Marketing involves a number of activities. To begin with, an organization may decide on
its target group of customers to be served. Once the target group is decided, the product
is to be placed in the market by providing the appropriate product, price, distribution, and
promotional efforts. These are to be combined or mixed in an appropriate proportion so
as to achieve the marketing goal. Such a mix of product, price, distribution and promotional
efforts is known as a ‘Marketing Mix’.
According to Philip Kotler, “Marketing Mix is the set of controllable variables that the firm
can use to influence the buyer’s response”. The controllable variables in this context refer
to the 4 ‘P’s [product, price, place (distribution), and promotion]. Each firm strives to
build up such a composition of 4‘P’s, which can create the highest level of consumer satisfaction
and at the same time meet its organizational objectives. Thus, this mix is assembled keeping
in mind the needs of target customers, and it varies from one organization to another
depending upon its available resources and marketing objectives. Let us now have a brief
idea about the four components of the marketing mix.
Product: Product refers to the goods and services offered by the organization. A pair of
shoes, a plate of Dahi-vada, a lipstick, all are products. All these are purchased because
they satisfy one or more of our needs. We are paying not for the tangible product but for
the benefit, it will provide. So, in simple words, a product can be described as a bundle of
benefits that a marketeer offers to the consumer for a price. While buying a pair of
shoes, we are actually buying comfort for our feet, while buying lipstick we are actually
paying for beauty because lipstick is likely to make us look good. The product can also take
the form of a service like air travel, telecommunication, etc. Thus, the term product
refers to goods and services offered by the organization for sale.
Price: Price is the amount charged for a product or service. It is the second most important
element in the marketing mix. Fixing the price of the product is a tricky job. Many factors
like demand for a product, the cost involved, consumer’s ability to pay, prices charged by
competitors for similar products, government restrictions, etc. have to be kept in mind
while fixing the price. In fact, pricing is a very crucial decision area as it has an effect on
demand for the product and also on the profitability of the firm.
Place: Goods are produced to be sold to the consumers. They must be made available to
the consumers at a place where they can conveniently make purchases. Woolens are
manufactured on a large scale in Ludhiana and you purchase them at a store from the
nearby market in your town. So, it is necessary that the product is available at shops in
your town. This involves a chain of individuals and institutions like distributors, wholesalers, and retailers who constitute the firm’s distribution network (also called a channel of distribution).
The organization has to decide whether to sell directly to the retailer or through the
distributors/wholesaler etc. It can even plan to sell it directly to consumers. The choice is
guided by a host of factors which you will learn later in this chapter.
Promotion: If the product is manufactured keeping the consumer needs in mind, is rightly
priced, and made available at outlets convenient to them but the consumer is not made
aware of its price, features, availability, etc, its marketing effort may not be successful.
Therefore promotion is an important ingredient of the marketing mix as it refers to a process
of informing, persuading, and influencing a consumer to make the choice of the product to be
bought. Promotion is done through means of personal selling, advertising, publicity, and
sales promotion. It is done mainly with a view to providing information to prospective
consumers about the availability, characteristics, and uses of a product. It arouses potential
consumers’ interest in the product, compares it with competitors’ products, and makes their
choice. The proliferation of print and electronic media has immensely helped the process
of promotion.
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As stated earlier, product refers to the goods and services offered by the organization for
sale. Here the marketers have to recognize that consumers are not simply interested in the
physical features of a product but a set of tangible and intangible attributes that satisfy their
wants. For example, when a consumer buys a washing machine he is not buying simply a
machine but a gadget that helps him in washing clothes. It also needs to be noted that the
term product refers to anything that can be offered to a market for attention, acquisition,
or use. Thus, the term product is defined as “anything that can be offered to a market to
satisfy a want”. It normally includes physical objects and services. In a broader sense,
however, it not only includes physical objects and services but also the supporting services
like brand name, packaging accessories, installation, after-sales service, etc. Look at the
definitions by Stanton and McCarthy as given in the box.
PRODUCT CLASSIFICATION
Product can be broadly classified on the basis of (1) use, (2) durability, and (3) tangibility.
Let us have a brief idea about the various categories and their exact nature under each
head, noting at the same time that in marketing the terms ‘product’ and ‘goods’ are often
used interchangeably.
