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Abstract
The research report is based on judging whether or not the Marketing Mix is a valid option used in companies for marketing purposes or not. The detailed study takes reference from multiple sources which include credible authors research papers and one to one interview. The marketing mix model has been elaborated to 7Ps now compared to its older version of the 4Ps.
There are multiple variations in the research report that can be found at different sources. But 7Ps are the most readily accepted new outline of the marketing mix model. We can clearly see with reference to real life examples that how frequently marketers use the marketing mix to plan. It has become a significant tool in the marketing industry today.
Introduction
Background of the Problem
How can we define marketing? The meaning that a lot of marketers study as they begin out in the business is:
Placing the right product in the correct place, at an appropriate price, at the correct time.
One only needs to make a product that an exacting group of populace wants, put it on retailing at some place that that populace visits frequently, and value it at a level which competes the worth they sense they get out of it; and do all that at an occasion or time they desire to pay money for that product.
There are many facts in this thought. Though, a lot of hard labour needs to go into judging out what clientele want, and recognizing where they do their shopping. Then you are required to shape out to create the thing at a cost that is worth to them.
But if you obtain just one constituent incorrect, it can result in a mess. You might be left endorsing a car with astonishing fuel-economy in a state where petroleum is very scarce or highly priced; or bringing out a course book after the beginning of the new school year, or advertising a thing at a price thats too high to afford or too near to the ground to attract the potential customers you are targeting.
When one is viewing all the way through your tactics for a manufactured goods or service, the marketing mix is what one needs to be good at as it assists you avoids these types of errors (Mind Tools, n.d).
Research Objective
The objective of the research is to deeply analyze the validity of the marketing mix model also known as the 4Ps model. This research will aim to examine the strengths and weaknesses of the marketing mix model and assess why the attention of most marketing experts as well as text books is focused specifically on Product, Price, Place and Promotion. The report will also strive to analyse the criticisms of various marketing experts and authors of what is considered to be the one of the fundamental pillars of the marketing subject.
Significance of the Research
A thorough research into the established theory will serve to re-examine the rationale of the marketing experts from a modern perspective. It will enable a better understanding of the theory for marketing students and help understand its strengths and weaknesses. The research will also allow a comprehensive look at the 4Ps of the marketing mix as they apply to the international environment. This will serve to enlighten international students as well as teachers of marketing and convey an in-depth analysis of the theory as it applies to their situation.
The research will also critically analyze the thoughts of famous marketing authors on the marketing mix framework and observe the application of the model by major international firms to formulate effective marketing strategies.
There are various authors who criticised the model which is deeply rooted in the marketing practice. Later, the research paper will be discussing how the model was revised by different authors to make it more adjustable in the era of relationship management by adding different other elements to the model.
Statement of the Problem
The nature of the problem in this research report will be based on viewpoints of different writers and the masses. It is evident that different people relate different importance to the validity of the marketing mix. We need to determine;
Whether or not the marketing mix model is valid for marketing purposes?
Literature Review
Introduction
This chapter will be discussing the history of the marketing mix model. A critical analysis of the idea of marketing mix will take place and its origination will also be discussed. Also, the revision of the model by different western authors in the last few decades will also be taken into consideration. In the last few years number of marketing authors also raised their voice against the validity of the marketing mix model; however, in the chapter 1 major critics of the model will be analyzed in detail. And lastly will be discussing how authors added different Ps, Cs and Ds to make the model more suitable for the business environment.
History of the Marketing Mix Model
Marketing Mix History
Marketing mix is one of the significant topics in marketing. The thought of this expression is created back in 1948 by James Culliton, he said marketing judgment should be the consequence of somewhat like formula. It is similar to the eating places which present the same recipe but the clients always go for better or the delicious ones. The idea of recipe was further sophisticated by Neil Borden and made up as the term Marketing Mix. In 19602s E.Jerome McCarthy detailed in more particulars by categorizing the term into 4Ps idea which are product, price, place and promotion.
