The ultimate guide to marketing mix: 4Ps, 7Ps, 8Ps, 4Cs, 7Cs

Updated: Dec 15, 2020

What are the variables a company must control to successfully implement a marketing strategy for each target market? What does “marketing mix” mean, what are its different models and how can it help organizations?


In this article, you will learn how to use and master a marketing mix to improve your business’ bottom line. This is an evergreen concept in the #MarketingPlan and determines the right company orientation toward a marketplace.


Let’s get started!



Table of contents

  1. The 4Ps of marketing mix;

  2. The evolution of marketing mix: 7Ps, 8Ps, 4Cs and 7Cs;

  3. How to use marketing mix for successful marketing strategies.






THE 4Ps OF MARKETING MIX




The marketing mix is the pillar of a marketing strategy and consists of a series of tools to guide a company through the ups and downs of its industry.


It drives decision making during the whole process of bringing a product or service to the market.


There are many models of marketing mix that have followed over time.


Let’s see what they are and how they have evolved.


The first model was presented in Basic marketing: a managerial approach by American marketing professor and author, Edmund Jerome McCarthy, in 1960.


McCarthy classified various marketing activities and grouped them under four dimensions:

  1. Product;

  2. Price;

  3. Place;

  4. Promotion.


That’s why it is called the 4Ps of marketing mix.


The image below depicts the 4Ps of marketing mix according to the earliest formulation of McCarthy.


4Ps of marketing mix
This scheme breaks down the 4Ps of marketing mix according to Edmund Jerome McCarthy earliest formulation in Basic marketing: a managerial approach.


Product

Product is what satisfies consumers’ needs and wants. It can be tangible (an actual product) or intangible (a service, ideas or experiences): what is being sold?


As you can see from the elements listed in the image above, it groups all the marketing decisions connected to the aspect, design and characteristics of a product/service.


What are the main components of a product?


Marketing and management of Kotler and Keller has identified five components that characterize a product.


The five product levels model
According to Marketing and management of Kotler and Keller, a product is composed by five elements: potential product, augmented product, expected product, actual product and core.

The five product levels model gives an idea of how much a company can improve a product:

  1. The potential product is what the product can become in the future. It includes all the upgrades and modifications that a business can make to increase its life;

  2. The augmented product represents all the additional services and goods like installation, complementary products, after-sales or customer service, warranty, shipping, credits…;

  3. The expected product represents the benefits and features the consumer expects. It changes according to each individual’s perception;

  4. The actual (or generic) product is the basic item with essential features. This element is fundamental for startups, because in their early stages they must generate profit as soon as possible and might not have time or resources to develop a full and accessorized product. In this case, it’s called minimum viable product (MVP): a simple version with just enough features to satisfy early consumers and provide feedback for future improvements. Examples of variables can be the product’s quality, brand, design, packaging, characteristics...;

  5. The core need and benefit is the main reason why a consumer should buy the product and represents the fundamental need or want to satisfy.


Let’s consider a hotel: the core is represented by a place to rest or sleep; the actual product can be towels, a bed, a bathroom and a closet; the expected product means taking for granted the presence of clean sheets and bathroom, a soft mattress and so on; the augmented product can be the Wi-fi, a free map of the town or room service; finally, the potential product can be made by placing new treats for guests in the rooms, including a spa or a gym and so on.


The same scheme may be shrunk in three parts and adapted for services:

  1. Delivery process: customer role, time, staff... ;

  2. Supplementary services: invoicing, order taking, exceptions, information, consultancy, safekeeping…;

  3. Core service: it is the principal, problem-solving benefit customers seek.


In 1999, Christopher Lovelock and Jochen Wirtz grouped the best facilitating and enhancing elements to service delivery in the Flower of Service model which is described in their book Services marketing.


The Flower of Service
The Flower of Service according to Jochen Wirtz: a core product surrounded by cluster of supplementary services.

Facilitating elements:

  • Information guides consumers in the purchase process and educates them on sales conditions, terms of use, pricing and other useful details needed for a mindful purchase.

  • Order taking is a critical contact phase between company and consumers, because it represents how the company fulfills transactions (quality of the experience during the transaction process). It includes constant feedback on transaction progress, questions or other problems. If a customer is left without feedback, they will soon become frustrated;

  • Payment is the transaction itself and determines when a prospect becomes a client;

  • Billing must be clear, precise and sent on-time. People want to know how, when and what they are paying for.


