Framework 123 Marketing (Focus On Ps)
Introduction
There are many frameworks for marketing, such as
1. 4Ps (product, promotion, place and price)
Edmund Jerome McCarthy as quoted by Albert Carniel, 2019
2. 7Ps (added people, process and physical evidence to the 4 Ps)
3. 8Ps (this is an enlargement of 4Ps by adding people, process, programs & performance)
3. 9 Ps (created by Larry Steven Londre, 2007) base on the above Ps, ie
(source: Larry Steven Londre, 2017)
4. 12 Ps is expanded to cover people, planning, product, price, promotion, place, partners, processes, presentation, programs, performance and passion.
NB There is overlap between the 12 Ps, eg planning involves all other 11 Ps.
(source: https://www.nineps.com)
More details on each of the Ps:
1. People (includes targeting customers, ie target market audience plus staff and other stakeholders, such as suppliers, partners, etc; target market consists of a distinct group of buyers who share common needs or characteristics; this is very different from mass marketing which views the market as a uniform group of customers)
People are fundamental in delivering any product and/or service.
NB
"...Mood, character and behaviour adopted during a service delivery affects the quality perceived by the customer..."
Albert Carniel, 2019
Some variables that can affect this dimension:
- staff recruitment and training
- uniforms
- scripting
- queuing systems and wait management
- handling complaints and understanding service failures
- managing social interaction
The most important people are customers, past, present and future. You need to understand them and their needs.
They can be segmented based upon demographics, geographics, psychographics, behavioural characteristics, technographics or technographical characteristics, etc
"...once a target market is chosen, the organisation can develop its marketing strategies to target this market segment..."
Larry Steven Londre, 2017
This can involve segmentation, targeting and positioning.
Need to develop specific marketing strategies for each targeted group. An example of this is AIDA
Elias St. Elmo Lewis as quoted by Albert Carniel, 2019
AIDA aims to
- attract attention
- maintain interest
- create desire
- take action
2. Planning (involves research and researching, ie looking at your potential customers around the other Ps; developing and transforming your market objectives to market strategies and tactics,
"...market management must make basic decisions on marketing targets, marketing mix, marketing budgets/expenditures and marketing allocations......Review dividing the total market budget amongst the various tools in the marketing mix and for various products, channels, promotions, media and sales areas..."
Larry Steven Londre, 2017)
3. Products and Services (definition:
"...is anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need......including variety of product mix, features, branding, designs, packaging, sizes, services, maintenance, contracts, warranties and return policies..."
Larry Steven Londre, 2017)
It can involve
"...Look at branding; brand equity; brand name; quality; unique selling proposition (USP) and unique value proposition (UVP); newness; complexity; physical appearance; packaging; labeling; ingredients; maintenance and service contracts; and others..."
Larry Steven Londre, 2017
A product line is a group of products that are closely related
- owing to their similar functions
- by being sold to the same customer group
- by usinge the same type of outlets or market to sell through
- by having similar price ranges.
There are 4 key dimensions to a product mix
"... i) width (number of different product lines)
ii) length (number of items a company carries within the product lines)
iii) depth (the number of versions offered for each product in the line)
iv) consistency (how closely related the various product lines are in end use, production requirements, distribution channels, or any other way)..."
Larry Steven Londre, 2017
There are 5 levels that can characterise a product (see diagram below)
Katler and Keller as quoted by Albert Carniel, 2019
i) potential product (what can the product/service become in the future ie upgrades, modifications, etc to increase its life, value, etc)
ii) augmented product (additional services and goods eg installation, complementary products/services, after sales or customer service, warranty, shipping, credits, etc)
iii) expected product (the benefits and features that the customer expects; this can change according to each individual's perception)
iv) actual (more generic) product (the basic item with essential features; minimal variable product
"...a simple version with just enough features to satisfy early customers and provide feedback for future improvements. Examples of variables can be the product's quality, brand, design, packaging, characteristics, etc..."
Albert Carniel, 2019
v) the core need and benefit (product/service is satisfying a fundamental customer need or want)
An example is a hotel where the core is represented by a place to rest or sleep; the actual product can be towels, a bed, a bathroom, wardrobe, etc; expected product are presence of clean sheets and bathroom, soft mattress, etc; the augmented product would-be Wi-Fi, room service, free tourist information; potential products could include a spa, gym, etc.
