2. the above variables is, in reality, a
Each of the above variables is, in reality, a collection of instruments. For the sake of simplicity we will, however, take them here as a single variable represented by a single magnitude, e.g. rupee per unit in the case of price, total rupees in the case of promotion or place or an index of relative attractiveness in the case of product.
The firm’s current marketing mix can be conveniently represented by the vector: (P,A,D,R) T
Here P represents price; A represents promotion (advertising, personal selling and sales promotion); D represents place (distribution); R represents product and T stands for a given time. If a firm is currently producing a product priced at Rs 20/- per period, distribution expense of Rs. 30,000 per period and the product quality is rated at 1.20 the company’s marketing mix at time T is: (Rs 20, Rs 20,000, Rs 30,000, 1.20).
Thus, it is evident that a company’s current marketing mix is selected from a number of possibilities. To elucidate the point consider the following:
1. The price lies between Rs. 16 and Rs. 24 (to the nearest rupee) i.e. 9 options.
2. Promotion expense lies between Rs. 1,00,000 to Rs. 50,000 (to the nearest Rs. 10,000) i.e. 5 options.
3. Distribution expense lies between Rs. 10,000 to Rs. 50,000 (to the nearest Rs. 10,000) i.e. 5 options.
4. Product quality can have two values.
This firm will have as many as 450 (9 x 5 x 5 x 2) combinations of marketing mix at that time. Had the choice not been restricted to such discrete values, the figure would have been much higher.
This explains why it is difficult to find an optimal marketing mix in actual practice. In a given environment ten different managers may accept ten different solutions to the problem as optimal.
Good market planning requires that the marketing mix be under continuous study and that the individual factors be constantly altered to adjust to a changing market. This may include changed product design, promotional and selling methods, distribution channels or price adjustments.
One of the biggest marketing errors in American marketing history was made by ‘Ford’ when they refused to alter their model ‘T’ in the wake of threatened changed demand pattern by General Motor’s streamlined models.
Before going further it may be well to have a brief overview of the four Ps. This will help appreciate the situation better.
Generally speaking, the companies that are growing fast are those which spend a substantial share of expenditure on product research and development. The life of an average product is getting shorter year after year in view of increased obsolescence. The success of a company’s product line depends upon decision in the following areas:
Selecting the right product, knowing when to add new products to the line, dropping products at the right time, brand and packaging, etc.
In the context of marketing mix, ‘place’ is used to indicate the method used to get the goods to the target market. The choices are very great. Some of the questions that must be answered in solving the problems of place are:
1. What sort of wholesale and retail institutions should be used?
2. Should the goods be marketed through multiple outlets or through exclusive stores?
3. Where should the outlets is situated?
4. How should the goods be shipped and warehoused?
It involves communicating with the target market about the product, place and price of the goods. There are many ways whereby this information can be directed to the consumer.
A marketing manager must select the media that is best suited to the particular mix. Sales promotion, advertising and personal selling are the elements that must be considered in the determination of a promotion policy.
In addition to product, place and promotion, the marketing manager must also select the proper price at which the goods may be sold. Some of the factors involved in this decision are competitor’s actions, discounts, target profit and legal restrictions.
All four elements of the marketing mix are so closely interrelated that it is impossible to consider one to be more important than the others. The success of the programme depends upon the ease and rapidity with which the institution adjusts its marketing mix to the constantly changing market.
From the above it will appear logical that the success of a marketing mix will depend upon how a marketing manager exercises his wits in devising a mix or programme which will give a profitable business operation.
To portray this broadened concept in a visual representation requires:
1. A list of the important elements or ingredients that make up the marketing programme.
2. A list of the forces that bear on the marketing operation of a firm, to which the marketing manager must adjust in his search for a successful mix or programme.
The list of elements can be long or short depending upon how far one wishes to go in ones classification and sub classification of the marketing procedures and policies concerning the firm.
The same applies to the marketing mix. The marketer has at his or her disposal a number of components. The ability to mix them in response to an identified set of requirements, coupled with a number of other objectives, is one of the major requirements of effective marketing.
The ‘four Ps model’ of the marketing mix has probably gained acceptance because of its elegance rather than its validity in all situations. Regrettably, what has been gained in simplicity has been sacrificed in universal appropriateness.
It is easy to find examples of marketing programmes which do not fit into the four Ps model. It is therefore important to emphasize at the outset that this model is not of universal validity.
The theory underlying the four Ps concepts is that, if one manages to achieve the right product at the right price with the appropriate promotion and in the right place, the marketing programme will be effective and successful. However, one must bear in mind that each of the four Ps can be broken into a number of subcomponents.
In other words, it is not sufficient to think in terms of the fours Ps alone. One needs to identify the significant sub-components which underlie the firm’s marketing strategy. A few simple examples of the marketing mixes of various companies will help to illustrate the point.
Automotive Components manufacturer places emphasis on the following components:
iv. Place (‘just-in-time’)
No mention is made of promotion and/or advertising. These are three very simple but disparate illustrations. The message is clear. What is right for a cosmetics company is not appropriate for a company manufacturing and selling automotive components to car manufacturers.
The situation is probably even more complicated, as the components company may have different mixes, depending on whether it sells its products to Original Equipment Manufacturers (OEM) companies or for the replacement market.
In the former case there is little point in spending resources on promotion and/or advertising, whereas in the latter case advertising may be quite relevant because one is seeking to reach a market with a large number of consumers in it.
Every situation calls for a careful analysis of the key points where marketing resources must be allocated. The marketing mix represents those key points.