Extended Marketing Mix - Essay Example

?Extended Marketing Mix Identify and analyse the individual elements of the extended marketing mix: Introduction: Marketing mix is a planned marketing strategic tool which comprises of four basic elements. It is an essential tool, required for proper and effective marketing of any product. (Kotler, 2003) and (Brassington and Pettitt, 2006) have referred it to as ‘4 P’s’ of marketing. In order to meet the needs of other areas of marketing, recently, marketing mix has been transformed into ‘Extended Marketing Mix’ by the addition of newer elements. It now consists of three more elements, in addition to the traditional marketing mix. This has enabled the marketers and businesses to cover all key areas, required for competent marketing of a product. Elements of Extended Marketing Mix: Extended marketing mix has seven elements; therefore, it can also be termed as 7 P’s of marketing. Let’s elaborate each element of the extended marketing mix so as to identify and analyse their functions. 1. Product: It can be defined as the substantial product or insubstantial service which is produced or manufactured massively, usually to serve or fulfil commercial purposes. The product so developed should be in accordance with the market’s demand-supply mechanism. Before product development, one needs to analyse the demand of that product in context of its supply, or needs to create a demand by creating marketing niche. Creation of a new marketing niche can be done through the creation of a brand. This means to create demand hype by convincing potential customers for buying and using that product, irrespective of its necessity. This is very common for luxurious goods and services. 2. Price It is the material amount that is paid by the customer for a product. According to Jed C. Jones ‘The price of any product has a direct impact on the marketability of that product. Pricing for offerings that are more commonly available in the market is more elastic, meaning that unit sales will go up or down more responsively in reply to price changes. By contrast, those products that have a generally more limited availability in the market (but with strong demand) are more inelastic, meaning that price changes will not affect their unit sales very much.’ (Jones, 2007) 3. Place It is one of the most important elements of marketing mix. It is the location from where a customer can purchase or obtain the product. It consist of various channels of distribution like retail or wholesale stores, outlets, promotional stalls, home delivery services, internet stores, online shopping cart facility, mail order and website order booking. 4. Promotion Product promotional activities serve as the directional factor for achieving marketing objective. They include marketing campaigns, promotional introductory trials, event sponsorships and incentives in form of special offers, discounts, gift and advertisements. Other promotional activities include recommendations, referrals, endorsements and promotion by using good will of the company. 5. People This element of extended marketing mix comprises of people involved in each and every step of product life cycle. The management of an organization plays a key role in development of this element. They collectively constitute the culture of an organization. People also are the target audience and market segment of a particular product. 6. Process This is primarily related to the organization which is providing any sort of service as its product. Secondarily, the production process, sales, after-sales and customer relationship management of a manufacturing concern forms the process. 7. Physical Evidence This element of extended marketing mix deals with the physical environmental evidences. Gaurav Garg explains it as: ’the importance of quality physical layout is important in a range of service providers, including: Students going to college or university have far higher expectations about the quality of their accommodation and learning environment than in the past. As a result colleges and universities pay far more attention on creating attractive learning environments, student accommodation, shops, bars and other facilities. (Garg, 2006) Air passengers expect attractive and stimulating environments, such as interesting departure lounges, with activities for young children. Hair dressing salons are expected to provide pleasant waiting areas, with attractive reading materials and access to coffee for customers. Physical layout is not only relevant to stores which we visit, but also to the layout and structure of virtual stores and websites. Today, consumers typically come into contact with products in retail units - and they expect a high level of presentation in modern shops - e.g. record stores and clothes shops. Not only do they need to easily find their way around the store but they also often expect a good standard or presentation.’ a. Describe how products are developed to sustain competitive advantage: The product so developed should be in accordance with the market’s demand-supply mechanism. If the product is developed for existing market demand then it will require effective product differentiation with the similar products already available in market. It is commonly done for products categorized under necessities and FMCG’s. Product differentiation requires a convincing answer to why a customer would choose our product over others? It highlights those features and characters of products that are different from the products of competitors like packaging, design, quality and value. Let’s consider the example of a sun screen lotion. It is developed in accordance with the local requirements regarding climate, temperature, proportion of women in society, level of awareness etc. This product can’t be marketed with same strategy in cold and hot regions of a same country. b. Explain how distribution is arranged to provide customer convenience: Increased potential distribution options results in raised volumes of sales and vice versa. Distribution channels which enable a customer to procure a product at his door-step are very famous and effective driver for sales of an organization. They not only increase sales but also increase customer convenience, thus creating customer satisfaction and improving customer retention capacity of an organization. Big organizations (like TESCO and STANSBURY) have