Marketing mix is a traditional and well-proven description scheme of key factors, using which a firm can influence behavior of consumers. Marketing mix is also called the 4P, which is less correct, since there are different approaches to determining composition of the marketing mix, although the 4P model is definitely dominant. However, no matter how good is the particular model, both theoretical and practical researches have the desire to modify it in order to reflect new information and to ensure the best fit to existing theoretical developments and experimental observations data. In case of marketing models, marketing mix takes into account the objective of companies that need the most effective tools for controlling behavior of the target audience.
The concept of the marketing mix is not an exception and work on its improvement has been carried out almost from its inception. Unfortunately, attempts to modify it have faced a number of serious problems, whereby modernized versions of the marketing mix have been unable to get recognition of researchers (except for versions that combine P models and C models). The classic version of the marketing mix (4P) continues to enjoy the greatest popularity. Thus, this paper will attempt to describe problems that exist in the development of the concept of the marketing mix and its effect on marketing channel relationships, as well as identifying potential benefits that a company gains from it.
Problems and Issues in Development of Marketing Mix Models
Marketing mix is a set of regulated and controlled variables that affect the market and are used by an organization to create a favorable financial situation. The main goal of the marketing mix as a marketing tool is to cause a desired response from the target market or to meet its needs (Maruyama, 1992).
Success of the concept of the marketing mix in its original version, including four controlled variables that the company may affect (product, price, place, and promotion), is predetermined by two factors:
- Simplicity and clarity of the model combined with the ease of use in marketing activities;
- A beautiful and easy-to-remember name of the proposed theory - 4P (product, price, place, and promotion).
These success factors have set the direction in which researchers have tried to develop the concept of the marketing mix. On the one hand, simplicity and clarity of the theory often assume that it takes into account not all key factors. Therefore, a natural vector of evolution is to refine the list of variables included in the model (Jain, 2010). On the other hand, the name of an updated version of the theory should be at least no less attractive than the name of the original concept (in fact, it is a question of the marketing theory and it should be successfully sold to the scientific community and marketing practitioners; thus, a good name is very important for its promotion). This has led to an implicit, but no less de facto strict requirement that factors included in the alternative model of the marketing mix must begin with the same letter (a few exceptions only prove existence of this rule) (Jain, 2010).
Such prevalence of form over substance is perhaps the reason why most new proposals for improving the traditional concept of the marketing mix fit into one of two basic models:
"More than 4 P's". In this case, it is the inclusion in the 4P scheme of additional variables that begin with the letter P, which, according to developers, allows one to fully describe factors that influence interaction of the company and the consumer;
"4, but no P's". In this case, four new variables are proposed instead of the traditional ones, which also start with the same letter (not P). This approach is not an addition to the classical marketing mix, but its radical rethinking, and most scholars often assume C models of the marketing mix.
Unfortunately, the majority of development ideas proposed in the framework of these models have not gained much popularity among experts.
Attempts to develop the concept of the marketing mix in the direction of increasing the number of P (there are such models as 5P, 7P, 9P, and so on) has long been pooh-poohed by researchers as an attempt to find suitable (within the meaning) English words that begin with the letter P. There is every reason for such attitude because proposed additions to the 4P model often seem unfounded. For example, an attempt to include packaging as a separate factor in the model raises the legitimate question about the independence of this factor because it is traditionally viewed as an integral part of the goods. Rationale for the inclusion of other factors is also doubtful. Here is another three examples that illustrate main problems faced by researchers in the framework of the "More than 4 P's" model:
- Public relations, which are considered as a separate variable in some models, hardly deserve an independent status because they are a part of promotion. The situation is similar to that described above in the example about packaging;
- Profit is not an instrument of marketing activities, but its ultimate goal, which also does not allow to include it as a separate factor in the marketing mix;
- Precedents, which are somewhat vaguely defined as external, uncontrollable, economic, political, and other variables. The assignment of this parameter to the marketing mix (which consists of controlled variables in its essence) is doubtful. Surely, it has an effect on the process of interaction of the company with customers, but it is out of the provider's control (Jain, 2010).
Thus, it can be said that experts that have chosen this scheme of the 4P model expansion have been under one of two delusions: either factors they allocated are excessive and detailed in classical variables of the marketing mix (as in situations with packaging and public relations) or those parameters do not belong to controlled variables of the marketing mix (as in situations with profit and precedents). However, some of the "More than 4 P's" models are successfully used in the real life.
