
selling price.
Value Based A price-setting strategy where prices are set primarily on consumers'
Pricing perceived value of the product or service.

4. PROMOTION

Promotion is the fourth P in the Marketing Mix. Promotion refers to the complete set
of activities, which communicate the product, brand or service to the user. The idea is
to create an awareness, attract and induce the consumers to buy the product, in
preference over others. The following are the most common medium in promoting a
product and this is called promotional mix.

PROMOTIONAL MIX

1. ADVERTISING

• Radio
Advertising by means of radio gives the advantage of selecting the territory and
audience to which the message is to be directed. It is also cheaper than TV
advertising.

• Television
This is the latest and the fast-developing medium of advertising and is getting
increased popularity these days. It is more effective as compared to radio as it has
the advantages of sound and sight. On account of pictorial presentation, it is more
effective and impressive and leaves a lasting impression on the mind of the viewer.

• Print
The print media carry their messages entirely through the visual mode. These media
consist of newspapers, magazines and direct mail.

• Electronic
You can also advertise electronically through your company website and provide
important and pertinent information to clients and customers. You can protect some
parts of your website through passwords and give access to member customers. You
can also send advertisements via direct e-mail as part of your promotional strategy.

• Word of Mouth
Word-of-mouth advertising is important for every business, as each happy customer
can steer dozens of new ones your way. And it's one of the most credible forms of
advertising because a person puts their reputation on the line every time they make
a recommendation and that person has nothing to gain but the appreciation of those
who are listening.
• Generic
The promotion of a particular commodity is without reference to a specific producer,
brand name or manufacturer. Producers join together to expand total demand for the
commodity, thereby helping their own sales. These activities are often self-funded
through assessments on marketing called check-off programs.
2. PUBLIC RELATIONS OR PR
In public relations, the article that features your company is not paid for. The
reporter, whether broadcast or print, writes about or films your company as a result of
information he or she received and researched.

Many people use the term PR and advertising interchangeably, PR involves sharing
information with the public using platforms that do not require a payment, such as
social media or through press releases shared with magazines and newspapers. PR
professionals package information and disseminate it in the hopes that it will be
organically shared. The goal of public relations is to shape public perception of a
business, presenting a positive image through various strategies to its various
constituents.

3. PERSONAL SELLING
Personal selling occurs when an individual salesperson sells a product, service or
solution to a client. Salespeople match the benefits of their offering to the specific
needs of a client. Today, personal selling involves the development of longstanding
client relationships.

Personal selling involves a selling process that is summarized in the following

Five Stage Personal Selling Process. The five stages are:
• Prospecting
• Making first contact
• The sales call
• Objection handling
• Closing the sale

4. SALES PROMOTIONS
Sales promotion is any initiative undertaken by an organization to promote an
increase in sales, usage or trial of a product or service (i.e., initiatives that are not
covered by the other elements of the marketing communications or promotions mix).

Sales Promotion Technique

• Free Gifts
There are many ways to utilize this particular sales promotion technique. A newly
opened store, for example, may offer the first 10 customers free items worth 100
pesos.
 • Free Samples
Providing free samples is a technique used to introduce new products to the
marketplace. Samples give the consumer a chance to see how well they like a
product or try something they otherwise would not normally buy.
• Free Trial
A free trial is a way for a consumer to try a new product while eliminating risk. It may
be used when a product is unique to the marketplace.
• Customer Contests
Contests offer the customer a chance to win prizes like cash or store merchandise.
• Special Pricing
Special pricing is used to offer consumers a lower price for a period of time or to
purchase in multiple quantities. For example, a retailer may offer a product that
normally costs 35 pesos at a price of 3-for-100-pesos during the promotional period.

5. DIRECT MARKETING
Direct marketing is a promotional method that involves presenting information about
your company, product, or service to your target customer without the use of an
advertising middleman. It is a targeted form of marketing that presents information of
potential interest to a consumer that has been determined to be a likely buyer.

Forms of Direct Marketing

Brochure Catalogs Fliers Newsletters Post cards

Coupons Email Phone calls Text messages

5. PEOPLE

The fifth P in the Marketing mix is People. Your team, the staff that makes it happen
for you, your audience, and your advertisers are the people in marketing. This
consist of each person who is involved in the product or service whether directly or
indirectly.
People are the ultimate marketing strategy. They sell and push the product. People
are one of the most important elements of the marketing mix today. This is because
of the remarkable rise of the services industry. Products are being sold through retail
channels today. If the retail channels are not handled with the right people, the
product will not be sold. Services must be first class nowadays. The people
rendering the service must be competent and skilled enough so that that the clients
will patronize your service. 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.
Therefore, the right people are essential in marketing mix in the current marketing
scenario.

