Marketing Mix

Topics: Marketing, Pricing, Price Pages: 6 (2581 words) Published: March 2, 2013
The marketing mix is often considered as the center of a marketing strategy. It is defined by Kotler and Armstrong (2010:84) as ‘the set of controllable, tactical marketing tools that the firm blends to produce the response it wants in the target market.’ These tools are; Product, Price, Place and Promotion, which are commonly known as the ‘4 Ps.’ A combination of these four components offers the ability to create a successful marketing mix that will produce the desired results. This essay will first introduce each of the ‘4 Ps.’ Next, it will explain how the 4Ps integrate with each other to provide an effective marketing mix with specific examples. Then, it will analyse how other factors might influence on the marketing mix. Lastly, it will explore the importance of the marketing mix in ensuring success and increased profitability for companies. For the context of this essay, Tesco’s Fresh and Easy and Gucci will be used as references. The first ‘P’ in the marketing mix is Product. For every business, the first stage is the type of product it offers and it can be in the form of goods or services. With advancement in computer technology, new products are consistently being designed and produced. This creates a very competitive environment where firms operate in. It is therefore necessary that the product satisfy the ever-changing customer needs or wants by creating values. There are broadly two sorts of values. First being the functional value, which is what the product does for its customers. The second being emotional value. This refers to creating a emotional bond with its customers which is crucial for a business when it comes to customer loyalty. Barnes (2006:5) supported this point by saying that ‘chiming with customer feelings makes value soar as brands are built and competitive advantage being fortified.’ All these lead to the theory of product differentiation, where companies are focused to differentiate their products from competitors to create a unique selling point. Product form the core of a company business and differentiating them from its competitors is the first part to a company’s success. The next P, price refers to the pricing strategy that a company takes to achieve its objectives. This is one of the most difficult decision a company must take as Stimpon (2004:8) put it, ‘no other business decision requires such careful balancing of potentially conflicting factors-the need to be competitive but profitable too.’ For launching of new products, setting a price too high may result in low demand, while in contrast a too low price undermines profitability. It is also worth noting that pricing strategy of a product varies with regards to the different stages of a product’s life cycle. Prices have also got to be consistently monitored and compared with competitors as all these affects the profitability of a company, since prices affect demand for the product. In addition to profitability, prices also have psychological effects on consumers and it also might encourage competitors to enter the market. Although generally low prices will lead to a higher consumer demand of a product, it may work the other hand as prices also have an effect on influencing consumers’ perception of the product’s quality and image. A reduction in prices for high-end fashion retailer like Gucci will result in the long-term damage of the brand name, which will in turn reduces its appeal to consumers. Lastly setting high prices may encourage competitors to enter the market to have a share in the lucrative market. Setting the correct prices are directly linked to the product the company offers, as different pricing strategy can be used for different products. As seen from the example of Gucci, they uses the price leader strategy where prices of their products are higher than the market average. They are able to do this as their business has a dominant brand name. Conversely a company such as Coca Cola, whose products are meant for mass...
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