The basic task of marketing

22
Marketing Mix
22.1 Introduction
The basic task of marketing is the delivery of product(s) to consumers
so that their needs are fulfilled and organisational objectives are also
achieved. This involves several important decisions, e.g. deciding about
the product or products which should be offered for sale, price of the
product, markets where products may sell and the means of
communication with the consumer for the sale of the product. All these
decisions form part of marketing-mix. In this lesson we shall study
about the concept of marketing mix, its components and the relationship
among various components of marketing mix.
22.2 Objectives
After studying this lesson, you will be able to :
explain the concept and characteristics of marketing mix;
describe various components of marketing-mix;
establish the relationship amongst various components.
22.3 Concept and Characteristics of Marketing Mix
The process of marketing or distribution of goods require particular
attention of management of business because production has no relevance
unless products are sold. Marketing mix, simply stated, is the process

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20:: Business Studies
of designing and integrating various elements of marketing in such a
way as to ensure the achievement of enterprise objectives. The elements
of marketing mix have been classified under four heads - product,
price, place and promotion. That is why marketing mix is said to be
a combination of 4 P’s. Decisions relating to the product include product
designing, packaging and labelling and varieties of the product. Decision
on ‘Price’ is very important because sales depend to a large extent on
product pricing. Whether uniform price will be charged or different
prices will be charged for the same product in different markets are
examples of decision pertaining to the price of the product. The third
important element is ‘place’, which refers to decision regarding the
market where products will be offered for sale. ‘Promotion’ involves
decisions bearing on the ways and means of increasing sales. Different
tools or methods may be adopted for this purpose. The relative
importance to be attached to the various methods is decided while
concentrating on the element of ‘promotion’ in marketing mix., Lastly,
the marketing manager has to take into account the impact of external
factors like consumer behaviour, competitors’ strategy, and Government
policy on each element of marketing mix.
In short, marketing mix involves decisions regarding products to the
made available, the price to be charged for the same, the incentives to
be provided to the consumers in the markets where products would be
made available for sale. These decision are taken keeping in view the
influence of marketing forces outside the organisation.
Characteristics of Marketing Mix
(i)
Marketing-mix is the crux of marketing process:
Marketing mix involves many crucial decisions relating to each
element of the mix. The impact of the mix would be the best
when proper weightage is assigned to each element and they are
integrated so that the combined effect leads to the best results.
(ii)
Marketing mix has to be reviewed constantly in order to meet
the changing requirements :
The marketing manager is required to constantly review the mix
and conditions of the market, and make necessary changes in the

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Marketing Mix :: 21
marketing mix according to changes in the conditions and
complexion of the market.
(iii)
Changes in external environment necessitate alterrations in
the mix:
Changes keep on taking place in the external environment. For
many industries, customer is the most fluctuating variable of
environment. Customers’ tastes and prefrances change very fast.
Brand loyalty and purchasing power too change over a period of
time. The marketing manager has to carry out market analysis
constantly to make necessary changes in the marketing mix.
(iv)
Changes taking place within the firm too necessitate changes
in marketing mix:
Changes within the firm may take place due to technological
changes, or changes in the product line, or changes in the size
and scale of operation. Such changes call for correspondent
changes in the marketing mix.
Intext Questions 22.1
State which of the following statements are ‘true’ and which are ‘false’.
1.
Marketing mix is a one time decision
2.
Marketing mix consists of four elements.
3.
External environment doesnot affect marketing mix.
4.
Marketing mix needs continuous review.
5.
Marketing mix should be so planned that it fulfills the needs of
the consumer as well as the organisation.
22.4 Elements of Marketing Mix
As mentioned earlier the elements or constituents of marketing mix
may be grouped broadly under four heads :

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22:: Business Studies
(i)
Product
(ii)
Price
(iii)
Place
(iv)
Promotion
Product
Product refers to a physical product or a service or an idea which a
consumer needs and for which he is ready to pay. Physical products
include tangible goods like grocery items, garments etc. Services are
intangible products which are offered and purchased by consumers.
Services may involve also an innovative idea on any aspect of operation.
Products is the key element of any marketing mix. The decisions
concerning product may relate to -
a)
Product attributes
b)
Branding
c)
Packaging and labelling
d)
Product support service
e)
Product mix.
Product attributes refer to the quality, features and design of the product.
A product should serve the purpose for which it is made, in terms of
utility and quality. In a competitive market, products are differentiated
on the basis of certain features or design. For example, in the whirlpool
washing machine.‘Agitate wash’ is the distinctive feature.
Branding is a crucial decision. In a competitive market, many products
are sold by brand names. You might have come across Indian brand
names, like Maruti, HMT, Godrej, TATA. Amongst foreign brand names
Sony, Samsung are well known. Brand is an identification of product.
It plays an important role in creation of demand while branding a
product, it should be ensured that the name is simple, easy to read and
pronounce and if possible, it should have an appeal.