6. PACKAGING
 Packaging is the sixth P in the Marketing Mix. Packaging is a silent hero in the
marketing world. Packaging refers to the outside appearance of a product and how it
is presented to the customers. The best packaging should be attractive enough and
cost efficient for the customers. Packaging is highly functional. It is for protection,
containment, information, utility of use and promotion.

Five Basic Functions of Packaging

1) Protection:
One of the major functions of packaging is to provide for the effects of time and
environment for the natural and manufactured products. The protection function can
be divided into some classes.

A. Natural deterioration:
It is 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.

B. Physical protection:
The packaging is also used for physical protection, which include improving shock
protection, internal product protection and reducing shock damage caused from
vibration, snagging, friction and impact.

C. Safety:
A special kind of protective packaging is required for products that are deemed
harmful to those who transport them or use them. These products include extremely
inflammable gas and liquid, radioactive elements, toxic materials etc. The packaging
should also be done so that children could not easily use or dispose them.

D. Waste reduction:
Packaging also serves to reduce the amount of waste especially in case of food
distribution.

2) Containment:
This involves merging of unit loads for shipping. It starts with spots of adhesives on
the individual shippers that stick them together, straps of steel and plastic, entire
coverings of shrinkable or stretchable plastic films and paper or corrugated wraps
that surround an entire pallet of product.

There are some special bulk boxes or pallet bins made from unusually strong
corrugated board or fabricated form plastics or metal, the method of which depends
on the type and weight of product and its protective needs. The cargo containers
made of aluminum used to hold many pallet loads of goods can be transferred to or
from ships, trains and flatbed trucks by giant cranes.
3) Information:
The packaging conveys necessary information to the consumers. The common
information that packaging provides include general features of the product,
ingredients, net weight of the contents, name and address of the manufacturers,
maximum retail price (MRP).

Packaging of medicine and some food products is required to provide information on

methods of preparations, recipes and serving ideas, nutritional benefits, and date of
manufacturing, date of expiry, warning messages and cautionary information.
Sometimes, the color of the packaging itself provides some information.

4) Utility of use:
The convenience packaging has been devised for foods, household chemicals,
drugs, adhesives, paints, cosmetics, paper goods and a host of other products. This
type of packaging includes dispensing devices, prepackaged hot metals, and
disposable medical packaging.

5) Promotion:
Companies use attractive colors, logos, symbols and captions to promote the product
that can influence customer purchase decision.

Packaging Decisions:

i. Packaging concept:
This defines what the package should be or do for the particular product in terms of
size, shape, materials, color, text, and brand mark and tamperproof ability

ii. Engineering tests:

This will ensure that the package stands up under normal conditions

iii. Visual tests:

This is to ensure that the script is legible and colors are harmonious

iv. Dealer tests:

This is to ensure that the dealers find the packages attractive and easy to handle

v. Consumer tests:
This is to ensure favorable consumer response
 7. POSITIONING

Finally, the seventh P in the Marketing Mix is Positioning. When a company

presents a product or service in a way that is different from the competitors, they are
said to be “positioning” it. Positioning refers to a process used by marketers to create
an image in the minds of a target market.
Solid positioning will allow a single product to attract different customers for not the
same reasons. For example, two people are interested in buying a phone; one wants
a phone that is cheaper in price and fashionable while the other buyer is looking for a
phone that is durable and has longer battery life and yet they buy the same exact
phone.
There are three basic concepts for positioning. These are Functional Positions,
Symbolic Positions and Experiential Positions. 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 the Positioning Process

Communicat
e and deliver
Define your on the
positioning positioning
Choose strategy strategy
competitive
Identify your advantages
competitive that define
Confirm your advantages your market
understanding
of market “niche”
dynamics

Step 1: Confirm Your Understanding of Market Dynamics

At the start of the positioning process, you need a firm understanding of your target
market and answers to the following questions:

In which product, service, or market category (also called the “frame of reference”)
do you plan to use this positioning?
Which target segment is your focus for the positioning you are developing?
What factors do these buyers evaluate when they make a purchasing decision? How
do these buyers view your competitors in the category?

If you don’t have answers to these questions, you should consider conducting formal
or informal marketing research to reach a better understanding of your target market
and the market dynamics around it.
Step 2: Identify Your Competitive Advantages
A competitive advantage is some trait, quality, or capability that allows you to
outperform the competition. It gives your product, service, or brand an advantage
over others in purchasing decisions. Competitive advantage may come from and or
all of the following:

Price: Something in your production process or supply chain may make it possible for
you to provide comparable value at a lower cost than competitors.

Features: You may provide tangible or intangible features that your competitors do
not: for example, more colors, better taste, a more elegant design, quicker delivery,
personalized service, etc.

