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Entrepreneurship
Quarter 1 – Module 4
The Marketing Mix

Department of Education ● Republic of the Philippines

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The Marketing Mix

What I Need to Know

This module will help you understand the concept of the marketing mix and its contribution to the
success of a business enterprise.

This also helps in understanding concepts, underlying principles, and processes of

developing a business plan.

After going through this module, you are expected to:

1. explain the concept of the marketing mix and its components;
2. state the importance of marketing mix in positioning
3. explain the importance of branding.

What I Know

Let’s see if you already have some ideas about the lesson by answering the pretest.
Choose from the word pool below.

people product positioning price promotion

place processes advertising packaging brand
marketing marketing mix market branding positioning

1. It refers to the goods and services offered by the organization.

2. It refers to the way the product/service appears from the outside.
3. These refer to how the service is delivered and part of what the customer is paying for.
4. It refers to the set of activities that create product awareness and brand loyalty.
5. This aspect refers to those who are employed by the company to design, develop, and
manufacture the products, do market research to establish demand and determine
customer needs, etc.
6. This is how you place the product/service in the hearts and minds of your customers.
7. It is the amount charged for the product or service.
8. It refers to the channel of distribution to reach the customers.
9. A the set of marketing tools that a business uses to sell products or services to its target
customers.
10. It is the name, term, sign, symbol (or combination of these) that identifies the maker or
seller of the product.

What’s In

It has been said many, MANY times in business that if you don't know your target market well enough
and figured out what they exactly want, you'll commit entrepreneurial suicide and the business will
inevitably fail.

What is meant by this statement?

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 What’s New

In the previous lesson, you learned that marketing identifies consumers’ needs and supplies
various goods and services to satisfy those needs most effectively. So the entrepreneur needs to:
(a) produce or manufacture the product according to consumers’ need; (b) make available it at a
price that the consumers’ find reasonable; (c) supply the product to the consumers at different
outlets they can conveniently approach; and (d) inform the consumers about the product and its
characteristics through the media they have access to.

What is It

CONCEPT AND COMPONENTS OF MARKETING MIX

Marketing involves a number of activities. To begin with, an organization may decide on its
target group of customers to be served. Once the target group is decided, the product is to be
placed in the market by providing the appropriate product, price, distribution, and promotional
efforts. These are to be combined or mixed in an appropriate proportion to achieve the marketing
goal. Such a mix of product, price, distribution, and promotional efforts is known as ‘Marketing
Mix’.

According to Philip Kotler, “Marketing Mix is the set of controllable variables that the
firm can use to influence the buyer’s response”. The controllable variables in this context refer to
the 4 ‘P’s [product, price, place (distribution), and promotion]. Each firm strives to build up such a
composition of 4‘P’s, which can create the highest level of consumer satisfaction and at the same
time meet its organizational objectives. Thus, this mix is assembled keeping in mind the needs of
target customers, and it varies from one organization to another depending upon its available
resources and marketing objectives.

The marketing mix definition is simple. It is about putting the

right product or a combination thereof in the place, at the right
time, and at the right price.

COMPONENTS OF MARKETING MIX

PRODUCT – A product is anything that can be offered to a market that can satisfy a need. The
product can take the form of ideas, goods, services, and experiences.

Product Attributes
1. Quality – this refers to the durability of the product, conformance to requirements, and
performance at an acceptable price.
Example- Levi’s 501 - Longevity of the classic design suggests quality and continued demand.

2. Features – the physical characteristics of your product that contribute to the benefits it
offers.
Example- The iconic straight fit with signature button fly since 1873

3. Design – is a combination of how a product looks and how it performs.

In the case of Levi’s 501, it has a classic design. It is easily recognizable and it connotes
nostalgia.
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In developing the right product, you have to answer the following questions:
• What does the client want from the service or product?
• How will the customer use it?
• Where will the client use it?
• What features must the product have to meet the client’s needs?
• Are there any necessary features that you missed out?
• Are you creating features that are not needed by the client?
• What’s the name of the product?
• Does it have a catchy name?
• What are the sizes or colors available?
• How is the product different from the products of your competitors?
• What does the product look like?

