THE MARKETING MIX: The 7Ps of marketing

The marketing mix is a widely accepted strategic marketing tool that combines the original 4Ps
(product, place, price, promotion) with the additional 3Ps (people, packaging, process) in formulating
marketing tactics for a product or service. These 7Ps are employed until the entrepreneur finds the right
combination that will most effectively serve the customer’s needs and wants and at the same time
achieve profitability objective.

The 7Ps are controlled by the entrepreneur and therefore must be well thought of to be
successful. Prior to 7Ps, and 4Ps were used in marketing products or physical goods only. However,
these are not completely applicable to marketing services; thus, the 3Ps, which are also applicable in
marketing products, were introduced. Only very few products are pure products and only few services
are pure services. Therefore, the marketing mix will be able to address marketing components of both
goods and services or even the hybrids.

Entrepreneurs must use 7Ps model to the following:

1. Conduct a situation analysis

2. Set objectives
3. Conduct a strength, weaknesses, opportunity, and threat (SWOT) or competitive analysis; and
4. Ultimately come up with marketing strategies and tactics.
A challenge to a budding entrepreneur is to ask the following key questions on set:
 Product – what product or service is the most appropriate for the opportunity, and why
will customers buy or avail them?
 Place – what location is best suited for the business where there are more potential
customers? Can they conventionally transact on-site or online? How is the process of
distribution of products or performance of services?
 Price – what is the most appropriate price, and what pricing strategies will be used for
the target customers?
 Promotion – what is the most effective advertisement or combination of
advertisements, and which advertising toll should be used to drive awareness and
increase sales?
 People - what type of people to be hired? What are the basic skills needed for the job?
What is leadership style will be applied by the entrepreneur?
 Packaging – what is the nest packaging of the product that is attractive enough to
customers and cost-efficient at the same time? What physical evidence does the
entrepreneur need to set up so as to sell the service?
 Processing – what is the most compelling feature of the product or the business that will
make the difference in the lives of the customers? What sets the products or service
from the rest?
PRODUCT
A product is any physical good, service, or idea that is created by an entrepreneur in serving the
needs of the customers and addressing their existing problems. An entrepreneur must first scan the
environment, find a compelling problem, and create a persuasive product or service out of the
opportunity. The product or service should not be created before finding the right customers, because
this is very risky and the resources and time might be put to waste. The three-level concept of products
of services summarizes the reasons that a customer decides to buy a product or avail of a service.
Level 1: core benefits of the product or service
The core benefits of a product or service are the major factors why a customer buys a product
or avails of a services. For example, a customer buys a coffee because he or she wants to feel energetic
and alert the whole day.
Level 2: physical characteristics of the product or services
Once the core benefit has been satisfied and options are available to customers, the tendency is
to look for the second layer of selection, i.e. which has a better packaging for products or a better
physical evidence or customer experience or services. In the previous example, the customer can choose
a coffee with a more appealing packaging or a more aromatic smell.
Level 3: augmented benefits of a product or service
Augments benefits are only additional benefits; a customer will still get the core benefits of a
product or service even without the augmented benefits. However, in case of common products and
services where there are a number of competitors, the differentiator comes from the physical
characteristics or physical evidence, the customer experience, or the augmented evidence. Therefore,
the entrepreneurs must provide customers with augmented benefits that distinguish them from the
competitors.
PLACE
The place refers to a location or the medium of transaction. A strategic location depends on the
nature of the business and the primary target market. In a physical location, the entrepreneur must
research about the area’s population, traffic, the people’s common paths, their buying behavior, and
their preferences for the location (e.g. Wi-Fi access, spacious area for parking). In a cyber-location, the
entrepreneur must use the web analytics data to understand web sites before performance (e.g.
number of visitor, duration of their stay on the web sites, or the frequency visited contents).
Place also covers the product distribution and the whole business logistics. The logistics side of
products should cover production, ordering and receiving raw materials or finished goods from the
suppliers, storage, reorder points, and transportation system. The logistics side for services covers the
physical evidence or service scape, service providers, and service delivery process, as well as policies and
procedures of the business.
One of the major objectives of the entrepreneur for place to provide customers with pleasant
experience in buying the product or availing of the service so that they will keep on coming back
whether on-site or online. The entrepreneur should place the product or services depending on the
needs of the customers and on where the profits will be maximized. The entrepreneur should also have
reliable supplier for the distribution of products and services. The place, whether on-site or online,
should also be presentable, appealing, and catchy.
The entrepreneur muse devise a set of criteria in choosing the right location aligned with certain
objectives, such as suitability to the target market, condition of the neighbourhood, potential of the
area for future developments, laws and regulations of the area, direct and indirect competitors, foot
traffic, and cost of doing the business.
PRICE
Price is the peso value that the entrepreneur assigns to a certain product or service after
considering its costs, competition, objectives, positioning, and target market. It is only P in the 7Ps thet
generates revenue for the business. Here are the most common pricing strategies.
 1. Bundling – this refers to 2 or more product or services in one reduce price (e.g. 3-in-1 coffee for
P8.00, manicure and pedicure for P150).
2. Penetration piercing – this refers to setting low prices to increase market share, but the
entrepreneur will eventually increase the price on the desired market share is achieved (e.g. a
mobile app-based transportation service offering reduced booking fee of P15 as its introductory
price).
3. Skimming – this is the opposite of penetration prising where prices are initially high and then
they are lowered to offer the product or service to a wider market (e.g. a real estate company
offering top-tier projects are now offering low-cost housing of same quality to serve the middle
market segment).
4. Competitive pricing – this refers to benchmarking prices with the competitors (e.g. milk tea
prices are competitively prices).
5. Product last pricing – this refers to pricing different products or services within a parallel
product array using varying price points (e.g. LED TV is more expensive than the LCD TV even if
under the same brand).
6. Psychological pricing – this considers the psychology and positioning of the price in the market
(e.g. price of haircut service is at P199 because consumers tend to think that odd prices are
considerable lower than what they are; in this example, they tend to round off the price P100
instead of P200).
7. Premium pricing – this refers to setting a very high price to reflect elitism and superiority (e.g.
prices of signature clothes, bags, perfumes).
8. Optional pricing – this refers to adding an extra product or services on top of the original to
generate more revenue (e.g. meals on top of the air face)
9. Cost-based pricing – the basis of the mark up is the cost of sale. For example, the entrepreneur
will compute the cost of coconut juice by adding the cost of the coconut juice (P10) and the
plastic container (P4). He or she can set the price at P20 to earn P6 per coconut juice.
10. Cost plus pricing – the mark up is based on a certain percentage of costs (e.g., the entrepreneur
wants to set a 50% mark up on the coconut juice cost which is P14 x 50% = P7; the new price is
P14 + P7 = P21.

