Chapter 3 : Marketing Mix in Contemporary Business

                   Chapter 3 : Marketing Mix in Contemporary Business 

1 Introduction to Contemporary Marketing 

Contemporary marketing encompasses the strategies, techniques, and practices employed by businesses to engage with consumers in today's rapidly evolving digital landscape. It goes beyond traditional marketing approaches, leveraging technology, data analytics, and consumer insights to create personalized and immersive experiences. In this chapter, we explore the importance of contemporary marketing in driving business growth, adapting to changing consumer behaviors, and staying ahead in competitive markets. 

Evolution of the Marketing Mix 

The evolution of the marketing mix traces back to the 1950s when Neil Borden introduced the concept of the "Marketing Mix" consisting of various elements crucial for marketing success. Over time, this framework was refined and popularized by E. Jerome McCarthy, who identified the four Ps: Product, Price, Place, and Promotion. In contemporary marketing, this framework has expanded to include additional elements like People, Process, and Physical Evidence, reflecting the growing importance of customer experience and service quality. 

Components of a Traditional Marketing Mix 

The traditional marketing mix comprises four key elements: 

1.  Product: This refers to the goods or services offered by a company to satisfy customer needs and wants. It involves product design, features, quality, branding, and packaging. 2.  Price: Price refers to the amount customers are willing to pay for a product or service. It involves pricing strategies, discounts, and payment options, aiming to maximize profitability while remaining competitive in the market. 

3.  Place: Place refers to the distribution channels through which products are made available to customers. It involves decisions related to inventory management, logistics, and retail partnerships to ensure products reach the right customers at the right time and place. 

4.  Promotion: Promotion encompasses all activities aimed at promoting and communicating the value of a product or service to customers. It includes advertising, sales promotions, public relations, and digital marketing efforts to create awareness, stimulate demand, and drive sales.

Additional Components in the Mix 

In addition to the traditional 4Ps, contemporary marketing includes three additional components: 

1.  People: People refer to the employees, stakeholders, and customers who interact with the brand. It emphasizes the importance of customer service, employee training, and building strong relationships to enhance customer satisfaction and loyalty. 

2.  Process: Process refers to the systems and procedures involved in delivering products or services to customers. It involves streamlining operations, optimizing workflows, and enhancing efficiency to improve the overall customer experience. 

3.  Physical Evidence: Physical evidence refers to the tangible elements that customers encounter when interacting with a brand. It includes physical facilities, packaging, signage, and other visual cues that influence perceptions of quality and credibility. 

Importance of Marketing Mix in Marketing Decisions 

The marketing mix serves as a framework for making strategic decisions that align with organizational objectives and meet customer needs. By carefully analyzing each component, marketers can develop tailored strategies to differentiate their offerings, target specific market segments, and create value for customers. The marketing mix also helps businesses adapt to changing market conditions, anticipate competitor actions, and optimize resource allocation for maximum impact. 

The marketing mix is a fundamental concept in marketing that outlines the various elements a business can control to influence consumer behavior and achieve its marketing objectives. Here's a closer look at the importance of the marketing mix in marketing decisions and the significance of various marketing mix elements: 

1.  Product Decisions: 

Product decisions involve determining what products or services to offer to meet customer needs and wants. This includes decisions regarding product design, features, branding, packaging, and quality. 

Importance: The product is the core offering that satisfies customer needs and forms the foundation of a company's value proposition. Effective product decisions can differentiate a brand from competitors and create long-term customer loyalty.

 2.  Price Decisions: 

Price decisions involve setting the right price for products or services based on factors such as costs, competition, demand, and perceived value. 

Importance: Pricing directly impacts revenue, profitability, and market positioning. Proper pricing strategies can maximize revenue while ensuring products remain competitive and attractive to customers. 

3.  Place (Distribution) Decisions: 

Place decisions involve determining how and where products will be distributed to reach target customers. This includes decisions regarding distribution channels, logistics, inventory management, and retail partnerships. 

Importance: Distribution ensures that products are available to customers when and where they need them. Effective distribution strategies can improve accessibility, increase market reach, and enhance customer convenience. 

4.  Promotion Decisions:

Promotion decisions involve the various marketing activities used to communicate the value of products or services to target customers. This includes advertising, sales promotions, public relations, direct marketing, and digital marketing efforts. Importance: Promotion creates awareness, generates interest, and influences purchasing decisions. Effective promotional strategies can drive sales, build brand equity, and maintain customer engagement. 

5.  People Decisions: 

People decisions focus on the employees, stakeholders, and customers who interact with the brand. This includes hiring and training employees, fostering strong relationships with customers, and creating positive experiences throughout the customer journey. 