The second misconception is fatal to a marketing mix model and leads to unacceptable confusion within the same circuit of parameters of a different order. It is incorrect from a theoretical standpoint and inconvenient for practitioners (who, instead of a set of homogeneous management tools of interaction with customers, receive a heterogeneous set of factors and phenomena, mechanism for applying of which is unclear).
The most flexible and successful model of marketing mix is the one that combines "More than 4 P's" models and "4, but no P's" models, namely P models and C models. Such model may include processes, performance, communication, cooperation, customers, and so on. Researches going in this direction have tried not to modify the marketing mix from a substantive point of view, but to fit it into the broader context of marketing activities in general with all controlled and uncontrolled internal and external variables, i.e. it has been about formulating a marketing paradigm. In this case, such scheme is perceived not as a set of tools or even the concept of one of the marketing directions, but rather as a paradigm of marketing activities. By getting rid of the problem of heterogeneity (through the distribution of parameters to homogeneous groups), this approach has really allowed to formulate concepts and paradigms that have been recognized among scientific community and are successfully used in real markets.
Role of Marketing Mix in Formulating Successful Chain Structure
Distribution channels are becoming more important than the product itself for successful activity in the today's market and this fact is associated with a number of circumstances.
One of the major trends in the modern concept of the marketing mix is to reduce the role of the traditional element of the product and increase the importance of such elements as place and promotion (Jain, 2010). Despite the fact that product differentiation is still the most important parameter for success, characteristics of goods are copied very quickly and the practice of leading world companies have already clearly shown a tendency of product differentiation on the basis of distribution attributes.
As a consequence, there is a change in the methods of segmenting consumers when the most important criteria for segmentation becomes a way of purchase, the specific use of the product, etc. Thus, the distribution channel becomes a means of product differentiation. Moreover, it is much more difficult to copy distribution advantages and some of them (for example, location of the retail outlet) in general are unique (Bowman & Gatignon, 2010).
How It Works
In this case, a quality product is no longer the key to victory in a competitive struggle, but only the "entry ticket" to the competitive market. The struggle for the consumer has been going beyond the product itself. Possession of consumer audience is also not an absolute guarantee of success. It is necessary to actively maintain and continually strengthen relationships with customers, influence their preferences, and create customer loyalty (Bowman & Gatignon, 2010). Since the role of the product itself reduces, the value of "no product" part of the goods increases. Changing the balance of forces leads to the fact that control of the distribution channel is becoming more important for the manufacturer than control over the product and distribution becomes the object of the application of significant marketing efforts (Bowman & Gatignon, 2010).
As a result of the marked redistribution of market power, some distributors are beginning to put pressure on manufacturers, dictating them selling and sales prices and the need for the production of certain goods (this problem is particularly acute in food markets).
Three aspects of the marketing mix's role in formulating chain structure should be emphasized:
- In terms of content, the marketing mix concept is an activity of the company aimed at meeting needs of customers while maintaining high-value goods and services provided;
- From the organizational point, the marketing mix is an integral part of the system of integrated logistics of a company. It flexibly responds to changing market demand and ensures a high level of customer service;
- In the instrumental aspect, the marketing mix is an association of marketing and logistics functions under the dominance of a client-oriented management (Bowman & Gatignon, 2010).
Given aspects largely correlate with aspects of marketing logistics. The marketing mix approach to the formation of the chain structure is different from the integration of marketing and logistics (or marketing logistics) in that the latter is functioning at the operational level and does not affect key strategic issues of cooperation between companies (Richter, 2012). Marketing logistics only builds infrastructure that enables to meet customer needs in the most efficient way using available options. In turn, integration of the marketing mix in marketing channel relationships includes strategic issues between companies in the chain structure, up to a change of the production process in order to create a more valuable offer for the customer (Richter, 2012).
Distinctive features of the marketing mix approach in the chain formation include the following:
- Orientation towards value provided to customers. It involves creation of an innovative product that requires adaptation of the whole technological part of the product. This entails a change in the cost structure and the result is a product with unique characteristics and maximum value for the consumer.
- Long-term relationship of trust within the chain and with consumers. They are formed by the use of ideology and relationship marketing tools that allow companies to abandon costly competition methods of pricing and use the demand method.
- Rejection of strategies for reducing costs. Additional costs, which are associated with the increase in value, are offset with higher profits derived from the sale of valuable supply (Richter, 2012).
