Marketing Mix and Market-Shaping Products - Essay Example

“On this path, the business grows either by logical extensions of the existing product line (new performance levels, and added features or services) or the addition of related products” (Day 320). If only life was as simple as that. The marketplace is dotted with products that have fallen by the wayside. Product development involves a lot more than the whims of a few people within the organization. Prahalad and Ramaswamy claim that it is the customer who has the competence to create value. (Prahalad and Ramaswamy 81)

Price

“Price is the marketing mix element that produces revenue; the others produce costs” Kotler 456. The way a company prices its products depends on what it wants to achieve through that policy. The pricing objectives that companies usually want to achieve through their pricing

policy are: “survival, maximum current profit, maximum market share, maximum market skimming, or product-quality leadership” (Kotler 458).
However, price is not a sustainable competitive advantage. Whatever the advantage that a company may accrue from its pricing policy, that does not usually result in sustained competitive advantage. When the price is used as a tool for competitive advantage, it is usually low price. And low prices often trigger price wars. And invariably the victims of every price war, are the companies that used low prices as a weapon. An instance is the “airline price wars of 1992” (Rao, Bergen, and David 107)

Place
Place; one of the elements of the marketing mix, is a marketing tool from the organization’s perspective. From a customer’s point of view, the place is seen as a convenience. “Place” in the marketing mix refers to how a company makes its products available to customers. The primary consideration here is customer convenience. There are myriad ways in which a company can distribute its products. A company can take its products directly to customers or use the services of channel partners. There are several factors on which distribution decisions depend. One reason for the success of online grocery stores is convenience. Shopping for groceries is not hedonistic. And as such people would rather buy them online.

Promotion
The marketing mix element “promotion”, comprises all the actions that a company must take to make its products visible to its target market and educate customers about its

benefits. This could involve hiring sales personnel, appointing an advertising agency, and formulating promotional programs.

The Four Ps
Procter &Gamble (P&G) focuses on middle-of-the-market packaged goods because that is where sales, for this genre of products, are the highest. In the early 1990s, P&G made remarkable changes to its pricing, promotion strategy, and distribution channel deals. It introduced a “value pricing strategy”, gave its advertising expenditure a fillip, and reduced its in-store displays and trade deals, while at the same time reducing its coupon promotions.
The reasons for P&G to tweak or cut back on the marketing mix elements were the “cost of administering promotions”, its yoyo effect on production, and its impact on customer loyalty. Coupons only encouraged cherry pickers and discouraged loyal customers.

As a consequence of its grand plan on marketing mix, P&G reduced its coupon expenditures by 50%, reduced its place expenses by 20%, and increased promotion expenses by 20%. At this time the general market trend was an increase in “deals and coupons” – an indirect reduction in product price - by 15% and a decrease in advertising by 20%.
The fallout of all this on P&G’s sales between 1990 and 1996, was an increase in the net price that customers paid for P&G’s products - an increase of 20.4%. However, the number of first-time buyers reduced by 16%, and its market share also reduced by 16%. But as already mentioned the price for its products increased. (Bollen and Thomas)

Conclusion
Market-shaping products like the walkman and the iiPodare, are not common fare. And yet for a product to be even moderately successful companies have to listen to customers to find out what makes them tick. Pricing strategies can be seminal. Several factors and objectives must be considered before a pricing strategy is decided. Advertising decisions are no less complicated. The objectives of advertising and a company’s resources are deciding factors. And as for place; a lot has to do with a company’s business model. The bottom line however is that the success of a company will depend on how well it can distinguish itself from the competition, in ways that are of meaning and value to its customers. Strategies relating to the elements of the marketing mix can make or break a company. Read More