Importance: People are critical to delivering exceptional customer service and building strong brand relationships. Investing in employee training and customer service initiatives can enhance customer satisfaction and loyalty. 

6.  Process Decisions: 

Process decisions involve the systems and procedures used to deliver products or services to customers. This includes streamlining operations, optimizing workflows, and improving efficiency to enhance the overall customer experience. 

Importance: Efficient processes ensure consistency, reliability, and quality in product delivery. By optimizing processes, businesses can reduce costs, minimize errors, and improve customer satisfaction. 

7.  Physical Evidence Decisions: 

Physical evidence decisions focus on the tangible elements that customers encounter when interacting with the brand. This includes physical facilities, packaging, signage, and other visual cues that shape perceptions of quality and credibility. Importance: Physical evidence reinforces brand identity, enhances brand perception, and influences purchase decisions. Attention to physical evidence can create a positive impression and build trust with customers.

Introduction to Marketing Planning and Strategies 

Marketing planning involves the systematic process of setting goals, identifying target markets, and developing actionable strategies to achieve desired outcomes. It begins with a thorough analysis of market trends, consumer preferences, and competitive forces, followed by the formulation of marketing objectives and the creation of a detailed marketing plan. Effective marketing strategies are flexible, data-driven, and aligned with overall business objectives to ensure long-term success. 

Management Processes in Marketing 

Effective marketing management requires a combination of strategic planning, resource allocation, implementation, and performance evaluation. It involves coordinating cross functional teams, managing budgets, and leveraging data analytics to optimize marketing efforts. Key management processes include market research, product development, 

branding, pricing, distribution, advertising, and sales management, all aimed at driving customer acquisition, retention, and satisfaction. 

Interactions between Marketing Mix and Marketing Environment 

The marketing mix operates within the broader marketing environment, which encompasses internal and external factors that influence organizational activities. Internal factors include company resources, capabilities, and culture, while external factors include macroeconomic trends, regulatory policies, technological advancements, competitive forces, and consumer 

behaviors. Understanding these interactions helps marketers identify opportunities and threats, anticipate market shifts, and develop strategies that leverage the strengths and mitigate the weaknesses of the organization. 

Control Mechanisms and Metrics in Contemporary Marketing 

Measuring and monitoring marketing performance is essential for evaluating the effectiveness of strategies and making necessary adjustments. Key performance indicators (KPIs) such as sales revenue, market share, customer satisfaction, brand awareness, and return on investment (ROI) provide valuable insights into the success of marketing initiatives. Control mechanisms include regular performance reviews, benchmarking against industry standards, and leveraging data analytics to track key metrics and identify areas for improvement. 

Control mechanisms and metrics play a crucial role in contemporary marketing by providing insights into the effectiveness of marketing strategies and helping businesses make informed decisions to optimize performance. Here are some key control mechanisms and metrics used in contemporary marketing: 

1.  Key Performance Indicators (KPIs): 

KPIs are quantifiable measures used to evaluate the success of marketing efforts against predefined objectives. Common marketing KPIs include: 

Sales revenue: Total revenue generated from sales of products or services. Customer acquisition cost (CAC): Cost incurred to acquire a new customer. Customer lifetime value (CLV): Predicted value of a customer over their lifetime relationship with the company. 

Return on Investment (ROI): Ratio of net profit to the cost of investment, indicating the efficiency of marketing campaigns. 

Conversion rate: Percentage of website visitors or leads who take a desired action, such as making a purchase or filling out a form. 

Customer retention rate: Percentage of customers retained over a specific period, indicating customer loyalty and satisfaction. 

2.  Marketing Analytics:

Marketing analytics involves the collection, analysis, and interpretation of data related to marketing activities and consumer behavior. Advanced analytics techniques, such as predictive modeling, machine learning, and data visualization, are used to gain actionable insights and inform decision-making. 

Metrics derived from marketing analytics include: 

Website traffic: Number of visitors to a website, including sources of traffic and user behavior. 

Social media engagement: Metrics such as likes, shares, comments, and followers on social media platforms. 

Email marketing metrics: Open rates, click-through rates, and conversion rates for email campaigns. 

Customer segmentation: Identification of distinct customer segments based on demographics, behaviors, or preferences. 

Market share: Percentage of total sales within a specific market or industry, indicating a company's competitive position. 

3.  Marketing Automation Platforms: 

Marketing automation platforms enable businesses to automate repetitive marketing tasks, streamline workflows, and track campaign performance in real-time. These platforms often include built-in analytics and reporting features to monitor key metrics and measure the impact of marketing activities. 

