American Marketing Association stated that, “marketing is an organizational function and a set of process for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stockholders“(McCarthy, 1982). Madura (2007) defined “marketing as the actions of firm to plan and execute the design, pricing, distribution and promotion of products”. It is important for a businessman to market his business in order to attract new customers by promising superior value and delivering satisfaction. In general, there is one type of marketing called marketing mix. Marketing mix is the mixture blend of four elements used before starting the production process and after the production of finished goods or services. The elements of marketing mix are often referred to as “the four P’s”, which are product, pricing, promotion and place (distribution).
First important element of marketing mix is product. Every firm needs to determine the types of product that they want to produce in order to serve customer’s need and desire. In addition, firms that successfully introduced a new product or improving existing product to better satisfy customers will classified according to the shopping afford required to buy the goods or service and the frequency of purchase. According to Edward (1984), convenience products are the products that are widely available to consumers, purchase frequently and easy accessible. Milk, newspaper, shampoo and chewing gum are the example of convenience products. On the other hand, shopping products can be describe as the products that are not purchased frequently and need a little afford to search for it. Furniture and appliances are the examples of this type of product. Other than that, there is still one type of product which is specialty products. Specialty products are the products that specific customers consider to be special and therefore they make a special afford to purchase. Rolex watch and Jaguar automobiles are the examples of the specialty products. Furthermore, products can be differentiate through the afford took by a firm to distinguish its products from competing products in a way that provides the firm in competitive advantage. This product differentiation can be determine by three things, first is unique design. Unique design is the unique characteristic that may result in superior product safety, reliability, and convenience or consumer satisfaction. The second thing is unique packaging, which is safer, attractive and can provide information to consumers and may convince them to buy the products. The last thing is unique branding. Unique branding could help customers to identify products and distinguish them from competitor’s products.
Another element in marketing mix is pricing, which is an important strategic issue because it is related to product positioning. Pricing is a price decision that should be taken into account profit margins and the probable pricing response of competitors. There are two important things that related with the price element, first is pricing strategy and the second is pricing method. Pricing strategy is the strategy took by a firm to make sure that the firm could serve the customers with a reasonable price and ensure that they could compete with other similar products in the market. There are two types of pricing strategy which are the skim pricing and penetration pricing. According to Edward (1984), skim pricing is a strategy used to pursue the objective of profit margin maximization whereas penetration pricing pursue the objective of quantity maximization by mean of setting the products with the lower price. A firm will use skim pricing when the demand is expected to be relatively inelastic, where the customers are not highly price sensitive. For example, customers will continually consume the petrol even if the price increases. The demand of petrol will never decrease even the price is increasing. Penetration pricing will normally used by a firm when the demand is expected to be highly elastic. This is usually happen to shopping products where customers will compare the price of the products before they buy it. In short, when the price is lower, the demand for the product will be higher. For example, the customers will prefer to buy a cheaper shirt rather than an expensive one. This shows that the penetration pricing will generate more sales in quantity. Pricing method, on the other hand is the method used to set the specific price level that achieves their pricing objectives. Pricing method can be divided into four, first is cost-plus pricing. Cost-plus pricing is a set of price at the production cost plus a certain profit margin. Second is target return pricing, which is a set of price, used to achieve a target return on investment. Third is value-based pricing, where a set of price based on the effective value of the product to the customers. For example, a firm sells a product based on the lifetime of the product. Finally, the last method is the psychological pricing. This method of pricing is based on the factors such as the quality of the product, popular price points and what the consumers perceive to be fair.
One other element in marketing mix is promotion, which represent all of the communication that a marketer may use in the market place. Hilger (1984), defined promotion as the act of informing or reminding consumers about a specific product or brand. As a result, an effective promotion should increase the demand for the product and generate higher sales level. All in all, promotion mix was separated into four groups, which are advertisement, personal selling, sales promotion and public relation. The first group of promotion mix is advertisement, which is a non-personal sales presentation communicated through media or non-media forms to influence a large number of consumers and its involve payment (Woolverton, 1991). There are many forms of advertising that can reach the audiences such as newspapers, magazines, television, radio, telemarketing, billboards and more. Second group of promotion mix is personal selling. Personal selling is a sales presentation used to influence one or more consumers. Next is sales promotion which is the set of activities that is intended to influence customers. There are four types sales promotion which are rebates, coupons, displays and premium. Firm used rebates to make the refund directly to the customers after product was purchased. Coupons were used by the customers to buy products at discounted price. For certain products such as sunglasses, it was placed in a prominent area in store to attract customers. Premiums, are the gift or prizes provided free to the customers who purchased a specific product. Last part of promotion mix is public relation, which is the action taken by a firm with the goal of creating or maintaining a favorable public image. There are three types of public relation, first is special events. Some firms sponsor a special event such as a race or a concert to promote it name. second type of public relation is news releases, a written announcement about a firm provided by that firm to media, which is slightly different to the last type of public relation, press conferences. Press conference is an oral announcement about a firm provided by that firm to media. These oral announcement and news releases are intended to fix the firm’s image or to eliminate any adverse effects caused by false rumors.
Last element of marketing mix is place for distribution. Every product need to be distributed perfectly to the suitable places so that the business will run smoothly. In general, distribution channel is the path a product will follow from the producer to the consumer. There are three types of distribution channel a firm could use which are direct channel, one-level channel and two-level channel. Direct channel, known as zero channel happen when a producer deals directly with the customers, without any intermediary such as telemarketing, catalog shopping, online shopping and television shopping networks. Second type of distribution channel is one-level channel where there is one marketing intermediary between the producer and the customers. Intermediary who become the owner of the products and resells them to the customers is known as merchant. For example, Ali opens a sports store. He buys many sports items from the producers such as Adidas and Nike and the resells the items to the customers. Other intermediary is known as agent. Agent is the person who brings together the buyer and the seller without assuming the ownership of the products that they help to distribute. There are certain products that usually used the help of agent such as insurance and real estate. The last type of distribution channel is two-level channel where two marketing intermediaries are between the producer and the customers. For example, TESCO bought variety of products in large quantity and then sells the products to the small shop before the customers could buy it from the shop. Other than distributing channel, there is one thing that is important in distribution which is the degree of the market coverage. According to McCarthy ( 1982), marketing coverage refers to the degree of product distribution among outlet. Any firm that uses marketing intermediaries must develop a strategy for market coverage. In market coverage, there are three basic levels. First level is intensive distribution where the firm attempts to sells the products through as many outlets as possible. Products like newspapers, cigarettes, soft drinks and candy are sold using this way. This approach makes it easy for the customers to locate and purchase the products. The second level is selective distribution where the firm limits the number of outlets in which the products will be sold in order to ensure that the sellers have the necessary expertise to sells the products. For example, computer hardware item may be sold in special stores where the employees are knowledgeable enough to answer the question the customers might have about the products. The last level of market coverage is exclusive distribution. Exclusive distribution is an extreme form of selective distribution in which the items sold in only one or a few outlet in a given area. This approach will creates a perception of prestige for the products for examples the products from PRADA, GUESS and LOUIS VUITTON.
In a nutshell, product, price, promotion and place(distribution) are the important elements of marketing mix. These four elements are important in the process of marketing the business in order to deliver satisfaction to the customers and achieving the organizational goals and objectives. Therefore, marketing mix elements could be used as a guideline for the businessman in improving their business.
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