Buying, selling, market research, transportation, storage, advertising — these are all part of the complex area of business known as marketing. In simple terms, marketing means the movement of goods and services from manufacturer to customer in order to satisfy the customer and to achieve the company's objectives. Marketing can be divided into four main elements that are popularly known as the four P's: product, price, placement, and promotion. Each one plays a vital role in the success or failure of the marketing operation.
The product element of marketing refers to the good or service that a company wants to sell. This often involves research and development (R&D) of a new product, research of the potential market, testing of the product to insure quality, and then introduction to the market.
A company next considers the price to charge for its product. There are three pricing options the company may take: above, with, or below the prices that its competitors are charging. For example, if the average price of a pair of women’s leather shoes is $27, a company that charges $23 has priced below the market; a company that charges $27 has priced with the market; and a company that charges $33 has priced above the market. Most companies price with the market and sell their goods or services for average prices established by major producers in the industry. The producers who establish these prices are known as price leaders.
The third element of the marketing process — placement — involves getting the product to the customer. This takes place through the channels of distribution. A common channel of distribution is:
Wholesalers generally sell large quantities of a product to retailers, and retailers usually sell smaller quantities to customers.
Finally, communication about the product takes place between buyer and seller. This communication between buyer and seller is known as promotion. There are two major ways promotion occurs: through personal selling, as in a department store; and through advertising, as in a newspaper or magazine.
The four elements of marketing — product, price, placement, and promotion — work together to develop a successful marketing operation that satisfies customers and achieves the company's objectives.
Below is a list of terms that you will find in the text. As you read «The Four P's,» see if you understand each term. Use this as a working list and add other terms with which you are unfamiliar:
the four P's
Circle the letters of the answers that best complete the sentences below:
1. The four main elements of marketing are popularly known as:
a. the movement of goods and services
b. the four P's
c. the four M's
d. buying, selling, market research, and storage
2. The product element refers to:
a. the four P's
b. testing of a product to insure quality
c. the good or service that a company wants to sell
d. getting the product to the customer
3. Most companies price:
a. with the market
b. below the market
c. beyond the market
d. above the market
4. A common channel of distribution is:
a. wholesaler -> retailer -> manufacturer -> customer
b. manufacturer -> retailer -> wholesaler -> customer
c. retailer -> manufacturer -> wholesaler ->customer
d. manufacturer -> wholesaler -> retailer -> customer
5. The two major forms of promotion are:
a. radio and television
b. personal selling and advertising
c. personal selling and newspapers
d. selling advertisements
Various problems that might occur in the marketing process are listed below. Determine to which of the four P's each problem is most closely related. Mark the appropriate category of product, price, placement, or promotion with an X.
Fill in the blanks with the most appropriate terms from the list:
vital insure retailer prices placement
charge wholesaler price leader take place channel of distribution
The most common ________________ is manufacturer ->
wholesaler -> ________________ ->costumer. Distribution can, however, ________________ through slightly modified channels. For example, products are sometimes sold directly by the ________________ or the manufacturer, rather than by the retailer. Generally, wholesalers ________________ lower ________________ than retailers and sell in larger quantities.
Together, these channels of distribution play a ________________ role in the ________________ element of marketing.
Reading and discussion
THE TARGET MARKET
The marketing strategies of determining product, price, placement, and promotion are not planned in isolation. Marketing analysts often look at a combination of these four factors. This combination of the four P's is known as the marketing mix. The elements of the marketing mix focus on the consumer. In order to develop a successful marketing mix, researchers first ask two important questions: Who is going to buy the product? What is the potential to sell this product?
The group of customers or consumers who will probably buy the product is known as the target market. The company directs its marketing efforts toward this group of potential customers who form the target market. Once market researchers have determined the target market they wish to appeal to, the company can develop an appropriate mix of product, price, placement, and promotion.
The company attempts to match consumer needs or mold consumer desires to the product being offered. For example, if the target market is «middle-class teenagers,» the marketing mix might consist of the following:
Product: blue jeans
Price: with the market
Placement: department store
Promotion: advertisements on a «pop music» radio station
A successful marketing mix depends on the knowledge about consumers and their buying habits gained through market research as well as correct identification of the target market. Strategies of product, price, placement, and promotion are blended in order to reach a chosen group of consumers.
Vocabulary. Use this as a working list and add other terms with which you are unfamiliar.
Use this as a working list and add other terms with you are unfamiliar:
There are many different ways in which an advertiser's message can be communicated to his or her audience. In the States, as well as most other developed countries, newspapers still attract the largest share of the total advertising budget, with television, radio, direct mail and magazines accounting for most of the rest. Other media such as billboards, yellow pages, videotex and telemarketing, although growing steadily, still account for a relatively small part of the amount spent on advertising. Each medium, of course, has its own strengths and weaknesses, and a prospective advertiser would do well to consider these when devising the company's advertising strategy.
The main advantage of newspaper advertising is its broad reach, getting through to a wide spectrum of the population. There's permanence which you don't have with the electronic media and an all-year-round readership which makes long-term strategies feasible. Regional newspapers also offer the advantages of geographical selectivity and flexibility. On the other hand, newspapers usually don't offer colour, and if they do the availability is limited and very often of mediocre quality. Most newspapers offer little in the way of demographic selectivity, which can make precise targeting very tricky.
Television's main appeal is that it offers a combination of sight and sound, which opens up an almost infinite range of creative possibilities. Furthermore, messages can be broadcast very frequently and, like newspapers, to a very broad target. The chief disadvantage, of course, is the high cost of production and air time. The message tends to be short-lived and is often not seen at all as many viewers now have VCRs and skip over the advertisements.
Direct mail campaigns or mail shots as they're otherwise known, rely on mailing lists containing the names of likely prospects. Obviously, the more specific the list, the more effective the campaign is likely to be — and some lists are very specific; for example, a list might contain the names of all the female shareholders between the ages of 40 and 65 in a particular geographical area and this makes targeting specific prospects much easier. Direct mail also has the ability to saturate a specific area quickly using a style and format that offers enormous flexibility. On the minus side, however, direct mail often meets with a certain amount of consumer resistance. It's also relatively expensive per exposure.
Radio offers the advantages of low cost and large potential audience. As with television, advertisers can select the stations and times favoured by the audience they want to reach but, like television viewers, listeners can easily switch stations when the advertisements come on. Even if they don't switch stations, there's a tendency for people to use the radio for background sound and ignore the advertisments. Maybe it's because radio doesn't offer any visual possibilities.
Magazines differ from newspapers in several respects. Firstly, they tend to be kept much longer, sometimes for several weeks or months, and are often passed from person to person. Secondly, the quality of the reproduction is much better, which means advertisers can show their products accurately and create a quality image. Thirdly, special interest magazines offer greater selectivity in reaching specific market segments. However, the costs tend to be high and the campaign usually has to be prepared a long time in advance.
Work in small groups and discuss which media would be used to promote the following in your own countries: