Marketing Mix | Principles of Marketing - B Com PDF Download

Introduction

• In the prior unit, we delved into the fundamental concept, necessity, and significance of tourism marketing. To accomplish marketing objectives, a tourism marketer must make decisions concerning controllable factors, commonly referred to as the "marketing mix."
• The term "marketing mix" was initially introduced by Prof Neil H Borden of Harvard Business School during his presidential speech at the American Marketing Association in 1953. Later, in 1962, he penned an article titled "The Concept of Marketing Mix." Borden portrays a marketer as an artist and decision-maker consistently blending marketing strategies and policies to ensure the enduring profitability of a business.
• Borden's marketing mix encompassed product planning, pricing, branding, channels of distribution, personnel selling, advertising, promotions, packaging, display, servicing, physical handling, and fact-finding and analysis.
• In 1960, Edmund Jerome McCarthy proposed the 4P's conceptual framework for marketing decision-making, emphasizing product, price, place, and promotion as the four controllable elements of the marketing mix. These elements are manageable variables that marketers can manipulate to meet consumer needs and desires.
• With the rise of services, Booms and Bitner in 1981 introduced the 7P's model, an extended marketing mix particularly relevant in the service sector. They augmented the original 4P's with three additional P's: people, process, and physical evidence.
• Recognizing the intricacies of marketing, Kotler and Keller expanded on the traditional marketing mix by introducing four supplementary P's—people, processes, programs, and performance. These additions exemplify a holistic marketing perspective.
• In this unit, we will explore each of these P's within the context of tourism marketing.

Elements of Marketing Mix

According to Philip Kotler, the marketing mix is defined as the "set of marketing tools that the firm uses to pursue its marketing objectives in the target market."

The classical framework of the marketing mix comprises the 4P's of marketing, which are:

• Product – Encompasses all decisions and activities related to a product or service offering benefits to enhance the overall tourist experience.
• Price – Involves decisions and activities concerning the pricing of the product or service.
• Place – Involves decisions and activities related to the distribution of the product or service.
• Promotion – Encompasses decisions and activities related to promoting the product or service.

In the context of services, three additional P's have been introduced:

• People – Involves decisions and activities linked to the human factors participating in the service delivery process and the interactions between customers and service providers.
• Process – Encompasses decisions and activities related to the procedures and mechanisms adopted by the service provider for service delivery.
• Physical Evidence – Involves decisions and activities concerning the environment and space where the service takes place.

In addition to the 7 P's mentioned above, Kotler and Keller introduced the following modern marketing realities:

• Programmes – Encompasses decisions related to consumer-directed activities not covered by the traditional marketing mix, including both online and offline activities aimed at consumers due to digitalization.
• Performance – This P encapsulates the various outcomes of marketing activities, encompassing both financial and non-financial implications of marketing decisions and programs.

Product

Product Assortment or Variety

The primary consideration for an organization is determining the range of products or services to offer. For instance, a tour operator must choose between focusing on inbound tourism, outbound tourism, or both. Similarly, a hotel marketing manager needs to decide whether to target upscale hotels, budget hotels, or other forms of accommodation.

• Product Design and Quality

  After deciding on the product assortment, the next critical decision involves defining the features and quality of the product. Quality is a significant competitive factor, with reliability and performance being key aspects. Marketers should focus on dimensions such as performance, features, reliability, conformance, durability, serviceability, aesthetics, and perceived quality.

• Brand Name

  Branding is crucial for product recognition and differentiation. A strong brand identity distinguishes a product and communicates its value to customers. Effective branding, as seen in companies like Uber and Airbnb, can lead to the creation of strong brand equity, which adds value to products and services.

• Warranty and Guarantee

  Due to the service nature of travel and hospitality products, customers seek assurance regarding service quality. Service guarantees, such as on-time delivery promises by Domino's or baggage claim guarantees by Alaska Airlines, enhance customer satisfaction and reduce perceived risks, contributing to brand equity and customer loyalty.

