An Introduction to Extended Marketing Mix - Essay Example

?An Introduction to Extended Marketing Mix Extended marketing mix is a paradigm that service marketers normally use to elaborate their marketing strategy. It encompasses not only strictly real products but also service offerings. A good marketer will try to optimize for five to six P’s rather than going for all seven P’s as it’s very difficult to ace and cover all 7 P’s of extended marketing mix (Kumar, 2004). These additional P’s are far more customer-oriented than before and also there is a growing trend of economies shifting their focus from product economies to service economies. Hong Kong is an emerging example of a service economy which generates around 80% of its revenue from the service sector. This extended marketing mix can be very easily applied to consumer markets such as FMCG’s markets, organizational markets such as non-profit organizations, services sector and international markets such as global markets (oil markets and commodities exchange are an example). Recommended ‘Extended Marketing Mix’ for two different segments Following discussion will throw some light on how, the 7 P’s should be transformed and tweaked to apply the extended marketing mix to psychographic and demographic segments in consumer markets which are described above. Product The product or the market offering should be parallel to the demographic variables and psychographic segmentation. If the product is not mass marketed, then offering a differentiated product or tailor-made product for each segment makes more sense. For example, BIC offers its various products according to the segmentation it has done. It has clearly demarcated and allotted each of its products to each segment. Offering the wrong product to the wrong market segment would dilute the essence of the brand. Besides, the steps of product development which involve the identification of needs of your target market should be pursued with ultimate care as the whole success of one’s product lies in this particular step. For example ‘Royal Dutch Shell’ released its new product of oils and lubricants for cars in England. The sales were pretty impressive and successful just because of the trend of maintaining cars with high quality products and services. Price Price is one of the most crucial aspects of the mix. When setting a price, it is extremely important to take demographic variables into consideration, for example, the average income of the target market can be a critical indicator to the right price of the product, similarly, factors like age and education may help in evaluating its value to the target market, which in turn suggests if the price can be set liberally or should it be priced modestly. An example to elucidate the price factor is that the branded products of Armani and Nike with higher prices have a very minimal amount of sales in South East Asia, when compared to the western countries. Evian bottle which costs $4 in US would be a failure if introduced in a less developed country because people there would be reluctant to buy branded water which would guzzle a major part of their income. Promotion Promotion is the easiest way to let your customers know about the merits of your existing or upcoming products. Setting a promotion budget depends on the segmentation that you have done. An ideal example would be of Pantene where great in-roads were made in promotional activities. In the Pantene ad, expensive celebrities like Katrina Kaif are being shown endorsing and patronizing the brand. The promotional strategies should be in coherence with the lifestyle of people. Another example is TESCO who made all the advertisements and banners in accordance with the lifestyle of the citizens of UK to attract them towards their products and services. Placement Placement is not only about just placing the product but it is more about presenting it in the right time at the right place. In this regard, Apple inc. the leading brand in computer technologies devised a perfect strategy to market their product via placement. In the mid 90’s, Apple inc. was facing a crisis and therefore, they started placing their products in Hollywood films, so that people may know more and more about their product and can get familiar with it. Packaging Packaging is not only restricted to the paper wrapper of a product but it also refers to the look of the salesperson, interior of your workplace to the outlook of your product manual, all comes under packaging. The shape of Evian bottles have been superbly thought out. It makes the customer believe that what they are drinking is more than just water. While packaging your product, the psychographics should also be kept into consideration. It’s the price and the way your product has been packaged that makes it different from the competitors. Positioning Positioning is how you place your product in the minds of the customer as compared to that of competitors. It is the perception of your product that resides in the minds of customers. Successful positioning can be done through ATL and BTL activities and other promotion activities. The classic Heinz ad, Axe ads and Herbal Essence ads speaks for the success of these brands throughout the global market. People People that are your customers as well as people that are your employees: having competent and well-qualified employees is worth as much as having satisfied customers. When it comes to psychographic segmentation, it is people who actually value your product. People not only constitute the human resources of an organization but also the systems they use and the processes they employ. Business processes and their proper functioning are vital for an organizations growth. Failure of these processes means that a certain product/service is not available at the right time and the right place to the right customer. Moreover, the goodwill of your company is also associated with people. Thus, to build the brand image of your product you need to ensure that the consumer’s perception regarding your brand is good. Differences in marketing a product/service to a consumer rather than an organization Marketing a product and a service are different concepts with some fuzzy overlapping. They differ greatly and therefore, we have two separate marketing mixes for services and products. Following are the differences between these two techniques of marketing: Business buying behavior: Business market and business marketing strategies differs from consumer marketing. The reasons for which are, of course, more than one. Business market unlike consumer market has different buying behaviors. Therefore, organizations have different incentives and motives behind the need of a service or a product. As a marketing expert, one must understand that although both the buyer and consumer may do the same thing, that is to acquire a service or purchase a product to satisfy a particular need, but they can never be treated alike nor can they need to be stimulated through similar ways. Derived Demand: It is important to understand that organizations, unlike consumer, have their needs derived. For example, the demand of wood largely depends on the consumer’s demand for furniture and construction purposes etc, hence, as the demand for these products increases the sport goods manufacturer will seek