The marketing mix model well known as the 4Ps considered to be the most acceptable and famous generic model among marketing practitioners and marketing educators. The 4Ps model is categorized under the headings of Product, Place, Price and Promotion by McCarthy in 1960 and since then this concept has been a part of a vast majority of marketing courses and programs. This model is assumed to be a fundamental step towards effective marketing strategies. The 4Ps that is the product, pricing, placement and promotion are all embraced/included within the marketing mix model.
The origin of the model is similar to the other theories and concepts that exist in the field of marketing and it roots out from the business and management authors and educators in the USA during the period of Second World War. The economist Neil Borden introduced the idea of marketing during his presidential speak to AMA (American Marketing Association) in 1953.
In 2009, Neil Borden, quoted that the phrase was recommended to him from a section in research bulletin, authored by his associate, Professor James Clinton (1948) on the subject matter of marketing cost. This subject matter related to manufacturers marketing cost, in which he narrated and termed business executives as a decision maker , an artiste - a blend of ingredient , who follows a pattern laid by others, who sometimes develops his own patterns as he move along, sometimes instantly adapt to the elements available, and sometimes tests and creates elements never tried before. His idea of calling marketing executive a blend of ingredients was very attracting for him, one who is regularly consumed in tailoring innovatively a mixture of marketing procedures and policies in its attempts to create profits for enterprise .
What is Marketing Mix?
Marketing mix is the term used for the outcome which appeared out as the effect of amalgamation of 4Ps to rouse the demand of firm products and services. Marketing mix can be as well be explained as planned, calculated and controllable marketing instrument containing product, price, place and promotion use by the corporation to produce reaction from target market.
Marketing Mix Variables
Product
Products are merchandise and services offered at a price by a corporation to the target market. Marketing mix is used in a diversity of ways by corporations to motivate potential customers and customers to buy and make use of their products. The diversity of alternatives that companies can use came out from only four variables product, price, place and promotion. Some firms like product to be the focal point so they will use up more on product wrapping, quality, design, brand name and service, to offer high brand products and services to target market. Such as Mercedes Benz is a luxurious car, but has its own place market populace who feel pompous to buy and drive the car just for the reason that of the product is totally differentiated from their opponents and has many features.
Price
Price is a quantity which client pays to buy the goods and services. Price can also be a focus for customer towards certain products and services such as Southwest Airlines offer low price services to their customers by offering normal service. It means they want to segment the target market on cost differentiation not on product differentiation. The price variables encompass the following factors such as; list price, discounts, payment periods and credit terms.
Place
Place allows the firm to spread their products for the clientele. It is the physical location of the product and its availability. Physical survival is not the only criterion of place but virtual companies and businesses like Amazon and EBay are also the fraction of third P i.e. place. Wal-Mart with the huge number of retail outlets around the world moves them to the number one company in the world.
Channels
It continues living today, with the internet, additional channels than in what went before but on the whole, you have to think about three most important channels:
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Selling to the clientele: Whether you put up for sale by hand (as retailer), whether you make use of a sales team, you are, in these instances, in direct contact with the ultimate client. There are no disinterested party between you and them. Regrettably, with the exception of the retailer trade, this state of affairs is far to be the common case.
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Selling to the vendors: You produce the fun boards and you sell them to the Arizona retailers. This practice could be a bit complex.
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Selling to the wholesalers: For example, there are perhaps four or five sport articles wholesalers in Arizona. You sell your fun boards to these big men. On turn the wholesalers sell the fun boards to the retailers which finally sell to their clientele.
In the case of Pacific Boat which produces its boats in Philippines for clientele situated in the USA or in Europe, there is no substitute ways to sell the product. It will be obliged to put on the market through some big import export business. Pacific boat has not any contact with its ultimate clientele but of course it will be obliged to be acquainted with precisely their profile. If the item for consumption does not fit to the profile of the ultimate client, the customers will not pay money for it.
