The Marketing Mix: The 7Ps of Marketing

Marketing Mix – formulates marketing tactics for a product or service

1. Product – any physical good, service or idea that is created in serving the needs of the customers
and addressing their existing problems

3 Level Concept of Product or Service

Level 1: Core Benefits of the Product or Service – major factors why a customer buys a product
or avails of a service

Level 2: Physical Characteristics of the Product or Service – Once the core benefit has been
satisfied and options are available to the customers, the tendency is to look for the second layer of
selection which has a better packaging for products or a better physical evidence or customer
experience for services.

Level 3: Augment Benefits of the Product or Service – the additional benefits; a customer will
still get the core benefits of a product or service even without the augmented benefits. However, in
case of common products or services where there are a number of competitors, the differentiator
comes from the physical characteristic or physical evidence, the customer experience, or the
augmented benefits. These benefits distinguish the product or service from the competitors.

2. Place – refers to a location or medium of transaction; A strategic location depends on the nature of
the business and the primary target market.
a. Physical Location – The entrepreneur must research about the area’s population, traffic,
people’s common paths, their buying behavior and preferences for the location (e.g., Wi-Fi
access, spacious area for parking).
b. Cyber Location – The entrepreneur must use Web analytics data to understand Web site
performance (e.g., number of visitors, duration of their stay on the Web site or the frequently
visited contents.
c. Distribution or Supply Chain – process of bringing the products or services to customers.
Distribution channels are the set of interdependent organiz1tions that are involved in the
process of making a product or service available for use or for consumption by the consumer
or individual user
 Manufacturer – handle the invention, development and production of the product or
service
 Distributor – buys products or services to the manufacturers and sell them to
wholesalers or retailers
d. Logistics – involves the technique of managing and controlling the flow of products and
services from the source of production to the market place/
 Warehousing – storing the finished goods manufactured in a facility until they are
distributed to end users.
 Transportation – process of efficiently transferring the products the products or services
to retailers or consumers
 Inventory Management - the management of inventory and stock; includes aspects such
as controlling and overseeing ordering inventory, storage of inventory, and controlling
the amount of product for sale; Inventory is a stock or store of goods

3. Price – the peso value of a certain product or service after considering its costs, competition,
objectives, positioning and target market; generates revenue for the business
Markup – the ratio between the cost of a good or service and its selling price. It is expressed as a
percentage over the cost; added onto the total cost incurred by the producer of a good or service in
order to cover the costs of doing business and create a profit
 Pricing Strategies:
a. Bundling – refers to two or more products or services in on reduced price (e.g., 3-in-1 coffee for
P8.00, manicure and pedicure for P150)
b. Penetrating Pricing – refers to setting low prices ti increase market share, but the
entrepreneur will eventually increase the price once the desired market share is achieved. (e.g.,
mobile app-based transportation service offering reduced booking fee of P15 as its introductory
price)
c. Skimming – setting a high price before other competitors come into the market; As the demand
of the first customers is satisfied and competition enters the market, the firm lowers the price to
attract another, more price-sensitive segment (e.g., innovative electronic products, such as the
Apple iPhone and Sony PlayStation 3)
d. Competitive Pricing – benchmarking prices with the competitors ( e.g., milk tea prices are
competitive priced)
e. Product Line Pricing – refers to pricing different products or services within a parallel product
array or line of products using varying price points ( e.g., LED TV is more expensive that the LCD
TV even if under the same brand, P&G products like Pantene, Head & Shoulders and Rejoice)
f. Odd-Number Pricing – prices that end in non-rounded odd number, such as 9.95 or 99.50;
gives the consumers the perception that the prices are not as expensive as they actually are (
e.g., price of hair cut service is P199, tend to round off the price to P100 instead of P200)
g. Premium Pricing – refers to setting a very high price to reflect elitism and superiority (e.g.,
prices of signature clothes, bags, perfumes)
h. Optional Pricing – refers to adding an extra product or service on top of the original to
generate more revenue (e.g., meals on top of the air fare
i. Cost-Based Pricing – The basis of markup is the cost of sales (e.g., cost of the coconut juice
from the cost of coconut juice P10 and the plastic container P4, selling price of P20 to earn P5
per cup of coconut juice)
j. Cost Plus Pricing – The markup is based on a certain percentage of cost (e.g., 50% markup on
the coconut juice which is P14 x 50% = P7, selling price is P14 + P7 = P21

The profit of an entrepreneur can be determined only if there is a proper computation of costs
associated with the products or service.
2 Classifications of Costs:
1. Variable Cost or Controllable Costs – Cost directly proportional to the number of
products manufactured or to the number of services performed. For example, variable costs
involved in car wash is the cost of cleaning materials; incur higher cost with more customers
and lower costs with few customers
2. Fixed Costs or Uncontrollable Costs – Costs that are not directly proportional to the
manufacturing of product or the performance of the service. These include cost of
equipment, employee remuneration, and rental costs. The business will still incur these costs
whether or not they provide more or less.