For services, on the other hand, it is around
i) delivery process (customer role, time, staff, etc)
ii) supplementary services (invoicing, order taking, exceptions, information, consultancy, safekeeping, etc)
iii) core service (problem-solving; providing benefits customers are seeking)
Another way of looking at this is called the 'flower of service'
Jachen Wirtz as quoted by Albert Carniel, 2019
Facilitating elements
- information (guide consumers through the purchase process; educate them on sales, conditions, terms of use, pricing, etc when purchasing)
- order taking (represents how the organisation handles transactions, ie quality of experience during transaction process; need for constant feedback during this process, ie
"...If the customer is left without feedback, they will soon become frustrated..."
Albert Carniel, 2019
- payment (transaction that determines when a prospect becomes a client)
- billing (needs to be clear, precise and timely
"...People want to know how, when and what they are paying for..."
Albert Carniel, 2019
Enhancing elements
- consultation (explaining all the distinguishing characteristics of the service you are providing; customers want to buy expertise, knowledge and a quality experience)
- hospitality (all the activities necessary to make the customer feel welcome and important
- safekeeping (respect privacy and confidentiality of customers' information including records, etc; builds trust between the different parties)
- exceptions (makes customers feel special and increases their loyalty, bond, trust, etc)
Managing the life cycle of a product or service, ie a product/service has a limited life and its sales go through different stages; strategies (marketing, production, HR, financial, etc ) must be relevant to each stage
Raymond Vernon as quoted by Albert Carniel, 2019
The five stages of revenue generation:
i) development (many products and/or services are developed; only a few make it to market successfully)
ii) introduction (via promotion customers become aware of product and/or service; despite revenue being low, need to prepare for growth)
iii) growth (as awareness and demand grows, sales increase with resultant increased profits and lowering production costs; competition increases with variations of product and/or service)
iv) maturity (established in the market and sales growth stabilising; much competition, especially around price; potential for market becomes saturated; need to develop differentiating strategies to keep, and acquire new, customers; looking for new markets, change or improve product and/or services, ie make product modifications; look at modifying on price activities plus distribution, communications, etc)
v) decline (product and/or services become obsolete; sales fall; as not profitable to continue making product and/or service, production ceases)
NB (For more details on this, see elsewhere in the Knowledge Base, ie life-cycle approach, S-curve, etc)
4. Place (marketplace where customers can buy products and/or services; involves distribution; it is
"...offering the right product at the RIGHT place, at the right time, at the right price......make the product available, using distribution trade channels, roles, coverage, assortments, locations, inventory and transportation characteristics and alternatives..."
Larry Steven Londre, 2017
It offers access to the product and/or service. Whether physical like a store, or intangible like e-commerce, it provides access to the product and/or service.
Linked with this is
"...considering, developing and reviewing store and non-store, e-commerce and 'bricks and mortar' factors, considerations, objectives, strategies and tactics, including partners..."
Larry Steven Londre, 2017
Place elements are also linked with physical evidence from environmental elements that surround consumers during product and/or service delivery, eg
- facilities (location, furniture, equipment, access, etc)
- interior design (decor, colour schemes, layout, etc)
- spatial layout (functionality, efficiency, etc)
- ambient conditions (noise, air, temperature, etc)
- paperwork (invoices, statements, stationary, brochures, flyers, etc.)
- artefacts (souvenirs, memorabilia, mementos, etc)
Can have a positive or negative impact)
5. Price (definition:
"...sum of the value that customers exchange for the benefits of having or using the product or service..."
Larry Steven Londre, 2017
"...The cost to buy a product and/or service. For a consumer, it represents the money spent retaining certain benefits......refers to consumers' perceived value and includes a sacrifice that they are willing to make in terms of time or effort..."
Albert Carniel, 2019
Can include wholesale/retail/promotional prices, discounts, trade-in allowances, quantity discounts, credit terms, sales and payment periods, etc
Factors influencing price decision-making include competitive environment, economic circumstances, buyers' perceptions, etc.
Price is pivotal in the marketing mix as it is the only element that generates revenue; all other dimensions are costs.
