Running head: the four "Ps"

The Four “Ps”:

An Analysis

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Abstract

The marketing dimension of business establishes the relationship and connection between an organization and its customers, or market. A successful marketing mix, which includes product, price, promotion and place, leads to successful marketing and, in turn, successful business. To develop such a mix, companies must understand the individual characteristics of each marketing element, and the interrelation between the elements. Organizations such as McDonald’s demonstrate how successful marketing mixes can be developed and utilize in order to benefit both the organization and the market.

The four Ps, also called the marketing mix, helps an organization broaden its base of clients and consumers within its market. It can also be used to help an organization broaden its market as well. While each marketing element can be understood and developed individually, success comes from a coherent and well coordinated mix, in which each element has been developed individually, but also in conjunction with the other elements (Lake, 2010).

The product refers to the service or concrete object being offered by the organization. Product can be further broken down into three levels: the core product, the actual product, and the augmented product (Marketing Mix, 2010). The core product refers to the ultimate advantage, or purpose of the purchase. Using the purchase of a computer as an example, the core product would refer to convenience or enhanced communication. The core product, as can be seen through this example, does not refer to a material object, but to the value or benefit that is being purchased through the material object. The actual object, on the other hand, refers to the physical entity that is purchased. In a computer purchase, the actual product being purchased is the computer itself – the CPU, monitor, etc. Finally, the augmented product refers to the entire package, which often includes distinct, but related services or products, such as a warrantee and customer support (Marketing Mix, 2010). The other three elements of place, price and promotion, must be targeted to meet the needs of the product being offered.

The price, or monetary charge of a product, is determined by the quality and material value of the object. Price also factors in profit. The same product, or product type, such as cars, can have a range of subtypes that vary in quality and value, and therefore vary in price. The quality of the product and resulting price must be appropriate for the target market. For example, selling $20,000 cars in Zambia would not be good marketing, as the market in Zambia cannot afford such a product. There are different methods of pricing, such as penetration, economy, skimming and premium, based on the relationship between price and value levels (Marketing Mix, 2010). Penetration pricing refers to a low price corresponding to high value, and is often used as a strategy to penetrate a given market. An economy price marks products that have low quality at a low price, forming a direct correlation between the cost of production and the cost of retail. Skimming attaches a high price to a low quality item, and is used to lure more competitors into a given market to help lower production costs and ensure ongoing competition. Skimming can be used for a while, but must ultimately be replaced by other pricing methods. Finally premium pricing has high quality products sold at high prices. Like economy pricing, there is a direct relationship between price and value. Organizations use various strategies when setting their product prices, but the resulting price value relationship always falls in one of the four categories just mentioned.

The place element of marketing refers to the channel of distribution. Where is the product sent to meet the market? The channel could be direct retail, which goes directly to the client, or an indirect route, through a wholesale organization (Marketing Mix, 2010). Place could include a single channel or multiple distribution routes and intermediaries. Intermediaries can include wholesalers, agents, retailers or the internet (Marketing Mix, 2010). An organization should select their marketing place based on the needs and tendencies of their market and on compatibility between the organization and its selected place.

The final P, promotion, deals with communication and publicity. The different emphases and characteristics of promotion help make an organization’s product and services unique, identifiable and attractive. Different forms of promotion include personal selling, sales promotion, public relations, direct mail, trade fairs, advertizing and sponsorship (Marketing Mix, 2010).

