The Marketing Mix: 7Ps of Marketing (CS_EP11/12ENTREP-0h-j-10)

Marketing Mix--- is a widely accepted strategic marketing tool that combines the original 4Ps with additional 3Ps in formulating marketing
tactics for a product or service.
--- employed until the entrepreneur finds the right combination that will most effectively serve the customer’s needs and wants
and at the same time achieve the profitability objective.

Entrepreneurs must use the 7Ps model to do the following:

1. Conduct a situation analysis
2. Set objectives
3. Conduct SWOT or competitive analysis
4. Ultimately come up with marketing strategies and tactics.
Key questions
1. Product----- What product is most appropriate for the opportunity and why will customers buy or avail them?
2. Place ----- What location is best suited for the business where there are more potential customers?
----- Can they conveniently transact on site or online?
----- How is the process of distribution of products or performance of services?
3. Price ----- What is the most appropriate price, and what pricing strategies will be used for the target customers?
4. Promotion—What is the most effective advertisement or combination of advertisements, and which advertising tool should be used
to drive awareness and increase sales?
5. People ----- What type of people need to be hired?
---- What are the basic skills needed for the job?
---- What leadership style will be applied by the entrepreneur?
6. Packaging--- What is the best packaging for the product that is attractive enough to customers and cost-efficient at the same time?
--- What physical evidence does the entrepreneur need to set up so as to sell the service?
7. Processing—What is the most compelling feature of the product or the business that will make a difference in the lives of the
customers?
--- What sets the product or service from the rest?

PRODUCT
- Any physical good, service or idea that is created by an entrepreneur or an innovator in serving the needs of the customers and
addressing their existing problems.
- The product or service should not be created before finding the right customers, because this is very risky and the resources and
time might be put to waste
- The Three-level Concept of products and services summarizes the reasons that a customer decides to buy a product or avail of a
service.
o Level 1: Core Benefits of the Product or Service
▪ Major factors why a customer buys a product or avails of a service
o Level 2: Physical Characteristics of the Product or Service
▪ Once the core benefit is satisfied and options are available to the customers, the tendency is to look for the
second layer of selection.
o Level 3: Augmented Benefits of a Product or Service
▪ Are only additional benefits: a customer will still get the core benefits of a product or service even without the
augmented benefits.
PLACE
- Refers to the location or the medium of transaction. A strategic location depends on the nature of the business and the primary
target market.
o Physical Location- area’s population, the traffic, the people’s common paths, their buying behavior and their preferences
for the location.
o Cyber Location- use web analytics data to understand website performance
- Covers the product distribution and the whole business logistics. The logistics side of the products should cover production,
ordering and receiving raw materials or finished goods from the suppliers, storage, reorder points and transportation systems.
ahermosilla/entrep/handout/reference;Entrepreneurship module SHS Series by Ronaldo Batisan/Diwa Learning System 1
 The logistics side for services covers the physical evidence or servicescape, service providers, and service delivery process, as well
as policies and procedures of the business.
- Major objective: To provide customers with pleasant experience in buying the product or availing of the service so that they will
keep on coming back whether on site or online.
- Characteristics 1. Presentable; 2. Appealing; 3. Catchy
- Criteria in Choosing a Location
o Suitability to the target market
o Condition of the neighborhood
o Potential of the area for future developments
o Laws and regulations of the area
o Direct and indirect competitors
o Foot traffic
o Cost of doing business
PRICE
- The peso value that the entrepreneur assigns to a certain product or service after considering its cost, competition, objectives,
positioning and target market.
- It is the only Pin 7Ps that generates revenue for the business.
o MOST COMMON PRICING STRATEGY
1. Bundling- this refers to two or more products or services in one reduced price (ex. 3-in-1 coffee for P8)
2. Penetration Pricing- setting low prices to increase market share, but the entrepreneur will eventually increase the
price once the desired market share is achieved (ex. Introductory price)
3. Skimming- opposite of penetration pricing where prices are initially high and then they are lowered to offer the
product or service to a wider market (real estate companies who offered top-tier projects is now offering low-cost
housing of same quality to serve the middle market segment.
4. Competitive Pricing- benchmarking prices with the competitors (ex. Milk tea prices are competitively priced)
5. Product Line Pricing- pricing different products or services within parallel product array using varying price points
(ex. LED TV is more expensive than LCD TV even if under the same brand)
6. Psychological Pricing- considers the psychology and positioning of price in market (ex. Price of haircut is at P199
because customers tend to think odd prices are considerably lower than what they are; in this example they round
off to P100 instead of P200.)
7. Premium Pricing- setting a very high price to reflect elitism and superiority (ex. Prices of signature clothes, bags,
perfumes)
8. Optional Pricing- adding an extra product or service on top of the original to generate more revenue (meals on top
of airfare)
9. Cost-based Pricing- basis of mark-up is the cost of sales (ex. Cost of coconut juice by adding the cost of coconut
juice- P10 and the plastic container- P4. He or she can set the price at P20 to earn P6 per coconut juice.)
10. Cost Plus Pricing- mark-up is based on a certain percentage of cost (ex. The entrepreneur wants to set a 50% mark-
up on the coconut juice which is P14 x 50%= P7; the new price is P14 + P7 = P21)

2 CLASSIFICATIONS OF COSTS
1. Variable Costs or Controllable Costs
- costs directly proportional to the number of products manufactured or to the number of services performed
- costs incurred will be higher only when more customers avail of the service or it will incur lower cost when
there are few customers.
- examples: cost of cleaning materials in a car wash business
2. Fixed Costs or Uncontrollable Costs
- costs not directly proportional to the manufacturing of a product or to the performance of the service .
- costs that are still incurred whether they provide more or less
- examples: cost of equipment, employee salary, rental cost, utilities

ahermosilla/entrep/handout/reference;Entrepreneurship module SHS Series by Ronaldo Batisan/Diwa Learning System 2