more wood and so will furniture manufacturers and builders. As a result, a marketing strategy to create a need for a consumer or to make a consumer realize of an unsatisfied need does not work in business market, the major reason why one does not see TV commercials for a company providing raw materials to Adidas or a car manufacturing company. (Burns, 2011) Organizations are well informed: Another factor that differs is that the organizations are well informed regarding what they need to buy, who is selling what and at what rate and what may be the right price, unlike the customer who only bothers to gather information when they intend to purchase a product. This is because a buyer is concerned with limited set of products unlike a consumer who has to buy many different things. Communication amongst the entire network: It is also observed that instead of keeping the buyer-seller relationship into consideration, now marketing gurus tend to consider the whole network and hierarchy vital for communication that yields the final product. The advantages of this approach are that trust is strengthened and relationship flourishes. Fluctuating market forces: Demand in business market is always fluctuating unlike consumer market, the reason behind this is that, for example, machinery installation or furniture purchase is not an everyday course and is subject to change. This instability, at time, may lead to diversification. A strategy that may seem intuitive is to cut prices in off season to attract competitor’s customers. Organizations require greater reinvestments into the marketing budget as they have to make sure that their rival don’t perform better and customers are always employing their services. Customer, at the end of service marketing chain is the boss, as he is the employer. Extended marketing mix not only helps service organizations is retaining older customers but also help in building fruitful future customer relations. Differences between International and Domestic marketing The conventional definition of marketing states it is a set of activities involved in the transferring of goods from the producer to the consumer (Bellis, 2011). In International marketing, the fundamental concept of marketing remains the same, but the way a marketing plan is carried out in international market differs greatly from that of domestic market. “The right product, in the right place, at the right time, at the right price” (Adcock). International marketing is when a product is promoted and sold not just in a firm’s home country but also in other countries i.e. the marketing of MNCs. Coca cola, Microsoft, Honda and Sony are some examples. Domestic marketing is about promoting and selling a product within the firm’s home country only. The product might also be facing global competition but marketing campaigns are devised targeting the local consumer only. The differences between domestic and international marketing are explained below: The scope of international market is greater as compared to that of domestic market. The best thing about this is that the product can be altered according to the needs of consumers. For instance Mc’ Donalds sells fast products in chicken in India because of some Hindu religious beliefs whereas Mc’ Donalds is known for quarter pounder throughout the world. International marketing has to deal with some issues in every country, though. The political state and resource bank of a country matters a lot. For example, Suzuki and Honda have given lions share to partners in India whereas in Pakistan, Suzuki and Honda holds the bigger share because of the deteriorating law and order situation in Pakistan. International marketing also has to deal with barriers for instance language, gestures, customs, traditions, currency and religion. The promotional messages need to be tailored according to the culture of a particular country (Rao, 2007). For instance in the United Kingdom and other western countries the round “O” gesture made with thumb and first finger means "okay" or “very good” while in Mediterranean countries the same gesture means "the worst".  Coca cola makes exclusive advertisement campaigns for Ramadan for Muslim countries so as to attract Muslims across the world. Similarly, the Starbucks Corporation devises different marketing strategies for every country and Heinz introduces a specially crafted sauce for its customers in Japan. Another example to elaborate the differences in international and domestic marketing is of IBM. IBM, at home that is US is very keen in marketing their products rather than services as they have a huge market for their products whereas in regions such as South Asia, they are more interested in marketing services like support and business consultancy. SAP, for example doesn’t provide the deployment services of ERP’s and other solutions itself but rely on Siemens and IBM to serve this purpose. Conclusion With the example and facts mentioned above, it is easy to ascertain that marketing mix is an integral part of the segments in consumer markets. It helps to devise an appropriate strategy to easily market a product and to complete the three steps cycle of marketing. Into the bargain, there are many differences between marketing products and services to organizations rather than consumers. Therefore, considering this fact, the suitable marketing approach is to apply extended marketing mix to attain marvelous results. Besides, we can also easily deduce that the application of extended marketing mix is everywhere. Whether you are devising an international marketing strategy or a domestic one, the use of extended marketing mix is necessary. A global supply chain can be achieved through the proper implementation of extended marketing mix. This global chain will have great supplier and customer relationships. The biggest example is P&G which has the largest marketing budget. This large budget is useless if P&G products are not available everywhere and people are unaware of newer products. Same is the case with Wal-Mart, as they too have a strong, established global supply chain and without which the dream of rock bottom prices remain a dream. Moreover, the seven elements of extended marketing mix are flexible enough to adjust according to the variable market conditions or different target markets. At the end of day, it can be justified that extended marketing mix is a better, transformed version of marketing mix which can be used intelligently to provide customer with fantastic services and great products. References Adcock, Dennia. What is Marketing?, Notes Desk [online] Available at http://notesdesk.com/notes/marketing/what-is-marketing-and-basic-marketing-concepts/ Bellis, Mary. What is Marketing?, Inventors About [online] Available at http://inventors.about.com/od/fundinglicensingmarketing/f/Marketing.htm Burns, Kathy. (2011) Difference Between Market Products and Services, Small Business Choron [online] Available at http://smallbusiness.chron.com/difference-between-marketing-products-services-650.html Kumar, Nirmalya (2004). Marketing as Strategy: Understanding the CEO’s Agenda for Driving Growth and Innovation. Harvard Business School Press Rao, Rama. (2007), Scope of International Marketing, Cite Man [online] Available at http://www.citeman.com/2057-scope-of-international-marketing/ Read More