Subscribe Us

header ads
header ads

Marketing Mix

 Marketing involves a number of activities. To begin with, an organization may decide on

its target group of customers to be served. Once the target group is decided, the product

is to be placed in the market by providing the appropriate product, price, distribution, and

promotional efforts. These are to be combined or mixed in an appropriate proportion so

as to achieve the marketing goal. Such a mix of product, price, distribution and promotional

efforts is known as a ‘Marketing Mix’.

According to Philip Kotler, “Marketing Mix is the set of controllable variables that the firm

can use to influence the buyer’s response”. The controllable variables in this context refer

to the 4 ‘P’s [product, price, place (distribution), and promotion]. Each firm strives to

build up such a composition of 4‘P’s, which can create the highest level of consumer satisfaction

and at the same time meet its organizational objectives. Thus, this mix is assembled keeping

in mind the needs of target customers, and it varies from one organization to another

depending upon its available resources and marketing objectives. Let us now have a brief

idea about the four components of the marketing mix.

Product: Product refers to the goods and services offered by the organization. A pair of

shoes, a plate of Dahi-vada, a lipstick, all are products. All these are purchased because

they satisfy one or more of our needs. We are paying not for the tangible product but for

the benefit, it will provide. So, in simple words, a product can be described as a bundle of

benefits that a marketeer offers to the consumer for a price. While buying a pair of

shoes, we are actually buying comfort for our feet, while buying lipstick we are actually

paying for beauty because lipstick is likely to make us look good. The product can also take

the form of a service like air travel, telecommunication, etc. Thus, the term product

refers to goods and services offered by the organization for sale.

Price: Price is the amount charged for a product or service. It is the second most important

element in the marketing mix. Fixing the price of the product is a tricky job. Many factors

like demand for a product, the cost involved, consumer’s ability to pay, prices charged by

competitors for similar products, government restrictions, etc. have to be kept in mind

while fixing the price. In fact, pricing is a very crucial decision area as it has an effect on

demand for the product and also on the profitability of the firm.

Place: Goods are produced to be sold to the consumers. They must be made available to

the consumers at a place where they can conveniently make purchases. Woolens are

manufactured on a large scale in Ludhiana and you purchase them at a store from the

nearby market in your town. So, it is necessary that the product is available at shops in

your town. This involves a chain of individuals and institutions like distributors, wholesalers, and retailers who constitute the firm’s distribution network (also called a channel of distribution).

The organization has to decide whether to sell directly to the retailer or through the

distributors/wholesaler etc. It can even plan to sell it directly to consumers. The choice is

guided by a host of factors which you will learn later in this chapter.

Promotion: If the product is manufactured keeping the consumer needs in mind, is rightly

priced, and made available at outlets convenient to them but the consumer is not made

aware of its price, features, availability, etc, its marketing effort may not be successful.

Therefore promotion is an important ingredient of the marketing mix as it refers to a process

of informing, persuading, and influencing a consumer to make the choice of the product to be

bought. Promotion is done through means of personal selling, advertising, publicity, and

sales promotion. It is done mainly with a view to providing information to prospective

consumers about the availability, characteristics, and uses of a product. It arouses potential

consumers’ interest in the product, compares it with competitors’ products, and makes their

choice. The proliferation of print and electronic media has immensely helped the process

of promotion.

marketing mix


As stated earlier, product refers to the goods and services offered by the organization for
sale. Here the marketers have to recognize that consumers are not simply interested in the
physical features of a product but a set of tangible and intangible attributes that satisfy their
wants. For example, when a consumer buys a washing machine he is not buying simply a
machine but a gadget that helps him in washing clothes. It also needs to be noted that the
term product refers to anything that can be offered to a market for attention, acquisition,
or use. Thus, the term product is defined as “anything that can be offered to a market to
satisfy a want”. It normally includes physical objects and services. In a broader sense,
however, it not only includes physical objects and services but also the supporting services
like brand name, packaging accessories, installation, after-sales service, etc. Look at the
definitions by Stanton and McCarthy as given in the box.


