Individual Assignment for Marketing Management

The Marketing Mix 4Ps

Marketing mix is the set of controllable tactical marketing tools that the firm blends to produce the
response it wants in the target market. It consists of everything a firm can do to influence the
demand for its product (Kotler 2008: 109). The concept of marketing mix actually came from
Borden (1964). It was he who actually coined the term for the first time and it was suggested to
him by his associate, Professor James Culliton in 1948. Borden called it marketing mix because to
him every marketing executive was a “mixer of ingredients”, one who is constantly engaged in
creatively fashioning a mix of marketing procedures and policies in his efforts to produce a
profitable enterprise (Kotler 2008). The concept of marketing mix was then popularized by E.
Jerome McCarthy with the help of 4Ps Model in 1960. The ingredients in Borden’ marketing mix
included product, planning, pricing, branding, distribution channels, personal selling, advertising,
promotions, packaging, display, servicing, physical handling, fact finding and analysis. E. Jerome
McCarthy later grouped these ingredients into the four categories that today are known as the 4Ps
of marketing.

As noted by Kalyanam & McIntyre (2002), marketing mix is a collection of thousands of micro-
elements clustered together in order to simplify managerial activity. The 4Ps in McCarthy’s Model
represent Product, Price, Place and Promotion. This model came into prominence in Philip Kotler’s
book Principles of Marketing, published in 1967. Since then, the concept of 4Ps has remained
prominent in the field of marketing.

Rapid Changes of Macro Factors in Malaysia.

Malaysia, ASEAN's third biggest economy (after Indonesia and Thailand), is well on track to
accomplish its objective of turning into a high salary economy by 2020. Regardless of modest GDP
development of 4.2% in 2016 (Department of Statistic Malaysia, 2016), Malaysia is one of the top
performing economies in the area in terms of productivity and business controls.

Due to the country’s minimum wage policy, its newly implemented Goods and Services Tax
(GST) and paid vacation allowances, firms establishing companies in Malaysia are likely to
experience higher business costs than in a number of other ASEAN states. However, an advanced
infrastructure, highly educated and growing workforce and strong regulatory environment
allow Malaysia to service high value add industries effectively and continue to entice overseas
investors.
Demographic, Ethic & Cultural
Malaysia is a country with people of various races, religions, beliefs, cultural customs and practice
different lifestyles. The population of Malaysia in Year 2016 has reached a total of 31.7 million,
an increase of 0.5 million persons as compared to 31.2 million persons in 2015 with 1.5 per cent
population growth rate for the same period (Department of Statistic Malaysia, 2016). The mixture
of religions in the country gives rise to a large number of religious celebrations. The cultural
differences mean that businesses entering the country will have to adapt their products and business
practices to suit the needs of the population.
Economy
GDP growth range for Year 2017 is predicted to be between 4.3% and 4.7%, indicating faster
growth than in 2016. Due to an increase in consumption, GDP per capita is also set to increase
significantly in Year 2017 (Department of Statistic Malaysia, 2016). Hence, this will present
opportunities to firms in industries such as retail and foodservice. In case the global economic
environment worsens, Malaysia’s dependence on external trade may be something to look out for.

Year 2017 is defined by “The Malaysian Digital Economy Corporation (MDEC)” as ‘the year of
the Internet Economy’. Thus, e-commerce is the key industry to watch in Malaysia in 2017. In the
hope to boost growth in the industry above the 11% it achieved in 2016, it was reported (The Star
Online, 4th Nov 2016) Alibaba’s Jack Ma is appointed as Digital Economy Advisor. MDEC believe
that the planned digital infrastructural spending, by both the government and private players, is
going to cause a serious boom in the e-commerce market.

Tourism is another key industry in Malaysia as it is estimated to have contributed around 15% of
GDP in 2016. With 63% of the world’s rubber gloves coming from Malaysia in 2016, the rubber
and palm oil industries are also significant (Department of Statistic Malaysia, 2016). Investment in
Malaysia’s higher education market continues to see growth; currently, there are 10 international
branch campuses in Malaysia, the most in Asia. At long last, the vast number of exceptionally
taught graduates make Malaysia an appealing spot for high-tech organizations.
Society
Malaysia’s active working-age population is expected to grow by 1.6 percent in the next decade,
one of the highest in the region. Malaysia offers a significant pool of talent for potential investors
with a literacy rate of 95 percent, widely spoken English and an ever increasing number of higher
education graduates. As such, Malaysia is increasingly being chosen by newcomers to Asia as their
ASEAN hub. However, talented minorities are moving abroad to seek opportunities due to
‘affirmative action policies’ that favour the bumiputera, causing a ‘brain drain’. These policies
may have caused non-Malays to take extra measures to level the playing field, contributing to
corruption.

