In marketing, a company is faced with two kinds of variables. First, there are the variables associated with the external environment; the environment surrounding the organization, made up of the macro-environment (the broad environment consisting of political, economic, socio-cultural, technological dimensions) and the micro-environment (the competitive structure of the industry in which the company operates). A company has no direct control of these external variables.  The second set of variables contains operational variables; factors over which a company has full control. Operational variables in marketing include
?Product - what products and services to sell
?Price - what to charge for products and services
?Place - how to make products/services available to customers
?Promotion - how to communicate the benefits of products/services and persuade customers to buy
The above variables are referred to as the marketing mix parameters, or the four P's of marketing. Today, organizations, particularly in the services sector, take a customer-centric view of the marketing mix and have accordingly extended the four P's to the seven P's - to include the additional variables of people, process and physical evidence. The addition of these variables reflects the focus on customer-centric services development, delivery and efficiency
The marketing mix refers to the way organizations combine the four P's (or seven P's) to convey an attractive value proposition to their targeted customers and persuade them to buy
Crucial to developing an effective marketing mix is an understanding of the type of customer being targeted and their characteristics. Organizations can target very diverse customer groupings. Think about a large grocery store, such as Walmart or Tesco. Their customers fall into the wealthy, middling and poor categories. The exact same products will not appeal to all three categories. Budget ranges would attract the poor, whilst upscale ranges would appeal to the wealthy. So a single marketing mix is an ineffective strategy. Aiming to sell something to everyone with a single marketing mix simply will not work; it will not work because customer characteristics are so very different
A market segment is a grouping of like customers with similar characteristics. Companies must, therefore, develop an optimal marketing mix for each market segment. The market segments that a company targets are then offered products/services and communicated with to meet their specific needs. Market segmentation must, therefore, precede the development of the marketing mix
We commence this module by giving you a short overview of marketing, setting the context for understanding the importance of the marketing mix in marketing decision making. We then examine market segmentation; a key part of the market management process and one that is necessary to carry out before developing the market mix. We look at why markets are segmented, how they are segmented and where knowledge of these segments is used in market decision making and development of strategies
Having looked at the crucial role of market segmentation, we then go on to evaluate the marketing mix parameters in-depth and look at how the marketing mix can be developed in practice for market segments. We look at the extended marketing mix and emphasise the importance of getting these variables right in adding value to complex services market offerings. We also examine the role of the marketing mix in the non-profit sector and consider how the mix parameters can be changed to address key issues in social marketing