The marketing mix is a widely accepted strategic marketing tool that combines

the original 4ps (product, place, price, promotion) with the additional 3Ps—people,
packaging, and process—in formulating marketing tactics for a product or service.
These 7Ps are 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.
The 7Ps are controllable by the entrepreneur and therefore must be well thought
of to be successful. Prior to the 7Ps, the 4Ps were used in marketing products or physical
good only. However, these are not completely applicable to marketing services; thus,
the other 3Ps, which are also applicable in marketing products, were introduced. Only
very few products are pure products and only few services are pure services. Therefore,
the marketing mix will be able to address marketing components of both goods and
services or even the hybrids.
Entrepreneurs must use the 7Ps model to do the following: conduct a situation
analysis; set objectives, conduct a strength, weakness, opportunity, and threat (SWOT)
or competitive analysis; and ultimately come up with marketing strategies and tactics.
A challenge to a budding entrepreneur is to ask the following key questions at the
onset:
 Product - What product or service is the most appropriate for the opportunity,
and why will customers buy or avail them?
 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? Price - What is
the most appropriate price, and what pricing strategies will be used for the
target customers?
 Promotion - What is the most effective advertisement or combination of
advertisements, and which advertising tool should be used to drive awareness
and increase sales?
 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?
 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?
 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

A product is 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. As discussed in Module 2, an entrepreneur must first scan the
environment, find a compelling problem, and create a persuasive product or service
out of the opportunity. 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 or services summarizes the reasons that a
customer decides to buy a product or avail of a service.
Level 1: Core Benefits of the Product or Service
The core benefits of a product or service are the major factors why a customer
buys a product or avails of a service. For example, a customer buys coffee because he
or she wants to feel energetic and alert the whole day.

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, i.e., which has a
better packaging for products or a better physical evidence or customer experience
for services. In the previous example, the customer can choose a coffee with a more
appealing packaging or a more aromatic smell.

Level 3: Augmented Benefits of a Product or Service

Augmented benefits are only 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 and services where there are a number of competitors, the
differentiator comes from the physical characteristics or physical evidence, the
customer experience, or the augmented benefits. Therefore, the entrepreneurs must
provide customers with augmented benefits that distinguish them from the competitors.
In the previous example, the customer can choose a coffee product that comes with a
loyalty card, so that when he or she accumulates, say, 10 coffee drinks, he or she will be
able to get a free coffee drink.

Place

The place refers to a location or the medium of transaction. A strategic location

depends on the nature of the business and the primary target market. In a physical
location, the entrepreneur must research about the area's population, the traffic, the
people's common paths. Their buying behavior, and their preferences for the location
(e.g., Wi-Fi access, spacious area for parking). In a 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).
Place also covers the product distribution and the whole business logistics. The logistics
side for products should cover production, ordering and receiving raw materials or
finished goods from the suppliers, storage, reorder points, and transportation systems.
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.
 One of the major objectives of the entrepreneur for place is 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. The entrepreneur should
place the product or service depending on the needs of the customers and on where
the profits will be maximized. The entrepreneur should also have a reliable supplier for
the distribution of products or services. The place, whether on-site or online, should also
be presentable, appealing, and catchy.
The entrepreneur must devise a set of criteria in choosing the right location
aligned with certain objectives, such as suitability to the target market, condition of the
neighborhood, potential of the area for future developments, laws and regulations in
the area, direct and indirect competitors, foot traffic, and cost of doing business.