Price

• Price is a crucial aspect of the marketing mix, directly impacting an organization's revenue. It involves various components beyond just a tag on a product or service.
• When determining tour costs, factors such as direct and indirect costs, fixed and variable costs, markups, profit margins, competitive pricing, special offers, and discounts must be considered.
• International travel considerations include fluctuations in foreign exchange rates due to increased competition and consumer access to pricing information.
• The pricing environment is increasingly challenging as service providers are more willing to meet consumer price expectations.
• Marketers face multiple pricing decisions, including setting product/service prices, discounts, credit terms, payment periods, and related choices.
• Pricing decisions significantly influence the perceived value of an offering and should consider factors like company objectives, competition, customers, and the marketing environment.
• Understanding demand patterns and price elasticity is crucial, especially for seasonal tourism products where pricing strategies vary based on demand fluctuations.
• Offering discounts and allowances to trade partners and customers is another important aspect, often utilized through promotional and differentiated pricing strategies in the travel and hospitality industry.

Examples and Illustrations:

• Hotels may offer off-season discounts to ensure survival during slow periods.
• Companies like Priceline.com allow customers to set their desired price point for products.
• Luxury hotels such as Burj Al Arab set high prices to maintain a quality leadership position.
• Online travel portals like Goibibo, Yatra.com, and Make My Trip employ various discount and cashback strategies to attract customers.

Key Takeaways and Further Discussion:

• In Unit 9, a detailed exploration of cost components and various pricing strategies available to marketers will be undertaken.

Promotion

• As a marketing strategy, besides creating value through product and service development, effectively communicating this value to potential customers holds equal importance. To reach and influence target markets successfully, a tourism marketer must innovatively devise an integrated marketing communication strategy. This involves deciding what, how, and when to communicate to ensure a synergistic impact of their messaging.
• Integrated marketing communication allows firms to inform, persuade, and remind consumers about their products and services, either directly or indirectly. The evolving landscape of technology, internet, and social media has significantly transformed how firms and consumers interact. In this dynamic communication environment, marketers need to creatively craft their marketing communication channels. They have various options to connect with consumers through an appropriate marketing communication mix.

Marketing Communication Mix

Advertising:

• Advertising involves paid non-personal communication methods. It can be executed through various channels such as print media (newspapers, magazines), broadcast media (radio, television), social media platforms (YouTube, Facebook, Instagram), electronic media (CD-ROM, videotape), and display media (boards at airports, hotels, etc.).

Sales Promotion:

• This paid communication activity offers short-term incentives to encourage product trial or purchase. For instance, travel apps often provide incentives like referral bonuses to attract new users.
• Trade promotions, another aspect of sales promotion, aim to induce purchases through initiatives like FamTours organized by destinations for tour operators and intermediaries to familiarize them with the location.

Events and Experiences:

• Events play a significant role in tourism marketing. Popular events like ITB Berlin, SATTE, and World Travel Market offer platforms for companies in the travel industry to engage with customers and intermediaries.

Public Relations and Publicity:

• The primary goal of public relations and publicity is to enhance or safeguard the company's image among stakeholders. Companies often utilize tactics like employee recognition programs and inviting influencers to share their experiences on social media to reach their target audience.

Direct Marketing:

• Direct marketing enables marketers to reach consumers directly through channels like emails and telephone, establishing a personalized communication channel. For instance, a business hotel may offer special room rates to corporate clients.

Interactive Marketing:

• With the rise of social media, firms can engage potential customers through online activities. Brands like British Airways and Intercontinental Hotels have successfully utilized interactive campaigns such as Safety Video campaigns and podcasts to connect with their audience.

Word of Mouth Marketing:

• Satisfied customers can serve as brand ambassadors by sharing positive experiences within their networks, whether through verbal communication, written testimonials, or electronic platforms.
• When formulating an effective communication strategy, marketers should identify their target audience, define communication objectives, collaborate with experts to design the messaging, select appropriate communication channels, and establish a suitable budget. Further elaboration on promotion, direct marketing, and digital marketing will be covered in detail in Units 11, 12, and 13.

Place in Marketing: Distribution Channels and Supply Chain Management

• Place decisions involve distribution channels where various organizations collaborate to make products or services available to consumers.
• Distribution channels play a crucial role in marketing effectiveness and market development.
• Companies often employ a hybrid channel strategy, using multiple channels like direct sales, websites, travel agents, and third-party vendors.
• Proper channel integration is essential for companies utilizing hybrid channel strategies.

Creating Value in Travel and Tourism

• Firms in the travel industry create value by understanding customer needs and designing their supply chains accordingly.
• Value is generated through partnerships with suppliers like airlines, hotels, transportation services, and local guides.
• For a holistic customer experience, tour operators must collaborate with various suppliers to meet customer expectations.