As you can see, the alternative of your distribution channel a great deal depends on your item for consumption and place in the industrious procedure.
Promotion
Promotion comprises of a set of methods used for communicating with the clients. The other 3Ps (product, price and place) communication is conveyed via the 4th P (promotion). The target market feels content to know concerning the new product and services offered to them. Price factor in marketing mix includes the subsequent factors; channels, coverage, assortments, locations, inventory, transportation and logistics (Sooper Tutorials, 2009).
Marketing mix perspectives
There are two perspectives of marketing mix one is from buyer point of view and other is from customer point of view.
Retailer marketing mix
The corporation see themselves as the vendor of the product the above conversation about the 4Ps tells the payback of the vendor not the client.
Buyer marketing mix
Buyer looks at the offering not with respect to the 4Ps, but buyer is probing for a way out within the product if the needs and wants are met then first P(product) match the customer first C (customer solution). Buyer for all time desires to get a good retail price for the manufactured goods to boost his profit margin, but its not the obsession most of the customers are really bothered about. What they are looking for is cost of the product which they have to pay by obtaining, using, preserving, stocking up and disposing the product. The second P (price) should take care of second C (customer cost) will lead the product towards the success, since the client will experience ease in buying the product at good market price.
Companies offer their product at many locations, which does not signify that their accessibility is high. In-depth analysis is necessary before choosing the location for placing the products and services (MBA-Tutorial, 2009). Companies must keep in mind the third customer C (convenience) for the buyer third P (place).
Definitions of marketing mix model
Authors such Watershoot & Bulte C, (1992), Kent (1986), Harvey et al., (1996) have also reiterated and described how the Neil Borden introduced the idea of marketing mix in various marketing journals. Therefore, Bordens idea was that the marketer is the one who mix different ingredients (Product, Price, Place and Promotion) properly to make the business operations profitable.
This concept was embraced by many business and managements authors over the period of time and developed further modifications of marketing mix model. (Frey, 1961) suggested that the factors involved in the marketing decision making strategy should be divided into two different parts firstly the offering must includes Product, Packaging, brand, price and service and secondly, the method or tools to offer the product should includes distribution channel, personal selling, advertising, sales promotion and publicity. One year later Lazer and Kelly further divided the marketing decision making into three parts and proposed the goods and service mix, distribution mix and communication mix which according to them are the key elements for marketers to make decisions. They proposed marketing decision variables for marketers, teachers, students and consultants to simplify the complexity involved in the marketing decision making activities.
McCarthy (1960) further reduced the marketing decision variables to 4Ps model which consists of Product, Place, Price and Promotion. He explained the 4Ps model in detail in the first ever marketing text book known as Basic Marketing: A Managerial Approach written by himself. According to Kent, Both McCarthy and Kotler established themselves as high priest of the faith in his period (Kent, 1986). It means both McCarthy and Kotler & Armstrong (2006) have played an important role in the popularity of marketing mix model. The process of adding and reducing factors does not end here, many authors such as Waterschoot and Van Den Bulte 1992, Harvey et al 1996 and Constantinides, (2002) have already suggested in their articles to add more Ps, or Cs, or Ds to make the model more effective. However, there are number of marketing writers who also argued the validity of the marketing mix model such as Kent 1986:148, Watershoot and Van Den Bulte which will be discussed later in the section of main criticisms of the Marketing Model.
The most recent marketing textbook, published in 2010 and written by Jobber (2010) Principle of Marketing explains the 4Ps as one of the major concept in modern marketing . 10 out of 20 Chapters in the book have been devoted to explaining the usefulness of the marketing mix model. Moreover, the fourth European edition of Kotler et al Principle of Marketing dedicated almost half of the book to explain the practical implications of the marketing mix model. Other authors such as David Jobbers in his book the Principle and Practice of Marketing describes the model as a core concept.