Price

Price is the peso value that the entrepreneur assigns to a certain product or
service after considering its costs, competition, objectives, positioning, and target
market. It is the only P in the 7Ps that generates revenue for the business. Here are the
most common pricing strategies.
1. Bundling - This refers to two or more products or services in one reduced price
(e.g.,
3-in-1 coffee for P8.00, manicure and pedicure for P150).
2. Penetration pricing – This refers to setting low prices to increase market share, but
the entrepreneur will eventually increase the price once the desired market
share is achieved (e.g., a mobile app-based transportation service offering
reduced booking fee of P15 as its introductory price).
3. Skimming - This is the opposite of penetration pricing where prices are initially
high and then they are lowered to offer the product or service to a wider market
(e.g., a real estate company offering top-tier projects is now offering low-cost
housing of same
quality to serve the middle market segment).
4. Competitive pricing - This refers to benchmarking prices with the competitors
(e.g.,
milk tea prices are competitively priced).
5. Product line pricing - This refers to pricing different products or services within a
parallel product array using varying price points (e.g., LED TV is more expensive
than the LCD TV even if under the same brand).
6. Psychological pricing - This considers the psychology and positioning of price in
the market (e.g., price of haircut service is at P199 because consumers tend to
think that odd prices are considerably lower than what they are; in this example,
they tend to round off the price to P100 instead of P200).
7. Premium pricing - This refers to setting a very high price to reflect elitism
superiority (e.g., prices of signature clothes, bags, perfumes).
8. Optional pricing - This refers to adding an extra product or service on top of the
original
 and to generate more revenue (e.g., meals on top of the air fare).
9. Cost-based pricing - The basis of markup is the cost of sales. For example, the
entrepreneur will compute the cost of coconut iuice by adding the cost of the
coconut juice (P10) and the plastic container (P4). He or she can set the price at
P20 to earn 6P per coconut juice.
10. Cost plus pricing - The markup is based on a certain percentage of cost (e.g, the
entrepreneur wants to set a 50% markup on the coconut juice cost which is P14 x
50 =P7; the new 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 product or service. There are two
classifications of costs.
1. Variable costs or controllable costs - These costs are directly proportional to the
number
of products manufactured or to the number of services performed. For example,
one of the variable costs involved in a car wash business is the cost of cleaning
materials. The business will incur higher costs only when more customers avail of
the service, or it!
will incur lower costs when there are few customers.
2. Fixed costs or uncontrollable costs - These are costs not directly proportional to
the
manufacturing of a product or to the performance of the service. These are
usually the cost of equipment, employee remuneration, rental cost, and utilities.
These are considered fixed costs because the business will still incur these costs
whether or not they provide more or less. Therefore, if the entrepreneur produces
more products and performs more services, his or her fixed costs per unit will be
lower because the fixed cost will be allocated to the number of units produced
or number of services performed (Sim, 2009).

The entrepreneur must follow these general pricing guidelines to make the
business sustainable and thriving:
1. Do not price the product or service below its cost.
2. 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'.
3. Align prices with the other 6Ps (product, place, promotion, people, packaging,
and
processing)
4. Implement price strategies that are relevant to your market segment. For
example, tingi
(sachet) pricing is more appropriate in the grassroots locality or barangay.
5. Align prices with your business objectives.
Promotion

Promotion involves presenting the products or services to the public and how
these can address the public's needs, wants, problems, or desires. In promotion, the
primary target market should be identified because it will become the main audience.
The main goal of promotion is to gain attention
A strong integrated marketing communication plan (IMC) should be devised to
deliver the compelling messages effectively. Key marketing messages for promotion
can be the following: (1) value proposition or unique selling proposition of the product
or service: (2) product or service image; (3) business image; or (4) business values and
philosophy. Once the key marketing message is established, the entrepreneur must
choose the right promotion tools to deliver these message to the target market. The
entrepreneur can choose one of the following promotional tools:

1. Advertising - This is a type of communication that influences the behavior of a

customer to choose the product or service of the entrepreneur over the
competitors. The objectives of advertising include the following: (1) informing,
educating, and familiarizing the public with the product and service offerings;
(2) building a trustworthy image; and (3) increasing sales. There are so many
ways to advertise, but the challenge for the entrepreneur is to choose which
is the most cost-effective and targeted channel to relay the key marketing
message to the target market. The entrepreneur can choose to advertise
through the following:
 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 applications, mobile Internet
 Print - newspapers, magazines, flyers, directories, signages, posters
 Out-of-home - billboards, buses, bus stops, trains, train stations, taxis, street
advertisements

2. Selling - This is the act of trading a product or service for a price or a fee. The
entrepreneur must identify the target customers who will likely buy the
product or service. Once identified, he or she must do further research on the
target customers to know their profile and behavior to come up with a
convincing way to sell the product or service. He or she must also know how
to handle objections through highlighting the product benefits and directing
the customers to their compelling need or want. The entrepreneur must also
know how to close a sale by leaving a convincing conclusion that will trigger
the customer purchase. After such, he or she must monitor the customer's
satisfaction, which is called the after sales. Depending on the size of the
business, the entrepreneur must decide whether to hire personnel or not. If so,
 he or she needs to plan for the recruitment and selection, training, salaries,
scope of work, and communication system.