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Marketing Mix :: 23
Packaging and labelling of product are quite important decisions
Packaging means putting the products in suitable containers or packets
such as tin, plastic jar or card board box, etc. Packaging should be
such that product is protected and easily handled. Sometimes, the
container may have its own usefulness. For instance Baidyanath
chyawanprash (pack) is available in a plastic jar which can be reused
after consuming the chyawanprash. Certain polythene and plastic are
not considered good as packaging material from the environment point
of view. Their usage should be avoided.
Labelling serves the purpose of indicating the contents, weight or
measure, instructions for use, price, name of the producer, date of
manufacture and expiry, etc. The information on the label is essential
for various reasons. For example, the date of expiry in case of medicines,
and date of manufacture in the case of eatables prevent the sale of
products which may prove harmful.
Product support service is another important element of product decision.
It includes decision pertaining to the type of service and availability of
the service. Service may be by way of installation service, training in
product use, after sale service, credit and financing service, etc. It
should be decided whether services would be provided free or against
separate charge. Secondly, how the services would be made available
by the producers or agencies, are also important decisions to be made
particularly with respect to durable consumer goods like TV, washing
machines electric fans, etc.
The markets in which products will be offered is yet another important
decision. A company may decide to a single or a variety of products,
add new products, or withdraw certain products. Relevant decisions are
made keeping in view the scope of marketing. Such decisions are called
product line or product mix decisions. Product life cycle is a guiding
factor while decisions are made.
Product life cycle
Product life cycle denotes different stages through which the sale of
any product changes over a period of time. Generally, there are four
stages in the life of each product–introductory stage, growth stage,
maturity stage, and declining stage. When any product is introduced in

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24:: Business Studies
the market, heavy expenditure is incurred on advertising and other
methods of increasing the sale. This is known as introductory stage.
During the growth period, sale of the product increases fast and cost
of production comes down due to increase in scale of production.
Profits earned increase substantially. During the maturity stage, the
growth in sale of the product slows down. Profits also start declining.
After the maturity stage there is a stage of decline, when the product
starts losing its acceptance. There is a pressure for price cut. Firms
generally start withdrawing the product after maturity stage. Some firms
start preparing for introducing alternative product at the end of growth
stage. Product life cycle, thus, helps in deciding about the product or
products which should be offered in different markets.
Price
Price is the amount charged for a product or service. It is the
consideration paid by consumers for the benefit of using any product
or service. Price fixation is an important aspect of marketing. Pricing
decisions of a company are affected by both internal as well as external
factors.
Internal Factors
External Factors
– Cost of the product
– Nature of market
– Marketing objectives
Pricing
or demand for product
– Marketing mix strategy
Decision
– Competitors' costs and
strategy
price offers.
– Organisation for pricing
– Other environmental
factors like economy,
government’s policies,
etc.
Internal factors :
Internal factors, affecting the price of a product, are many. Cost of the
product sets the floor. Any company would like to charge a price
which covers the cost of the product and a fair rate of return.
Cost of the product means total cost i.e., fixed plus variable costs.
Fixed costs do not change with the change in volume of production
upto a certain level. Variable costs change proportionately. In the period

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Marketing Mix :: 25
of recession, companies continue to supply at a rate which covers
variable costs and as much of costs as possible.
The Company’s marketing objective is yet another important variable
for price fixation. If it is survival, the company would stay in the
market as long as it covers variable costs fully and fixed costs partly.
In case it is market leadership, a low price will be fixed initially. After
wards prices may be enhanced. ‘Surf Excel’ is an example. At the time
of introduction, its price was just equal to other close substitutes, but
today it has its own market. It is bought by consumers without
comparing its price with other substitutes.
The relative importance of pricing decision in marketing mix, also
affects price fixation. Sometimes pricing decision is the control decision
and all other decisions are taken afterwards.
It may also happen that other variables of marketing mix like promotion
become more important. Price is fixed after considering other variables.
Who will fix the price is yet another important decision. In small
organisations, top management sets the price. In large companies, product
line managers perform this job. For industrial markets, sales managers
are permitted to negotiate prices within a specified range. These days
many companies set up a separate department to handle pricing decision.
External factors
Besides internal factors, external factors also influence the pricing
decision of a company. These factors are called environmental factors.
Nature of demand, competitors’ costs, price offers and government
policy are very important factors to be considered while fixing prices.
The relationship between price and demand should be analysed properly.
No company can ignore the costs, prices and offers of substitute items
from competitiors. Economic factors, like rate of interest, state of
industry (boom or recession), inflation, etc. affect the price-fixing
decision. In case of certain products, e.g. products which fulfil basic
needs, government may impose price control. Thus, it would also affect
price of the product.
There may be two methods of price-fixation:

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26:: Business Studies
1.
Cost-based approach
2.
Competition-based approach
Cost-based approach :
This is the simplest method of pricing. Generally companies add a
certain percentage of Profit, to the total cost of the product. The total
cost of the product is calculated after taking all types of costs into
consideration. While following this approach, no other factors e.g. prices
of substitute goods, nature of demand, etc. are considered.
Competition-based approach :
In competitive market, cost-based approach is not always practicable.
The prices are determined on the basis of conditions in the market.
Companies may follow any one of the following three approaches.
a)
Price-in-line
b)
Market-plus
c)
Market-minus
Price-in-line means prices fixed nearly equal to the prices of close
alternatives. Generally this happens under free market conditions i.e.
when the number of buyers and sellers is so large that they cannot
affect the prices. Prices are decided by the market forces of demand
and supply.
When companies charge (fix up) a price which is more than the price
of existing substitutes, it is called market plus pricing. This approach
is adopted when the quality of a product is better, or it has a popular
brand name, or its packaging is attractive and useful. Consumers will
pay more only when they find distinctive differences in the product
and its substitutes.
Sometimes business enterprises get ready to supply products at a price
lower than the market price. It may be adopted to grab a larger market
share or to make a newly introduced product more popular. This
approach is called market-minus approach. Companies having shorter
channels of distributions or direct selling facilities can afford to fix a
price lower than the prevailing market price.

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Marketing Mix :: 27
Intext Questions 22.2
A.
Fill in the blanks :
1.
Products are more identified by their _________ name.
2.
Plastic jars are nowadays quite popular for __________.
3.
__________ refers to the decision concerning product line
or which product (s) will be offered in different markets.
4.
Services which are provided with the product and may be
before or after sale are known as ___________ services.
5.
Different stages through which the sale of a product passes
over a period of time denote _________.
B.
State which of the folllowing statements are ‘true’ and which are
‘false’.
(i)
Cost is the main consideration while setting the price of
a product.
(ii)
Govt. policies have no influence on the price fixation policy
of a company.
(iii)
Both internal as well as external factors affect price
fixation.
(iv)
Under cost-based approach, only the variable costs of a
product are considered.
(v)
Competition-based approach of price fixation forces a
company to supply the product at existing prices.
Promotion
Promotion refers to using methods of communication with two
objectives : (i) informing the existing and potential consumers about a
product, and (2) to persuade consumers to buy the product. It is an
important element of marketing mix. In the absence of communication,
consumers may not be aware of the product and its potential to satisfy
their needs and desires. Various tools of communication form part of
promotion mix. Companies must decide which tool(s) should be used

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28:: Business Studies
for larger sales and in what proportion. The tools should be combined.
These decisions are known as promotion-mix decisions.
There are four components of promotion-mix i.e., advertising, personal
selling, sales promotion and public relations. Thus, promotion mix is
a company’s total communication programs which consists of different
blends of its components and which is used to achieve the company’s
marketing objectives.
Tools of Promotion-mix
Advertising, personal selling, sales promotion and publicity are the
major tools. The marketing manager must recognise the characteristics
of each tool and costs involved while deciding on the promotion-mix.
Advertising
Advertising is an impersonal form of communication for which the
seller pays in order to promote a physical product or service. It may
be in print form as in newspapers and magazines, or in audio form as
on the radio and other similiar methods, or in audio-visual forms as on
the Television, cinema screen, etc.
The merits of advertising is that it reaches a larger number of people,
the message can be repeated, its cost is not high, and with the
development of art and computer graphics, simple statements can be
transformed into forceful messages.
The other side of advertising is that it doesnot provide any feed back,
it is not as forceful as personal selling, it is not flexible, and good
advertisements cost a lot.
Personal selling
Personal selling is a personal communication with one or more
prospective buyers for the purpose of selling a product or service.
These days, personal selling is considered to be the most effective tool
because of various characteristics which are listed below:
it involves personal interaction, hence feed back is received
immediately;

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