The profit of an entrepreneur can be determined only if there is a proper computation of costs
associated with the product service. There are 2 classification of costs:

1. Variable cost or controllable cost – these costs are directly proportional to the number of
products manufactured or to the number of services performed. For example, one of the
variable costs involved in a car wash business is the cost of cleaning materials. The business will
incur higher costs only when more customers avail of the service, or it will incur lower costs
when there are few customers.
2. Fixed costs or uncontrollable costs – there are costs not directly proportional to the
manufacturing of a product or to the performance of the service. These are usually the cost of
equipment, employee remuneration, rental cost, and utilities. These are considered fixed costs
because the business will still incur these costs whether or they not provide more or less.
Therefore, if the entrepreneur produces more products and performs more services, his or her
fixed costs per unit will be lower because the fixed costs will be allocated to the number of
unites produced or number of services performed (Sim, 2009).
 The entrepreneur must follow these general pricing guidelines to make the business sustainable
and thriving:

1. Do not price the product or services below its cost.

2. Monitor competitors’ prices, and ensure that your prices at par with them unless the product or
services is really way superior to the competitors’.
3. Align prices with the 6ps (product, place, promotion, people, packaging, and processing)
4. Implement price strategies that are relevant to your market segment. For example, tingi (sachet)
pricing is more appropriate in the grassroots locality or barangay.
5. Align prices with your business objectives.

PROMOTION
Promotion involves presenting the products or services to the public and how these can address
the public’s needs, want, problems, or desires. In promotion, the primary target market should be
identified because it will become the main audience. The main goal of promotion is to gain attention.

A strong integrated marketing communication plan (IMC) should be devised to deliver the
compelling messages effectively. Key marketing messages for promotion can be the following:

1. Value proposition or unique selling proposition of the product or services

2. Product or service image
3. Business image
4. Business values and philosophy

Once the key marketing is established, the entrepreneur must choose the right promotion tools
to deliver these message to the target market. The entrepreneur can choose one or combination of the
following promotion tools:

