Part I Unit 1 The Marketing Mix (The 4 p's)
The "Dictionary of Economics" gives the following definition of marketing - the functions of sales, distribution, advertising and sales promotion, product planning and market research. The British Chartered Institute of Marketing defines marketing as "the process which identifies, anticipates and supplies customer requirements efficiently and profitably." There derives the "marketing concept" which assumes that the producer's task is to find wants and fill them. In other words, not to sell what is made but to make what will be bought.
As well as satisfying the already existing needs, marketers can anticipate and create new ones. The market for the notebook, handy, remote control, PC, video games, compact disc player, Walkman, Internet, fax machine, telephone answering machine, microwave oven, air conditioner, video-cassette recorder, etc. were largely created rather than identified.
Rather than risk launching a product or service solely on the basis of intuition or guesswork, companies undertake market research (Br,) or marketing research (Am.). They gather and analyse information on markets, products and consumers' reaction to a particular product, preference of one product to similar ones. Sales representatives who interact with customers are another important source of information.
Once the product concept has been identified, the company begins to think about the marketing mix. The last comprises four essential components - the 4 P's of marketing:
product - goods and services to be sold;
place - means of getting the product or service to the customer;
price - cost of the product;
promotion - means of informing people about the product or service.
It is of paramount importance that the product is right. There is a history of "white elephants" - products that were developed and launched which proved to have little or no demand, e.g. the infamous Sinclair C 5 electric car.
There are two generic types of product - consumer and industrial goods. Consumer goods are products that are bought by the final user. The two broad categories of consumer goods are: fast moving consumer goods which tend to be bought quickly from shops and are consumed relatively quickly (food, cleaning materials, magazines, etc.) and durables which are bought infrequently and last longer (washing machines, cookers, hi-fi and TV systems, etc.). Industrial goods are those products that are used in industrial processes and are usually processed further. Common examples are raw materials, parts, spares and accessories, machines and installations.
Companies that sell a wide range of products find it helpful to analyse their offering according to the portfolio theory. The wisdom of this theory rests in the idea that it is patently unwise "to have all your eggs in the same basket". It means that companies that wish to take advantage of increased opportunity and to reduce risk should offer several different products into several different markets.
When planning product strategies, use is often made of the product life cycle (PLC). The product life cycle assumes that all products have limited lives during which they pass through a series of stages, all of which have implications for sales and profitability.
