MARKETING MIX

The term marketing mix refers to the four major areas of
decision making in the marketing process that are blended
to obtain the results desired by the organization: product,
price, promotion, and place. The four elements of the
marketing mix are sometimes referred to as the four Ps of
marketing. The marketing mix shapes the role of marketing
within all types of organizations, both profit and nonprofit.
Each element of the four Ps consists of numerous
subelements. Marketing managers make numerous decisions
based on the various subelements of the marketing
mix, all in an attempt to satisfy the needs and wants of
consumers.
PRODUCT
The first element in the marketing mix is the product. A
product is any combination of goods and services offered
to satisfy the needs and wants of consumers. Thus, a product
is anything tangible or intangible that can be offered
for purchase or use by consumers. A tangible product is
one that consumers can actually touch, such as an automobile,
a computer, a newspaper, or a window. An intangible
product is a service that cannot be touched, such as
an automobile repair, a doctor’s office visit, or income tax
preparation.
Other examples of products include places and ideas.
For example, the New Hampshire Division of Travel and
Tourism Development might promote New Hampshire as
a great place to visit and by doing so stimulate the economy.
Cities also promote themselves as great places to live
and work. For example, the slogan touted by the Chamber
of Commerce in San Bernardino, California, is “It’s a
great day in San Bernardino.” The idea of wearing seat
belts has been promoted as a way of saving lives, as has the
idea of recycling to help reduce the amount of garbage
placed in landfills.
Typically, a product is divided into three basic levels.
The first level is often called the core product, what the
consumer actually buys in terms of benefits. For example,
consumers do not just buy 4¥4 pickup trucks. Rather,
consumers buy the benefit that 4¥4 pickup trucks offer,
such as being able to get around in deep snow and ice in
the winter. Next is the second level, or actual product, that
is built around the core product. The actual product consists
of the brand name, features, packaging, parts, and
styling. These components provided the benefits to consumers
that they seek at the first level.
The final, or third, level of the product is the augmented
component. The augmented component includes
additional services and benefits that surround the first two
levels of the product. Examples of augmented product
components are technical assistance in operating the
product and service agreements. Buyers of technical products
such as computers and video cameras are frequently
provided with operating assistance as well as optional service
agreement plans.

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Durable and Nondurable Goods. Products are classified
by how long they can be used—durability—and their tangibility.
Products that can be used repeatedly over a long
period are called durable goods. Examples of durable
goods include automobiles, furniture, and houses. By contrast,
goods that are normally used or consumed quickly
are called nondurable goods. Some examples of nondurable
goods are food, soap, and soft drinks. In addition,
services are activities and benefits that are also involved in
the exchange process but are intangible because they cannot
be held or touched. Examples of intangible services
included eye exams and automobile repair.
Categorizing Products by Their Users. Another way to
categorize products is by their users. Products are classified
as either consumer or business goods.
Consumer goods. Consumer goods are purchased by
final consumers, sometimes called end users, for their personal
consumption. The shopping patterns of consumers
are also used to classify products. Products sold to the final
consumer are arranged as follows: convenience, shopping,
specialty, and unsought goods. Convenience goods are
products and services that consumers buy frequently and
with little effort. Most convenience goods are easily
obtainable and low-priced, items such as bread, candy,
milk, and shampoo.
Convenience goods can be further divided into staple,
impulse, and emergency goods. Staple goods are
products—such as bread and milk, coffee, and toothpaste—
that consumers buy on a consistent basis. Impulse
goods such as magazines and candy are products that
require little planning or search effort because they are
normally available in many places. As impulse goods,
candy and magazines are frequently located near checkout
counters in grocery stores. Emergency goods are bought
when consumers have a pressing need for a product, such
as during a natural disaster. An example of an emergency
good would be the purchase of a generator when the electricity
is expected to be out for a considerable time, such
as after a severe ice storm.
Shopping goods are those products that consumers
compare during the selection and purchase process. Typically,
factors such as price, quality, style, and suitability are
used as bases of comparison. With shopping goods, consumers
usually take considerable time and effort in gathering
information and making comparisons between
products. Major appliances such as refrigerators and televisions
are typical shopping goods. Shopping goods are
further divided into uniform and nonuniform categories.
Uniform shopping goods are goods that are similar in
quality but which differ in price. Consumers will try to
justify price differences by focusing on product features.
Nonuniform shopping goods are those goods that differ
in both quality and price.
