4Ps of marketing

Product issues: 

There are two main product issues to consider: 

Product definition – The main issue regarding product is to define exactly what the product should be. This can be done on three levels:

– Product positioning – With all of these factors the question of product positioning is critical – how does our product compare with the offerings of competitors? Is our product better? If so, in what way?

Pricing issues: 

There are four key considerations (the ‘4Cs’) when deciding the price of a product:

– Cost – the price must be high enough to make a profit.

– Customers – what are they willing to pay?

– Competition – is our price higher than competitors?

– Corporate objectives – e.g. the price could be set low to gain market share.

These issues can be blended to give a range of pricing tactics, including the following:

– Cost plus pricing – the cost per unit is calculated and then a mark-up added.

– Penetration pricing – a low price is set to gain market share.

– Perceived quality pricing – a high price is set to reflect/create an image of high quality.

– Price discrimination – different prices are set for the same product in different markets, e.g. peak/off-peak rail fares.

– Going rate pricing – prices are set to match competitors.

– Price skimming – high prices are set when a new product is launched. Later the price is dropped to increase demand once the customers who are willing to pay more have been ‘skimmed off’.

– Loss leaders – one product may be sold at a loss with the expectation that customers will then go on and buy other more profitable products.

– Captive product pricing – this is used where customers must buy two products. The first is cheap to attract customers but the second is expensive, once they are captive.

Promotional issues: 

Promotion is essentially about market communication. The primary aim is to encourage customers to buy the products by moving them along the AIDA sequence: 

Awareness 

Interest 

Desire 

Action 

Towards this firms will use a combination of different promotional techniques as part of their ‘promotional mix’, including:

– Advertising – e.g. placing adverts on TV, in newspapers, on billboards, etc.

– Sales promotion techniques – e.g. ‘Buy one get one free’.

– Personal selling – e.g. door-to-door salesmen.

– Public relations (PR) – e.g. sponsoring sports events.

Place (distribution) issues: 

The key decision under ‘place’ is between: 

– Selling direct – here the manufacturer sells directly to the ultimate consumer without using any middlemen, e.g. accountancy firms deal directly with their clients without recourse to brokers or other middlemen.

– Selling indirect – here the channel strategy could comprise a mixture of retailer, distributors, wholesalers and shipping agents, e.g. food distribution will often involve distributors and retailers to get the product from farmer to consumer.