improved customer facilitation by developing online shopping cart options at their websites. This has facilitated their customers (especially B2B) by increasing the distribution options. Customer can shop online from TESCO and STANSBURY and the products are delivered at their premises. This has greatly improved the sales of both organizations. c. Explain how prices are set to reflect an organisation’s objectives and market conditions: Price of a product determines the objective of an organization. It categorizes an organization’s objective into one of the following: Maximization of profit. The basis of this type of organization objective is increased profit margins. It is usually done when there is weak or no market competition like, in monopolistic market. Company maintenance. This objective is characterized by low profit margins. It is opted for maintenance of an organization by overcoming the costs and expenses with sales just above the breakeven. Taking over competitor’s market share is accompanied by low pricing strategy to capture the competitor’s share. It results in increased sales and this increased roll-over leads to handsome profits along with the broadened market share. Stabilizing existing market share. Product’s price is set to meet the neck to neck competition with competitors, market demand-supply mechanism and changing environment. Usually it is characterised by negligible fluctuation in the price of the product. Pricing according to return on investment. It aims at efficient cost effective pricing with marginal profits. Prices are also affected by market conditions. Increased demand with limited supply results in increased prices while decreased demand with increased supply causes a drop in product price. Increased demand with increased supply causes stability in prices due to tougher market competition whereas decreased demand with decreased supply usually results in low product prices. The factors that play basic part in determining product price, includes: Cost of product Market sensitivity of product Demand of product Competitor’s pricing strategy Stage of product life-cycle Expected sales and profits Economy and inflation factor d. Illustrate how promotional activity is integrated to achieve marketing objectives: Free or discounted user trial packs are usually used for achieving the marketing objective by creating a niche or product differentiation. Promotions through advertising via TV, radio ads, celebrity branding, posters, leaflets and pamphlets are the most common promotional activity for achieving general marketing objective of an organization. It is used in combination with other promotional elements for the attainment of any specific objective. Other activities include special offers, discounted prices or provision for extra amounts. This promotion type is common for marketing strategy that aims to take over competitor’s market share. Marketing objectives like offering incentives, free gifts, lucky draws for prizes and coupons are usually offered to retain and stabilize existing market share and to prevent loss of potential customers due to competitor’s offerings [5]. If we take a look on the random marketing campaigns of Coca-Cola, it can be easily observed that their promotions are aimed at retention of their existing market share. But they occasional change their marketing strategy, in response to the change in marketing strategy of Pepsi Co., by gift offerings and discounted prices. (Banting et al. 2010) e. Analyse the additional elements of the extended marketing mix: As mentioned above, it includes People, Process and Physical evidence in addition to the traditional 4 P’s of marketing mix. People: Service concern organizations are the prime focus of this component. Organizations providing customer care services needs to deeply focus on this element. It is followed through right recruitment of staff and by conducting job specific training, if required, to improve interpersonal and managerial skills. It relates to maintenance of employee satisfaction and retention, workplace environment, suppliers’ satisfaction and retention and finally, customer satisfaction and retention. The quality of service provided by customer relationship staff of Pay Pal’s online facilitation centre is remarkable. It has been standardized by proper training and up gradation of employees by Pay Pal. Process: It involves effective time management of an organization which enables its staff to work efficiently within the limited time schedule. It deals with the way services were delivered, how they were consumed, what was the response time and were there any complaints. Amazon is the best example for the efficient and effective processing regarding customer care. Physical Evidence: It involves the tangible appearance, presentation, atmosphere and environment of the premises, as well as the intangible ambience experienced by the customer and the value perceived in form of customer satisfaction. It also includes the value delivered to potential customers by existing consumers. The environment at The Grove, one of the world’s best spa in UK, comprise of peaceful atmosphere, pleasant staff and attractive interior have a good impact on the customers. Conclusion: The Extended Marketing Mix, also known as the 7 P’s, is one of the commonly used marketing strategic tool. It is used by marketers to define appropriate marketing strategy for their product in accordance with the organizational objectives. It is proposed to expand its applicability from tangible products to intangible services. Typically, seven elements of extended marketing mix can be adjusted for variable market conditions or different target markets. References: 1. Kotler, Philip (2003), Principles of Marketing, 11th Edition, Prentice Hall, New Jersey 2. Brassington, F. and Pettitt, S. (2006) Principles of Marketing, 4th Edition, Pearson: Harlow, Essex 3. Jones, C. Jed (2007), Definition of marketing Mix – Product, Price, Place & Promotion, Ezine Articles [online] Available at http://EzineArticles.com/721799 4. Garg, Gaurav (2006), The Extended Marketing Mix (7Ps), Management Paradise [online] Available at http://www.managementparadise.com/forums/marketing-management-rm-im/10026-extended-marketing-mix-7ps.html#post37374 5. Banting, Peter; Ross, Randolph E., (2010), SpringerLink - Journal of the Academy of Marketing Science, Volume 1, Number 1 Read More