3. Sales promotions - These are short-term promotional gimmicks wherein

practical
contrives and appealing activities are incorporated to entice the customers
to buy the product or avail of the service. These are also called "below-the-
line" promotions. These are normally implemented when an entrepreneur
needs to reach a certain sales quota to either recover investment or achieve
better profitability. Successful sales promotions involve time limit and sense of
urgency, as this strategy enables customers to act immediately to avail of the
promo. Longer sales promotions usually result in customers not taking
advantage and not acting immediately. Here are common examples of
sales promotions in the Philippines:
 Sales discounts or discount coupons
 Raffles
 Contests and games
 Promo items
 Product or service bundles
 Trade fairs or exhibits (e.g., wedding expo)
 Sample distributions or free taste/free trials
 Premiums (e.g., free toys for fast food meals)
 Point-of-purchase promotions (e.g., display stands in grocery stores)
 Advertising specialties (e.g., pens, notebooks, umbrellas, bags,
calendars) Rewards (e.g., reward cards)

4. Public relations - These are 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.
Unlike advertisements, public relations (PR) do not directly promote products
or services. These PR strategies affect customers indirectly, but they do
influence the stakeholders to build more trust to the business. This stimulates
the stakeholders to write or share positive news, resulting in more effective
marketing campaigns than regular advertisements. Positive write-ups from
journals, newspapers, Web sites or social media, and even word-of-mouth are
more credible than traditional advertisements. Examples of PR strategies are
as follows:
 Press conferences
 Launching events
 Strong media relations through press kits
 Social responsibility events (e.g., charitable or community events)
 Lobbying (e.g., good relationships with government officials)
 Web public relations (e.g., blogs, social media , e-mails, word-of-
mouth)
People

People is one of the three additional Ps in the marketing mix. In today's marketing
arena, people play a vital role in servicing customers even though the entrepreneur
sells only physical goods. With the influx of various competing products and services,
one of the major differentiators is how people or employees make a difference in the
lives of the customers. It is not just about the quality of products anymore, but how
employees serve customers. Employees have become a major influence in the
customer's buying behavior.
Most of the legwork at the beginning is done by either the entrepreneur or some
of his or her family relatives. Most entrepreneurs only hire people when the business
starts to expand. The core job of the business owner is more of strategy implementation.
When the need arises to hire people, he or she must identify the specific, necessary job
roles of employees and their descriptions, so they will be able to know their purpose
clearly and serve customers well. These potential employees also need to be well-
compensated and provided with benefits. The entrepreneur must list the criteria of the
following job offers, as well as the requirements such as academic background, job
experience, skills or expertise, attitude, and other documents (e.g., police and NBI
clearance).

Packaging

Another addition in the 7Ps is packaging. Packaging is 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 customers see because they don't know what's inside yet.
Aside from this, packaging preserves the shelf life of the product or service. Because of
the clamor in ensuring environmental protection and preservation, many businesses
begin to make packages out of environment-friendly materials, not just in products but
also in services.
Packaging's ultimate goal is to entice customers to purchase the product or
service. Thus, the entrepreneur should focus on pleasing the customers' eyes. It is not just
limited on the product or service alone, but on its totality, including its accessories, after
sales service, and warranty.
Packaging is very important in selling physical products or goods, as it establishes
the brands identity, as well as its unique selling proposition. Therefore, elements such as
color (which has different meanings on the customer segment and culture), shape, size,
materials, font and text, and graphics must be considered. After establishing the final
packaging, the product must be put into several tests, such as packaging and graphics
tests, to ensure that the packaging is attractive and of high quality.
In selling services, the term services cape was used to refer to the overall
ambiance of the place where the service is performed. For example, in a spa business,
the servicescape should be cozy, service staff should be friendly, the massage bed
should be comfortable and clean, and relaxing music and the aromatic smell of nature
should be evident. Packaging services often involve bundling to make them look
attractive. Examples are tour packages offering hotel accommodation or a beauty
salon having a rebound package with free hair coloring or hot oil treatment.
As one of the additional Ps in the marketing mix, packaging plays a vital role in
persuading a customer to try a product or avail of a service based on what he or she
has seen. In fact, packaging sometimes matters more than the product or service itself.
Indeed, it must please the eye of the beholder.

Process

Process is the last addition in the marketing mix as marketers began to realize the
importance of the internal and external operations of the business to serve customers
better. Process is defined as a step-by-step procedure or activity workflow that the
entrepreneur or employees follow to effectively and efficiently serve customers. Its
components include input, throughput, and output. The internal process includes the
back-office operations (preprocessing, processing, and post processing), wherein
employees or machines process customers' requests without necessarily being seen by
the customer. The external process includes the actual servicing where customers are
part of the process.