HistoryThe term marketing mix was coined in an article written by Neil Borden called “The Concept of the Marketing Mix.” He started teaching the term after he learned about if from an associate, James Culliton, who in 1948 described the role of the marketing manager as a "mixer of ingredients"; one who sometimes follows recipes prepared by others, sometimes prepares his own recipe as he goes along, sometimes adapts a recipe from immediately available ingredients, and at other times invents new ingredients no one else has tried.\
Four Ps: the producer-oriented modelThe marketer, E. Jerome McCarthy, proposed a four Ps classification in 1960, which has since been used by marketers throughout the world.
- Product - A product is seen as an item that satisfies what a consumer needs or wants. It is a tangible good or an intangible service. Intangible products are service based like the tourism industry, the hotel industry and the financial industry. Tangible products are those that have an independent physical existence. Typical examples of mass-produced, tangible objects are the motor car and the disposable razor. A less obvious but ubiquitous mass produced service is a computer operating system.
- Every product is subject to a life-cycle including a growth phase followed by a maturity phase and finally an eventual period of decline as sales falls. Marketers must do careful research on how long the life cycle of the product they are marketing is likely to be and focus their attention on different challenges that arise as the product moves through each stage.
- The marketer must also consider the product mix. Marketers can expand the current product mix by increasing a certain product line's depth or by increasing the number of product lines. Marketers should consider how to position the product, how to exploit the brand, how to exploit the company's resources and how to configure the product mix so that each product complements the other. The marketer must also consider product development strategies.
- Price – The price is the amount a customer pays for the product. The price is very important as it determines the company's profit and hence, survival. Adjusting the price has a profound impact on the marketing strategy, and depending on the price elasticity of the product, often; it will affect the demand and sales as well. The marketer should set a price that complements the other elements of the marketing mix.
- When setting a price, the marketer must be aware of the customer perceived value for the product. Three basic pricing strategies are: market skimming pricing, marketing penetration pricing and neutral pricing. The 'reference value' (where the consumer refers to the prices of competing products) and the 'differential value' (the consumer's view of this product's attributes versus the attributes of other products) must be taken into account.
- Promotion - represents all of the methods of communication that a marketer may use to provide information to different parties about the product. Promotion comprises elements such as: advertising, public relations, personal selling and sales promotion.
- Advertising covers any communication that is paid for, from cinema commercials, radio and Internet advertisements through print media and billboards. Public relations is where the communication is not directly paid for and includes press releases, sponsorship deals, exhibitions, conferences, seminars or trade fairs and events. Word-of-mouth is any apparently informal communication about the product by ordinary individuals, satisfied customers or people specifically engaged to create word of mouth momentum. Sales staff often plays an important role in word of mouth and public relations (see 'product' above).
- Place - refers to providing the product at a place which is convenient for consumers to access. Place is synonymous with distribution. Various strategies such as intensive distribution, selective distribution, exclusive distribution and franchising can be used by the marketer to complement the other aspects of the marketing mix.
Four Cs: the consumer-oriented modelRobert F. Lauterborn proposed a four Cs classification in 1993 which is more consumer-oriented version of the four Ps that attempts to better fit the movement from mass marketing to niche marketing:
- Product part of the four Ps model is replaced by "consumer", shifting the focus to satisfying the consumer needs. Another C replacement for "product" is "capable". By defining offerings as individual capabilities that when combined and focused to a specific industry, creates a custom solution rather than pigeon-holing a customer into a product.
- Price is replaced by "cost", reflecting the total cost of ownership. Many factors affect cost, including but not limited to the customer's cost to change or implement the new product or service and the customer's cost for not selecting a competitor's product or service.
- Promotion is replaced by "communication", which represents a broader focus than simply promotions. Communications can include advertising, public relations, personal selling, viral advertising, and any form of communication between the firm and the consumer.
- Place is replaced by "convenience". With the rise of internet and hybrid models of purchasing, Place is becoming less relevant. Convenience takes into account the ease of buying the product, finding the product, finding information about the product, and several other factors.
The seven Cs compass modelAfter Koichi Shimizu proposed a four Cs classification in 1973, this was expanded to incorporate seven Cs in what is known as the "compass model", to provide a more complete picture of the nature of marketing. It attempts to explain the success or failure of a firm within a market and is somewhat analogous to Michael Porter's diamond model, which tries to explain the success and failure of different countries economically.
The seven Cs of the compass model are:
- The company (C1): it's organization, competitors, and stakeholders.
- The competition (C2,3,4,5): the areas in which the company competes with other firms in its industry. These are the four Ps, renamed and reworded to provide a customer focus:
- Product → commodity (C2): the product itself, and more importantly, the utility that is provides to the consumer
- Price → cost (C3): how much the consumer has to give up so that he or she can obtain and utilize this product
- Promotion → communication (C4): how the consumer is made aware of the product, its utility, and its cost
- Place → channel (C5): how the product is made available to the consumer, and how that affects its utility and cost.
- These four Cs of competition along with the other three Cs compose the seven Cs.
- The consumer (C6): The factors that lead customers to purchase a product These can be remembered by the cardinal directions, hence the name compass model:
- N = needs
- W = wants
- S = security
- E = education
- The circumstances (C7): the uncontrollable external
factors affecting the companies. These can also be remembered by the
cardinal directions marked on a compass:
- N = national and international political circumstances
- W = weather
- S = social and cultural circumstances
- E = economic circumstances
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- Koichi Shimizu (2009) "Advertising Theory and Strategies,"16th edition, Souseisha Book Company. (Japanese)
- Koichi Shimizu (2003)"Symbiotic Marketing Strategy,"4th edition, Souseisha Book Company.(Japanese)
- Brian Solis(2011) Engage!: The Complete Guide for Brands and Businesses to Build, Cultivate, and Measure Success in the New Web, John Wiley & Sons, Inc. pp.201-202.
- E. Jerome McCarthy (1975)”Basic Marketing: A Managerial Approach," fifth edition, Richard D. Irwin, Inc., p.37.