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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 and process) – in
formulating tactics for a product or service.

Entrepreneurs must use the 7Ps model to do the


following:
• Conduct a situation analysis
• Set objectives
• Conduct SWOT (Strengths, Weaknesses, Opportunities
and Threats) Analysis
• Ultimately come up with marketing strategies and
tactics
Key questions for the 7Ps

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 conveniently transact on-
site or online?
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 and which advertising tool
should be used to drive awareness and increase
sales?
People - What type of people need to be hired?
What are the basic skills needed for the job?
Packaging – What is the best packaging for the
product to be attractive enough to customers
and cost-efficient at the same time?
Processing – What is the most compelling feature
of the product or the business that will make a
difference in the lives of the customers?
A product is any physical good, service, or idea
that is created by an entrepreneur or an
innovator in serving the needs of the
customers and addressing their existing
problems.
The three-level concept of products or 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 service. For example, a customer
buys coffee because he or she wants to feel
energetic and alert the whole day.

Level 2: Physical Characteristics of the Product or


Service
Once the core benefit has been satisfied and
options are available to the customers, the
tendency is to look for the second layer of
selection which has a better packaging for
products or a better physical evidence or
customer experience for services.
Level 3: Augmented Benefits of a Product or
Service
Augmented benefits are only additional benefits.
A customer will still get the core benefits of a
product or service even without the augmented
benefits. However, an entrepreneur must
provide customers with augmented benefits to
distinguish them from the competitors.
The place refers to a location or the medium of
transaction. In a physical location, the
entrepreneur must research about the area’s
population, the traffic, the people’s common
paths, their buying behavior, and their
preferences for the location. In a cyber location,
the entrepreneur must use Web analytics data to
understand Web site performance.
Place also covers the product distribution and the
whole business logistics. The logistics side for
products should cover production, ordering and
receiving raw materials or finished goods from
the suppliers, storage, reorder points, and
transportation systems.

One of the major objectives of the entrepreneur


for place is 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.
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 the only P in
the 7Ps that generates revenue for the business.
Here are the most common pricing strategies.
1. Bundling – this refers to two or more products
or services in one reduced price.
2. Penetration pricing - this refers to setting low
prices to increase market share, but the
entrepreneur will eventually increase the price
once the desired market share is achieved.
3. Skimming – this is the opposite of penetration
pricing where prices are initially high and then
they are lowered to offer the product or service
to a wider market.
4. Competitive pricing – this refers to
benchmarking prices with competitors.
5. Product line pricing – this refers to pricing
different products or services within a parallel
product array using varying price points.
6. Psychological pricing – this considers the
psychology and positioning of price in the
market ( P199.95, 999.50)
7. Premium pricing – this refers to setting a very
high price to reflect elitism and superiority.
8. Optional pricing – this refers to adding an
extra product or service on top of the original
to generate more revenue (meals on airfare).
9. Cost-based pricing – the basis of markup is
the cost of sales.
10. Cost plus pricing – the markup is based on a
certain percentage of cost.
1. Variable costs or controllable costs – these
costs are directly proportional to the
number of products manufactured or to the
number of services performed.
2. Fixed costs or uncontrollable costs – these
are costs not directly proportional to the
manufacturing of a product or to the
performance of the service. (cost of
equipment, rental, utilities)
1. Do not price the product or service below its
cost.
2. Monitor the competitors’ prices, and ensure
that your prices are at par with them
3. Align prices with the other 6Ps.
4. Implement price strategies that are relevant to
your market segment.
5. Align prices with your business objectives.
Promotion involves presenting the products or
services to the public and how these can address
the public’s needs, wants, problems, or desires.
The main goal of promotion is to gain attention.

Key marketing messages for promotion:


1. Value proposition or unique selling proposition
of the product or service
2. Product or service image
3. Business image
4. Business values and philosophy
The entrepreneur can choose one or a combination of
the following promotional tools:
1. Advertising – 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
The entrepreneur can choose to advertise through
the following:
• Television * out of home (billboards,
• Radio street advertisements)
• Internet
• Mobile phones
• print
2. Selling
3. Sales promotions – short-term gimmicks
wherein practical incentives and appealing
activities are incorporated. These are also
called “below-the-line” promotions.
• Sales discounts or discount coupons
• Raffles * Promo items
• Contests and games * Premiums
• Product or service bundles
• Trade fairs or exhibits * Rewards
• Point-of-purchase promotions
• Advertising specialties
4. Public relations
People play a vital role in servicing customers
even though the entrepreneur sells only
physical goods. It is not just about the quality
of products anymore, but how employees
serve the customers.
The entrepreneur must list the criteria of the
following job offers as well as the
requirements such as academic background,
job experience, skills or expertise, attitude,
and other documents (NBI clearance, etc.)
Packaging is how the product or service is
presented to customers. It is the overall
identification 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.
Packaging is very important in selling physical
products or goods as it establishes the brand’s
identity, as well as its unique selling
proposition.
In selling services, the term servicescape was
used to refer to the overall ambiance of the
place where the service is performed. For
example, in a spa business, the servicescape
should be cozy, service staff should be
friendly, the massage bed should be
comfortable and clean, and relaxing music
and the aromatic smell of nature should be
evident.
Packaging services often involve bundling to
make them look attractive. Examples are tour
packages offering hotel accommodation or a
beauty salon having a rebond package with
free hair coloring or hot oil treatment.
Process is defined as a step-a-step procedure or
activity workflow that the entrepreneur or
employees follow to effectively and efficiently
serve customers. Its components include input,
throughput and output. The internal process
includes the back-office operations
(preprocessing, processing, and
postprocessing), wherein employees or
machines process customer’s requests without
necessarily being seen by the customer. The
external process includes the actual servicing
where customers are part of the process.