PRICE – is defined as the cost of the product. It is the value that the consumer gives up to
acquire the product, and is generally expressed in monetary terms.

- Among the 3 support P’s, pricing is the most flexible.

- It is the only support P that generates sales (Quantity Sold x Price = Sales)

Factors Affecting Pricing Decision

A. Marketing objectives D. Fixed and variable costs
B. Target groups and willingness to pay E. Competition
C. Demand F. Government regulations

New Product Pricing Strategies

A. Market Penetration – this is usually used for new product wherein lower than regular
market prices are set to increase sales and market share. Once these objectives are
achieved the company will increase the price.
B. Market Skimming – this is usually used for new inventions wherein higher prices are set
and the revenue is skimmed layer by layer from the market. This is used for products that
cannot easily be copied by the competition, thus allowing time for the company to skim the
market layer by layer, eventually making the product available to wider markets.

General Pricing Approaches

A. Cost-based pricing – the company determines the cost of producing, distributing, and
promoting the product then they add the markup.
unit cost = variable cost + fixed cost
Under this method, the price of the product is fixed by adding the amount of desired profit margin
to the cost of the product. If a particular soap costs the marketer Php 8 and he desires a profit of
25%, the price of the soap is fixed at Php 8 + (8x25/100) =Php 10.

While calculating the price in this way, all costs (variable as well as fixed) incurred in manufacturing
the product are taken into consideration.

B. Competition based pricing – setting a price comparable with the competition

C. Value-based pricing– setting a price based on the perceived value of the product, which
means coming up with a price that your customers are willing to pay.
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 D. Demand-based pricing – setting a price based on demand
E. Objective -based Pricing - This method is applies to the introduction of new (innovative)
products. If, at the introductory stage of the products, the organization wishes to penetrate
the market
Example: to capture large parts of the market and discourage prospective competitors to
enter into the fray, it fixes a low price.

Here are some of the important questions that you should ask yourself when you are setting the
product price:
• How much did it cost you to produce the product?
• What is the customers’ perceived product value?
• Do you think that the slight price decrease could significantly increase your market share?
• Can the current price of the product keep up with the price of the product’s competitors?

PLACE
Place decisions are those associated with channels of distribution. Distribution is the
process of deciding the best way to get products to consumers. To make a place decision,
marketers must decide on a channel of distribution.

Structure of Distribution Channels

Indirect channel of distribution -when a
Direct channel of distribution – when a manufacturer sells a product with the help of
manufacturer sells a product directly to a consumer intermediaries
MANUFACTURER MANUFACTURER

WHOLESALER

END USER RETAILER

END USER

Modern Concept of Channels of Distribution

1. E-commerce – a virtual channel of distribution wherein buying and selling of products

happen over the internet
2. Wholesaling – means doing business by buying a large quantity of goods from producers,
warehouses them and resells to retailers
3. Retailing – means doing business by buying goods from manufacturers, wholesalers, etc.
and selling them to end-users.

Here are some of the questions that you should answer in developing your distribution strategy:
• Where do your clients look for your service or product?
• What kind of stores do potential clients go to? Do they shop in a mall, in a regular brick and
mortar store, in the supermarket, or online?
• How do you access the different distribution channels?
• How is your distribution strategy different from your competitors?
• Do you need a strong sales force?
• Do you need to attend trade fairs?
• Do you need to sell in an online store?
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PROMOTION
Promotion is one of the support P’s that is used by marketers to communicate to the target market.
Through promotion, a company creates target market awareness, interest, desire, and action
(AIDA) to purchase a product.
Promotion refers to the process of informing and persuading consumers to buy a certain product.
By using this process, the marketers convey persuasive messages and information to their
potential customers.
The main objective of promotion is to seek buyers’ attention towards the product with a view to:
– arouse his interest in the product;
– inform him about its availability; and
– inform him as to how it is different from others.

