Marketing Mix Concept In Developing Services Marketing Strategies - Term Paper Example

Marketing Mix Concept In Developing Services Marketing Strategies Introduction A marketing mix is the controllable variable the company puts together to satisfy a target group. (Perreault, 2004, 6-9) Marketing mix is also a concept that summarizes the basic elements of effective implementation of the fundamental variables of marketing. The strategy chosen by the organization is followed through to the customer. These fundamental elements are commonly referred to as the Four P's. Properly covering each of these elements ensures an adequate coverage of reaching multiple customers in each market. The flexibility and robust nature of the concept is its most powerful aspect. A full understanding of each of the elements can be formulated into a comprehensive marketing plan. The Four P's are defined as follows: A marketing mix is the combination of marketing actions that make up a marketing program. The marketing mix principles are used by business as tools to assist them in pursuing their objectives. The marketing mix principles are controllable variables, which have to be carefully managed and must meet the needs of the defined target group. In order to increase sale, companies will set their objectives as product development. In this situation, generally, companies will improve their current products, innovate in products' functions and value or develop a new one to attract buyers. To develop a new product entering a new market is risky. If it is successful, the products will be a leader, which have high market share. (Doyle, 2004, 88-92) On the contrary, if it is failed, it may cause the products to disappear soon. The best way of entering a new market is conjunction of a company's current products. As the product life cycle presents growth, it has to strengthen the competitive advantages to maintain a company's existing buyers and attractive the potential consumers, because at the same time some new competitors will entry continually. Therefore, it is beneficial for a company or an organization to cut price or extend their distribution. Furthermore, in the mature stage, due to the decline of profit, the strategic objective should focus on boost of revenue and defence the market share. The final one is decline stage. It indicates that products will trend to vanish, because they do not match the needs of customers or market. Generally, for this time being, business should milk the profit from products with developing a new product or support new one to exploit a completely new market. Marketing mix decisions is a pack of decisions that a company makes in order to achieve the objectives. Generally, these decisions intend to involve four Ps: characteristics of products (e.g. product variety, product presentation, product performance, etc.), art of listing price (e.g. discounts, allowances, geographical pricing, payment terms, credit terms, etc.), attractive promotions (e.g. sale force, advertising, public relations, consumer promotion, trade promotion, direct marketing, etc.) and the finial one, place (i.e. distribution). However, in the past few years, it emerged two new decisions that Doyle (2004:88-92) mentioned: "staff and service" respectively. Briefly, staff decisions include some sub-decisions, like staff motivation, and tasks and responsibilities; service decisions mean pre-sale decision, post-sale decisions and point-of sale service. In principle, marketing mix decisions have to be flexible. They should change and adjust to new needs of market and customers. After mix decisions, a company or an organization has to develop an action plan. The action plan is a plan that describes who is accountable; when this plan has to be done. On the other words, it is a schedule that describes the tasks of all plans. The product is the heart and soul of any marketing program. If the product is good, the marketing program has a chance for success, but if the product is bad, no marketing program can make the product a winner. Product designing, developing, maintaining, and improving are all important aspect to be considered in your marketing mix. A company must always be on the lookout for new products, redesigning existing products, or killing existing ones. The goal must be to keep the customer seeing your product, as special, and to insure that they are champions for your product. The target customer's needs must be met. Naming the product, labelling and packaging all go into your product development. As the market changes, the marketing mix can be adjusted accordingly to accommodate these changes. Often small changes in consumer wants can be addresses by changing the promotional and advertising campaign. As the changes become more significant, a product redesign or an entirely new product may be needed. The marketing process does not end with implementation; there must be continual monitoring and adaptation is needed to fulfil the customer needs consistently over the long term. The complexity of modern society makes it necessary for intermediaries to act as a direct link between producers and the ultimate consumers of products and services. A distribution channel refers to the type of intermediary or linkage between producers and consumers. A one-channel distribution network involves only the retailer between producer and consumer. Two-channelled distribution may include various intermediaries such as wholesalers. Direct distribution occurs when the producer directly supplies the product to the buyer. The choice of distribution channel is dependant on a variety of factors, for example the type of product. Some products are not suited for direct distribution. A channel specialist such as a warehouse or wholesaler may provide an effective link with retailers as an existing relationship may already be in existence. Usefulness of Marketing Mix Concept When It Comes To Services With the market strategy, the service parameters essentially change as price, lifestyle image and quality engineering held their positions. In addition to the change of the service parameter was the addition of financial plans. The marketing mix must be altered because of the changes. The strategy is to keep the current product and maintain price. The strategy with place is to supply dealers and internet (manufacturer’s web site) with the product. The implemented place of the internet is important because it is appealing to the younger, active market. The next part of the mix is promotion which will consist of