The 4 P's of Marketing
In order to for a company to penetrate its target market, it must create its marketing plan which includes the essential 4 P’s of marketing - The 4 P's of Marketing introduction. These are product, price, place, and promotion. The 4 P’s make up the marketing mix which is used for appropriate marketing strategies intended for a target market. They are bound by parameters in which internal and external constraints of the marketing domain affect each variable. The thrust of the marketing mix is to generate amiable feedback from customers as well as produce expected revenue for the company. The marketing mix merges each “P” in synergetic integration and complements each other as well.
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A product is the good purchased by the buyer. It may be a tangible product or a service offered by the company. The product decision includes aspects of brand name, functionality, quality, packaging, and warranty. For a company to create a product, it must first constitute an idea in which the product will emerge and eventually materialize. A brand manager is always at the helm of every product development in mind, under the tutelage of the marketing manager who oversees a new product in tow.
A new product undergoes six phases namely: idea generation, idea screening, project planning, project development, test marketing, and commercialization. Each phase of product development is crucial in determining if whether a new product is feasible and will be able to penetrate its target market. Idea screening broadens the idea itself then omits all unwanted aspects of the new product and determines certain risks that the product will face upon the possibility of entering its target market. Project planning assesses factors which involves production, marketing, financial and competitive aspects. It is crucial in determining the subsequent budget for preliminary technical and marketing research which the top management will further evaluate. Product development ascertains the product from the perspective of engineering, manufacturing, finance and marketing. It assesses the finished product that will be subjected for market testing with the approval of the top management. Upon the approval of the top management, the materialized idea or the product undergoes market testing which tests if the marketing strategy used in the initial launching of the product is effective or not. Site marketers have the opportunity of garnering feedbacks from consumers which will play a role in adjusting the entirety of marketing strategy. Developers will then use these feedbacks to study if the price, promotion, and place decisions are substantial and relevant for the product, and is applied properly in order to create a final marketing plan that will be used in the launching of the product (Donnelly Jr., J, Peter, J., 2005).
Upon the successful launching of the product, commercialization comes into play in order to augment the marketing plan and omit product nuisances as well. But not all product launchings are successful. Essential product decisions are always to be considered. Quality level and product features are some product decisions that constantly need further emphasis in order to avoid product failures which cause subsequent losses for the company.
With a product comes a corresponding price for it. A price is the cost of a product which a buyer is willing to pay. Pricing decisions always consider account profit margins that affect the pricing feedback of the entirety of its market and its competitors. Pricing includes allowances, financing, leasing options, and discounts as well. Whenever a consumer finds a price for a product too high, the consumer will resort in buying substitute or alternative products instead. This will result into a sales liability and profit loss. Yet whenever the company decides to reduce a product’s price, this will not yield sales and profitability will suffer, which leads us to the supply factor that primarily affects the price of a certain product. The supply greatly influences the price of a product because production is driven by the number of people that are willing to pay the certain value for a product. This is what we call price discrimination.
This brings us to the notion that price affects the level of promotion and the place of distribution of the product as well. With this in mind, pricing objectives come into play. Pricing objectives determines the stabilization of price and margin which gives the company the factual basis for pricing in order to meet competition and achieve the target market share. Most importantly, pricing objectives gives the company the pricing initiative in order to attain its target return of investment. Cost considerations also play a role in pricing decisions. The cost of production, promotion, and profits is what primarily covers the cost of a product. One of the most conventional practices in costing is the cost-oriented pricing which enables companies for sustainable market expansion. Product specifications are considered in pricing decisions as well. A company should have a standard general model in order to sustain its profit margin. For a company to initiate such, it should perform profit potential analysis, cost estimation, product-price relationship evaluation, and most importantly set pricing objectives. These will serve as a firm basis for changes in price as well as creating a standard price structure for a specific product (Donnelly Jr.,J, Peter, J., 2005).
The thrust of promotion is advertising. Advertising the product brings a lot to the table. Promotion decisions are matters that concern the constant communication with potential consumers which can be then company’s cash cows in the future. In creating promotion decisions, a break-even analysis is a requisite due to the fact that promotion costs are higher compared to the product price itself. A customer’s value is a helpful aid in ascertaining if more customers are worth the promotion budget that will bring them into the fold. For a company to build a positive image and draw prospects, they nurture relationships with potential consumers, so as to retain them as their cash cows.
The promotion mix is a useful tool in determining whether the promotion decisions are efficient or not. It consists of five elements namely: advertising, sales promotion, public relations, direct markets, and personal selling. These elements are aimed at the goal of marketing communication programs which integrate the elements of the promotion mix in order to convey a standard message to consumers. Promotion decisions are created in order to attain loyalty from the consumers. Relationship with distributors is also important in conveying the company’s standard advertising message to the consumers. This helps the company to broaden its horizons in promoting its product through the aid of middlemen which are the distributors and retailers. Promotion decisions are only a partial element of a marketing communications program but should not be overrated as the primary promotional tool in order to generate sales and retain consumers in a long-term basis (Donnelly Jr., J, Peter, J., 2005).
A place or a distribution channel is essential because this is where a consumer can realize a product. Placement decisions are matters concerning apt distribution channels with the purpose of delivering the product to the consumers. Logistical and transactional tasks are performed by a company’s distribution system. The distribution system involves a number of personnel which has the sole task of delivering the product to consumers. These includes: middleman, merchant middleman, agent, wholesaler, retail, broker, manufacturer’s agents, distributor jobber, facilitating agent. Various marketing functions are done by these intermediaries with each having a certain degree (Donnelly Jr., J, Peter, J., 2005).
Donnelly Jr.,J, Peter, J.(2005). A Preface to Marketing Management. Tenth Edition.