Reorientation and Potential Gains from Marketing Mix
Significant changes within the company are required in order to achieve success using the marketing mix. Providing goods and services, the company should flexibly respond to market changes and customer demand, offer innovative solutions to customer problems, and have flexible delivery methods. The most flexible and successful model of the marketing mix is the one that combines P models and C models. The main features of a flexible organization that uses such marketing mix models are the following:
- Reorientation from functions to processes. Traditional organizations have a vertical structure and each function has clearly defined objectives. Reorientation involves establishment of horizontal relations between buyers and the company (and its suppliers), which determine basic processes of the cross-functional nature;
- Reorientation from profitability indicators to performance indicators. In addition to financial performance of the company (which is still extremely important and must be kept in sight of heads), performance indicators are currently coming to the fore. They cover three major areas of the company and relate to a non-financial type of indicators: customer satisfaction, company's flexibility, and employees' loyalty;
- Reorientation from products to customers. In spite of the fact that product is the first item in the marketing mix concept, various companies understand its meaning literally and follow the tendency of the management of products, brands, and services rather than relationships with customer. Since customer satisfaction should be the main goal of any company, it is extremely important for the management structure and control system to be in line with this objective;
- Reorientation from stocks to demand information (communication). The presence of excess stocks is associated with uncertainty in forecasting of demand. The solution lies in the rapid collection of information in the field of sales and rapid transfer of its production, whereby leading companies achieve a significant reduction in response time to requests from customers and a significant reduction or complete destruction of stockpiles as a consequence;
- Reorientation from deals to relationships (cooperation). One of the main foundations of the marketing mix is relationship marketing. The longer the customer remains a client of the company, the greater benefits it brings. The longer the company cooperates with the supplier, the greater is the likelihood that it will be considered as the most preferred source of replenishment resources of the firm. Thus, the emphasis on the relationship with customers is transferred to the establishment and development of permanent cooperation (Richter, 2012).
There are some main potential benefits and long-term perspective from the integration of the above marketing mix model within the marketing channels.
First of all, the marketing mix gives a great opportunity to control sales service and sales operations, distribution channels, supply chain, and logistics costs (Rolnicki, 1998). This control allows one to strengthen the company's relationship with customers by improving service quality and expanding a set of marketing tools (through the inclusion of logistics tools).
Logistics, in turn, fosters a marketing ideology and strategic thinking, i.e. the ability to analyze current solutions in terms of their long-term impact on customer satisfaction. Direct access to marketing tools for strategic planning and forecasting can help to improve "administrative status" of logistics within the company in the long term, as a result strengthening its organizational structure and increasing resource supply, including investments in long-term projects (Betancourt, 2004).
The Relationship between Different Players in the Marketing Mix
There are such relationships in the marketing mix as: manufacturer - distributor, manufacturer - supplier, distributor - customer, customer - supplier, and so on. Each of these groups of relations raises the question of its measurability and the sequence of stages of development. The most important difference of the marketing mix from traditional marketing is the fact that the marketing mix shifts the focus and scope of marketing influence from separate dual relationship "buyer - seller" to the whole complex of company relationships (Bowman & Gatignon, 2010). However, "buyer - seller" relationships remain a key area of interest in the marketing mix.
"Buyer - seller" relationship is changed from simple transactions through formation of increased interdependence of the buyer and the seller to their strategic alliance. The relationship between the buyer and the seller are purely competitive in the sense that one tends to get the lowest price and the other tends to get the highest one. Both parties can terminate the relationship as the competitive market provides many other opportunities and to a certain extent allows to adjust relationship through market forces, as well as bureaucratic and administrative rules, policies, and agreements.
The marketing mix is a set of regulated and controlled variables that affect the market and are used by an organization to create a favorable financial situation. The main goal of the marketing mix is to cause the desired response from the target market or to meet its needs.
The function of the marketing mix is to create a set that will not only satisfy needs of potential customers within target markets, but also maximize efficiency of the organization. The paper states that such set includes P models and C models of the marketing mix. This set includes processes, performance, communication, cooperation, customers, and some other variables.
The marketing mix formulates the chain structure in terms of content, organizational point, and instrumental aspect. The marketing mix involves creation of an innovative product within the chain and provides a long-term relationship. Integration of the marketing mix results in potential benefits in the long-term perspective. These benefits are based on various reorientations of company's processes and result in an opportunity to control such spheres as sales service, sales operations, distribution channels, supply chain, and logistics costs, as well as strengthening organizational structure of the company and increasing resource supply.