offering insurance and protection plans, free test rides and publicizing the product through Hollywood films. In addition to the marketing mix, services will consist of club membership, training dealers, financial services and customization options which are extremely important to customers who want the image of the product to be unique. (Bagozzi, 1998, 342-45) The term product refers to tangible, physical products, as well as to services. A lot of thought and preliminary research goes into the type of product a company will manufacture, including product specifications, design, and production of the unit. The biggest concern for a business is that they are able to introduce their product at the appropriate time, when the consumer's needs are greatest. A product will generally go through a life cycle, much like a human life cycle, consisting of four different stages: introduction, growth, maturity, and decline. After the developmental period, a product is introduced or launched into the market. At this stage the need for immediate profit is not a pressure; the product is promoted to create awareness. In the growth stage, competitors are attracted into the market with very similar offerings. Products become more profitable and companies may form alliances, joint ventures, or take each other over. The money spent on advertising is high and its focus is on building brand recognition. In the maturity stage sales will grow at a decreasing rate and then stabilize. Producers will try to differentiate products and brands, while price wars and intense competition will occur. At the decline stage there is a downturn in the market where there is intense price-cutting and many more products are withdrawn from the market. (Jobber, 2001, 159-63) Profits can be improved by reducing the amount spent on marketing and product promotion. However, very few products follow such a prescriptive cycle. The length of each stage varies enormously and not all products will go through all stages. The channel or the intermediary is the mechanism through which goods and services are moved from the manufacturer or service provider to the user or consumer. There are many considerations to be made when deciding upon a distributor. The distributor must be familiar with the company's target market and segment. Changes in the product life cycle may also determine the type of distributor to use because different channels can be exploited at different points during the product life cycle. (McDonald, 2002, 168-73) Another thing to consider would be how well the fit, or synergy, between the producer and the distributor is. Case Study Verizon Wireless (VZW) is an organization that is directly effected by proper marketing. Efficient implementation of the marketing mix can be seen on many levels. VZW is a very large corporation with a huge marketing budget. This is due to the company's business being based solely on customer participation. Therefore, the marketing section of the company is constantly revising the structure of the marketing strategy as it reacts to market conditions, competition, and customer movements through the market. The wireless industry relies upon its customers for its success. This translates in to a very competitive environment to produce the most satisfied customers to retain loyalty and convert new users. Marketing strategies are very important to the success of these companies. Improvement of the position in the market is constantly evolving and huge budgets are maintained to facilitate this. In the business world, it's about connecting with customers, serving the needs of people, and accomplishing the goals of the organization. Customer satisfaction creates the customers loyalty needed to reach an organization's overall objectives. The process works by creating valuable exchanges that provide customer satisfaction. "A marketing-oriented firm tries to offer customers what they need" (Perreault, 2004, Pg.5). The marketing mix product, price, promotion, and place are made to support this strategy. A marketing strategy is a plan identifying what marketing goals and objectives will be followed, and how they can be achieved within a time frame. In a marketing strategy, there are specific target markets to identify. A marketing strategy is needed to provide a "big picture" of what a business's intentions are. Under the marketing concept, a company must find a way to bring the customers needs to the market, and continue to satisfy those needs. This can be established in steps which include analysis of the situation to identify opportunities, the marketing strategy that is formulated, the decisions regarding the marketing mix, and the implementation of a plan. At this point, the best opportunity is identified; a marketing plan for pursuing the opportunity can be developed. Market research will provide specific marketing information that will allow the firm to select the target market to position their product. The result will be a value proposition to the target market. To make decisions based upon the controllable variables of the marketing mix that is comprised of the four Ps. A marketing mix is the 4P's which are product, place, pricing, and promotion; these are elements in the marketers' arsenal, which are aspects that can be controlled to keep ahead of the competition. The four Ps are controlled by the marketing manager, they are allowed to make decisions that surround the four Ps of the customers in the target market in order to create perceived value and generate a positive reaction. The marketing mix is the organization's overall offer, or value, to the customer, as well as the total concept and application of the goods or services to be marketed. A product refers to the total concept that is sold which consist of total products consist of both tangible and intangible products. Product also refers to the needs satisfying offering by a business to consumers. "A product isn't much good to a customer if it isn't available when and where it's wanted" (Perreault, 2004, 10-12). As a result, more than the physical thing is sold by the business. One of the largest concerns for a business is the ability to introduce their product at the right time, when the customer's needs are the greatest. In the introduction stage a product will go through a life cycle, which consists of four stages introduction, growth, maturity, and decline. A product is introduced into the market. In the Growth stage, competitors are attracted into the market with similar offerings. In the maturity stage, sales