Marketing Mix - 7Ps

The tangible and intangible features of the product or service itself, including the brand (goodwill).

Aspects of the product can be created / changed to specifically target the needs of a mass market, a market segment, or a niche market.

By intentionally creating product features that are attractive to your target market, you make sales much easier: ‘the product sells itself’

The aim is to design a product / service that has the right features, that is at the right price, that has appropriate promotion, and that is in the right place. 

Elements that can be adapted include:

• Quality

• Design

• Customer service

• Accessories

• Ease of use

• Functionality

• Customisation

• Packaging

• Warranties

• Durability

• Speed of functionality 

The exchange value of a product or service to a firm’s immediate customer. 

The price of a good or service is a flexible, sensitive and powerful way to attract a target market. The price of a good / service must be appropriate for:

• Target market income levels

• The level of quality / desirability / uniqueness of the product

• The ‘positioning’ of the good / service (high end, cut price)

• The costs of producing the good / service (must be above cost!)

A price set too high for the target market limits sales, but could have high profit margins. A price set too low might make more sales but limits business profitability by having narrow profit margins - see Income Statement.

There are 4 main ways to set the price of a good or service:

Cost-plus margin: This involves calculating the costs of production and simple adding a percentage margin on top for profit. This approach ensures a profit on sales but doesn't account for competitors prices or target market ability to pay.

Market-based pricing: This involves setting the price according to what the market is willing / able to pay. The level of supply and demand for an item influences what price customers are willing to pay.

Competition-based pricing: Setting the price in relation to competitors’ prices. This allows a firm to ‘position’ itself in the market against it rivals. Prices can be set lower (capture sales, steal market share) or higher (perceived quality).

The methods through which a firm informs, persuades and reminds the target market to make purchases.

The aim is to raise awareness of the firm’s product / service to capture new customers from rivals (increase sales / revenue), increase brand loyalty, and encourage further purchases from existing customers (increased usage, new range).

Promotion can include:

• Advertising: A paid, one-directional message

• Personal Selling: Using salespeople to make personal connections

• Sales Promotions: Temporary discounts / offers to entice purchase

• Publicity: Public sponsorships / stunts to gain attention and media coverage

Marketing departments need to work out the nature of the messages delivered to their target market (what is said, by whom, to inform, to persuade). This should be based on research.

Depending upon the target market, the promotional strategies need to be changed. 

Promotion is necessary, but very expensive. Effective marketing involves tailoring a message to the right people, at the right time. This eliminates wasted money on messages delivered to the wrong people.

The way or ways that customers can access your product / service. 

The distribution strategies to enable the target market to buy the product. Depending upon the target market and the features of the product, marketing must work out the best channels through which to distribute the product. Options could include:

Producer to consumer: Direct from the manufacturer; either online or through sales in a firm-owned outlets. This channel is cheaper for consumer as less intermediaries (middle men). Usually only for exclusive, one-off purchases.

Producer to Retailer to Consumer: The manufacturer determines which retail outlet (tertiary) best matches the product and the target market. The retailer ‘marks-up’ the price to allow for their profit. Usually for semi-exclusive, smaller scale items.

Producer to Wholesaler to Retailer to Consumer: A wholesaler (tertiary) purchases bulk amounts of a mass-produced product, and distributes it to retailers (tertiary). The wholesaler also adds their ‘mark-up’. Usually for goods of mass-consumption.

Marketing needs to design distribution networks to maximise sales. Consideration must be given to costs of distribution. 

Place strategies for a service business are very different. The customer usually needs to enter into the business to acquire the service (either physically or online).