The 4 Ps of Marketing Mix

The term marketing mix was first used in 1953 by Neil H. Borden in his presidential address of the American Marketing Association and later in his article entitled “The concept of the marketing mix”.

In 1960, a well-known marketer E.J. McCarthy categorized elements of the marketing mix proposed by Neil H. Borden into four main categories. According to E.J. McCarthy, marketing mix consists of four main elements:

  1. product
  2. place (distribution)
  3. promotion
  4. price

These elements commonly called 4Ps of marketing mix.

Maximizing performance of the marketing mix is what marketing as a function of organization focuses on. Of course, the ultimate objective of managing the 4 Ps marketing mix is the same as of any other action of the organization, to increase the wealth of the shareholders of the enterprise.

The 4Ps of the marketing mix

Product – Product, as an element of marketing mix, refers to products and services produced by companies for consumption by the population. Various marketing decisions have to be made concerning the product element of the marketing mix. Such decisions include decisions on packaging of the product, branding of the product or service, and on the product warranty.

Place (distribution) – Place (distribution), as an element of marketing mix, refers making products and services available for the customer. It also refers to the site where the product or service is made available to customers. Management of place as an element of the marketing mix includes various vital decisions such as decisions regarding the distribution channel and inventory management.

Promotion – Promotion, as an element of marketing mix, incorporates everything that companies do to attract customers to its products and services. Management of promotion, as an element of marketing mix, includes management of the “promotional mix” which consists of sales promotion, advertising, sponsorships, direct marketing, personal selling and public relations (publicity).

Price – Price, the last of the 4 Ps, refers to the amount, in monetary terms, that the producer requires from consumer in order to part with the ownership of or ability to use the product or service which is offered for sale. One of the key elements of the marketing mix is pricing strategy.

 

The Importance of Customer Relations Management

Whereas in the past companies could afford to ignore consumers’ needs and preferences, this is no longer the case. With options available to consumers due to such factors as increased competition and drastic changes and improvements in technology, consumers become increasingly more educated and demanding.

For example, Portia have to work really hard to keep consumers of Pearlparadise.com satisfied and to build long lasting relationships with them. Otherwise they will move to a competitor.

Since Portia’s business is a small business, Portia has an advantage compared to large competitors. This advantage arises because Portia can address each customer personally and superior higher customer service which will lead to greater customer satisfaction and loyalty.

It is crucial for Pearlparadise.com to keep current customers satisfied since acquisition of new customers is very costly. It costs about five times more to acquire a new customer in comparison to keeping an existing one. Current customers also tend to buy more from the enterprise and may refer their family and friends.

On average, businesses keep between 70-90 percent of customers each year. However, if retention of customers could increase by 5-10 percent per year, than businesses could double their profitability.

This statistics highlights how incredibly important it is for Portia to keep current customers satisfied. So think about this for a minute. While Portia wants to spend money on advertising, that is really a small part of the battle. Once people see Portia’s advertising, she needs to convert them into paying customers. Once Portia converts them into paying customers she then needs to ensure they are repeat clients, otherwise she needs to spend even more on advertising. If she does a poor job serving existing customers, they may write poor review of her business which will lead to even less effect from her advertising.

Moreover, customers are often willing to pay a premium for excellent customer service. Therefore, Portia could even increase her profit margin by providing higher customer service than that of her competitors.