Specialty goods are products with distinctive characteristics
or brand identification for which consumers
expend exceptional buying effort. Specialty goods include
specific brands and types of products. Typically, buyers do
not compare specialty goods with other similar products
because the products are unique. Unsought goods are
those products or services that consumers are not readily
aware of or do not normally consider buying. Burial plots
and life insurance policies are examples of unsought
goods. Often, unsought goods require considerable promotional
efforts on the part of the seller in order to attract
the interest of consumers.
Business goods. Business goods are those products used
in the production of other goods. Examples of business
goods include accessory equipment, component parts,
installations, operating supplies, raw materials, and services.
Accessory equipment refers to movable items and
small office equipment items that never become part of a
final product. Office furniture and fax machines are examples
of accessory equipment. Component parts are products
that are turned into a component of the final product
which does not require further processing. Component
parts are frequently custom-made for the final product of
which they will become a part. For example, an automatic
transmission could be produced by one manufacturer for
use in an automobile made by another manufacturer.
Installations are capital goods that are usually very
expensive but have a long useful life. Mainframe computers,
power generators, and trucks and other heavy equipment
are examples of installations. Operating supplies are
similar to accessory equipment in that they do not
become part of the finished product. Operating supplies
include items necessary to maintain and operate the overall
firm, such as cleaners, file folders, paper, and pens. Raw
materials are goods sold in their original form before
being processed for use in other products. Crops, crude
oil, iron ore, and logs are examples of raw materials in
need of further processing before being used in products.
The last category of business goods is services. Organizations
sometimes require the use of services, just as
individuals do. Examples of services sought by organizations
include maintenance and repair and legal counsel.
PRICE
Price is the second element of the marketing mix. Price is
the value exchange that occurs between buyers and sellers
for a product or service. Factors related to price include
legal and regulatory guidelines, pricing objectives, pricing
strategies, and options for increasing sales.

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Among the legal and regulatory guidelines affecting
pricing are the Sherman Antitrust Act of 1890, the Clayton
Antitrust Act of 1914, the Robinson-Patman Act of
1936, and various unfair- and fair-trade laws. The Sherman
Antitrust Act was enacted to prevent a business from
becoming a monopoly. The Clayton Antitrust Act was
established to prevent practices such as price discrimination
and the exclusive or nearly exclusive dealing between
and among only a few companies that would result in
reduced competition. The Robinson-Patman Act prohibits
a business from selling its product at a price so unreasonably
low as to eliminate its competitors. Unfair-trade laws
protect special markets by setting minimum retail prices
for a product, theoretically protecting specialty businesses
from larger businesses that could drive smaller stores out of
by selling the same products below cost. Fair-trade laws
allow producers to set a minimum price for products.
Four frequently used objectives are competitive, prestige,
profitability, and volume pricing. Competitive pricing
is to simply match the price established by a leader in the
industry for a product and to attract and retain customers
by other means such as superior customer service. Prestige
pricing involves pricing a product high so as to make it
available only to the higher-end customer as a product
image enhancing strategy. Profitability pricing seeks to
maximize profit while at the same time remaining competitive.
Volume pricing seeks sales maximization within established
profit guidelines. Higher sales volume is expected to
make up for the lower than normal selling price.
Companies can chose from a variety of pricing strategies
such as penetration and skimming. Penetration-pricing
strategy is used to build market share by obtaining
profits from repeat sales. Occasionally, high sales volume
allows sellers to further reduce prices. A price-skimming
strategy uses different pricing phases over time. Initially,
prices are set high to maximize profits and then gradually
reduced to generate additional sales.
Companies have several options available for increasing
the sales of a product: coupons, prepayment, price
shading, seasonal pricing, term pricing, segment pricing,
and volume discounts.
• Coupons: Offered by almost all companies, reflecting
their numerous advantages—enhancing market
share, increasing sales on mature products, or reviving
old products; coupons are distributed via the
Internet, newspapers, and point-of-purchase dispensers
• Prepayment plan: Typically used with customers who
have no credit or poor credit; these do not as a rule
provide customers with a price break
• Price shading: Allowing salespeople to offer discounts
on a product’s price
• Seasonal pricing: Adjusts price based on seasonal
demand for a product or service; used to move
products when they are least salable
• Term pricing: Offering a discount to customers paying
promptly for purchases; occasionally, companies
offer an additional small discount to customers who
pay cash
• Segment pricing: Discounts offered frequently to
children, senior citizens, and students
• Volume discounting: Customers purchasing a large
volume of a product are offered lower prices
PROMOTION
Promotion is the third element in the marketing mix. Promotion
is a communication process that takes place
between a business and its various publics. Publics are
those individuals and organizations that have an interest
in what the business produces and offers for sale. Thus, in
order to be effective, businesses need to plan promotional
activities with the communication process in mind.
