The Four Ps of Marketing by Mccarthy - Essay Example

The four P’s of marketing was introduced by McCarthy as a means of translating marketing planning into practice. The four P’s ly product, place, price and promotion were treated as the unchallenged basic model of marketing. According to the American marketing Association, ‘marketing is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchange and satisfy individual and organizational objectives’ (Grönroos, 1997). The marketing mix would differ across industrial marketing or services marketing. The concept of marketing mix emerged from the notion of the marketer as a ‘mixer of ingredients’. The marketer blends the elements of the marketing mix to optimize profits. The product (which includes services) is priced according to the buyer’s ability, made available to the customer (place) and is promoted to make the customer gather as much information as required before the purchase takes place (Bennett, 1997). Thus the marketing mix of any product would include the right product at the right time in the right place with the right sales and promotion strategy and at the right price. Products include services or conveniences that are offered to consumers. Product decisions include aspects such as appearance, packaging and warranty (Facweb, n.d.). Pricing decisions includes the profit margins, discounts, financing or other aspects such as leasing. Place refers to the channels of distribution used to reach the products to the end consumer. Distribution decisions include market coverage, logistics and levels of service. Promotion in marketing refers to the decisions pertaining to selling and communicating about the product to the consumers. These costs often are huge and hence it becomes essential to perform a break-even analysis so that informed right decisions can be taken about promotion. Promotion includes advertising, public relations and media. For a successful marketing approach, each element of the marketing mix has to be well coordinated so as not to send mixed signals to the potential customer, which could cause confusion. Hence it is essential to experiment and research before deciding on the right marketing mix. Bennett states that people and organizations have wants and needs and it is the duty of the marketing to recognize and respond to these needs. When organizations apply the marketing mix principle, targeting the customer involves giving value in relation to quality, value for money, reliability, product performance and cost effectiveness. Marketing in an organization is usually left to a specialized department who are responsible for planning and implementation of various marketing tasks, such as market analysis, marketing planning, advertising, sales promotion, sales, pricing, distribution and product packaging (Grönroos). Of late, the utility of the four Ps of the marketing mix as a general marketing theory for practical purposes has become questionable. There is a shift towards relationship marketing. Internationalization and globalization have led the multinational companies to adjust to an entirely different marketing strategy. Globalization views the world as a uniform market like Levi’s jeans and Coca-Cola. In internationalization marketing strategies have to be customized according to cultural, regional and national differences. To standardize the marketing mix, the strategy must group nations by social, technological, cultural and political similarities. Based on the 4 marketing Ps, McDonald’s using detailed information about its customers can determine which products are well received, the favorable prices appealing to the customers, what media is more popular among the target customers and which restaurants they visit most often. This market research helps them to create the right marketing mix to win customer loyalty. Product - McDonald’s wanted to standardize the items that taste the same whether in Singapore, Spain or South Africa (Vignali, 2001). This could have resulted in substantial cost savings but McDonald’s realized that they have to adapt to local environment. Therefore they adopted the principle of ‘think global, act local’. McDonald’s has had to adopt the local taste, laws and customs. While in Israel Big Macs are served without cheese in several outlets, in India they serve vegetable McNuggets and a mutton-based Maharaja Mac. As Hindus do not eat beef, Muslims do not eat pork and Jains do not eat meat at all, such adaptation becomes necessary. In Malaysia and Singapore they had to undergo rigorous inspection by Muslim clerics to ensure ritual cleanliness. In Germany they sell beer while in Turkey chilled yoghurt drinks are available. They sell Teryaki burgers in Japan and vegetable burgers in the Netherlands. These demonstrate how a company needs to adapt its product offer in international environment. Despite this, it has maintained uniformity in its main menu structure – main course burger/sandwich, fries and a drink. Place - McDonald’s currently has 24500 restaurants in 116 countries across the world. After learning a lesson in USA they now adapt a strategy of building in the new country as many restaurants as possible before competition penetrates the market. For example, in 1998, they added 415 restaurants in Japan accounting for 25% of the system wide restaurant additions in the country. Long term markets like China, Mexico and India will have a growing proportion of restaurants added every year. This strategy has helped the company to share ideas across borders thereby further enhancing their competitive advantage and strengthening its leadership position. Pricing - Apart from place, pricing too is a rigorous process where country specific circumstances have to be taken into consideration. The overall pricing objective is to increase the market share for which they have to consider the demands, the costs, the competition products and prices on offer and then finally decide upon the price. While setting the price in India they looked at the prices of Nirula’s, a local food chain and could estimate what the Indian market would accept. They also link it to the local earnings and see how the products would be appreciated. They also look at the life cycle of the product before selecting a pricing strategy. Promotion – promotion consists of advertising, direct marketing, sales promotion, public relations and personal selling. With the help of these tools, McDonald’s adopts the local marketing communications strategy. They cannot afford to ignore the local markets and they need to analyze the consumers’ attitude towards its product, usage pattern, and moral and religious considerations. In different countries they use local celebrities in their advertising campaign to get the same message across. In East Asia they appeal to the younger generation while in Beijing it is pointless using television as a media to advertise as the commercials are shown only between two programs. McDonald’s associates itself with sports events like Olympics and the World Cup and uses this platform to convey its message. In the USA it concentrates on the Basketball events which becomes country specific. To maintain public relations, in USA it substitutes technology for human workers but in Beijing they have to rely on personal interactions with customers. They also understand that British do not require any public relations and would be happy to eat and leave the restaurant. Thus, any organization has to take into account various factors before using the four Ps for marketing. It is only experience, experiment and research that can suggest the right mix of the various elements to attain success. Firms that plan to expand in international markets have to decide whether they intend to globalize or internationalize their products. The strategy would differ and the marketing mix may have to be altered according to the local demand, customs, law and culture. The local economy, the changing social attitudes, the buying habits, the image of the product has all to be considered before arriving at strategic decisions. These help to convert the marketing planning into effective practice. References: Bennett, A. R., (1997), The five Vs – a buyer’s perspective of the marketing mix, Marketing Intelligence & Planning 15/3 [1997] 151–156 Facweb, (n.d.). The Marketing Mix - (The 5 Ps of Marketing), 05 May 2007 Grönroos, C., (1997), From marketing mix to relationship marketing – towards a paradigm shift in marketing, Management Decision 35/4 [1997] 322–339 Vignali, C., (2001), McDonalds: "think global, act local" - the marketing mix, British Food Journal, Vol. 103 No. 2, 2001. pp. 97-111 Read More