Metrics tracked through marketing automation platforms may include: Lead generation and nurturing: Number of leads generated, conversion rates at each stage of the sales funnel, and lead-to-customer conversion rates. Campaign performance: Metrics such as email open rates, click-through rates, and engagement with marketing content. 

Customer journey analytics: Analysis of customer interactions across multiple touchpoints, identifying opportunities for personalization and optimization. 4.  Customer Feedback and Surveys: 

Soliciting feedback from customers through surveys, reviews, and social media listening provides valuable qualitative insights into customer perceptions, preferences, and satisfaction levels. 

Metrics derived from customer feedback include: 

Net Promoter Score (NPS): Measure of customer loyalty and satisfaction based on the likelihood of customers to recommend a company to others. 

Customer satisfaction (CSAT) score: Measure of overall satisfaction with products, services, or interactions with the brand. 

Customer sentiment analysis: Analysis of customer comments and feedback to gauge sentiment and identify areas for improvement or intervention. 

5.  Competitive Benchmarking:

Monitoring competitors' marketing activities and performance metrics provides context and benchmarks for evaluating the effectiveness of one's own marketing efforts. 

Metrics used for competitive benchmarking include: 

Market share comparison: Comparing market share trends and performance against competitors within the same industry or market segment. 

Ad spend and impression share: Analysis of competitors' advertising budgets, ad placements, and share of voice in the market. 

Social media benchmarking: Comparison of social media engagement metrics, follower growth, and content performance with competitors.

Product-Related Decisions in the Digital Age 

In the digital age, product-related decisions are influenced by factors such as technological innovation, changing consumer preferences, and global market dynamics. Organizations must leverage digital technologies to enhance product design, customization, and personalization, while also adapting to shorter product life cycles and increasing competition. Product related decisions involve continuous innovation, market research, feedback collection, and agile development processes to meet evolving customer needs and stay ahead of competitors. 

Product Life Cycle 

The various stages of a product’s life cycle determine how it is marketed to consumers. Successfully introducing a product to the market should see a rise in demand and popularity, pushing older products from the market. As the new product becomes established, the marketing efforts lessen and the associated costs of marketing and production drop. As the product moves from maturity to decline, so demand wanes and the product can be removed from the market, possibly to be replaced by a newer alternative. 

Managing the four stages of the life cycle can help increase profitability and maximise returns, while a failure to do so could see a product fail to meet its potential and reduce its shelf life. 

Writing in the Harvard Business Review in 1965, marketing professor Theodore Levitt declared that the innovator had the most to lose as many new products fail at the introductory stage of the product life cycle. These failures are particularly costly as they come after investment has already been made in research, development and production. Because of this, many businesses avoid genuine innovation in favour of waiting for someone else to develop a successful product before cloning it. 

Stages 

There are four stages of a product’s life cycle, as follows: 

1. Market Introduction and Development 

This product life cycle stage involves developing a market strategy, usually through an investment in advertising and marketing to make consumers aware of the product and its benefits. 

At this stage, sales tend to be slow as demand is created. This stage can take time to move through, depending on the complexity of the product, how new and innovative it is, how it suits customer needs and whether there is any competition in the marketplace. A new product development that is suited to customer needs is more likely to succeed, but there is plenty of evidence that products can fail at this point, meaning that stage two is never reached. For this reason, many companies prefer to follow in the footsteps of an innovative pioneer, improving an existing product and releasing their own version. 

2. Market Growth 

If a product successfully navigates through the market introduction it is ready to enter the growth stage of the life cycle. This should see growing demand promote an increase in production and the product becoming more widely available. 

The steady growth of the market introduction and development stage now turns into a sharp upturn as the product takes off. At this point competitors may enter the market with their own versions of your product – either direct copies or with some improvements. Branding

becomes important to maintain your position in the marketplace as the consumer is given a choice to go elsewhere. Product pricing and availability in the marketplace become important factors to continue driving sales in the face of increasing competition. At this point the life cycle moves to stage three; market maturity. 

3. Market Maturity 

At this point a product is established in the marketplace and so the cost of producing and marketing the existing product will decline. As the product life cycle reaches this mature stage there are the beginnings of market saturation. Many consumers will now have bought the product and competitors will be established, meaning that branding, price and product differentiation becomes even more important to maintain a market share. Retailers will not seek to promote your product as they may have done in stage one, but will instead become Stuckists and order takers. 