It has been noticed that almost all marketing and marketing management text books describes the benefit of using Marketing Mix Model in marketing. But amazingly none of them provide explanation about how this model emerged, how it has been developed and modified over the years and notably is there any evidence to the continuation of the practical use of this theory. Therefore, after reviewing the history of marketing mix one can easily understand the reason for developing marketing Mix theory and evidence to support its continued application to marketing theory. This theory was developed as a basic tool for marketers, students and advisors to explain the complexity involve in the field of marketing.
The first marketing textbook by McCarthy, title of the book Basic Marketing: A Managerial Approach already revealed the fact that 4Ps were developed as a marketing management tool. The marketing mix model was invented almost five decades ago. Although over the years it has been challenged by many marketing writers, yet no writer has come close to forming a theory as acceptable in the field of marketing as the marketing mix. In 2002, Constantinides wrote a very famous paper The marketing mix revisited: Towards the 21st century Marketing in which he further insisted on the elimination of the limitations and said that there is need for further research (Answers.com, n.d). These remarks are discouraging and illustrate that these models have various flaws which have not been eradicated even after 50 years and challenged the value of the model (Jones, n.d).
Criticisms of the Marketing Model
Previously the history of marketing mix model was discussed. Now we direct our attention to the criticisms of the 4Ps model. According to Masterson & Pickton (2010), McCarthys invention of the 4Ps classification has already received a great recognition in the last decades. However, in the last few years a numbers of marketing professors and marketing practitioners raised their concerns against the validity of the marketing mix model. According to Waterschoot and Van den Bulte, You are right to question the classical principles. All principles should be subject to the closest examination, both the logic and the factual relevance (Watershoot & Bulte C, 1992) Philip Kotler in Waterschoot and Van den Bulte 1992 also recognized the need to develop better classification of marketing mix model.
However these marketing educators and researcher addressed the issues and criticized the marketing mix model but yet we are far behind in developing a better conceptual distinction among the large variety of marketing decision variables. Economists and social scientist have been trying to develop useful marketing theories in the past decades and but nobody could develop a general theory. Many general theories that we can hold up today in the field of marketing are either restricted to a specific situation or product category.
According to Goi (2005) the best theories are considered to be those which can be applied to predict the results of certain actions. The theories of physics and chemistry are very useful to predict the consequences of certain action or phenomenon. For instance the theories in physics can easily predict the speed with which an object falls to the ground and same is the case of chemistry we can easily predict the results of the chemical reactions of atoms and molecules. But unfortunately no one could develop such a theory in the field of marketing which has tendency to predict the results. Furthermore current marketing theories are more helpful after the fact diagnosis . According to Goi (2005), authors felt the need to develop predictive theories in the marketing and said that marketing educators are not devoting time to develop such a theory. Marketing as a course are being taught in many universities in the world and marketing practitioners are designing marketing strategies using (Product, Price, Place and Promotion) without realizing the limitations of the mix.
As we already mentioned above many authors in the field of marketing raised their concerns about the marketing mix model. At this point in time we will address the main criticism of the marketing mix model which is considered to be the most useful or significant invention in the area of marketing. Everyday marketers make decisions on the basis of 4Ps, without realizing that the decisions they are making could not be empirically tested and verified. In 1960, when McCarthy introduced the marketing mix model he was not even aware of the fact whether this model is developed in scientific terms or not.
Masterson and Pickton argued that 4Ps model has three major flaws and all three are very much linked to each other. The marketing mix model is systematically weak and it does not suggest to marketing practitioners and student how different ingredients such as (Product, Price, Place and Promotion) are being mixed and whether these variables interrelated with one another or not Masterson & Pickton (2010), Masterson and Pickton (2010) and Fitchett, (2010). Authors stated: to their comprehension the classification of elements for differentiation of the four categories termed product , price , place and promotion have never been explained& albeit casual examinations of students, textbooks and practitioners proposed a broad agreement to categorize elements of marketing mix in identical groups, the deficiency of any proper and exact specification of the elements or traits according to which these elements of the marketing mix should be explained is a key mistake .