will grow at a decreasing rate and then stabilized. In the decline stage, there is a downturn in the market where there is intense price cutting and many more products are withdrawn from the market. Price refers to the final cost of the product that is paid by the consumer. It represents the intrinsic value of a product or service to consumers. A business may implement a variety of pricing policies dependant on revenue goals. An economics analysis through market research will indicate how much consumers are prepared to pay for a particular product or service at any given point in time. At this point, the higher the price of a good, the fewer people that will demand the product. Their satisfaction level is not maximized, and in most cases as price fall the product becomes relatively attractive and as such in demand by consumers. Place is mainly concerned with both the location of business and the method of distribution between producers and consumers. Only in some occasions does the producer or manufacturer of products act as the first and final link to consumers. The complexity of modern society makes it a necessity for mediators to act as a direct link between producers and the consumers of products and services. A distribution channel refers to the type of mediator between producers and consumers. A one channel distribution network involves only the retailer between producer and consumer. Two channelled distribution includes a lot of mediators such as wholesalers. Direct distribution channel is dependant on a variety of factors, such as the type of product. In most case products are not appropriate for direct distribution. A channel specialist such as a warehouse or wholesaler may provide a link with retailers. Most organizations and individuals relate promotion to direct advertising of a product. But, the decision to buy a particular product is a complex process. Promotion refers to the communication of information between seller and buyer. It's aimed to influence attitudes and behaviour. The business will construct the desired message it wishes to convey and then encode the message into a particular promotional method. Consumers will then decode the information and a buying decision is made. There are a variety of methods used in promotion which include publicity which refers to any unpaid form of impersonal presentation of ideas, goods, or services, such as newspapers, editorials, celebrity plugs for the product or service being introduced. A sales promotion is aimed at final consumers or users and is usually used to increase demand or speed up time of purchase, such as banners and streamers in retail stores. Advertising refers to the paid, impersonal presentation of ideas, goods and services by an identified sponsor such as TV, radio, magazines, direct mail, or signs. Marketing Mix Distinction between Products and Services The marketing plan is developed and the product has been launched. The results of the marketing effort should closely accommodate these changes. Often small changes in customer wants can be addressed by changing the promotional and advertising campaign. As the changes become more significant, a product redesign or an entirely new product may be needed. The marketing process does not end with creation of the product, but must be a continual monitoring is needed to fulfil the customer needs constantly over the long term. Service is a difficult subject to be learned in a very short term; nevertheless, this executive summary tries to summarize whatever had been learned in the past few years. Service as the intangible product but yet essential to give better customer satisfaction and also to maximize profit and maintain the old customers. In order to provide a high level of service, then Internal Marketing would come into play. Internal marketing is something where one department serves the other department. After internally correct, then an enterprise should focus on the external (i.e. customers, suppliers, etc). For customers, customization on service would be one of the most influencing factors in getting the business strive in the aggressive competitive and to keep the position as the top marketer in the South East Asia. With customization, the customer would felt better appreciated. With all that had been informed above, high service quality are expected to happen after being applied for a certain period of time. Today, the competitions among enterprises, regardless they are in the same industry or not, the managers are struggling to keep their companies survive and thrive by winning more and more customers. These managers are bearing duties that becoming harder and harder by the day. Competitive advantage that belongs to a company cannot be sustained for a very long time as a competitive advantage. Managers and professionals are required to be creative in creating something new and innovative, and at the same time continuously conduct customer-oriented approach. This approach is essential for an enterprise to maximize profit and also to stay (if not to increase) a position in the market by acquiring new customers and retaining old customers. Service is recognized as one of the most important factors in the marketing world by managers and professionals. Today, the competitions among enterprises, regardless they are in the same industry or not, the managers are struggling to keep their companies survive and thrive by winning more and more customers. These managers are bearing duties that becoming harder and harder by the day. Competitive advantage that belongs to a company cannot be sustained for a very long time as a competitive advantage. Managers and professionals are required to be creative in creating something new and innovative, and at the same time continuously conduct customer-oriented approach. This approach is essential for an enterprise to maximize profit and also to stay (if not to increase) a position in the market by acquiring new customers and retaining old customers. Service is recognized as one of the most important factors in the marketing world by managers and professionals. It is vital for a business to have a broad future vision, a vision to be a successful leader in whichever field it operates. To be a successful leader, company needs to develop new products and services from time to time. Product and service development has been important in the past and it's getting increasingly important in today's highly competitive business world as markets are becoming fragmented, competition is getting stronger and