Need to be careful of deceptive and misleading pricing practices that can give the perception that the customers are getting more value and a better price than they are actually receiving.
Many factors can influence price, ie internal and external:
Internal
- fixed costs, ie don't vary on quantity produced; some examples are lease payments, insurance, property taxes, interest expenses, depreciation, etc
- variable costs, ie based on the production output; some examples include staff, raw materials, packaging, transport, etc
- organisation's objectives, ie what does a company want to achieve with its pricing policy? eg profit orientated, not-for-profit, etc
- production capacity, ie economies of scale, outsourcing, etc
- production life-cycle, ie your position on the cycle - see above
- brand, ie awareness, loyalty, perceived value, etc
- culture, ie customer-centric and customer-focused, etc
External
- market coverage, ie % of the market covered with a marketing strategy
- market share, ie the portion of the market segment controlled by a particular organisation or product/service, using expressed as a percentage
- competition, ie price, quality and quantity of product and/or service, reputation, etc
- target segment, ie wants and needs of a particular group that you desire to do business with, etc
- economic context, ie macro-economic environment eg growth, unemployment, gross national product, gross domestic product, etc
- demand, ie the popularity and need for your products and/or services, etc
- government, ie laws, regulations, taxes, etc
- substitutes, ie other products and/or services that are similar and are viable alternatives, etc
- distribution channels, ie position of intermediaries, etc (see later)
Some pricing strategies
- maximise profit (revenue minus costs)
- short-term survival, ie tolerate losses for a short period to hold, and/or win, customers
- maximising return on investment (ROI), ie net profit divided by total costs
- status quo, ie keeping the market stable, etc
- preventing new entrants, ie stopping competitors entering the market by, for example, using price, services, quality, etc to deter competition
- cash flow, ie generating revenue; not necessarily profit
- maintaining high quality of product and/or service, ie differentiate from competitors
Price can be determined by cost and/or value
Albert Carniel, 2019
Cost-based pricing involves determining the overall cost of production (including fixed and variable costs) and adding a margin/mark-up to make a profit. Determining the right level of markup/margin can be difficult. Cost-based pricing is works well for commodities.
Albert Carniel, 2019
Value-based pricing involves determining what the value is to the consumer for a certain product and/or service. Determining the true value requires detailed knowledge of the target audience.
Five price strategy, ie how to set the best price for a product and/or service
"... i) price skimming: company sets premier price to attract high-end consumers who don't mind dealing with expensive prices;
ii) penetration pricing: companies set low prices to penetrate a competitive market. It can also be used to attract consumers to seek convenience;
iii) prestige pricing: it is a psychological strategy based on the principle that people make assumptions on the quality/price ratio and don't like if the price is too low. It happens with luxury brands, just think of a $10 Gucci bag; it doesn't have value at all. People buy expensive and luxury brands: to stand out and be recognised as members of a certain exclusive social order/category;
iv) competition-orientated pricing; company studies and applies competitor's price;
v) psychological pricing: company set prices slightly lower than the rounded number (eg all prices end with 9..."
Albert Carniel, 2019
Using there are 2 types of positioning around volume and margin, ie
i) high-volumes with low margins, ie commodity-type markets with many alternatives, eg mass merchandisers, discount stores, etc
ii) low-volume with high margins, ie specialised, niche with elite, restricted supply, eg exclusive, each stores, etc
NB
"...Prices are a key positioning factor and must be decided in relation to the target market, the product service assortment mix, and the competition..."
Larry Steven Londre, 2017)
6. Promotion (includes all kind of advertising, programs and activities (online and offline); variations are based on the segment targeted, and the marketing strategy involves communications by sales personnel, advertising, sales promotion, collateral materials, direct marketing, interactive/Internet/Web/digital media/social media, events and experiences, public relation, etc
Remember: sales personnel need to be good listeners, ie
"...People who listen more, learn more......helps you position your service/product/solution or offering..."
Larry Steven Londre, 2017
Advertising
"... It's only good media spending if it sells..."
Larry Steven Londre, 2017
"...The mission of an advertisement is to attract a reader, so that he will look at the advertisement and start to read it; then to interest him, so that he will continue to read it, then to convince him, so that when he has read it he believes it. If an advertisement contains these three qualities of success, it's a successful advertisement..."