The existence of a standard nickname - Mickey D – for McDonald’s points to its marketing success. People feel familiar with McDonalds; they feel as though they know McDonalds. McDonald’s falls under the restaurant industry, and more specifically, under the fast food or quick service restaurant industry. In developing its four Ps, McDonalds has exercised much background research and planning. Prior to defining any of its marketing elements, McDonalds identified its specific audiences and their respective needs. Some of these audiences include parents with children who consider McDonald’s as a treat; children, who find McDonalds to be a fun environment; business customers who need a fast, reliable meal, and teenagers, who are attracted by affordable prices and internet access (Marketing at McDonalds, 2008). In addition to defining their target customers, McDonald’s researched into elements that could affect their customers’ trends in the future. They found that economic, social, legal and technological changes could affect their industry by affecting price range, patterns of eating, regulations and techniques, all of which also affect the form and extent of competition McDonald’s will face (Marketing at McDonalds, 2008). Finally, based on the previous analyses, McDonalds did a SWOT analysis, identifying their strengths, weaknesses, opportunities and threats. Their strengths include the brand name, and detailed research that will help create an effective marketing mix; weaknesses mentioned the length of McDonald’s existence, which leads to the need for innovation; opportunities include increasing numbers of customers looking for McDonald’s services; and threats include new competitors, and changing lifestyles that could reduce the market (Marketing at McDonalds, 2008).

Only after this evaluation and analysis did McDonald’s develop its current marketing mix. This signifies the importance of the marketing mix and the effect it has on success. Dedicating time and resources for proper background work and analysis in order to establish an effective marketing mix is worth the effort. In terms of product, McDonald’s offers a variety menu that seeks to meet the needs and desires of its customers. McDonald’s continually looks for feedback, monitoring the preferences and needs of customers, and has accordingly developed an adjustable product menu. New products are regularly introduced, and previous products that are no longer appreciated are removed. McDonald’s has further established a product life cycle marking trends in the development, introduction, growth, maturity, and decline of sales that come from new products (Marketing at McDonald’s, 2008). Based on this gauge and continual research, McDonald’s offers a product menu that has choices appealing to all sectors of its market. McDonald’s overall price range, in context of the larger restaurant industry, can be considered economy – fast, assembly line food offered at low prices. Nevertheless, in the context of its subgroup, the fast food industry, McDonald’s offers competitive, but not overly low prices, in order to transmit the message that they offer quality (Marketing at McDonald’s, 2008). In terms of promotion, McDonald’s has developed a mix of advertising, display, merchandising, telemarketing and sales promotion techniques to establish effective marketing. McDonald’s focuses on ensuring that its different channels of promotion transmit compatible messages (Marketing at McDonald’s, 2008). Finally, in terms of place, McDonald’s relies primarily on direct retail, dealing directly with its clients, rather than going through agents or wholesalers.

The effectiveness of McDonald’s marketing mix can be seen through the success of the organization. In spite of its long lifespan, McDonald’s continues to be one of the most popular fast food restaurants, and is well established both nationally and internationally. The effectiveness of McDonald’s continual research and adaptation strategies can been seen through its ability to hold and broaden its market by meeting changing demands. One example of this is the recent addition of internet access and different coffee drinks that resemble those sold by Starbucks and Paneras. McDonald’s perceived that the café like organizations such as Starbucks could lure McDonald’s market, and reacted by establishing a similar service broaden its market and meet the needs of customers who would otherwise be attracted to Starbucks. This ability to perceive and adapt has helped McDonald’s establish and benefit from an effective marketing mix.

In conclusion, the marketing mix plays a key role in business, and is often the determining factor in the extent to which a given organization succeeds or fails. An organization can only exist if it has customers, and the marketing dimension of business develops that customer relationship. As a result, all organizations should focus on developing an effective marketing mix that distinguishes the organization’s services from other competitors, and attracts customers. Considering the changing needs of society, an effective marketing mix that includes mechanisms of feedback, evaluation, updating and constant improvement, such as that developed by McDonald’s, will benefit both the organization and society.

Definition of Marketing. (2010). American Marketing Association. Retrieved from

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Lake, Laura. (2010). Developing your marketing mix. About.com. Retrieved from

http://marketing.about.com/od/marketingplanandstrategy/a/marketingmix.htm

Marketing at McDonald’s. (2008). Retrieved from

http://www.mcdonalds.co.uk/static/pdf/aboutus/education/mcd_marketing.pdf

Marketing Mix. (2010). Marketing Teacher. Retrieved from