product life cycles are getting shorter than ever (Slack:2002, Pg:392). Product and service development has become essential not only for commercial success but also for commercial survival. In other words, if a company does not update its products or services from time to time then its rivals can outpace it and takeover the market control. Price is a "language" to customers. If a marketer does not pay attention to the price structure that the market prefers, he may be unable to achieve his company goal, which is gaining profit. Why service pricing is so important to marketers? It is significant because service does more than just provide a means to drive sales. Marketers can capture and maintain their market share and build sales in the particular industry. In these days, as service is becoming the main source of profit for many companies, it is playing a more essential role in marketer’s point of view. Thus, a marketer around the world who has recognized the necessity to value service pricing has grown. However, service pricing is different from product pricing in many aspects. These articles have illustrated the difference between these two elements. First of all, the major difference is the nature of the two elements; service is intangible whereas product is tangible (Docters et al, 2004; Groth, 1995; Berry and Yadav, 1996). According to Groth (1995), services cannot be seen by customers; therefore customers often hesitate about the service whether matching their needs. In contrast, customers are more confident as they get to feel the product, try it, operate it or put it on. They can also observe the characteristics of the products that suit more to their preferences. As service is intangible, customers are more difficult to compare price. Unlike the products, customers get to compare the cost of the products as they are well categorized (Berry and Yadav, 1996). In addition, Docters et al (2004) say that the intangible nature of services have created more customers demand such as counting units sold, which are more complicated to apply on a service than a product. Besides that, services are usually “non- returnable". Whereas, customers can return, reuse, resale, exchange or alter the product (Groth, 1995). When marketers fail to meet customer expectation, customer probably may not accept the compensation or offer a second chance to the marketers to provide the service. Besides that, "services unlike products, where business can often have spare parts or fail- safe systems, services do not lend themselves to replacement." (Docters et al, 2004). Basically, Berry and Yadav (1996) agrees that the lack of physical differentiation among competing services is another factor that contributes to poorly implement pricing. Often the tangible such as the appearance of service facilities and providers, associated with a service are relatively insignificant to the purchase decision or differ little from the competition" (Bitner, 1992 cited Berry and Yadav, 1996). Thus, marketers focus on the price tool which is faster in its effects and more convincing with targeted customers. The errors in pricing of services may lead to the rejection of customer to purchase the service from the same provider (Groth, 1995). In a nutshell, " the distinctive characteristics of services (intangibility, heterogeneity, perishability and inseparability) necessitate a closer look at the way at which services are priced" (Schlissel and Chasin, 1991; Zeithaml and Bitner, 1996; Kurtz and Clow, 1998; Langeard, 2000; Hoffman et al., 2002 cited in Avlonitis and Indounas, 2005). When the customer is buying a service, they are buying an intangible product. Thus the impact of incorrect pricing strategies on services is greater than on product. Generally, the factors that differentiate service pricing from product pricing includes the uncertainty of characteristic- needs match, the non- returnable concept of services and the difficulty in comparing price by the customers. In addition, the misprice of the services by provider is an issue as well. In my opinion, knowing that the services are harder to price than product because of its intangible characteristic, marketers should emphasize on their customer perspective. They should conduct a survey before developing a service to satisfy the customers' requirement. As a result, customers are willing to pay for the price because the services provided have met their needs and wants. Conclusion Marketing mix was originally a manifestation of a naturally occurring combination of the different aspects of basic marketing fundamentals. The use of these tools evolved into a very basic, universally applicable template for marketing structures. The implementation of the marketing mix concept is very robust and adaptable to virtually any business case. These key concepts simplify what can be a very complicated problem posed to a business. All of the aspects of the Four P's can be adaptable. However, in the initial phases of implementation, certain aspects of the Four P's might not be subject to adjustability. Certain aspects of the product and distribution might be static until a more developed market can be established. VZW has successfully implemented the concepts of marketing mix. The organization has a very large, very experienced, well budgeted marketing department which employs some of the best marketing professionals. It is without a doubt that these capable professionals know and fully understand the concepts contained within the fundamentals of marketing mix. The idea of marketing is very broad. There are many things to think about when successfully introducing a product into the market. Most important is the marketing mix made up of the four Ps, which are the controllable variables in a marketing strategy. Marketing has many definitions which are focused upon customer orientation and satisfaction of customer needs. The marketing concept is the idea that firms should analyze the needs of their customers and then make decisions to satisfy those needs, better than the competition. The marketing concept relies upon marketing research to define market segments, their size, and their needs. To satisfy those needs, the marketing team of the company must make decisions about the controllable factors of the marketing mix. Works Cited Bagozzi, Richard P. (et al.) (1998), Marketing Management, London: Prentice Hall. 342-45 Boynton, N. (1999) Serving the market as one. Limra's Market Facts. 18 (2), 16-25 Doyle, Peter. 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