The marketing mix is probably the most famous marketing term. Its elements are the basic, tactical components of a marketing plan. Also known as the Four P's, the marketing mix elements are Price, Place, Product, and Promotion. More recently 3 more P's have been added to the marketing mix namely People, Process and Physical evidence this is known as the extended marketing mix
Product is a tangible object or an intangible service offered to the customer. This includes the appearance, functionality, and support or non-tangibles the customer will receive. The physical product itself is part of “product” as well as any packaging it arrives
Price is the amount a customer pays for the product. The business may increase or decrease the price of a product if another stores selling the same product
Place is also known as channel, distribution, or intermediary. It is the mechanism through which goods and/or services are moved from the manufacturer/ service provider to the user or consumer.
Promotion is the advertising and selling part of Marketing. Often, promotions are categorized into push versus pull. Advertising pulls by making the consumer aware of and ask for your product or service. Incentives, such as premiums or price reductions, push your product out the door by encouraging your customers to purchase in volume, more, or more often than he would otherwise purchase.
Pricing is one of the most important elements of the marketing mix, as it is the only mix, which generates a turnover for the organisation. The remaining 3p’s are the variable cost for the organisation. It costs to produce and design a product; it costs to distribute a product and costs to promote it. Price must support these elements of the mix. Pricing is difficult and must reflect supply and demand relationship. Pricing a product too high or too low could mean a loss of sales for the organisation. Pricing should take into account the following factors:
Fixed and variable costs: Fixed costs are costs that must be paid whether or not any units are produced. These costs are "fixed" over a specified period of time or range of production. Variable costs are costs that vary directly with the number of products produced. For instance, the cost of the materials needed and the labour used to produce units isn't always the same
Competition: Open market rivalry in which every seller tries to get what other sellers are seeking at the same time-sales, profit, and market share by offering the best practicable combination of price, quality, and service. Where the market information flows freely, competition plays a regulatory function in balancing demand and supply.
Company objectives: give the business a clearly defined target. Plans can then be made to achieve these targets. This can motivate the employees. It also enables the business to measure the progress towards to its stated aims.
Proposed positioning strategies: After the organisation has selected its target market, the next stage is to decide how it wants to position itself within that chosen segment. Positioning refers to ‘how organisations want their consumers to see their product’. What message about the product or service is the company trying to put across?
Target group and willingness to pay: Target audiences are developed to give companies a population to market products to. It is important for companies to not only market a target audience, but also to earn their trust and loyalty. This makes it easier to convince the same audience to buy future products and services, because there is already a relationship for the company to work with. An organisation can adopt a number of pricing strategies. The pricing strategies are based much on what objectives the company has set itself to achieve. Premium Pricing.
The price set is high to reflect uniqueness about the product or service. This...