Marketing mix

What is the marketing mix?

The marketing mix was first developed by Neil Borden, an American marketing researcher, in the 1950s. Borden described the marketing mix as a combination of marketing tools that a company uses to market its product or service.

Later, Jerome McCarthy refined Borden’s idea and developed the concept of the 4 Ps in the marketing mix: product, price, promotion, and placement. This concept was adopted by many companies in the 1960s and has served as the basis for developing marketing strategies ever since.

Since then, the Marketing Mix has continued to evolve and various approaches and additions have been added, such as the expansion to seven marketing tools (Product, Price, Promotion, Placement, Process, People and Physical Evidence). Today, the mix is a fundamental tool in the field of marketing and helps companies align their marketing strategies and successfully achieve their marketing goals.

What marketing tools does the marketing mix include?

The four P’s in the marketing mix stand for product, price, promotion and placement. Product refers to what the company offers, while price refers to the amount a customer must pay for the product. Promotion refers to how the company advertises the product, and placement refers to how the product is made available to the customer. Together, these four elements form the basis of a successful marketing strategy by ensuring that the product meets the needs and wants of the customer, is competitive and is marketed effectively.

What are the four marketing tools in the marketing mix?

Product Policy (Product):

The product refers to what the company offers. The aim here is to design the product or service in such a way that it meets the needs and wants of the customers. Factors such as the quality, design and packaging of the product must also be taken into account. In particular, the product life cycle plays an extremely important role in planning the product strategy. A successful product policy is always based on customer benefit and how the product solves the problems of the target group. When designing the product policy, several factors must be considered:

• Product diversification and modification: companies can improve their market position by introducing new product lines or adapting existing products.
• Product design: This includes the design, quality and packaging of the product. A product must stand out clearly from the competition, whether through its functionality, aesthetics or brand.
• Product life cycle: Companies must manage their products throughout their life cycle – from introduction, through growth, maturity and then decline. Each phase requires different marketing measures.

Pricing Policy:

The price is the amount a customer has to pay for the product. The company has to find the right price to make both profits and remain competitive. Factors such as discounts, promotions and payment terms must also be considered in the pricing strategy. The aim is not only to make a profit, but also to set the price in line with the expectations of the target group and the competitive environment. Important strategies in pricing policy are:

• Cost-based pricing: Here, the price is determined based on production costs and a profit margin.
• Competitive pricing: Companies base their prices on those of their competitors in order to remain competitive in the market.
• Demand-based pricing: The price is adjusted depending on the customers’ willingness to pay and market demand.
• Pricing strategies: These include skimming (high introductory price that is later reduced) and penetration (low introductory price to gain market share).

Communication policy (promotion):

Promotion is the way in which the company advertises the product or service – in other words, the communication channels. The aim is to appeal to the target group and persuade them to buy the product. Various advertising media such as TV commercials, advertisements, posters, PR or online marketing are used. The communication policy must be consistent and adapted to the target group in order to have the greatest possible influence on purchasing behaviour. Important instruments of communication policy are:

• Advertising: Classic channels such as television, radio and print media as well as digital platforms (social media, online advertising) are used to promote the product.
• Sales promotion: special offers, discounts, vouchers and loyalty programmes boost sales in the short term and promote customer loyalty.
• Public relations (PR): the aim is to present the company in a positive light, whether through media relations, sponsorship or event marketing.
• Direct marketing: this involves direct contact with the customer, e.g. through email marketing, newsletters or telephone marketing.

Distribution policy (place):

Placement refers to how the product is made available to the customer. The aim here is to find the right distribution channel and the right distribution partners to bring the product to the customer. The choice of distribution channels and distribution strategies plays a central role here. Companies must decide whether they want to sell their products directly (via their own channels) or indirectly (via intermediaries). Factors such as availability and the presentation of the product at the point of sale must also be taken into account. Here are the most important aspects:

• Distribution channels: Companies can opt for online distribution, stationary retail stores or a combination of both (multichannel). The choice of channel depends heavily on the preferences of the target group.
• Logistics: Efficient logistics are essential to deliver products to the customer quickly and cost-effectively. This includes warehousing, transport and coordination between the various distribution channels.
• Channel partners: Working with wholesalers, retailers or e-commerce platforms can significantly expand market access.

What are the seven marketing tools in the marketing mix?

Process policy (Process): Process policy encompasses all activities that ensure that a product or service is efficiently created and provided to the customer. It deals with the optimisation of internal processes and customer interaction during the provision of the service. It is crucial that the process runs smoothly, quickly and in a customer-oriented manner. Here are some key elements:

• Standardisation: Processes should be clearly structured and repeatable to ensure consistent quality.
• Automation: The use of technology to automate processes can increase efficiency and reduce errors.
• Customer experience: Every interaction the customer has with the company – from ordering to delivery – should be as pleasant and straightforward as possible.