There are different types of promotion and the combination of promotion activities that a
company does is called the promotional mix.

1. Advertising – this is a non-personal communication that utilizes media. This is a paid form
of communication done by an identified sponsor.
2. Sales Promotion – this represents all marketing activities to boost sales in the short term.
3. Personal Selling – this is a personal communication that requires a sales representative
who needs to maintain direct contact with prospects and customers.
This is a paid form of communication.
4. Public Relations (PR) – identifies relevant publics (shareholders, customer, government,
etc) and making sure that the company has good relations with these publics.
5. Direct Marketing – companies directly communicate with consumers. This may involve
the following forms: email, marketing, telemarketing, direct mail,
direct advertising, direct selling
6. Publicity - It is a non-paid process of generating a wide range of communication to
contribute a favorable attitude towards the product and the organization.

In creating an effective product promotion strategy, you need to answer the following questions:
• How can you send marketing messages to your potential buyers?
• When is the best time to promote your product?
• Will you reach your potential audience and buyers through television ads?
• Is it best to use social media in promoting the product?
• What is the promotion strategy of your competitors?

PEOPLE
This includes everyone who is involved in the product or service whether directly or indirectly.
But all these people have their own roles to play in the production, marketing, distribution, and
delivery of the products and services to the customers.

Modern marketing theories place people as the 5th P in the marketing mix, joining the other 4 Ps
namely: product, promotions, price, and place. Without people, all these other Ps will not
complete a successful marketing formula. This aspect refers to those who are employed by the
company to: design, develop, and manufacture the products; do market research to establish
demand and determine customer needs; manage the supply chain to ensure timely delivery;
provide support services; and serve as touchpoints for customer interaction among others.
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PROCESSES
Processes refer to how the service is delivered and part of what the customer is paying for.
This includes anything within the organization that has an impact on how a product or service is
handled by employees and delivered to consumers. Some examples are the order in which
employees must perform tasks, how many queries salespeople receive and where they direct
customers for help, or how performance is tracked and measured.

PACKAGING
A product's packaging communicates many things, from what the product can do for your
customers to your company's values. Some would argue that the packaging is as important as
the product itself because it's a crucial marketing and communication tool for your business.

The Importance of Packaging

1. Function
The purpose of product packaging is to protect the product from damage. Product packaging not
only protects the product during transit from the manufacturer to the retailer, but it also prevents
damage while the product sits on retail shelves.

2. Attraction
How a product is packaged may be what attracts the consumer to take a look at the product as it
sits on store shelves. For this reason, many companies conduct extensive research on color
schemes, designs, and types of product packaging that is the most appealing to its intended
consumer.

3. Promotion
Packaging also plays an important role in portraying information about the product. Outside
packaging may contain directions on how to use the product or make the product.

4. Facilitates Purchase Decision

Packaging may also contain ingredients and nutritional information about the product. This
information can help to sell the product because it allows potential customers to obtain the
necessary information they need to make a purchase decision.

5. Differentiation
Packaging can also differentiate one brand of product from another brand. Because the product
packaging can contain company names, logos, and the color scheme of the company, it helps
consumers to identify the product as it sits among the competition’s products.

Positioning and the Marketing Mix

In the previous lesson, you have learned that positioning is how you place the product/service in
the hearts and minds of your customers. Positioning is a marketing concept that outlines what a
business should do to market its product or service to its customers. In positioning, the
marketing department creates an image for the product based on its intended audience (target
market). This is created through the use of promotion, price, place, and product.

Product positioning goals must be supported by the full marketing mix. All marketing mix
elements need to be consistently focused at the end positioning goal.
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What is branding?

