4 Ps of Marketing
This article covers meaning, importance, components & example of 4 Ps of Marketing from marketing perspective.
What is 4 Ps of Marketing?
4 Ps of marketing - Product, Price, Place and Promotion are part of the marketing mix framework which enables a company to formulate its basic marketing strategy for the target market through these four Ps covering the overall offering, distribution, advertising and pricing. The 4 Ps of marketing are also known as the Product Mix. The product mix is a crucial tool in determining a product’s offering to the customer. 4Ps of marketing (Product mix) is an important marketing strategy that companies have to understand the market & sell their products effectively, to increase sales revenue. The 4 Ps in the modern format was proposed by E. Jerome McCarthy in 1960 and it was made more accessible and known by Phillip Kotler.
Importance of 4 Ps of Marketing
4Ps of Marketing or the Product Mix is one of the most important and popular theories in marketing. It helps marketers devise a working marketing strategy which focuses on all the major factors which are related to product, pricing, distribution and promotional activities. To be successful in the market, each company needs to make sure that there product is of the highest quality and meets the customer needs well as expected and even more.
The pricing strategy is critical for the success. Based on the positioning, the price needs to aligned as affordable or premium. If the product is of the best quality at a great price point but it is not available to the target group, then the sales cannot happen so distribution is the next piece in the marketing jigsaw puzzle. Finally without letting the people know about the product, the strategy is incomplete.
Let us say if a company launches a new soft drink in the United States competing with other brands at an affordable price but there is no promotion or awareness in major places like New York, LA, Washington etc. then it becomes difficult for the target group to know about it.
4Ps of Marketing or the product mix becomes very important in helping to formulate all the 4 components together to make a winning strategy.
The figure below shows 4Ps of Marketing with its types.
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Components of the 4 Ps of Marketing
Let us look at each component in the 4 Ps one by one.
1. Product
The Product can either be tangible, which have independent physical existence (from needle to motor parts) or Intangible service (like in IT and tourism industry).
Launching the right kind of product with appropriate number of variants is one of the critical decisions for marketing managers. Product is always the primary component defined in the product mix.
Without the product, the price, place, promotion will not stand independently. Product binds the entire strategy as it is the main offering which a customer interacts with and gets the expected value from.
2. Price
The price of a product determines the offering which the customers are willing to give to buy that product. The price can neither be too low that the seller incurs losses, nor be too high that the consumers cannot afford the product. The price of a product or a service depends on its demand, which is determined by demand elasticity.
Pricing strategy is itself a field in itself and is the second most important component in the mix. Every product offerings needs a price in exchange of the value provided by the product. A manufacturer spends dollars making a product and expects a fair price for the product to earn a profit.
A product is said to be elastic if raising its price reduces the demand considerably (example: coffee, people will switch to tea) and the product/service is inelastic if its demand is not affected even after raising the price. (Example: petrol)
3. Place
The market where the product is sold is known as place. The markets should be convenient for the consumers to access. Distribution network for a product determines its availability in shops/outlets.
Place is determined by a clearly devised strategy. In modern business, place can be online as well as offline. E-commerce has changed the concept of Place in the frontend. Distribution is very complex and requires thorough analysis of the various channels, stakeholders, supply chain in order to make sure that the product is available to the customer at the right place at the right time.
4. Promotion
The method of communication by which the marketer provides information about the product is known as promotion. It included advertisements, personal selling, word of mouth publicity etc. Without promotion, a customer may not come to know about the features of the product or may be the customer doesn't even know that the product exists in the market. Promotion can be used to inform or educate the customer about Product, price as well as the place of availability so that the customer can get it as expected.
Most of the time, the promotions costs money and adds to the expenses hence it is very critical to design the promotional strategies and activities so as to optimize the spend to drive revenue and sales higher still earning a profit..
Example of 4 Ps of Marketing
Let us consider a product like a smartphone.
If a company needs to launch the smartphone in the market, the need to formulate the marketing strategy based on the 4Ps.
Product Example
Product should have all the required features which a customer expects along with service, repair, warranty etc. Apart from the expected features, there should be some unexpected requirements to differentiate the product from the competitors.
Price Example
Price has to match the product offering. A company has to see which segment the phone fits in. What is the cost of manufacturing. If it is a flagship brand with all features then it can be priced at a premium comparable to other competitors in the market.
Place Example
People expect the phone to be available at all channels including online and offline. Products like smartphones are expected to be available in all online retailers like Amazon.
Promotion Example
The promotion can be in form of advertisements, product placement, celebrity association, exhibitions etc.
Hence, this concludes the definition of 4 Ps of Marketing along with its overview.
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