People: The HR policy focuses on the management and development of employees who are directly or indirectly involved in the provision of a product or service. Particularly in the service sector, employees play a crucial role in the marketing mix, as they have a significant influence on customer satisfaction and brand perception. Important aspects of HR policy include:

• Training and development: Skilled employees help ensure that customers receive the best possible experience. Regular training on products, sales strategies and customer communication is essential.
• Employee motivation: A positive corporate culture and motivated employees can significantly improve the customer experience. This includes attractive compensation models, career development opportunities and a pleasant working environment.
• Customer focus and service orientation: Employees should be trained to treat customers in a friendly and professional manner in order to build long-term customer loyalty.

Physical Evidence: The physical evidence refers to the physical elements that the customer encounters during the service experience or purchase. This includes the appearance of business premises, online presences or even the packaging of the product. These physical cues play a major role in how the customer perceives the company and the product. Aspects of the physical evidence are:

• Business premises: The design, cleanliness and atmosphere of a store influence the customer’s perception of the brand and their satisfaction. A well-designed salesroom conveys professionalism and trust.
• Website and online presence: In the digital age, the user-friendliness and aesthetics of a website count as much as its physical elements. A well-designed website with easy navigation and a clear design boosts customer confidence.
• Packaging: Product packaging should be functional, but it should also reflect the brand image and quality of the product. High-quality packaging can increase the perceived value of the product.

These seven marketing tools ensure that a company develops and implements a successful marketing strategy that is aligned with the needs and desires of its customers and end users and remains competitive.

Alternative models to the classic 4P marketing mix

The classic marketing mix with its 4P’s – product, price, placement and promotion – remains one of the most important foundations in marketing. However, changing consumer behaviour and advancing digitalisation have led to the development of alternative models that are more responsive to customer needs and offer new approaches to marketing strategy. In particular, the 4C model and the SAVE model put the customer at the centre and offer a more developed perspective on how marketing should work today.

The following table provides an overview of these modern models and shows how they differ from the traditional 4P approach.

The 4C model puts the customer at the centre of the marketing strategy. It focuses on customer needs and replaces the product-oriented 4P’s with a customer-oriented view.

• Customer (Kunde): The focus is on what the customer really needs, rather than just developing a product.
• Cost: Instead of just determining the price, the aim is to consider the overall cost-benefit factor for the customer.
• Convenience: The distribution channel is based on how the customer can purchase the product most conveniently.
• Communication: Instead of one-way advertising, it is about a dialogue with the customer to better understand their needs. – The focus is on solving customer problems rather than on the product itself.

The SAVE model offers an alternative to the 4 Ps, placing more emphasis on providing solutions and added value than on pure product marketing.

• Solution: Instead of the product, the focus is on the solution to a customer problem.
• Access: The sales channel is geared towards how easily the customer can access the solution.
• Value: The value for the customer is emphasised, instead of just focusing on price.
• Education: The focus is on educating and advising customers about the product or solution, instead of just relying on aggressive advertising.

These alternative models show a clear shift from a product-oriented to a customer-oriented marketing approach, which, in view of current trends and changing consumer behaviour, represents a timely further development of the classic marketing mix.

Why is the marketing mix important?

The marketing mix is an essential tool for companies to develop and implement a successful marketing strategy. Here are some aspects of why it is so important:

Clarity: the mix model helps companies define and implement their marketing strategy in a clear and understandable way. It gives them a structure and a roadmap that allows them to align their marketing activities as well as achieve their goals more effectively.

Target group orientation: The marketing mix tools help companies to align their marketing activities with the needs and wishes of their target group. By taking into account customer needs in the areas of product, price, promotion and placement, it can ensure that it successfully addresses its target group.

Competitiveness: the model helps to remain competitive by allowing companies to adapt their marketing strategy to changing market conditions and the needs of their customers. Constantly reviewing the marketing mix can ensure that they are always up to date and maintain their competitive advantage.

Profitability: 5P Marketing or 7P Marketing helps companies maximize their profitability by allowing them to focus their marketing efforts on the most impactful and profitable areas. Optimizing the marketing mix can ensure that companies use their budget wisely and achieve the best possible results.

Trends in the marketing mix

• Omnichannel marketing and e-commerce Integration of online and offline channels for a consistent customer experience. Combination of physical retail and e-commerce for greater reach. Customers buy products online and pick them up in store (click & collect). Greater reach through online marketplaces such as Amazon.

• Personalisation and data-driven marketing Use of big data and analysis tools to tailor marketing measures to the individual needs of customers. Dynamic pricing based on customer behaviour. Personalised advertising messages by email or on social media.

• Influencer marketing and social media Use of influencers on platforms such as Instagram and TikTok to promote products in an authentic way. Constant adaptation to new social media trends. Influencers as brand ambassadors with a high trust factor. Short videos and viral campaigns on TikTok.

• Sustainability and social responsibility (CSR) Customers demand ethically sound and environmentally friendly products as well as responsible corporate practices. Use of environmentally friendly materials and transparent communication of sustainability initiatives.

• Artificial intelligence and automation Use of AI to automate marketing processes and optimise the customer journey. AI-powered chatbots for customer service. Automated email marketing campaigns that respond to customer behaviour.

Marketing mix – a useful tool for every company

In conclusion, marketing mix helps companies align their marketing activities, effectively reach their target audience and remain competitive, ultimately leading to higher profitability.