The elements of the communication process are:
sender, encoding, message, media, decoding, receiver,
feedback, and noise. The sender refers to the business that
is sending a promotional message to a potential customer.
Encoding involves putting a message or promotional
activity into some form. Symbols are formed to represent
the message. The sender transmits these symbols through
some form of media. Media are methods the sender uses
to transmit the message to the receiver. Decoding is the
process by which the receiver translates the meaning of the
symbols sent by the sender into a form that can be understood.
The receiver is the intended recipient of the message.
Feedback occurs when the receiver communicates
back to the sender. Noise is anything that interferes with
the communication process.
There are four basic promotion tools: advertising,
sales promotion, public relations, and personal selling.
Each promotion tool has its own unique characteristics
and function.
Advertising. Advertising is paid, nonpersonal communication
by an organization using various media to reach its
various publics. The purpose of advertising is to inform or
persuade a targeted audience to purchase a product or
service, visit a location, or adopt an idea. Advertising is
also classified as to its intended purpose. The purpose of
product advertising is to secure the purchase of the product
by consumers. The purpose of institutional advertising
is to promote the image or philosophy of an organization.
For example, Ball State University, located in Muncie,
Indiana, touts the tag line: “Everything You Need.”

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Advertising can be further divided into six subcategories:
pioneering, competitive, comparative, advocacy,
reminder, and cooperative advertising. Pioneering advertising
aims to develop primary demand for the product or
product category. Competitive advertising seeks to develop
demand for a specific product or service. Comparative
advertising seeks to contrast one product or service with
another. Advocacy advertising is an organizational
approach designed to support socially responsible activities,
causes, or messages such as helping feed the homeless.
Reminder advertising seeks to keep a product or company
name in the mind of consumers by its repetitive nature.
Cooperative advertising occurs when wholesalers and
retailers work with product manufacturers to produce a
single advertising campaign and share the costs.
Advantages of advertising include the ability to reach
a large group or audience at a relatively low cost per individual
contacted. Further, advertising allows organizations
to control the message, which means the message can be
adapted to either a mass or a specific target audience. Disadvantages
of advertising include difficulty in measuring
results and the inability to close sales because there is no
personal contact between the organization and consumers.
Sales Promotion. Sales promotions are short-term incentives
used to encourage consumers to purchase a product
or service. There are three basic categories of sales promotion:
consumer, trade, and business. Consumer promotion
tools include such items as free samples, coupons,
rebates, price packs, premiums, patronage rewards, pointof-
purchase coupons, contests, sweepstakes, and games.
Trade promotion tools include discounts and allowances
directed at wholesalers and retailers. Business promotion
tools include conventions and trade shows. Sales promotion
has several advantages over other promotional tools
in that it can produce a more immediate consumer
response, attract more attention and create product awareness,
measure the results, and increase short-term sales.
Public Relations. An organization builds positive public
relations with various groups by obtaining favorable publicity,
establishing a good corporate image, and handling
or heading off unfavorable rumors, stories, and events.
Organizations have at their disposal a variety of tools, such
as press releases, product publicity, official communications,
lobbying, and counseling to develop image. Public
relations tools are effective in developing a positive attitude
toward the organization and can enhance the credibility
of a product. Public relations activities have the
drawback that they may not provide an accurate measure
of their influence on sales as they are not directly involved
with specific marketing goals.
Personal Selling. Personal selling involves an interpersonal
influence and information-exchange process. There
are seven general steps in the personal selling process:
prospecting and qualifying, preapproach, approach, presentation
and demonstration, handling objections, closing,
and follow-up. Personal selling does provide a measurement
of effectiveness because a more immediate response
is received by the salesperson from the customer. Another
advantage of personal selling is that salespeople can shape
the information presented to fit the needs of the customer.
Disadvantages are the high cost per contact and dependence
on the ability of the salesperson.
For a promotion to be effective, organizations should
blend all four promotion tools together in order to achieve
the promotional mix. The promotional mix can be influenced
by a number of factors, including the product itself,
the product life-cycle stage, and the budget. Within the
promotional mix there are two promotional strategies:
pull and push. Pull strategy occurs when the manufacturer
tries to establish final-consumer demand and thus pull the
product through the wholesalers and retailers. Advertising
and sales promotion are most frequently used in a pulling
strategy. Pushing strategy, in contrast, occurs when a seller
tries to develop demand through incentives to wholesalers
and retailers, who in turn place the product in front of
consumers.
