Marketing mix, also called 4 Ps of marketing, is a group of marketing tools—product, price, place, and promotion—that are controlled by the firm to satisfy the needs and wants of its target market.

Marketing mix elements, 4Ps, can be considered as 4Cs from the customers’ point of view. These 4C’s are; Consumer value, Cost, Communication and Convenience.

Marketing mix is extended for services because of their specific aspects such as intangibility, perishability, variability, and inseparability. Services can’t be sensed, stored, standardized, and separated from the provider. Therefore, 3 more Ps are added to marketing mix: Process, people, and physical evidence. Process refers to activities related to providing a service. People can be considered as anyone in the service environment such as services producers, front line employees. Since services are intangible, physical evidences are necessary to embody the benefits of the services.

Product is anything, which is offered to a market to satisfy consumers’ needs and wants. Products include both tangible objects such as physical goods and intangible aspects such as services.

There are three main levels of products. Core product is the core value expected from a product. For example, the core value of a mobile phone is communication. The core value should be transformed into an actual product, which includes product features, quality, and design as well as packaging and brand. For instance, IPhone is an actual product. Augmented product consists of warranty, after-sale service, payment options, and credits. In the case of smart phones, applications may be part of the augmented product and may make a phone more competitive.

Consumer products are physical goods and services bought for personal use by final consumers.

Industrial products are materials, supplies, parts and services bought to create economic value rather than personal use.

Tangibility level classification includes three classes of products: durable goods, non-durable goods, and services. Durable goods are those goods purchased less frequently and used in a longer period of time such as refrigerator, carpet, and mobile phone. Non-durable goods are those goods bought frequently and consumed shortly such as newspaper, bread, and water. Services refer to intangible marketing elements such as travel and hospitality

Price is the amount of money paid by consumers to buy a product or get a service. Price differs from other marketing mix elements due to some reasons. Firstly, it provides revenue while others create a cost. Secondly, price is the most flexible element of the marketing mix; companies may make price changes such as increasing and decreasing it easily. Lastly, other marketing mix elements create value for consumers while price captures value from them.

Price can be set between two extremes: cost and customer value. Companies use three major pricing strategies including cost-based pricing, value-based pricing, and competition-based pricing. In value-based pricing, customers’ value is used to set a price for a product. This is a customer-driven strategy and if a company charges a higher price than the value of the product in the eyes of the consumer, it cannot sell the product. Cost-based pricing determines the cost of the product firstly. A mark-up is then added to the cost to set a price level. This strategy is product-driven. In competitor-based pricing companies set a price that is very similar to the competitive products.

The pricing strategies change in different stages of product life cycle. Two pricing strategies can be used in the introductory stage: Market-skimming and market-penetration. Market-skimming pricing sets high prices to skim higher revenue from the market. Market-penetration pricing sets low prices to penetrate the market as much as possible.

There are different product mix pricing strategies including product line pricing, by-product pricing, optional-product pricing, captive-product pricing and product bundle pricing.

There are many price-adjustment strategies including dynamic pricing, psychological pricing, discount and allowance pricing, segmented pricing, geographical pricing, promotional pricing, and international pricing.

Value delivery network includes every party from suppliers to consumers and every party collaborates with each other to maximize the performance of the network.

There are many functions of channel members including physical distribution, communication, tran­saction, and facilitation. These functions include:

• Information: Channel members gather information from market and consumers and transfer it to the company. They also transfer the information about the company and its products to consumers.
• Promotion: Channel members communicate with consumers to convince them for buying. Sales incentives may be offered to the retailers to gain their cooperation for the sales of the products. Retailers may promote the products by advertising in local billboards.
• Contact: Channel members try to find and get in touch with potential buyers.
• Matching: Channel members coordinate production activities with the needs and wants of consumers.
• Negotiation: Channel members try to reach a deal in order to transfer the ownership of products. They negotiate on price, selling terms, duty of each member etc.
• Physical distribution: Channel members transport and store the products.
• Financing: Channel members fund channel activities.
• Risk taking: Channel members take the risks of channel activities.

Intensive distribution aims to reach consumers as many stores as possible.

In selective distribution, the product is available in a few stores in a locale such as a city.

Exclusive distribution allows limited number of stores to sell the product in a territory such as a country or a continent.

Retailing refers to activities related to selling products to final consumers directly. Wholesaling involves activities related to selling products to industrial consumers purchasing for creating economic value.

Promotion is a communication process, which aims to convince consumers to buy products of the firm.

Promotion mix is a set of tools which aims to communicate with consumers and other parties. The aims of promotion is explained by AIDA formula:

• Attention: Promotion should draw the attention of potential buyer.
• Interest: Promotion should make prospect interested in the product.
• Desire: Promotion should create a desire to purchase the product.
• Action: Promotion should make potential buyers purchase the product.

Advertising refers to all forms of paid non-face-to-face effort of introducing or promoting products, ideas, people, or places via media.

Main advertising decisions are

• Setting the objectives of advertising
• Setting the budget of advertising
• Developing the message
• Selecting the media
• Evaluation

Direct marketing is to communicate with target market directly via an interactive group of tools such as telephone, the Internet, e-mail, kiosks, or direct mail with the purpose of selling products or obtaining a response.

Public relations (PR) refers to creating favourable public image and eliminating unfavourable rumours