Product can be broadly classified on the basis of (1) use, (2) durability, and (3) tangibility.

Let us have a brief idea about the various categories and their exact nature under each

head, noting at the same time that in marketing the terms ‘product’ and ‘goods’ are often

used interchangeably.

1. Based on use, the product can be classified as:

(a) Consumer Goods; and

(b) Industrial Goods.

(a) Consumer goods: Goods meant for personal consumption by the households or

ultimate consumers are called consumer goods. This includes items like toiletries,

groceries, clothes, etc. Based on consumers’ buying behavior the consumer goods

can be further classified as :

(i) Convenience Goods;

(ii) Shopping Goods; and

(iii) Speciality Goods.

(i) Convenience Goods: Do you remember, the last time when did you buy a

packet of butter or a soft drink or a grocery item? Perhaps you don’t remember,

or you will say last week or yesterday. The reason is, that these goods belong to the

category of convenience goods which are bought frequently without much

planning or shopping effort and are also consumed quickly. Buying decisions in

case of these goods do not involve much pre-planning. Such goods are usually

sold at convenient retail outlets.

(ii) Shopping Goods: These are goods that are purchased less frequently and are

used very slowly like clothes, shoes, and household appliances. In the case of these goods,

consumers make the choice of a product considering its suitability, price, style, quality, and products of competitors and substitutes if any. In other words, consumers

usually spend a considerable amount of time and effort to finalize their purchase

decision as they lack complete information prior to their shopping trip. It may be

noted that shopping for goods involves much more expenses than convenience goods.

(iii) Speciality Goods: Because of some special characteristics of certain categories

of goods people generally put special efforts to buy them. They are ready to buy

these goods at the prices at which they are offered and also put in extra time to

locate the seller to make the purchase. The nearest car dealer may be ten kilometers

away but the buyer will go there to inspect and purchase it. In fact, prior to

making a trip to buy the product he/she will collect complete information about

the various brands. Examples of specialty goods are cameras, TV sets, new

automobiles, etc.

(b) Industrial Goods: Goods meant for consumption or use as inputs in the production of

other products or provision of some service are termed as ‘industrial goods’. These

are meant for non-personal and commercial use and include (i) raw materials,

(ii) machinery, (iii) components, and (iv) operating supplies (such as lubricants,

stationery, etc). The buyers of industrial goods are supposed to be knowledgeable,

cost-conscious, and rational in their purchase and therefore, the marketeers follow

different pricing, distribution, and promotional strategies for their sales.

It may be noted that the same product may be classified as consumer goods as well as

industrial goods depending upon its end-use. Take for example the case of coconut

oil. When it is used as hair oil or cooking oil, it is treated as consumer goods and when

used for manufacturing a bath soap it is termed as industrial goods. However, the way

these products are marketed to these two groups is very different because purchase

by the industrial buyers is usually large in quantity and bought either directly from the

manufacturer or the local distributor.

2. Based on Durability, the products can be classified as :

(a) Durable Goods; and

(b) Non-durable Goods.

(a) Durable Goods: Durable goods are products that are used for a long period

i.e., for months or years together. Examples of such goods are refrigerators, cars,

washing machines, etc. Such goods generally require more personal selling efforts

and have high-profit margins. In the case of these goods, the seller’s reputation and presale

and after-sale service are important determinants of the purchase decision.

(b) Non-durable Goods: Non-durable goods are products that are normally

consumed in one go or last for a few uses. Examples of such products are soap,

salt, pickles, sauce, etc. These items are consumed quickly and we purchase

these goods more often. Such items are generally made available by the producer

through a large number of convenient retail outlets. Profit margins on such items

are usually kept low and heavy advertising is done to attract people to their

trial and use.

3. Based on tangibility, the products can be classified as:

(a) Tangible Goods; and

(b) Intangible Goods.

