7Ps of Marketing

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Objectives
1. Discuss the 7Ps of Marketing
2. Identify how each component is used in
different products available in the market.

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Lesson Outline:
1. 4Ps of Marketing Mix
2. Expanded Marketing Mix

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Which do you prefer?

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Which do you prefer?

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Which do you prefer?

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Which do you prefer?

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The Marketing Mix: The 7Ps of
Marketing
The marketing mix is a widely accepted
strategic marketing tool that combines
the original 4Ps (product, place, price,
promotion) with the additional 3Ps –
people, packaging, and process – in
formulating marketing tactics for a
product or service.
The Marketing Mix: The 7Ps of
Marketing
These 7Ps are employed until the
entrepreneur finds the right combination
that will most effectively serve the
customer’s needs and wants and the
same time achieve the profitability
objective.
7Ps of Marketing

Types of Business Activities

Manufacturing and Service
Merchandising
Product Product
Promotion Promotion
Price Price
Placement Placement
Physical Environment
Process
People

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7Ps of Marketing
Component Objective
Product Satisfy the needs and wants of customers
Promotion Build and improve consumer demand
Price Reflect the value of benefits of a product or service
Placement Make the product available and accessible
Physical Provide extra convenience and comfort
Environment
Process Deliver efficient flow of activities
People Provide customer service and customer relations

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Product


A product is any physical good, service, or idea that is

created by an entrepreneur or an innovator in serving
the needs of the customers and addressing their existing
problem.
Three-level concept of products or services summarizes the reasons
that a customer decides to buy a product or avail of a service

 Level 1: Core Benefits of the Product or Service

The core-benefits of a product or service are the major
factors why a customer buys a product or avails of a
service.

For example, a customer buys coffee because he or she

wants to feel energetic and alert the whole day.
Level 2: Physical characteristics of the product or
service

Once the core benefit has been satisfied and options are available to
the customers, the tendency is to look for the second layer of
selection which has a better packaging for products or a better
physical evidence or customer experience for services.

In the previous example, the customer can choose a coffee with a

more appealing packaging or a more aromatic smell.
Level 3: Augmented benefits of a product or
service

Augmented benefits are only additional benefits a customer

will still get the core benefits of a product or service even
without the augmented benefits.

In the previous example, the customer can choose a coffee

product that comes with a loyalty card, so that when he/she
accumulates, say, 10 coffee drinks, he/she will able to get a
free coffee drink.
 Elite

Authenticity

Convenience
PRODUCT CONSUMER

The product must satisfy the needs or

wants of the consumers.
 Place
The place refers to a location or the
medium of transaction. In a physical
location, must research about the area’s
population, the traffic, the people’s
common paths, their buying behavior, and
their preference for the location (Wi-Fi
access, spacious area for parking).
 Place
In a cyber location web analytics data (e.g. number of
visitors, duration of their stay on the web site, or the
frequently visited contents).
PLACEMENT means CONVENIENCE
 Price
Price is the peso value that
the entrepreneur assigns to
a certain product or service
after considering its costs,
competition, objectives,
positioning, and target
market. It is the only P in the
7Ps that generates revenue
for the business.
Variables that influence
the setting of price
1. Availability of the competing product/service.
2. Cost of making the product/service.
3. Type of product
4. Presence of substitute products
5. Stages of the product in the market
6. Demographic profile of the target consumers.
 Two classifications of costs

Variable costs or controllable costs- these costs are directly

proportional to the number of products manufactured or to the
number of services performed. Ex.one of the variable costs
involved in a car wash business is the cost of cleaning
materials. The business will incur higher costs only when
more customers avail of the service, or it will incur lower cost
when there are few customers.
 Two classifications of costs

Fixed costs or uncontrollable costs- these are costs not directly

proportional to the manufacturing of a product or to the performance of
the service. These are usually the cost of equipment, employee
remuneration, rental cost, and utilities. These are considered fixed costs
because the business will still incur these costs whether or not they
provide more or less. Therefore, if the entrepreneur produces more
products and performs more services, his or her fixed costs per unit will
be lower because the fixed cost will be allocated to the number of units
produced or number of service performed.
 Most common strategies

Bundling- this refers to 2 or

more products or services in
one reduced price(e.g., 3-in-
1 coffee for P8.00, a
manicure and pedicure for
P150).
 Most common strategies

Penetration pricing- this refers to setting low

price to increase market share, but the
entrepreneur will eventually increase the price
once the desired market share is achieved (e.g.,
a mobile app-based transportation service
offering reduced booking fee of P15 as its
introductory price).
Skimming- this is the opposite of penetration pricing where prices are initially high
and then they are lowered to offer the product or service to a wider market (e.g. a real
estate company offering top-tier projects is now offering low-cost housing of same
quality to serve the middle market segment).
Competitive pricing-
this refers to
benchmarking prices
with the competitors
(e.g., a milk tea prices
are competitively
priced; shoppee/lazada).
5.Product line pricing- this refers to pricing different
products or services within a parallel product array
using varying price points (e.g. LED TV is more
expensive than the LCD TV even if under the same
brand).
6.Psychological pricing- this considers
the psychology and positioning of price
in the market (e.g. price of haircut service
is at P199 because consumers tend to
think that old prices are considerably
lower than what they are in this example,
they tend to round off the price to P100
instead P200).
7.Premium pricing- this refers to setting a
very high price to reflect elitism and
superiority (e.g. prices of signature clothes,
bags, perfumes).
8.Optional pricing- this refers to adding an extra product or
service on top of the original to generate more revenue (e.g.
meals on top of the air fare).
9. Cost-based pricing – the basis of markup
is the cost of sales. For example, the
entrepreneur will compute the cost of coconut
juice by adding all cost of the coconut juice
(P10) and the plastic container (P4). He/She
can set the price at P20 to earn P6 per
coconut juice.
10. Cost plus pricing- the markup is based on a certain percentage of cost (e.g. the
entrepreneur wants to set a 50% markup on the coconut juice which is P14×50%=P7; the
new price is P14+P7=P21).
General Pricing Guidelines:
Do not price the product or service below its cost.
Monitor competitors prices, and ensure that your prices
are at par with them unless the product or service is
really way superior to the competitors.
Align prices with the other 6Ps (product, place,
promotion, people, packaging, and processing).
General Pricing Guidelines:

Implement price strategies that are relevant to

your market segment. Ex. tingi (sachet) pricing is
more appropriate in the grassroots locality or
barangay.
Align prices with your business objectives.
 PRICE COST

Price is not an indicator of “mahal at mura”,

but the willingness and ability of the
consumers to spend for a product.
Promotion
Promotion involves presenting the
products or services to the public and how
these can address the public’s needs,
wants, problems, or desires. The major
goal of promotion is to gain attention.
Promotion
 Key marketing messages for promotion can be the
following:
1. Value proposition or unique selling proposition of the
product of service
2. Product or service image
3. Business image
4. Business values and philosophy
The entrepreneur can choose one or
combination of the following promotional
tools:

1. Advertising – this is a type of communication that influences the behavior of a customer

to choose the product or service of the entrepreneur over the competitors.
(1)informing, educating, and familiarizing the public with the product and service offerings;
(2)building a trustworthy image; and
(3)increasing sales
Entrepreneur can choose to advertise through the following:

• Television – regular channels, cable TV

• Radio – AM and FM radio
• Internet- e-mails, web sites, blogs, social media, search engines, podcasts
• Mobile phones- text messages, mobile applications, mobile internet
• Print- newspapers, magazines, flyers, directories, signage's, posters
• Out-of-home- billboards, buses, bus stops, trains, train stations, taxis, street advertisements
2. Selling

This is the act of trading a product or service for a price or a fee. The entrepreneur must
identify the target customers who will likely buy the product or service. Once identified,
he or she must do further research on the target customers to know their profile and
behavior to come up with a convincing way to sell the product or service.
3. Sales promotion

These are short-term promotional gimmicks wherein practical incentives and appealing
activities are incorporated to entice the customers to buy the product or avail of the service.

Also called as the ‘’below-the-line’ ’promotions

Common example of sales promotions in the Philippines:

• Sales discounts or discount coupons

• Raffles
• Contests and games
• Promo items
• Product or service bundles
Common example of sales promotions in the Philippines:

• Trade fairs or exhibits (e.g. wedding expo)

• Sample distributions or free taste/free trials
• Premiums(e.g. free toys for fast food meals)
• Point-of-purchase promotions (e.g. display stands in grocery stores
• Advertising specialties (e.g. pens, notebooks, umbrellas, bags, calendars)
• Rewards (e.g. reward cards)
 4. Public relations / Publicity

These are image-building initiatives of the entrepreneur to make the name of the business
reputable to stakeholders, such as the target customers, government agencies, business
partners, media, and the public.
Examples of PR strategies are as follows:

• Press conference
• Launching events
• Strong media relations through press kits
• Social responsibility events (e.g. charitable or community events)
• Lobbying (e.g. good relationships with government officials)
• Web public relations (e.g. blogs, social media, e-mails, word-of-
mouth)
 PROMOTION COMMUNICATION

Promotion is there to influence consumer demand. Promotion

therefore should be able to communicate the features, benefits,
and advantages of a product to the consumer.
 People

Most entrepreneurs only hire people when the business starts to expand.

When the need arises to hire people, he or she must identify the specific, necessary
job roles of employees and their descriptions, so they will be able to know their
purpose clearly and serve customers well.
 People

The entrepreneur must list the

criteria of the following job offers,
as well as the requirements such as
academic background, job
experience, skills or expertise,
attitude, and other documents (e.g.
police and NBI clearance).
 PEOPLE RIGHT PEOPLE

“Find the right people, not the best people”

-Jack Ma
Customer Service/Relationship and Satisfaction
Packaging / Physical Environment

Packaging is how the product or service is presented to customers. It is the

overall identification (look and feel) of the product of service.

Its ultimate goal is to entice the customers to purchase the product or

service

“Servicescape” is used to refer to the overall ambiance of the place where

the service is performed.
Packaging Convenience

Excellent packaging
provides extra comfort
and convenience
Process

Marketers began to realize the importance of the

internal and external operations of the business to
serve customers better.

It is defined as the step by step procedure or activity

workflow that the entrepreneur or employees follow
effectively and efficiently serve customers
Internal process
includes the back-
office operations
(preprocessing,
processing, and
postprocessing)
External process
includes the actual
servicing where
customers are part
of the process.
PROCESS Efficiency

Process targets efficient

flow of activities
 Activities:

Answer page 192 (II Discussion) (1-4 questions) (20

points)

Study and prepare for Quiz #1

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