According to Fitchett, this criticism of marketing mix can be understood from this example: A marketer is a chief, to make the final product delicious. He needs to have a list of ingredients specifying both the quality and quantity, any of the ingredients should not be replaced with other ingredient and the amount of ingredients should be balanced in the recipe. If anything is unclear or missing or unbalanced the final product will be weak. Hence, when a marketer is not sure about what is being mixed and how the ingredients are interrelated with one another, the decisions based on marketing mix are completely worthless.
Another criticism raised by Waterschoot and Van den Bulte is that each of the four Ps is not mutually exclusive. The sale promotion, a sub category of Promotion cannot be separated from the other advertising and personal selling subcategories and same goes for the other categories of 4Ps such as Product, Price and Place. Kent 1986 also had reservations on the marketing mix model. And he argued The listing of the product as one of the four Ps separate from the other three implies that price, promotion and place are not product decisions. However, products price is its price, products promotion is its promotion and its distribution is its place. They all are product decisions. So both Waterschoot et al 1992 and Kent 1986 agreed that the elements of the marketing mix are not mutually exclusive.
The Marketing Mix Framework Revisited
Previously we were discussing the limitations of the marketing mix model. Now we will be analyzing how marketing mix is being revised and developed over the years. According to Goi, over the couple of years the marketing mix classification has been refined and as a result many marketing educators suggested adding one or more Ps, Cs and Ds to McCarthys invention. According to Zineldin & Philipson (2007) at the era of relationship marketing, the managers are being pressured to satisfy customers needs and wants, recognizing the importance of building long term relations with profitable customers, keeping all this in mind, right now seems to be the perfect time for marketing managers and authors to address the limitations of the marketing mix framework.
Despite the history and current status of the 4Ps model several authors have questioned the future acceptance of marketing mix model and proposed to further modify the model by adding few more Ps, Cs and Ds. According to Constantinides, it has been argued that the marketing mix only addresses the micro issues, as its ultimate focus is on sellers perspective not customer. As a result in 1984, the Kotler suggested to add more elements to the marketing mix such as Customers , Environmental variables , Competitive variables and two addition Ps Political power and Public opinion formation . In 1991 Robins advised to overcome the problem of the lack of customer orientation in the marketing mix model further and recommended to add fours Cs such as Customers , Competitors , Capabilities and Company . In order to enhance the customer services aspect in 4Ps model, Doyle in 1994. advised to add two extra variables like Service and Staff to the marketing mix Moreover in the case of service marketing, relationship marketing, service marketing, retail marketing and industrial marketing additional Ps, Cs and Ds have also been added to develop an effective decision making tool.
According to Goi, (2009), Watershoot et al 1992, further divided the mix into three categories such as Mass Communication Mix , Personal Communication Mix and Publicity Mix , to improve the promotional aspect of marketing mix decision. Mass communication includes: Advertising, Exhibitions and Sponsoring, Personal Communication consists of: Personal efforts to create the awareness and knowledge about product or services and last but not least the Publicity focuses on Press Bulletins, Conferences and trips for media officials. Harvey et al (1996) also suggested adding additional 5Ps. According to Hyman in Goi to make a model valuable, it must have 8Ds. However, the question is that even after adding more elements to the marketing mix model, can it manage to get rid of its major limitations. The answer seems to be No because until or unless we design a theory which is not restricted to a specific product category, predictive, empirically verified and tested and mutually exclusive the problem still persists. Hence the real question seems to be the actual need of the model and if it does not manage to deal with all of these problems then why dont we abandon it completely.