1. Advertising – these is a type of communication that influences the behaviour of a customer to

choose the product or service of the entrepreneur over the competitors. The objectives of
Advertising include the following:
a. Informing, educating, and familiarizing the public with the product and service offerings;
b. Building a trustworthy image
c. Increasing sales
There are so many ways to advertise, but the challenge for the entrepreneur is to choose which
the most cost-effective and targeted channel to relay the key marketing message to the market.
The entrepreneur can choose to advertise through the following;
 Television – regular channels, cable TV
 Radio - AM and FM radio
 Internet – e-mails, web sites, blogs, social media, search engines, podcasts
 Mobile phones – text messages, mobile application, mobile internet
 Print – newspaper, magazines, flyers, directories, signage’s, posters
 Out-of-home – billboards, buses, bus stops, strains, train stations, taxis, street
advertisement.
2. Selling – this is the act of trading a product or services for a price or a fee. The entrepreneur
must identify the target customers who will likely buy the product or service. Once identified, he
 or she must do further research on the target customers to know their profile and behaviour to
come up with a convincing way to sell the product or service. He or she must also know how to
handle objections through highlighting the product benefits and directing the customers to their
compelling need or want. The entrepreneur must also know how to close the sale by leaving a
convincing conclusion that will trigger the customer purchase. After such, he or she must
monitor the customer’s satisfaction, which is called the after sales. Depending on the size of the
business, the entrepreneur must decide whether to hire personnel or not. If so, he or she needs
to plan for the recruitment and selection, training, salaries, scope of work, and communication
system.
3. Sales of promotion – these are short-term promotional gimmicks wherein practical incentives
and appealing activities are incorporated to entice the customers to buy the product or avail of
the service. These are also called “below-the-line” promotions. These are normally implemented
when an entrepreneur needs to reach certain sales quota to either recovery investment or
achieve better profitability. Successful sales promotion involves time limit and sense of urgency,
as this strategy enables customer to act immediately to avail the promo. Longer sales promotion
usually result in customers not taking advantage and not acting immediately. Here are common
examples of sales promotion in the Philippines:
 Sales discount or discount coupons
 Raffles
 Contest and games
 Promo items
 Product or services bundles
 Trade fairs or exhibits (e.g., wedding expo)
 Sample distributions of free taste/free trials
 Premiums (e.g., free toys for fast food meals)
 Point-of-purchase promotion (e.g., display stands in grocery stores)
 Advertising specialties (e.g., pens, notebooks, umbrellas, bags, calendars)
 Rewards (e.g., reward cards)
4. Public relations – these are image-building initiatives of the entrepreneur to make the name of
the business reputable to stakeholders, such as the target customers, government agencies,
business partners, media, and the public. Unlike advertisements, public relation (PR) do not
directly promote products or services. These PR strategies affect customers indirectly, but they
do influence the stakeholders to build more trust to the business. This stimulates the
stakeholders to write or share positive news, resulting in more effective marketing campaigns
than regular advertisement. Positive write ups from journals, newspapers, web sites or social
media, and even word-of-mouth are more creditable than traditional advertisement. Examples
of PR strategies are as follows:
 Press conference
 Launching events
 Strong media relations through press kits
 Social responsibility events ( e.g., charitable or community events)
 Lobbying (e.g., good relationships with government officials)
 Web public relations (e.g., blogs, social media, e-mails, word-of-mouth)
PEOPLE
People is one of the 3 additional Ps in the marketing mix. In today’s marketing arena, people
play a vital role in servicing customers even though the entrepreneur sells only physical goods.
With the influx of the carious competing products and services, one of the major differentiators
is how people or employees make a difference in the lives of the customers. Employees have
become the major influence in the customer’s buying behaviour.
PACKAGING
Another additional in the 7ps is packaging. Packaging is how the product or service is presented
in customers. It is the overall identification (look and feel) of the product or service. This will determine
the uniqueness of the product from competitors. This is the first element that customers see because
they don’t know what’s inside yet. Aside from this, packaging preserves the shelf life of the product or
service. Because of the clamour in ensuring the environmental protection and preservation, many
businesses begin to make packages out of environmental-friendly materials, not just in products but also
in services.
Packaging ultimate’s goal is to entice customer to purchase the product or service. Thus, the
entrepreneur should focus on pleasing the customer’s eyes. It is not just limited on the product or
services alone. But in its totality, including its accessories, after sale service, and warranty.
Packaging is very important in selling physical products or goods, as it establishes the brand’s
identity, as well as its unique selling proposition. Therefore, elements such as colour which has different
meanings on the customer segment and culture, shape, size, materials, font and text, and graphics must
be considered. After establishing the final packaging, the product must be put into several tests, such as
packaging and graphics test, to ensure that the packaging is attractive and of high quality.
In selling services, the term service scape was used to refer to the overall ambiance of the place
where the service is performed. As an additional Ps in the marketing mix, packaging plays a vital role in
persuading a customer to try product or avail of a service based on what he or she has seen. In fact,
packaging sometimes matters more that the product or service itself. Indeed, it must please the eye of
the beholders.
PROCESS
Process is the last addition to the marketing mix as marketers began to realize the importance of
the internal and external operations of the business to serve customers better. Process is defined as a
step-by-step procedure or activity workflow that the entrepreneur or employees follow to effectively
and efficiently serve the customers. Its components include inputs, throughput, and output. The internal
process includes the back-office operations (pre-processing, processing, and post-processing) wherein
employees or machines process customers’ request without necessarily being seen by the customers.
The external process includes the actual servicing where customers are part of the process.