Branding is a marketing practice in which a company creates a name, symbol, or design that is
easily identifiable as belonging to the company. This helps to identify a product and distinguish it
from other products and services. Branding is important because not only is it what makes a
memorable impression on consumers but it allows your customers and clients to know what to
expect from your company. It is a way of distinguishing yourself from the competitors and
clarifying what it is you offer that makes you the better choice. Your brand is built to be a true
representation of who you are as a business, and how you wish to be perceived.

A brand is defined as the name, term, sign, symbol (or combination of these) that identifies the
maker or the seller of the product (Kotler & Armstrong, 2014)

When creating a brand name, it must be appealing and easy to recall. A logo is a symbol used to
represent a brand or a company. A great logo is simple, scalable, impactful, versatile, and relevant.

Using a tagline is a good way to add character to your brand. This also serves as “your promise” to
your customers, thus it must be clear and concise. To make it relevant, a slogan or tagline should
be based on the preferences of your target market.

What’s More

Do the following activities on your answer sheet.

Activity 1

A. Answer the following.

1. What is a marketing mix?
2. What is branding?

B. List the four basic components of the marketing mix

1.___________________________ 3. ______________________________
2.___________________________ 4._______________________________

Activity 2
Guess the name of the companies that employ the given taglines.
On your answer sheet, write the name of the company and its tagline.
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 What I Have Learned

A m____________ m _____ is a set of marketing tools that a business uses to sell products or
services to its target customers. (1)

Components of Marketing Mix (Ps of Marketing)

P_________ - refers to the goods and services offered by the organization. (2)
P_________ – is the amount charged for the product or service (3)
4 P’s
Basic P_________ – is the channel of distribution in order to reach the customers. (4)
Elements P_________ – refers to the set of activities that create product awareness and brand
loyalty. (5)
P_________ – refer to those who are employed by the company to design, develop, and
manufacture the products, do market research to establish demand and
t
Extended determine customer needs, etc. (6)
P’s
P_________ – refer to how the service is delivered and is part of what the customer is
paying for. (7)
P_________ – it refers to the way the product/service appears from the outside. (8)

P_________ This is how you place the product/service in the hearts and minds of your customers.
(9)

B_________ is a marketing practice in which a company creates a name, symbol, or design that is
easily identifiable as belonging to the company. (10)

What I Can Do

Decide on the kind of business that you want to organize and manage then, do what
is indicated in Additional Activities.

Assessment

Write the letter that corresponds to your choice on a separate sheet of paper.

_____ 1. Which of the following is not an element in the marketing mix?

A. price B. profiling C. promotion D. product
_____2. It is the process of making a product or a service available for the consumer or business
user that needs it.
A. marketing B. distribution C. production D. promotion
_____3. Refers to the quantity of payment requested by a seller of goods and services
A. offer B. prize C. price D. sale
_____4. In the marketing mix, what does the term ‘place’ refer to?
A. retail outlet such as shops C. online shops
B. anywhere products are available to customers D. market
_____5. You place your product in the minds of your target market as the challenger of the
leading brand of coffee in the market.
A. targeting B. positioning C. segmentation D. profiling
_____6. Refers to a set of marketing tools that the firm uses to pursue its marketing objectives in
the target market
A. marketing mix C. marketing tools
B. marketing strategies D. marketing decision
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_____7. The basic elements that make up the marketing mix are __.
A. product, price, purchasing, promotion C. product, price, place, promotion
B. product, payment, prize, promotion D. product, prize, place, promotion
_____8. Which of the four P’s is described by the following statement?
Making the customers aware that the product exists and persuading them to buy it.
A. product B. price C. place D. promotion
_____9. ____ is a symbol used to represent a brand or company.
A. logo B. design C. tagline D. brand name
_____10. Which of the following statements is not correct?
A. Marketing mix is about putting the right product or a combination thereof in the place,
at the right time, and at the right price.
B. Product can take the form of ideas, goods, services, and experiences.
C. Place decisions are not associated with channels of distribution.
D. Marketing objectives, fixed and variable costs, target groups and willingness to pay,
and competition affect the pricing decision.

Additional Activities

Create a business plan using the given template.

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