5.7

• The 7Ps model of marketing: product, price, place, promotion,

  people, physical evidence and process

  The 7Ps — product, price, place, promotion, people, physical

  evidence and process — are referred to as the marketing mix

  and are central to a marketing plan.
• When you buy a book or digital camera you are

  purchasing a good. Goods are real, physical objects that

  can be touched and owned; they are tangible. Purchasing

  financial advice and tickets to sporting events is

  purchasing an intangible service for our use or

  enjoyment, not for our ownership. However, goods and

  services are both products. A product is a good, service,

  experience, idea or information that can be offered in an

  exchange for the purpose of satisfying a need or want.

  The relationship between a business and its customers is

  based mainly on the product
• Products

  • Tangible goods
  • Intangible services
• Most products are combinations of tangible and intangible components
• Example of a product


  • Dinner at an expensive restaurant
• Dinner at an expensive restaurant

  • Tangible elements (food and drinks)
  • Intangible elements (efficient service, live music, pleasant atmosphere)
• Total product concept


  Customers purchase both tangible and intangible benefits (attributes)
• A product


  A collection of satisfactions that might include a variety of things such as the package, brand name, warranty and after-sales service
• The term ‘product’, therefore, is a much broader concept than most people

  understand. Usually when people talk about products, they refer to what a

  company produces, such as motor vehicles or entertainment. And yet the

  intangibles that come with these products are also important. They can be

  used to differentiate a business’s product from that of its competitor.
• With mass-produced products, product competition is often based on the differences in intangible benefits
• Intangible benefits

  Attributes that differentiate products, such as image, reputation, style, and safety record
• Cars are basically a means of transportation used to get from one place to another
• If cars were only a means of transportation, there would be only one model
• A car contains a vast array of intangibles that are used to differentiate each model
• Total product concept


  Viewing the car shows that no two car models are exactly the same
• Attributes of products

  • Tangible attributes
  • Intangible attributes
• All products are a combination of tangible and intangible attributes
• Product development-

  Product development can involve modifying an existing product or

  the way in which it is presented, or creating an entirely new

  product that meets the demands of a newly defined customer or

  market. The development of a new product is risky, and will

  involve large amounts of effort, time and money. However, it is

  important for businesses to develop new products in order to

  remain competitive and to ensure that their products continue to

  appeal to customers.
• Product Development (cont)

  Starting with an idea for a new product, or an idea to modify a

  product, a business will go through a series of steps to bring the

  product to market. The product will need to undergo a design

  process and then a prototype or mock-up will need to be created.

  The product will then go through market testing. The testing will

  confirm if the product is on the right track or if improvements need

  to be made. After the technical needs of the product are planned

  for, including materials, suppliers and final production

  requirements, the product will be launched onto the market.
• Product positioning


  The way a product image is developed
• Some brand names, such as Rolex, Ferrari and North Face can immediately evoke an image of the product’s quality
• The product’s image gives

  The product its position within the market
• In highly competitive markets, sales may be difficult to secure
• A business will attempt to create an image that differentiates its product from the others
• Many businesses invest considerable resources in the positioning of their product
• Elements used to shape and maintain product image

  • Name
  • Price
  • Packaging
  • Style
  • Promotion
  • Channels of distribution
• Whenever a new product is launched, the marketers need to have clearly determined the desired positioning of the product
• Combined individual characteristics

  Create the image of the product
• Product branding — symbols and logos

  Read the list of popular brand names below and test yourself — what products do you associate with each brand name? Your score was

  probably 27 out of 27. You have just experienced the power of brand name recognition. The 27 businesses that market these brands have

  spent a lot of money making sure customers instantly recognise their brand name and the products associated with them. A brand name can

  be a powerful marketing tool.
• Brand packaging

  he packaging of a product is sometimes as important as the

  product itself to assist sales. Well-designed packaging will give a

  positive impression of the product and encourage first-time

  customers to purchase. Tasteful packaging can create an image

  of luxury, sensuality and exclusiveness, helping to promote the

  product. In addition, packaging helps preserve, inform, protect and

  promote the product.
• The ‘price’ element of the marketing mix

  Many factors affect the price of a product. For example, the quantity of the

  product that is being supplied to the marketplace and the size of the

  consumer demand for the product will both affect the price. Many

  businesses have difficulty in selecting the ‘correct’ price for their products.

  A price set too high could mean lost sales unless superior benefits are

  offered. A price set too low may give customers the impression that the

  product is ‘cheap and nasty’.
• Pricing strategies

  Several different factors can influence the prices a business sets

  for the goods and/or services it supplies. A business can use any

  one or a combination of the following strategies.

  Wholesalers or manufacturers provide retailers with an RRP,

  which provides guidance to the retail business owner.
• Cont.

  Price leadership and competition

   To follow the prices set by another seller is to acknowledge that business as a price leader. For instance, in a shopping

  centre that has a number of shops selling the same items, the prices set by the most competitive of these shops may be

  used as a guide by the other shops. All businesses need to adjust their prices from time to time to ensure they are

  competitive when compared with the prices charged by other suppliers in the same market. Special promotions or weekly

  specials are often used to improve the competitive position of a business.