Benefits: You may provide unique benefits to customers that your competitors cannot
match. Benefits are intangible strengths or outcomes your customer gets when they
use your offering. For example, time savings, convenience, increased control,
enjoyment, relaxation, more choices, feeling better about oneself, being more
attractive, etc.
Create a list of the things that make you different from competitors in positive ways.
Then identify which of these factors are also competitive advantages: the influential
factors that help you perform better in the marketplace and cause customers to
choose your product, service, or brand over other options.

Step 3: Choose Competitive Advantages That Define Your Niche

Your list of competitive advantages represents a set of possible positioning strategies

you could pursue for your product, service, or brand. The next step is to examine
how these factors fit into customer perceptions of your broader competitive set. Your
goal is to pick a positioning approach that gives you a unique and valued position in
the market that competitors are not addressing.

How to Create an Effective Market Positioning Strategy?

Create a positioning statement that will serve to identify your business and how you
want the brand to be perceived by consumers.

1. Determine company uniqueness by comparing to competitors

Compare and contrast differences between your company and competitors to
identify opportunities. Focus on your strengths and how it can exploit these
opportunities.

2. Identify current market position

Identify your existing market position and how the new positioning will be
beneficial in setting you apart from competitors.

3. Competitor positioning analysis

Identify the conditions of the marketplace and the amount of influence each
competitor can place on each other.
4. Develop a positioning strategy
Through the preceding steps, you should achieve an understanding of what
your company is, how your company is different from competitors, the conditions of
the marketplace, opportunities in the marketplace, and how your company can
position itself.

Lesson Developing a Brand Name

We are now in the second lesson of this module. After studying and understanding
the framework of the Marketing Mix which is the 7 P’s of Marketing, you are now
ready to develop your Brand Name.
What comes to your mind when you hear the word “coffee”? How about “milk”?
When you are asked to name a “toothpaste” or a “soft drinks, what will you think and
say first?
Now as a future entrepreneur, how do you describe the sales of your product being
displayed on the shelves of various malls and groceries beside the product with a
brand name? Do you think the consumers will notice or remember it? Branding will
ultimately reside(s) in the mind of every consumers, thus, it plays a significant role in
every business.
Brand Name is a name, symbol, or other feature that distinguishes a seller's goods
or services in the marketplace. Your brand is one of your greatest assets because
your brand is your customers' over-all experience of your business. Brand strategy is
a long-term design for the development of a popular brand in order to achieve the
goals and objectives. A well-defined brand strategy shakes all parts of a business
and is directly linked to customer needs, wants, emotions, and competitive
surroundings.
Experts believe that a good brand can result in better loyalty for its customers,
a better corporate image and a more relevant identity.

As more customers continue to differentiate between emotional and experienced

companies, a brand may be the first step forward in your competition instead of price
points and product features. The question is, can you build a brand which truly talks
to your audience?

Branding is a powerful and sustainable high-level marketing strategy used to create

or influence a brand. Branding as a strategy to distinguish products and companies
and to build economic value to both customers and to brand owners, is described by
Pickton and Broderick in 2001.

Commonly Used Branding Strategies

1) Purpose
"Every brand makes a promise. But in a market in which customer confidence is little
and budgetary observance is great, it’s not just making a promise that separates one
brand from another, but having a significant purpose," (Allen Adamson). How can
you define your business purpose? According to Business Strategy Insider, purpose
can be viewed in two ways:

a. Functional. This way focuses on the assessments of success in terms of fast

and profitable reasons. For example, the purpose of the business is to make
money.
b. Intentional. This way focuses on fulfillment as it relates to the capability to
generate money and do well in the world.
2) Consistency
The significance of consistency is to avoid things that don’t relate to or improve your
brand. Consistency aids to brand recognition, which fuels customer loyalty.
3) Emotion
There should be an emotional voice, whispering "Buy me". This means you allow the
customers to have the chance to feel that they are part of your brand.
You should find ways to connect more deeply and emotionally with your customers.
Make them feel part of the family and use emotion to build relationships and promote
brand loyalty.

4) Flexibility
Marketers should remain flexible too in this rapidly changing world. Consistency
targets at setting the standard for your brand, flexibility allows you to adjust and
differentiate your approach from your competition.
 According to Kevin Budelmann, "Effective identity programs require sufficient
consistency to be identifiable, but sufficient variation to keep things fresh and
human," so if your old tactics don't work anymore, don't be afraid to change. It
doesn’t mean it worked in the past it may still work now.

5) Employee Involvement
It is equally important for your employees to be well versed in how they
communicate with customers and represent the brand of your product.

6) Loyalty
Loyalty is an important part of brand strategy. At the end of the day, the emphasis on
a positive relationship between you and your existing customers sets the tone for
what potential customers can expect from doing business with you.

7) Competitive Awareness
Do not be frightened of competition. Take it as a challenge to improve your branding
strategy and craft a better value in your brand.