 GENERAL PRICING GUIDELINES
1. Do not price the product or service below its cost.
2. Monitor competitor’s prices, and ensure that your prices are at par with them unless the product or service is really way
superior to the competitors’.
3. Align the prices with the other 6Ps.
4. Implement price strategies that are relevant to your market segment (ex. Sachet pricing is more appropriate in the Barangay)
5. Align prices with your business objectives.
PROMOTION
- Involves presenting the products or services to the public and how these can address the public’s needs, wants, problems, or
desires.
- The primary target market should be identified because it will become the main audience.
- Main goal is to gain ATTENTION
- IMC (Integrated Marketing Communication Plan) should be devised to deliver compelling messages effectively.
o KEY MARKETING MESSAGES FOR PROMOTION’
▪ Value Proposition or Unique Selling Proposition of the product or service
▪ Product or Service Image
▪ Business Image
▪ Business Values and Philosophy
o PROMOTIONAL TOOLS
▪ 1. ADVERTISING
❖ Type of communication that influences the behavior of a customer to choose the product or service of the
entrepreneur over the competitors
❖ OBJECTIVES OF ADVERTISING
• Informing, educating, and familiarizing the public with the product and service offerings
• Building a trustworthy image
• Increasing sales
❖ ADVERTISING CHANNELS
• Television- regular channels, cable tv
• Radio- AM and FM Radio
• Internet- e-mails, web sites, blogs, social media, search engines, podcasts
• Mobile Phones- text messages, mobile apps, mobile internet
• Print- newspapers, magazines, flyers, directories, signages, posters
• Out-of-home- billboards, buses, bus stops, trains, train stations, taxis, street advertisements.
▪ 2. SELLING
❖ Act of trading a product or service for a price or a fee
• Identify the target customers
• Research on target customers profile and behavior
• Devise a convincing way to sell the product
• Handle objections
• Close a sale by leaving a convincing conclusion that triggers purchase
• Monitor customer satisfaction (after sales)

▪ 3. SALES PROMOTIONS
❖ Short-term promotional gimmicks wherein practical incentives and appealing activities are incorporated to
entice the customers to buy the product or avail of the service.
❖ Also called “below-the-line” promotions.
❖ Usually implemented when the entrepreneur needs to reach a certain sales quota. Involves time limit and
sense of urgency.
❖ EXAMPLES OF SALES PROMOTIONS
• Sales discounts or discount coupons
• Raffles, contests and games
• Promo items, product or service bundles
ahermosilla/entrep/handout/reference;Entrepreneurship module SHS Series by Ronaldo Batisan/Diwa Learning System 3
 • Trade fairs or exhibits
• Sample distributions or free taste/free trials
• Premiums (free toys for meals)
• Point-of-Purchase Promotions (display stand in stores)
• Advertising specialties (pens, umbrella etc.)
• Rewards (reward cards)
▪ 4. PUBLIC RELATIONS
❖ Image-building initiatives of the entrepreneur to make the name of the business reputable to stakeholders,
such as the target customers, government agencies, business partners, media and the public.
❖ Do not directly promote the product or services
❖ EXAMPLES OF PR STRATEGIES
• Press conference
• Launching events
• Strong media relations through press kits
• Social responsibility events
• Lobbying (good relationships with government officials)
• Web public relations (blogs, social media, emails etc.)

PEOPLE
- With the influx of various competing products, one of the differentiators is how people or employees make a difference in the
lives of the customers. It is not about the quality of the products anymore, but how employees serve customers. Employees have
become a major influence in the customers buying behavior.
- For the employees to serve customers well, they should know their specific roles, must be well-compensated and provided with
benefits.

PACKAGING
- How the product or service is presented to customers. It is the overall identification (look and Feel) of the product or service. This
will determine the uniqueness of the product from competitors. This is the first element that the customers see because they
don’t know what’s inside yet. It preserves also the shelf life of the product.
- GOAL OF PACKAGING- Entice customers to purchase the product or service
- Establishes the brand’s identity, as well as Unique Selling Proposition
- Elements such as color, shape, size, materials, font and text, and graphics must be considered
- Must be tested for its attractiveness and quality
- In selling services, the term servicescape was used to refer to the overall ambiance of the place where the service is performed.
For example, in spa business, the servicescape should be cozy, service staff should be friendly, the massage bed should be
comfortable and clean etc.
- IMPORTANCE: Persuades a customer to try a product or avail a service based on what he or she has seen. Sometimes it matters
more than the product itself. Indeed, it must please the eye of the beholder.
PROCESS
- Internal and external operations of the business is important to serve customers better.
- PROCESS is a step by step activity workflow that the entrepreneur or employees follow to effectively and efficiently serve
customers. COMPONENTS of a process are: INPUT, THROUGHPUT, and OUTPUT
INTERNAL PROCESS- includes the back-office operations (preprocessing, processing, and postprocessing)
EXTERNAL PROCESS- includes actual servicing where customers are part of the process.

Big Idea
When used effectively, the 7Ps of marketing will achieve the two most important objectives of an entrepreneur :
CUSTOMER DELIGHT and PROFITABILITY.

ahermosilla/entrep/handout/reference;Entrepreneurship module SHS Series by Ronaldo Batisan/Diwa Learning System 4