General Pricing Guidelines in making a business sustainable and living:

a. Do not price product o service below its cost.
b. Monitor competitors’ prices and ensure that your prices are at par with them unless the product
or service is really way superior to the competitors’.
c. Align prices with the other 6Ps (product, place, promotion, people, packaging and process).
d. Implement prise strategies that are relevant to your market segment.
e. Align prices with your business objectives.

4. Promotion – involves presenting the products or services to the public and how these can address
the public’s needs, wants, problem or desires. The primary target market should be identified because it
will become the main audience. Its main goal is to gain attention.
Promotional Tools:
 A. Advertising - a paid persuasive communication that uses non personal media to reach broad
audiences to connect an identified sponsor with a target audience.
5 Basic Components of Advertising:

Major Types of Advertising:

1. Print Advertisements
 Newspapers are one of the traditional mediums used by businesses, both big and
small alike, to advertise their businesses.
 Magazines are more focused, although more expensive, alternative to newspaper
advertising. This medium allows you to reach highly targeted audiences.
 Direct Mail, often called direct marketing or direct response marketing, is an
advertising technique in which the seller sends marketing messages directly to the
buyer.
2. Broadcast Advertisements
 Television is an audiovisual medium that provides advertisers with many creative
opportunities.
 Radio is an audio medium that provides Commercials of various lengths that run
on radio stations.
3. Outdoor Media – Billboards, Wall Stickers, App painted in Vehicles
4. Telemarketing - process of selling products or services over the telephone. It is an effective
system for introducing a company to a prospect and setting up appointments.
5. Online Advertisements
 Banner Advertising is one of the dominant forms of advertising online. It entails the
display of a graphical advertising unit.
 Social Media Advertising is a way to target audiences on specific networks through
demographic information so targeted consumers can see the brand in their social media
accounts.
 Pay per Click is a form of advertising where ads are run and shown in search engines
(including their partner sites).
B. Selling – the act of trading a product or service for a price of a fee;
Entrepreneur must:
a. Identify target customers.
b. Research on target customers’ profile and behavior.
c. Highlight product benefits and direct customers to their compelling need or want.
d. Close a sale by leaving a convincing conclusion that will trigger the customer purchase.
e. Do after sales, monitoring customer satisfaction.
f. Depending on the size of the business, decide whether to hire personnel or not. Plan for the
recruitment and selection, training, salaries, scope of work and communication system.
C. Sales Promotions – These are short-term promotional gimmicks wherein practical incentives and
appealing activities are incorporated to entice the customers to buy the product or avail the service;
also called below the line promotions
Examples of Sales Promotion in the Philippines:
 Sales discounts or discount coupons
 Raffles
 Contests and games
 Promo Items
 Product or service bundles
 Trade fairs or exhibits (wedding expo)
 Sample distributions or free taste/free trials
 Premiums (free toys for fast food meals)
 Point of purchase Promotions
 Advertising specialties (pens, notebooks, umbrellas, bags, calendars)
 Rewards (reward cards)
D. Public Relations (PR) – These are image building initiatives of the entrepreneur to make the name
of the business reputable to stakeholders, such as target customers, government agencies, business
partners, media and the public. PR strategies affect customers indirectly, but they do influence the
stakeholders to build more trust to the business. Positive write ups from journal, news paper, Web
sites or social media and even word-of-mouth are more credible than traditional advertisements.
Examples of PR strategies:
 Press conferences
 Launching events
 Strong media relations through press kits
 Social responsibility events (charities, community events)
 Lobbying (good relationships with government officials)
 Web public relations (blogs, social media, e-mails, word-of-mouth)

5. People – plays vital role in servicing customers; influence customer’s buying behavior; one of the
major differentiators wherein employees make a difference in the lives of the customers.

6. Packaging – how the product or service is presented to customers;

 the overall identification (look and feel) of the product or service; determine the uniqueness of the
product from competitors
 preserves the shelf life of the product or service
 plays a vital role in persuading a customer to try the product or avail the service
 The ultimate goal is to entice customers to purchase the product or service
 Must be pleasing to the eyes of the customers
 Establishes the brand’s entity
 Servicescape refers to the overall ambiance of the place where the service is performed

7. Process – the last addition in the marketing mix as the marketers began to realize the importance of
the internal and external operations of the business.
 It is the step-by-step procedure or activity workflow that the entrepreneur or employees follow to
effectively and efficiently serve customers.
 Its components include input, throughout and output.
 The internal process includes the back-office operations (pre-processing, processing and post
processing).
 The external process includes the actual servicing where customers are part of the process.