4. Market Decline 

Eventually, as competition continues to rise, with other companies seeking to emulate your success with additional product features or lower prices, so the life cycle will go into decline. Decline can also be caused by new innovations that supersede your existing product, such as horse-drawn carriages going out of fashion as the automobile took over. 

Many companies will begin to move onto different ventures as market saturation means there is no longer any profit to be gained. Of course, some companies will survive the decline and may continue to offer the product but production is likely to be on a smaller scale and prices and profit margins may become depressed. Consumers may also turn away from a product in favour of a new alternative, although this can be reversed in some instances with styles and fashions coming back into play to revive interest in an older product. 

Product Life Cycle Strategy and Management 

Having a properly managed product life cycle strategy can help extend the life cycle of your product in the market.  The strategy begins right at the market introduction stage with setting of pricing. Options include ‘price skimming,’ where the initial price is set high and then lowered in order to ‘skim’ consumer groups as the market grows. Alternatively, you can opt for price penetration, setting the price low to reach as much of the market as quickly as possible before increasing the price once established. 

Product advertising and packaging are equally important in order to appeal to the target market. In addition, it is important to market your product to new demographics in order to grow your revenue stream.

Products may also become redundant or need to be pivoted to meet changing demands. An example of this is Netflix, who moved from a DVD rental delivery model to subscription streaming. 

Understanding the product life cycle allows you to keep reinventing and innovating with an existing product (like the iPhone) to reinvigorate demand and elongate the product’s market life. 

Examples 

Many products or brands have gone into decline as consumer needs change or new innovations are introduced. Some industries operate in several stages of the product life cycle simultaneously, such as with televisual entertainment, where flat screen TVs are at the mature phase, on-demand programming is in the growth stage, DVDs are in decline and video cassettes are now largely redundant. Many of the most successful products in the world stay at the mature stage for as long as possible, with small updates and redesigns along with renewed marketing to keep them in the thoughts of consumers, such as with the Apple iPhone. 

Here are a few well-known examples of products that have passed or are passing through the product life cycle: 

1. Typewriters 

The typewriter was hugely popular following its introduction in the late 19th century due to the way it made writing easier and more efficient. Quickly moving through market growth to maturity, the typewriter began to go into decline with the advent of the electronic word processor and then computers, laptops and smartphones. While there are still typewriters available, the product is now at the end of its decline phase with few sales and little demand. Meanwhile, desktop computers, laptops, smartphones and tablets are all experiencing the growth or maturity phases of the product lifecycle. 

2. Video Cassette Recorders (VCRs) 

Having first appeared as a relatively expensive product, VCRs experienced large-scale product growth as prices reduced leading to market maturation when they could be found in many homes. However, the creation of DVDs and then more recently streaming services, VCRs are now effectively obsolete. Once a ground-breaking product VCRs are now deep in a decline stage from which it seems unlikely they will ever recover. 

3. Electric Vehicles 

Electric vehicles are experiencing a growth stage in their product life cycle as companies work to push them into the marketplace with continued design improvements. Although electric

vehicles are not new, the consistent innovation in the market and the improving sales potential means that they are still growing and not yet into the mature phase. 

4. AI Products 

Like electric vehicles, artificial intelligence (AI) has been in development and use for years, but due to the continued developments in AI, there are many products that are still in the market introduction stage of the product life cycle. These include innovations that are still being developed, such as autonomous vehicles, which are yet to be adopted by consumers. 

Importance of the Product Life Cycle 

Understanding the product life cycle can inform the strategic actions of a company or business, allowing management and decision-makers to work out staff allocation and resources, budgeting, and what should be prioritised, as well as the next areas for innovation and development. 

An overview of the product life cycle is integral to marketing and promotions as well as informing long-term planning. In addition, it helps with streamlining processes within an organisation. 

It is always easier to make better decisions with accurate information and the product life cycle can be an important facet of this. 

When to Use the Product Life Cycle 

The product life cycle can be used across your business from advertising to pricing and innovation to marketing. 

A new product can be promoted as a ground-breaking or an improvement on existing products, while an established product can be promoted based on a long, successful and trusted history in the marketplace. 

The pricing of your product should also be informed by the life cycle, with newer products being priced to entice buyers and more established products in their growth stage can be priced higher. 

Marketing strategies can also be based around the product life cycle, audience awareness and market maturity means that a product will be marketed differently to a new and emerging product. Consumers will also be aware of a product’s life cycle and will know if you try to promote a new item as something that is well-established. 

Of course, those products that are in decline or have saturated the market will need a different strategy again, allowing you to maintain your position in the marketplace even as you look at reinvigorating your product or innovating new ideas.