There is also an increase in number of immigrants or foreigners in Malaysia to fill labour gaps that
may arise. As of Year 2016, the percentage of non-Malaysian citizen in 2016 was at 10.3% of total
population in Malaysia. It is also reported Malaysia will be an ageing nation by 2035, when 15 per
cent of the population are classified as senior citizens (Daim, 2016).
Technological
As said, internet business (e-commerce) is being pushed as one of the significant drivers of
monetary development to lift Malaysia to high pay status. To encourage this, the government,
alongside various private ventures, are putting intensely in innovative and computerized
infrastructure. For instance, the world's first 'computerized free trade zone' is set to open in March
2017.
Legal
On 31st January 2017, the Companies Act 2016 is enforced and applies to all organizations in
Malaysia, including foreign-owned companies. The act also presents a new online portal, MyCoID
2016, with the goal of facilitating corporate establishment and registration.

Corruption does exist in the country. Transparency International ranks Malaysia 47th of 180
countries in its Corruption Perceptions Index. This fact may become a barrier to foreign businesses
as it adds to firm’s costs and can cause problems.

Environmental
The rapid development of Malaysia has come with high environmental costs. According to a data
from the UN, Malaysia’s deforestation rate is increasing at a faster rate than other tropical country.
Since 2000, the country has lost an average of 140,200 hectares – 0.65% of its forest area per year
(Butler, 2006). A great part of the nation's territory that was once rainforest is currently used for
generation of palm oil, which is utilized for processing food we eat and as a source of biofuel.

How These External Factors Affect The Marketing Mix of 4Ps?

Due to the rapid changes of external factors, consumer behaviour in Malaysia has undergone a
series of changes. One significant shift is the transition from mass marketing to personalised
marketing. As a result, innovation, customer orientation, relationship management and networking
have become indispensable (Kotler, Armstrong, Saunders, Wong, 2001). Based on this, Richard
Ettenson, Eduardo Conrado and Jonathan Knowles suggested the SAVE model for business to
business (B2B) marketing as a successor of 4Ps in their article “Rethinking the 4Ps” published in
the January-February 2013 edition of Harvard Business Review.

It seems that this model has all the ingredients to replace 4Ps in every form of marketing. The
SAVE model shifts the emphasis from Products to Solutions, Place to Access, Price to Value, and
Promotion to Education, thereby coining the acronym-SAVE. The authors, in a five-year study
involving more than 500 managers and customers in multiple countries and, across a wide range
of B2B industries, found that the 4 Ps model undercuts B2B marketers in three important ways:
 
It leads their marketing and sales teams to stress product technology and quality;
 
It underemphasises the need to build a robust case for the superior value of their solutions;

It distracts them from leveraging their advantage as a trusted source of diagnostics, advice

and problem-solving;
Education in SAVE means give and take and it ends with the responses and recommendations from
the customers. This makes SAVE a client driven model as in it, the concentration shifts from
products towards providing solutions for clients’ problems. Elliott (2012) says that, people do not
buy products or services; they buy solutions to solve problems. For example, when you buy a can
of Coke; chances are you are not just attracted to the shiny red can. You are buying a coke for an
uplifting refreshment, pleasure and delight. So essentially the concept is- “Don‟t sell the cans, sell
a thirst quenching, satisfying experience.” If a product fails to solve their problem, customers do
not care about product features or usability. It is about the problems that customers need to solve,
not about the features you want your product to have. Solve their problem better than anyone else,
and you will end up with a product your customers cannot live without (Gamez 2013).