Elias St. Elmo Lewis as quoted by Albert Carniel, 2019)
However it needs to go one step further: the customer then buys the product and/or service!!!
There are 8 major strategic elements of promotion:
i) personal selling/salesforce (includes 'word-of-mouth', social media, etc)
ii) advertising (it is any paid form of non-personal communication; this includes the media (print, TV, radio, etc), online (social media, etc), mobile, etc)
iii) sales promotion (includes ways to speed up sales and/or value; provide an extra incentive to buy, like trade deals, trade incentives, rebates, money-back offers, frequency programs, allowances for in-store promotion, samples, loyalty programs, coupons, premiums, tie-ins, displays, sweepstakes, allowances, trade shows, contests, etc)
iv) collateral materials (extra promotional materials like booklets, catalogues, brochures, films, videos, sales kits, promotional products, annual reports, etc)
v) direct marketing (going direct to the customer; some examples include direct mail, database management, telemarketing, etc)
vi) interactive/Internet/Web/digital media/social media
"...Use the Internet and web to deliver promotional messages to attract customers. Social media is an interactive platform individuals and communities create to share user-generated content. Social media is ubiquitously accessible, including Facebook, YouTube, LinkedIn, Twitter, as examples..."
Larry Steven Londre, 2017
vii) events and experiences (interacting with the brand; having an impactful experience, such as being at an event, promotions, one-on-one, face-to-face encounters, interacting with the product and/or service, prior to buying)
viii) public relations (this involves
"...Press releases, publicity. Securing editorial space, as opposed to paid space - usually in print, electronic or Internet media. Promote or 'hype' a product, service, idea, place, person or organisation, internal communication, lobbying, PR involves a variety of programs designed to promote or protect company's image/reputation individual products..."
Larry Steven Londre, 2017
NB some questions to ask
"...Should we promote? What should we promote? To whom should we promote? What economic and discount levels should we offer? What form of promotion should we offer? What features? How frequently?..."
Larry Steven Londre, 2017
The increasing use of smart phones which are already multi-use devices, means that people are available 24/7, with 'brands in the hands'.
7. Processes (they are the mechanisms, planning and decision-making that ensure a smooth delivery of a product and/or service; some useful strategies include
- designing processes that are user-friendly, effective and efficient
- flow-charting as a way to identify bottlenecks and contact point with customers
- standardisation vs personalisation
- locating fail-points, critical incidents and system failures
- monitoring and tracking service performance
- analysing resources: requirements and allocation
- creating and measuring key performance indicators (KPIs)
- aligning with guidelines
- preparing operational manuals)
8. Partners/Alliances (involves working with others, ie people and organisations to share risk and returns; linked with 'like-minded' organisation around cultural philosophy, etc: have shared agreed-upon objectives and strategies)
9. Presentation (involves presenting, displaying and putting forward any of the ideas, activities, products and/or services, etc around other 11 Ps to different stakeholders like customers/clients, suppliers, wholesalers, retailers, sales force, marketing intermediaries, staff, partners, etc; encourage stakeholders to have an emotional attachment to the brand, eg engage them.
How an organisation is presented forms the basis for its public persona, eg good citizen, position on sustainability, etc)
10. Program (it involves integrating and supporting all the other Ps to help achieve the organisation's goals)
11. Performance (this includes elements that are financial and non-financial outcomes, eg
- profitability (making money)
- brand equity (monetary value)
- customer equity (total monetary lifetime value of an organisation's customers)
- social responsibility (good corporate citizen)
- legal responsibility (obeying the laws, rules and regulations of a country, etc)
- ethical responsibility (doing what is right)
12. Passion (displaying emotional feelings to stakeholders and encouraging them to reciprocate; sales staff need to believe in their product and/or service they are selling; linked with passion is inspiration, perseverance, longevity.
NB Negative emotions encourage behaviour towards current survival, while positive emotions broaden your horizons by making you more perceptive and creative, ie
"...While negative emotions help us see trees, positive ones reveal forests..."
Larry Steven Londre, 2017
In addition to encouraging unexpected solutions, positivity during a sales experience can make the buyer less adversarial and more receptive to making a purchase.
(for more detail, see marketing elsewhere in the Knowledge Base)