According to Masterson et al although the marketing mix model has been criticized in the last few decades but for a marketer it is impossible to imagine marketing without 4Ps (Business Knowledge Source, n.d). The 4Ps model is deeply rooted in the field of marketing and it is unlikely to think what marketing would be without 4Ps. It has been argued that marketing mix model has become an abstract idea which helps marketers to explain complexity involved in the area of marketing (Rafiq & Ahmed, 1995). Moreover, the marketing mix model will keep helping marketers to provide a comprehensive explanation of marketing. Due to all this the marketing mix model will always considered to be the core principle of marketing idea and will be taught in the universities and is also being practiced by marketers. One could also argue that no matter whether the 4Ps is a good or bad theory but until or unless it helps the marketers in their everyday marketing practices, we cannot leave it as an outdated concept. The marketing mix model is also considered to be constructive theory as it also helps non marketers to understand the marketing jargon (Constantinides, 2006).
After analyzing the current literature on marketing mix one could argue that the marketing mix model will stay alive until or unless someone comes up with a new idea or theory which can replace the marketing mix. Presumably it seems to be very difficult, as no one could develop such a theory even after fifty years of the invention of Mix. In the management department of various universities, the marketing mix is being taught to students as a useful managers tool. Moreover our future marketers will assume the 4Ps model as a valid theory.
Marketing Mix Modeling
Commerce magazines and websites are filled with information concerning the worth of marketing mix modelling as a method to assist corporations make the most of returns on their marketing investments (ROMI). In spite of the coinage of this subject matter in the medium, the facts and gears of marketing mix representations are at least 30 to 40 years old. The issue is of increasing attention partially for the reason that of the business worlds attention in growing top line returns. The last couple of decades have witnessed unparalleled cost cutting and staff cutbacks in the middle of the Fortune 500 in the U.S. The chances for further cost cuts are deteriorating in figure and extent, so the force for long-term monetary performance from civic markets can only be met by rehabilitated importance on few products and revenue expansion.
A second motive for the on the increase interest in marketing mix modelling is the propagation of new medium (i.e., new habits to pay out the advertising financial plan), together with the Internet, online centre of population, search engines, occasion marketing, sports marketing, viral marketing, cell phones, and text messaging, etc. No one knows how to precisely gauge the possible worth of these many recent habits to use up ones advertising dollars. To raise income and profits, corporate decision-making need to comprehend the sorts of advertising savings that are most probable to create feasible, long-term proceeds expansion.
That is, what mixture of marketing and advertising savings will make the maximum sales expansion and/or get the most out of proceeds? Eureka! Marketing mix modelling may make available some answers to this demanding trouble.
What precisely is marketing mix modelling?
The expression is far and wide old and practical unsystematically to a broad series of marketing models used to weigh up different mechanism of marketing tactics, such as advertising, promotion, packaging; media heaviness levels, sales force statistics, etc. These models can be of a lot of types, but numerous regressions are the life blood for the most part marketing mix modelling. Regression is foundation on a variety of inputs (or self-determining variables) and how these speak about to a result (or dependent variable) such as sales or proceeds or both. When the model is constructed and acknowledged, the input elements (advertising, promotion, etc.) can be manoeuvred to establish the total result on an organizations sales or returns. If the head of an organization recognizes that his sales will move in an upward direction that is U$10 million for each $1 million he puts on an ad campaign, he can quickly measure if other advertising ventures make monetary sense. But in a holistic view, a thorough knowledge of the elements that triggers sales and returns in an upward direction, it is mandatory to come up with a result oriented strategy for the company. This establishes that the not only the marketing mix model provides a path for making different marketing choices and transactions, but it also helps in establishing a refined base of knowledge pool to steer strategic planning.
From a theoretical viewpoint, there are two major strategies to follow in marketing mix modelling. The two strategies are longitudinal and cross-sectional. In longitudinal analysis, the business appears at trade and proceeds in excess of a figure of time era (months, quarters, years), evaluated to the advertising input in every of those time stages. In the cross-sectional approach, the companys diverse sales regions every obtains diverse marketing inputs at the similar time, or these inputs are methodically varied from corner to corner in the sales territories, and are evaluated to the sales and proceeds product. Both means are noise, and together have their position. Over
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