SAVE changes focus from Place to Access with focus on considering customers purchase journey.
This is especially relevant with the advent of e-commerce, where a physical location of a store is
no longer an issue. It means making the product/service available to a customer near a point of his
convenience. E.g. shopping on a phone, laptop, making it available through post offices and etc.
From price as a marketer’s tool, the shift is towards providing higher value. The higher the value
of a product or the more the benefits, the better are the profits of a company as there are more brand
loyalty associated with it than others providing products/solutions at same price. Leszinski & Marn
(1997) have argued that if firms want to survive and thrive in the long run, then they will have to
shift their focus from price to better value. Wear (2012) echoes the same ideas in her article titled
“How to Compete on Value, Not on Price”. She says, “The fundamentals are always the same: Sell
value. Don’t compete on price.”
Last but not least, what SAVE has incorporated is the focus on education rather than on promotion
of the products. It involves a two-way communication process like a teacher-student
communication. The firm gives particular data to its customers and tries to get timely feedbacks
from them and no longer depend on advertising and other forms of promotion. Antonios (2011)
has also found positive effects of customer education on customer loyalty, higher Return of
Investment and customer satisfaction. Marketers have learned from globalisation that if you do not
listen to customers, they will not listen to you.

In conclusion, it seems that the SAVE Model comprises all the right ingredients that current
business scenario demands. From solutions to education, everything seems to be customer-centric
which was missing in the 4Ps model of McCarthy. The customer-centric foundation is the
cornerstone for being successful today.

What Do Business Managers Have To Do To Shift from 4P Thinking to SAVE?

First, a solutions mind-set should be encouraged by management throughout the company. Many
companies think that it is challenging to move past thinking in terms of “technologically superior”
products and services and take a customer-focused perception instead, especially those who
emphasises on engineering or technology.

Second, management needs to guarantee that marketing organisation’s strategy reflects and
strengthens the customer-focused principle. This initiated the sensational rearrangement of the
marketing function into corresponding specialties, permitting focus around every component of the
SAVE system and in line with the client's procurement journey.

And third, partnership between the marketing and sales organizations and with the development
and delivery teams should be generated by management. Specialist teams should concentrate on
solutions and organise their approaches to particular customer needs. This will ensure that the
company’s solutions are not determined by functional boundaries.

Marketing Managers who keep on embracing the 4 P's model and mentality risks getting trapped
into a product-technology based battle. The SAVE framework is the centerpiece of a new solution-
selling strategy—and companies ignore it at their peril.
REFERENCES

1. Antonios, Jessica (2011). ‘Understanding The Effects of Customer Education on Customer

Loyalty’, Business Leadership Review, Vol. VIII, pp. 1-15.
2. Borden, Neil H. (1964). ‘The Concept of the Marketing Mix’ in Science in Marketing,
George Schwartz, Ed. New York: John Wiley.
3. Butler, Rhett A. (2006, Feb 4). ‘Malaysia: Environmental Profile-Tropical Rainforests’,
Mongabay. Retrieved from http://rainforests.mongabay.com/20malaysia.htm.
4. Daim, Nuradzimmah (2016, Mar 23). ‘Malaysia to become ‘ageing nation” by 2035’, New
Straits Times. Retrieved from https://www.nst.com.my/news/2016/03/134562/malaysia-
become-ageing-nation-2035.
5. Department of Statistics Malaysia (2016). ‘Current Population Estimates, Malaysia, 2014 –
2016’. Retrieved from https://www.dosm.gov.my.
6. Elliott, Mark (2012, October 17). ‘Focus On Selling Solutions Not Products’. Retrieved from
https://www.communitech.ca/focus -on-selling-solutions-not-products/
7. Ettenson, Richard, Eduardo Conrado and Jonathan Knowles (2013). ‘Rethinking the 4Ps’,
Harvard Business Review, January-February 2013.
8. Kalyanam, K. and McIntyre, S. (2002). ‘The e-marketing mix: a contribution of the e-tailing
wars’. Journal of the Academy of Marketing Science, Vol. 30, pp. 487-499.
8. Kotler, Philip J. (2008). Principles of Marketing. New Delhi: Pearson Education India.
9. Kotler, P., Armstrong, G., Saunders, J., Wong, V. (2001). Principles of Marketing, Third
European Edition. Prentice Hall, Pearson Education Limited.
10. Leszinski, Ralf and Michael V. Marn (1997, Feb). ‘Setting value, not price’. McKinsey
Quarterly. Retrieved from http://www.mckinseyquarterly.com /Setting_value_not_price_213.
11. Wah Foon, Ho (2016, Nov 4). ‘Najib: Alibaba founder Jack Ma agrees to be advisor to
Malaysian Govt on digital economy’. The Star Online. Retrieved from
http://www.thestar.com.my/news/nation/2016/11/04/
12. Wear, Sandra (2012). ‘How to Compete on Value, Not Price’, Inc., January 9. Retrieved from
https://www.inc.com/sandra-wear/how-to-compete-on-value-not-price.html.