Enhancing elements:

  • Consultation includes all the distinguishing characteristics of a proper tailored consultancy: consumers want to buy expertise, knowledge and a quality experience;

  • Hospitality stands for the refreshments and comfortable waiting area, and all those attentions necessary to make customers feel welcomed;

  • Safekeeping represents a business capability to keep customers’ records safe and private. A safekeeping failure can compromise the trust between seller and buyer;

  • Exceptions are also critical in services, because they make clients feel special and increase their loyalty/bond to the brand.


What’s one of the most critical aspects to consider in the product dimension of a marketing mix?


A fundamental factor that marketers should consider is managing their product/service through its life-cycle.


The product life-cycle theory was formulated in 1966 by American economist, Raymond Vernon, who addressed US exports in an article called International investment and international trade in the product cycle.


According to this theory, a product/service has a limited life and its sales go through different stages of ups and downs. For this reason, offerings require distinct marketing, production, HR and financial strategies based on their specific life-cycle phase.


The product life-cycle curve
This graph represents the life-cycle of a product. It is divided in 5 stages: development, introduction, growth, maturity and decline.

This theory breaks down a product/service life-cycle in five stages according to the revenue generated over time:

  1. Development: companies develop new products and services all the time, but only a small percentage reaches the market after the validation stage;

  2. Introduction: the offering is promoted and consumers become aware of its existence. Revenues are still low, but they are going to grow exponentially in the next phase;

  3. Growth: the demand and awareness grow. Sales increase on par with profits and production costs decrease. Competitors enter the market with their version of the product/service;

  4. Maturity: the offering is now well known, the demand tends to stabilize and sales slow down. The industry is characterized by a thick competition which pushes the company to decrease prices in order to maintain the leadership. The market saturates and the company must activate some differentiating strategies to acquire new consumers. According to Marketing and management of Kotler and Keller, it can expand the market (market modification), change or improve the quality, features or style of the product/service (product modification), and edit non-product-related elements such as communication, price and distribution;

  5. Decline: as soon as the offering becomes obsolete, sales and revenues drop till it’s not convenient to continue making the product/service anymore.


This theory should make marketers recognize that people have different readiness to try new products/services. In 1962, the American communication theorist and sociologist Everett M. Rogers described the timing for innovation adoption in his work Diffusion of innovations.


Product adoption curve
This graph represents the adoption curve as Everett M. Rogers described. The diffusion of innovation is composed by innovators, early adopters, early majority, late majority and laggards.

The graph above is the product adoption curve which divides adopters in five groups:

  1. Innovators are pioneers who love new ideas and test new products for a cheaper price. They allow companies to discover offering’s weaknesses;

  2. Early adopters are visionaries or opinion leaders who seek new technology to acquire a drastic competitive advantage. They are usually less price-sensitive and appreciate personalized solutions and superior customer support;

  3. Early majority is composed by pragmatists who buy a product/service only when its benefits are proven. They represent the mainstream market;

  4. Late majority is made up by conservatives who avoid risk and prefer buying for a cheaper price;

  5. Laggards are skeptics who resist the innovation and prefer convenience rather than novelty.


Companies must design a specific marketing strategy for each group of consumers, if they want to move their innovation through the product/service life-cycle.


Diffusion of innovations implies another method to tailor a marketing strategy for the purchasing process. It is called AIDA and works for both products and services.


The AIDA model
The AIDA acronym according to Elias St. Elmo Lewis: Attention, Interest, Desire and Attention.

In this article, I present an overview of this model, because in my digital marketing strategies I use the inbound methodology which is more complete and appropriate. The AIDA model is a brief version of the inbound methodology.


The AIDA acronym was first presented in 1898 by the American advertiser Elias St. Elmo Lewis who worked to improve advertising strategy and, in one of his writings, stated (source: The development of the hierarchy of effects: an historical perspective by Thomas E. Barry, 1987):


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 will believe it. If an advertisement contains these three qualities of success, it is a successful advertisement.

The AIDA model is often used as a framework for landing pages, sales pitch and other strategic assets, and it follows these rules:

  1. Attract attention;

  2. Maintain interest;

  3. Create desire;

  4. Take action.



Price

Price is the cost to buy a product/service. For a consumer, it represents the money to spend for attaining certain benefits; for the company, it is the money asked for the offering.


Price also refers to consumers’ perceived value and includes the sacrifice that they are willing to make in terms of time or effort.


Price is critical for a marketing mix, because it is the only element that generates profit. All the other marketing mix dimensions produce costs.