PLACE
The fourth element of the marketing mix is place. Place
refers to having the right product, in the right location, at
the right time to be purchased by consumers. This proper
placement of products is done through middlemen called
the channel of distribution. The channel of distribution is
comprised of interdependent manufacturers, wholesalers,
and retailers. These groups are involved with making a
product or service available for use or consumption. Each
participant in the channel of distribution is concerned
with three basic utilities: time, place, and possession. Time
utility refers to having a product available at the time that
will satisfy the needs of consumers. Place utility occurs
when a firm provides satisfaction by locating products
where they can be easily acquired by consumers. The last
utility is possession utility, which means that wholesalers
and retailers in the channel of distribution provide services
to consumers with as few obstacles as possible.
Channels of distribution operate by one of two methods:
conventional distribution or a vertical marketing system.
In the conventional distribution system, there can be
one or more independent product manufacturers, wholesalers,
and retailers in a channel. The vertical marketing
system requires that producers, wholesalers, and retailers
to work together to avoid channel conflicts.

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Physical Distribution. How manufacturers store, handle,
and move products to customers at the right time and at
the right place is referred to as physical distribution. In
considering physical distribution, manufacturers need to
review issues such as distribution objectives, product
transportation, and product warehousing. Choosing the
mode of transportation requires an understanding of each
possible method: rail, truck, water, pipeline, and air.
Rail transportation is typically used to ship automobiles,
chemicals, farm products, minerals, and sand. Truck
transportation is most suitable for transporting clothing,
gasoline and diesel fuel, food, and paper goods. Water
transportation is good for oil, grain, sand, gravel, metallic
ores, coal, and other heavy items. Pipeline transportation
is best when shipping products such as oil or chemicals.
Air transport works best when moving technical instruments,
perishable products, and important documents.
Product Distribution. Another issue of concern to manufacturers
is the level of product distribution. Normally,
manufacturers select from one of three levels of distribution:
intensive, selective, or exclusive. Intensive distribution
occurs when manufacturers distribute products
through all wholesalers or retailers that want to offer their
products. Selective distribution occurs when manufacturers
distribute products through a limited, select number of
wholesalers and retailers. Under exclusive distribution,
only a single wholesaler or retailer is allowed to sell the
product in a specific geographic area.
SEE ALSO Marketing; Pricing; Promotion
BIBLIOGRAPHY
Boone, Louis E., and Kurtz, David L. (2005). Contemporary
marketing 2006 (11th ed.). Eagan, MN: Thomson South-
Western.
Churchill, Gilbert A., Jr., and Peter, Paul J. (1998). Marketing:
Creating value for customers (2nd ed.). New York: Irwin
McGraw-Hill.
Farese, Lois, Kimbrell, Grady, and Woloszyk, Carl (2002). Marketing
essentials (3rd ed.). Mission Hills, CA:
Glencoe/McGraw-Hill.
Kotler, Philip, and Armstrong, Gary (2006). Principles of marketing
(11th ed.). Upper Saddle River, NJ: Pearson Prentice-
Hall.
Pride, William M., and Ferrell, O. C. (2006). Marketing concepts
and strategies. New York: Houghton Mifflin.
Semenik, Richard J., and Bamossy, Gary J. (1995). Principles of
marketing: A global perspective (2nd ed.). Cincinnati: South-
Western.
Allen D. Truell
MARKETING RESEARCH
Accelerating product cycles, easy access to information on
products and services, highly discerning consumers, and
fierce competition among companies are all a reality in the
world of business. Too many companies are chasing too
few consumers. Therefore, knowing, understanding, and
responding to one’s target market is more important than
ever. And this requires information—good information.
Good information can lead to successful products and
services. Good information is the result of market
research. Marketing gurus Kevin Clancy and Peter Krieg
in their book, Counterintuitive Marketing, wrote, “Marketing
research, we believe, poses many dangers and many
opportunities. Bad research can, and often does, lead
companies in the wrong direction. Good research, on the
other hand, is the sine qua non of the counterintuitive
approach to great marketing” (quoted in DeVries, 2005).
WHAT IS MARKETING RESEARCH?
According to the Marketing Research Association, “Marketing
research is a process used by businesses to collect,
analyze and interpret information used to make sound
business decisions and successfully manage the business”
(2005). Marketing research is a $6-billion-a-year industry.
Marketing research provides, analyzes, and interprets
information for manufacturers on how consumers view
their products and services and on how they can better
meet consumer needs. The ultimate goal is to please the consumer in order to get, or keep, the consumer’s business