Product Life Cycle Marketing Strategies 

As highlighted above, the product life cycle in marketing is also an important consideration for businesses. Products need to be addressed differently according to their position in the life cycle, as follows: 

Development Stage Marketing Strategies 

You don’t need to wait until your product fully launches to begin to build customer interest. You can place your product with selected voices in your industry to start to build a ‘buzz’ around your upcoming product or promote a limited release to create an air of exclusivity and build anticipation for the full market release. An early, limited release can create positive feedback that can be used to build awareness and excitement around your product. 

Introduction Stage Marketing Strategies 

With the full launch of your product you can begin to promote it in earnest. This could include reaching out to industry experts or influencers within your target market who can review and promote your product, using their endorsement to create credibility and reach a wider audience. This stage is all about educating the marketplace about the key selling points and benefits of your product. 

Growth Stage Marketing Strategies 

At this point the focus shifts to establishing a brand presence to create customer loyalty over any competitors. Marketing strategies at this point can include social media advertising and promotion, search engine optimisation (SEO), content marketing and partnerships with industry experts or influencers. Companies will also seek new distribution channels, add additional features and develop support services. Exploring new markets and e-commerce platforms as well as partnering with retailers could also boost your customer base at this point. 

Maturity Stage Marketing Strategies 

As your product reaches maturity, you may feel that you can rest on your laurels and reap the rewards of having an established product in the marketplace. However, work is still required in order to position yourself as a leader in your field and differentiate yourself from your competitors. As with the introduction stage, you could seek to educate the marketplace, except this time it will be from a position of authority, letting your customers know about the benefits of your product. This can be achieved via blog posts and industry insights. In addition, you will want to continue improving your product, offering more features for example, and informing your customer base of the improvements and their associated benefits. This will help protect your product or business as you reach the saturation stage…

Saturation Stage Marketing Strategies 

Once the market becomes saturated you will need to lean into your brand and how it differentiates you from the competition. You can tailor your marketing efforts to appeal to specific customer segments in your market, highlighting their preferences and needs. As well as directly targeting parts of your market, you need to strengthen your relationship with your existing customer base. A more personalised customer interaction, new product features, special product bundles with similar items, exclusive packaging options, product personalisation, and customer loyalty programmes are just some of the techniques that are used according to product and industry. This is when the competition will be at its highest and there may not be many available tweaks to your product, so excellent customer service is vital in order to maintain a good position in the marketplace. To stay at the forefront, your customers need to know your product (and business) is the best – and you need to back it up with your product, service, and delivery. Good customer testimonials are a good addition for your marketing plan at this time. 

Decline Stage Marketing Strategies 

Companies don’t want to see their product go into decline, but sometimes it can’t be avoided. When the entire market goes into decline – as was the case with video cassettes – it might be impossible (or at least inadvisable) to fight against the tide. However, a decline doesn’t always mean a total collapse and strategies such as improved advertising campaigns, reduced prices, new product features, improved branding, or even new market penetration can allow you to flourish while other, lesser products fall aside as the market balances out. The key is in emphasising the superiority of your product and professionalism, using many of the same strategies from the saturation stage. Of course, if a product goes or is going obsolete, then it is best to plan for a timely exit from the market or a pivot to new products.  

International Product Life Cycle (IPL) 

The International Product Life Cycle (IPL) is a way of keeping track of how you need to manage and market your product in different international markets. Companies will often explore other markets globally to avoid reaching the decline stage for their product or service. Others will seek to move manufacturing and production to other countries as well, either to meet the demands of other markets or to reduce production costs. 

The stages of an IPL are the same as those for a normal product life cycle, although some stages may be approached differently to take account of local customs and cultures as well as regulations. Exploring other markets gives you the opportunity to learn from prior mistakes and innovate into new regions. An IPL will not prevent decline altogether as competitors may also decide to move into the same markets, creating a shift in life cycle stages towards saturation and decline.

The marketing theory behind product life cycles interacting with international trade was developed by Harvard Business School professor Raymond Vernon in the late 1960s, to take account of trends in international trade. 

Vernon stated that products in international markets had three phases; new products, maturing products, and standardised products. He believed that products would perform best in their country of origin as this would keep manufacturing and production costs low. However, once demand increased, companies can start exporting to other countries, as well as building local production plants in each new location. These plants would provide the flexibility to make changes to a product locally, without incurring large costs. 

As with the saturation phase of regular product life cycles, which grew from Vernon’s original theory, he said there would be an influx of competition once a product entered its standardised phase. At this point companies need to reduce production and manufacturing costs to stay competitive, as well as exploring new markets or products to begin the life cycle process again.