1. Based on use, the product can be classified as:
(a) Consumer Goods; and
(b) Industrial Goods.
(a) Consumer goods: Goods meant for personal consumption by the households or
ultimate consumers are called consumer goods. This includes items like toiletries,
groceries, clothes, etc. Based on consumers’ buying behavior the consumer goods
can be further classified as :
(i) Convenience Goods;
(ii) Shopping Goods; and
(iii) Speciality Goods.
(i) Convenience Goods: Do you remember, the last time when did you buy a
packet of butter or a soft drink or a grocery item? Perhaps you don’t remember,
or you will say last week or yesterday. The reason is, that these goods belong to the
category of convenience goods which are bought frequently without much
planning or shopping effort and are also consumed quickly. Buying decisions in
case of these goods do not involve much pre-planning. Such goods are usually
sold at convenient retail outlets.
(ii) Shopping Goods: These are goods that are purchased less frequently and are
used very slowly like clothes, shoes, and household appliances. In the case of these goods,
consumers make the choice of a product considering its suitability, price, style, quality, and products of competitors and substitutes if any. In other words, consumers
usually spend a considerable amount of time and effort to finalize their purchase
decision as they lack complete information prior to their shopping trip. It may be
noted that shopping for goods involves much more expenses than convenience goods.
(iii) Speciality Goods: Because of some special characteristics of certain categories
of goods people generally put special efforts to buy them. They are ready to buy
these goods at the prices at which they are offered and also put in extra time to
locate the seller to make the purchase. The nearest car dealer may be ten kilometers
away but the buyer will go there to inspect and purchase it. In fact, prior to
making a trip to buy the product he/she will collect complete information about
the various brands. Examples of specialty goods are cameras, TV sets, new
automobiles, etc.
(b) Industrial Goods: Goods meant for consumption or use as inputs in the production of
other products or provision of some service are termed as ‘industrial goods’. These
are meant for non-personal and commercial use and include (i) raw materials,
(ii) machinery, (iii) components, and (iv) operating supplies (such as lubricants,
stationery, etc). The buyers of industrial goods are supposed to be knowledgeable,
cost-conscious, and rational in their purchase and therefore, the marketeers follow
different pricing, distribution, and promotional strategies for their sales.
It may be noted that the same product may be classified as consumer goods as well as
industrial goods depending upon its end-use. Take for example the case of coconut
oil. When it is used as hair oil or cooking oil, it is treated as consumer goods and when
used for manufacturing a bath soap it is termed as industrial goods. However, the way
these products are marketed to these two groups is very different because purchase
by the industrial buyers is usually large in quantity and bought either directly from the
manufacturer or the local distributor.
2. Based on Durability, the products can be classified as :
(a) Durable Goods; and
(b) Non-durable Goods.
(a) Durable Goods: Durable goods are products that are used for a long period
i.e., for months or years together. Examples of such goods are refrigerators, cars,
washing machines, etc. Such goods generally require more personal selling efforts
and have high-profit margins. In the case of these goods, the seller’s reputation and presale
and after-sale service are important determinants of the purchase decision.
(b) Non-durable Goods: Non-durable goods are products that are normally
consumed in one go or last for a few uses. Examples of such products are soap,
salt, pickles, sauce, etc. These items are consumed quickly and we purchase
these goods more often. Such items are generally made available by the producer
through a large number of convenient retail outlets. Profit margins on such items
are usually kept low and heavy advertising is done to attract people to their
trial and use.
3. Based on tangibility, the products can be classified as:
(a) Tangible Goods; and
(b) Intangible Goods.
(a) Tangible Goods: Most goods, whether these are consumer goods or industrial
goods and whether these are durable or non-durable, fall in this category as they
have a physical form, that can be touched and seen. Thus, all items like groceries,
cars, raw materials, machinery, etc. fall in the category of tangible goods.
(b) Intangible Goods: Intangible goods refer to services provided to individual
consumers or to organizational buyers (industrial, commercial, institutional,
government, etc.). Services are essentially intangible activities that provide want
or need satisfaction. Medical treatment, postal, banking and insurance services, etc.
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