Channel Design and Management

• Marketers need to analyze customer needs, establish channels, define service levels, and set cost objectives when making channel design decisions.
• They must consider various channel alternatives such as sales forces, agents, direct mail, telemarketing, and the internet.
• Decisions on types of intermediaries, their number, and responsibilities are crucial for effective channel management.
• Building strong partnerships with dealers and distributors is essential for firms relying on intermediaries.

Adapting to E-Commerce and Technology

• Companies must understand the complexities of e-commerce and leverage technology to enhance customer experiences.
• Non-store retailing methods like e-commerce and internet retailing are on the rise.
• Technology-based platforms play a significant role in reaching consumers, requiring a focus on interaction ease, service delivery, and problem resolution.
• Issues such as failed transactions should be promptly addressed, with commitments made through online platforms honored during service delivery.

Future Focus: Channel-Related Decisions

• As e-commerce and technology continue to evolve, companies need to prioritize seamless interactions, efficient service delivery, and effective issue resolution.
• Ensuring customer commitments made online are fulfilled is crucial for maintaining trust and loyalty.

People, Process, and Physical Evidence

Role of Employees in Service Delivery:

• Employees are crucial in delivering services, impacting service quality through interactions with customers and colleagues.
• According to the Service Profit Chain concept, there exists a connection between customer loyalty and employee loyalty, as well as between customer satisfaction and employee satisfaction.
• The value of a service is often created by satisfied, loyal, and productive employees.

Service Marketing Triangle:

• The triangle establishes links between the organization, employees, and customers.
• External marketing focuses on organization-customer communication, while internal marketing emphasizes organization-employee communication.
• Interactive marketing refers to employee-customer communication.

Importance of Properly Trained Staff:

• Well-trained staff who understand the organization's marketing objectives lead to satisfied consumers.
• Collaboration between marketing and HR teams is essential for recruiting staff that align with brand expectations and organizing training programs.

Process in the Extended Marketing Mix:

• Process involves the procedures and mechanisms for delivering services, directly impacting customer value creation.
• Decisions related to processes aim to simplify service acquisition, consumption, and delivery, enhancing overall customer experience.
• Examples include digital solutions in hotels and airlines to streamline customer interactions.

Physical Evidence:

• Physical evidence includes tangible elements that support service performance, such as facilities, signage, and artifacts.
• Decisions related to physical evidence enhance the tangible aspects of service encounters, contributing to the overall service experience.
• Examples include business stationary, billing statements, and brochures that complement intangible service products.

The 8th P Marketing Mix

Thought there is a universal consensus on the 7P's of marketing, while there is generally a debate about the 8th P of marketing mix. In Section 2.2 we have discussed about programmes and performance that can be considered as additional P to marketing mix. Some experts believe that partnerships should be considered as the 8th P of service marketing mix, while others consider productivity and quality as the additional P. Though all of them are important, we will consider Performance as the 8th P of marketing.

• Performance marketing also corresponds to productivity as it is the easiest way to tie marketing costs with the results. This is more relevant in present times when online or digital marketing is viewed as the future. It is all about improving the processes and systems for reducing the cost to serve the customer as well as quicker cycle or service time.
• The staff has to be enabled by refocusing on the human resources while optimizing the marketing communication. It helps in continual improvement and is a result-driven approach for building brand equity in the long run.

Positioning Statement Examples

Around the Incredible India campaign:

• Kerala - "God's Own Country"
• Madhya Pradesh - "The Heart of Incredible India"
• West Bengal - "The Sweetest Part of India"

Similarly at the international level, many countries have established their own unique identity:

• Malaysia - "Truly Asia"
• Australia - "There is Nothing like Australia"

Summary

Marketing mix is the set of marketing tools and activities that any firm or organisation uses to pursue its marketing objectives. The classical framework of marketing mix includes 4P’s of marketing which are Product, Price, Promotion and Place. In context of services marketing, the traditional marketing mix was extended with three additional P’s. These are People, Process and Physical Evidence. In the modern marketing where technology has changed the entire marketing scenario, the 8th P of marketing mix is also discussed among practitioners. The 8th P that we discuss here is Performance Marketing. Collectively a marketer has to take marketing decisions on all these elements of marketing mix in order to achieve the marketing objectives of the organisation.