There are many factors that affect price, some of the internal ones are:

  • Fixed costs (they don’t vary based on the production output, e.g.: lease payments, insurance, property taxes, interest expenses, depreciation...);

  • Variable costs (they vary based on the production output, e.g.: employees, raw material, packaging...);

  • Companies objectives;

  • Production capacity;

  • Product life-cycle;

  • Brand.


Instead, external influencing factors can be:

  • Market coverage (percentage of the market covered with a marketing strategy);

  • Market share (resulting percentage from the difference between a company’s sales and the total amount of product/service sold in the segment);

  • Competition;

  • Target segment;

  • Economic context;

  • Demand;

  • Laws, regulations and taxes;

  • Substitutes;

  • Distribution channels (presence or absence of intermediaries);

  • Culture.


At this point, the most important question should be what a company wants to achieve with its pricing policy.


Some of the pricing strategies could be:

  • Maximizing profits (revenues - costs);

  • Short-term survival: a company tolerates losses for a short period in order to win the competition or resist from an attack of competitors;

  • Maximizing ROI (profit ÷ costs);

  • Status quo: keeping the market stable;

  • Preventing new entrants: avoiding competitors to enter the market;

  • Cash flow;

  • Keeping a high quality of the product/service.


There are two variables that allow marketers to set a price: value and costs. A traditional approach considers the production costs as a starting point to make the price.


Cost-based pricing
A cost-based pricing starts from evaluating the production costs.

The cost-based pricing is good for commodities, but it can be counterproductive for different types of offerings. Let’s say that a company calculates the overall costs from making to selling a product/service and then adds a markup to make a profit. How can it know if the consumer would have paid more for that offering? Is the markup enough or could it be raised?


You see, this model generates the risk to underestimate the price.


The value-based pricing is the opposite and starts from the value perceived from consumers.


The value-based pricing
A value-based pricing starts from evaluating the value that consumers attribute to a certain product/service.

How much is the consumer willing to pay for the offering?


This model represents a modern approach to pricing and it is actually very effective for most products and services. Starting from the value attributed by the consumer allows companies to generate the right margins from the demand. Nevertheless, it requires an excellent knowledge of the target audience.


What is a pricing strategy?


Given a specific audience, a pricing strategy is a marketing action taken to set the best price for a product or service.


There are mainly five pricing strategies:

  1. Price skimming: companies set a premium price to attract high-end consumers who don’t mind dealing with expensive prices;

  2. Penetration pricing: companies set low prices to penetrate a competitive market. It can also be used to attract consumers who seek convenience;

  3. Prestige pricing: it is a psychological strategy based on the principle that people make assumptions on the quality/price ratio and don’t buy 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 recognized as members of a certain exclusive social class/category;

  4. Competition-oriented pricing: companies study and apply competitors’ price;

  5. Psychological pricing: companies set prices slightly lower the rounded number (e.g.: all prices that end with 9).



Promotion

Promotion includes all kinds of advertising, programs and activities (online and offline) to foster a product/service. It varies according to the segment served and marketing strategy adopted.



Place

Place is a marketplace where people can buy a product/service. It can be physical, like a store, or intangible, like an e-commerce, what matters is that it provides access to the product/service.





THE EVOLUTION OF MARKETING MIX:

7Ps, 8Ps, 4Cs AND 7Cs



About twenty years later, the community of economists and theorists started thinking of a more complete model to suit the complexity of services. The 4Ps of marketing mix is too simple to serve this purpose.


How have the 4Ps of marketing mix changed over time?



The 7Ps of marketing mix

In 1981, the professors Bernard Booms and Mary Jo Bitner published Marketing strategies and organizational structures for service firms where they presented the 7Ps of marketing mix.


This updated version added 3 dimensions to the original 4Ps: people, process and physical evidence.


People are fundamental in delivering any product or service. They represent everyone involved during the buyer’s journey, buyer themselves included: employees, partners, customers and even the relationships established among them.


Mood, character and behavior adopted during a service delivery affect the quality perceived by the customer. If the offering expects to satisfy more consumers simultaneously, they can influence their experience with each other. Just think of being at the cinema. If people start talking during a movie, you get upset and can’t follow the story anymore.


Some of the variables that affect this dimension are:

  • Employees recruitment and training;

  • Uniforms;

  • Scripting;

  • Queuing systems and wait management;

  • Handling complaints and understanding service failures;

  • Managing social interactions.


Processes are all the mechanism, plann