The 4 Ps; Product, Price, Place, and Promotion is known as the Marketing Mix. It is an all inclusive Marketing Strategy; a long-term forward looking approach. One can simply say that it is an overall game plan.
According to the Marketing Mix Theory, the 4 P's are a set of controllable marketing tools that can be effectively used to execute a successful marketing campaign in the target market.With a proper understanding of the customer needs and wants, one can use these tools to create the desired response from the market he or she is targeting.
Marketing mix approach is applicable to any product or service in any industry whether it is small scale or large scale and whether a sole proprietorship or a public company establishment. A carefully executed Marketing mix strategy leads the way for a business to achieve a sustainable competitive advantage in the long run.
4 Ps constitutes the marketing mix variables that a marketing team of a company can utilize to compete in the dynamic competitive business environment. Understanding these variables allows the Marketing team to position its products among the target customers in the market.
A product is anything or any activity that can be offered to a market to satisfy a customer's wants or needs. It can either be a tangible product or an intangible service which will satisfy the consumer expectations. Product can also be defined as a “Customer Solution”.
When working on the product, designing the right product for the right target market is essential because at the end of the day the aim of the business entity is to earn an income, pay the bills and keep profits for the investors. Therefore every profit oriented business must effectively design their product or service in order it to be successfully sold in the open market.
The concept of Price can be worded as “Customer Cost”; the amount that the customer is willing to pay for a product or a service. It is the value exchanged for the benefit of using a product or receiving a service.
On the other hand, when you consider from the producer’s view point, it's the amount that can be charged for your product or service in the market which will earn you a profit.
Further, the price of any product implies several other aspects apart from the cost of the consumer and the profit concerns of the producer. The price itself can stand as an indicator for the market segment of your product. It brings out loud whether your product is a standard, a luxury or a budget option.
Apart from the price tag we generally refer to, there are other money aspects which are closely related to Pricing such as discounts, offers, allowances, bundles, alternative payment options / credit terms etc. They also influence the demand and are very common and popular pricing strategies in modern times.
The key behind successful pricing rests with the producer’s ability to establish a proper understanding of the customer perception of the value and the cost of the product he/she produces. The best price is never below the Product Cost and never above the Customer Perception of Value. Because, any price below the Product Cost is never going to generate any profits whereas any price above the Customer Perceived Value is never going to create ample demand for your product.
Place is where the product or service will be available for sale. Place can either be a show-room, a store, any physical location or an online marketplace. Simply “Place”can be defined as the “means of distribution”. This may also involve several places in the process of moving the products from the producer to the target customer. Because, in general the place of production and the place of purchase is always different.
In a complex scenario, “Place” can refer to a set of interdependent firms or collaborations that make the product or service available and accessible to the end user or customer. This can refer to a network inclusive of the intermediaries such as distributors, wholesalers and retailers who take part in the process of delivering the customer value. Accordingly a place can either be a direct point of sale or an indirect channel. Further “Place” may extend from mere location to channels of distribution, assortments, stores, modes of transportation, logistics as well as coverage.
Accurate placement of the selling point to reach the target customer will definitely be helpful to attract more customers. Thereby, it helps to enhance market demand and market share. Further the positioning of the stores and transport facilities effectively also would create an added advantage which results in enhanced profitability. The entire process can create a competitive advantage in the long run.
Promotion includes any activity by the firm with the purpose of communicating and promoting the products and services to the target market.
A successful promotion campaign targets at communicating and convincing the customers that they have a need and the particular product we offer fulfills the said need with a fair transfer of value. The Promotion Campaign thus should be able to persuade a purchasing decision.
The process of promotion can be executed with the help of different types of promotion tools according to its appropriateness. An effective blend of promotion tools will help a Company to properly communicate the offerings in comparison with the customer value in order to persuade a purchase decision. This process can ultimately build a good customer relationship creating a loyal customer.
A fine mixture of the above tools is also known as “Promotion Mix” and is in the hands of the Marketing Executive of the firm.
Michael Porter’s 3 Generic Strategies Model brings forward three basic strategic options or approaches available for any business organization to gain competitive advantage. They are; Cost Leadership Differentiation Focus