(a) Tangible Goods: Most goods, whether these are consumer goods or industrial

goods and whether these are durable or non-durable, fall in this category as they

have a physical form, that can be touched and seen. Thus, all items like groceries,

cars, raw materials, machinery, etc. fall in the category of tangible goods.

(b) Intangible Goods: Intangible goods refer to services provided to individual

consumers or to organizational buyers (industrial, commercial, institutional,

government, etc.). Services are essentially intangible activities that provide want

or need satisfaction. Medical treatment, postal, banking and insurance services, mix


As stated earlier price is the consideration in terms of money paid by consumers for the
bundle of benefits he/she derives by using the product/ service. In simple terms, it is the
exchange value of goods and services in terms of money. Pricing (determination of price to
be charged) is another important element of the marketing mix and it plays a crucial role in the
success of a product in the market. If the price fixed is high, it is likely to have an adverse
effect on the sales volume. If, on the other hand, it is too low, it will adversely affect the
profitability. Hence, it has to be fixed after taking various aspects into consideration. The
factors usually taken into account while determining the price of a product can be broadly
described as follows:
(a) Cost: No business can survive unless it covers its cost of production and distribution.
In a large number of products, the retail prices are determined by adding a reasonable
profit margin to the cost. The higher the cost, the higher is likely to be the price, the lower the cost
lower the price.
(b) Demand: Demand also affects the price in a big way. When there is a limited supply of
a product and the demand is high, people buy even if high prices are charged by the
producer. But how high the price would be is dependent upon prospective buyers’
capacity and willingness to pay and their preference for the product. In this context,
price elasticity, i.e. responsiveness of demand to changes in price should also be kept
in view.

(c) Competition: The price charged by the competitor for a similar product is an important
determinant of price. A marketeer would not like to charge a price higher than the
competitor for fear of losing customers. Also, he may avoid charging a price lower
than the competitor. Because it may result in a price war which we have recently seen in
the case of soft drinks, washing powder, mobile phones,s, etc.
(d) Marketing Objectives: A firm may have different marketing objectives such as
maximization of profit, maximization of sales, bigger market share, survival in the market, and so on. The prices have to be determined accordingly. For example, if the objective
is to maximize sales or have a bigger market share, a low price will be fixed. Recently
one brand of washing powder slashed its prices to half, to grab a bigger share of the
(e) Government Regulation: Prices of some essential products are regulated by the
government under the Essential Commodities Act. For example, prior to the liberalization
of the economy, cement and steel prices were decided by the government. Hence, it
is essential that the existing statutory limits, if any, are also kept in view while determining
the prices of products by the producers.


Methods of fixing the price can be broadly divided into the following categories.
1. Cost-based pricing
2. Competition based pricing
3. Demand-based pricing
4. Objective-based pricing

1. Cost-Based Pricing
Under this method, the price of the product is fixed by adding the amount of desired profit
margin to the cost of the product. If a particular soap costs the marketeer Rs. 8 and he
desires a profit of 25%, the price of the soap is fixed at Rs 8 + (8x25/100) =Rs. 10.
While calculating the price in this way, all costs (variable as well as fixed) incurred in
manufacturing the product is taken into consideration.

2. Competition Based Pricing
In the case of products where the market is highly competitive and there is negligible difference
in the quality of competing brands, the price is usually fixed closer to the price of the competing
brands. It is called ‘young rate pricing’ and is a very convenient method because the
marketeers do not have to worry much about demand and cost and effect the change
as per the changes by the industry leaders.

3. Demand-Based Pricing
At times, prices are determined by the demand for the product. Under this method,
without paying much attention to cost and competitors' prices, the marketeers try to
ascertain the demand for the product. If the demand is high they decide to take advantage
and fix a high price. If the demand is low, they fix low prices for their product. At times
they resort to differential prices and charge different prices to different groups of
customers depending upon their perceived values and capacity to pay. Take the case
of cinema halls where the rates of tickets differ for the different sets of rows in the hall.

4. Objective-Based Pricing
This method is applicable to the introduction of new (innovative) products. If at the
introductory stage of the products, the organization wishes to penetrate the market
i.e., to capture large parts of the market and discourage prospective competitors
to enter the fray, it fixes a low price. Alternatively, the organization may decide to
skim the market i.e., to earn a high profit by taking advantage of a group of customers
who give more importance to their status or distinction and are willing to pay even a
higher price for it. In such a situation they fix quite high prices at the introductory stage
of their product and market it to only those customers who can afford it.


You are aware that while a manufacturer of a product is located in one place, its consumers
are located in innumerable places spread all over the country or the world. The manufacturer has to ensure the availability of his goods to the consumers at convenient points for their
purchase. He may do so directly or, as stated earlier, through a chain of middlemen like
distributors, wholesalers, and retailers. The path or route adopted by him for the purpose
is known as a channel of distribution. A channel of distribution thus refers to the pathway
used by the manufacturer for the transfer of the ownership of goods and its physical transfer to
the consumers and the user/buyers (industrial buyers).
Stanton has also defined it as “A distribution channel consists of the set of people and firms
involved in the transfer of title to a product as the product moves from producer to the ultimate
consumer or business user”. Basically, it refers to the vital links connecting the manufacturers
and producers and the ultimate consumers/users. It includes both the producer and the
end-user and also the middlemen/agents engaged in the process of transfer of title of
Primarily a channel of distribution performs the following functions:
(a) It helps in establishing regular contact with the customers and provides them the
necessary information relating to the goods.
(b) It provides the facility for inspection of goods by the consumers at convenient points
to make their choice.
(c) It facilitates the transfer of ownership as well as the delivery of goods.
(d) It helps in financing by giving credit facilities.
(e) It assists the provision of after-sales services, if necessary.
(f) It assumes all risks connected with carrying out the distribution function.


Promotion refers to the process of informing and persuading consumers to buy certain
product. By using this process, the marketeers convey persuasive messages and information
 to its potential customers. The main objective of promotion is to seek buyers’ attention
towards the product with a view to:
– arouse his interest in the product;
– inform him about its availability; and
– inform him as to how is it different from others.
It is thus persuasive communication and also serves as a reminder. A firm uses different
tools for its promotional activities which are as follows :

– Advertising
– Publicity
– Personal selling
– Sales promotion
These are also termed as four elements of a promotion mix. Let us have a brief idea
about these promotion tools.

1. Advertising: Advertising is the most commonly used tool for informing the present
and prospective consumers about the product, its quality, features, availability, etc. It
is a paid form of non-personal communication through different media about a product,
idea, service, or organization by an identified sponsor. It can be done through print
media like newspapers, magazines, billboards, electronic media like radio, television,
etc. It is a very flexible and comparatively low-cost tool for promotion.

2. Publicity: This is a non-paid process of generating a wide range of communication to
contribute a favorable attitude towards the product and the organization. You may
have seen articles in newspapers about an organization, its products, and its policies. The
other tools of publicity are press conferences, publications, and news in the electronic
media, etc. It is published or broadcasted without charging any money from the firm.
Marketers often spend a lot of time and effort in getting news items placed in the
media for the creation of a favorable image of the company and its products.

3. Personal selling: You must have come across representatives of different companies
knocking at your door and persuading you to buy their product. It is a direct presentation
of the product to the consumers or prospective buyers. It refers to the use of
salespersons to persuade the buyers to act favorably and buy the product. It is the most
effective promotional tool in the case of industrial goods.

4. Sales promotion: This refers to short-term and temporary incentives to purchase or
induce trials of new goods. The tool includes contests, games, gifts, trade shows,
discounts, etc. Sales promotional activities are often carried out at retail levels

External Source:

Post a Comment