Extended Use of the Marketing Mix
Marketing mix has long been part of strategic management. Basically, the concept is composed of the combined marketing elements and resources of a company. By definition, marketing mix is the outcome of blending, compounding and mixing marketing factors into an integrated whole at a specific period of time. This marketing principle implies that every necessary marketing element has been integrated and arranged on a planned basis. The mix is created through the application of the skills of the marketing management, which requires a systems perspective (1971).
The creation of the marketing mix is intended for the purpose of insuring the achievement of various corporate goals such as profit, volume, image, reputation and return on investment through the satisfaction of the consumers’ wants and needs. It results in the total bundle of utilities actually purchased by consumers in selecting products and services, and it is concerned with such factors as price, design, advertising, packaging and distribution channels. Thus, consumer wants and needs become the basis for developing the mix.
It was around 1960, when marketing mix was first introduced. The concept of the marketing mix primarily revolves around marketing’s four Ps, which include price, product, place and promotion (1994). From then on, this basic marketing mix model remained unchallenged. It even overpowered earlier marketing models Wroe Alderson’s organic functionalist approach as well as the system-oriented approaches and parameters theory advocated by Copenhagen school in Europe. Similarly, previous approaches like the commodity, functional geography-related regional and institutional schools, have long been forgotten. For a long time, the use of marketing mix has been concentrated on the simple business to customer market.
For over forty years, the management paradigm of marketing mix has indeed dominated most thoughts, practice and research of marketing. As time goes, the concept of the marketing mix and the four Ps had become an irrefutable paradigm used in academic research, which in turn results to validity being taken for granted. In most parts of the marketing and academic world, researchers remain to consider the concept as the epitome of marketing truth even up to the present time. Perhaps, the concept remains unchallenged as the attempt to question it was futile.
Academic researchers for instance, who inquire about the conventional marketing mix model is said to be sticking ones neck too far. Authors of marketing publications suggesting other organizations of the marketing mix were immediately corrected by other publishers. Hence, empirical studies related to key marketing variables as well as to how these variables are utilized by managers, have only been neglected. During this time, structure was highly favored over processes. Because of this, marketing educators tend to focus on describing the model itself rather that discussing the processes and real meaning behind the conceptual model (1994).
But then of course times, change and the business-to-customer market use of marketing mix should be extended more that this area. In fact, the conventional paradigm of marketing mix has started to lose its hold on the marketing world. In marketing research, the emergence of several extended uses of marketing mix has been substantial. Perhaps, the most well-known of these extended uses is its ability to improve the perception of the public and create greater understanding and communications. Brought about by the emergence of globalization in the business industry, the recognition of most companies on the significance of customer retention, market economies as the popularization of customer relationship economics, such factors had enforced the changes occurring within mainstream marketing mix.
One way of using the marketing mix in generating greater understanding and communications is through the establishment of long lasting customer relationships. For years, there has been a growing interest on the study of customer relationship economics. It has been introduced by (1994) that understanding the concept of market economies means the achievement of understanding the customers rather than focusing on the development of scale economies. One example cited by (1993) was the result of his study at MBNA, a US credit card business, wherein the integration of this extended use of the marketing mix resulted to a 5 percent increase in retention rate, which in turn provided the company a marked 60 percent increase in profit on its fifth year.
Similar results from industrial studies conducted by (1990) were reported as well. Greater understanding and communications eventually results to the establishment of long term relationships. This is an effective use of the marketing mix as its employment enables parties, the company and its customers, to learn how to effectively interact with one another. More importantly, such extended use of marketing mix leads to the reduction of the relationship costs for the customers and the service provider or supplier. Based on the suggestions of (1994), the relationship cost theory is characterized by the quality costs as well as the transaction costs. Applying this theory, when the relationship shared by the company and customers is mutually satisfactory, significant transaction costs can be avoided by the customers. In the same way, suppliers are able to avoid suffering needless quality costs.
Batelco, one of Bahrain’s major telecommunications company, may similarly utilized its marketing mix to generate greater understanding and communications. The focal point of the proposed market mix of the telecommunication company is on the enhancement of its customer and consulting services through the utilization of customer relationship management systems as well as the improvement of its human resource structure. The mix itself being directed to the enhancement of the company’s services to the customers is way of utilizing the mix in generating greater understanding and communications.
The marketing mix of the company is not solely focused on the knowing the needs of the customers, but the company is also extending effort in knowing its customers more through the establishement of a better customer care and consulting services. The company’s marketing mix is not only on directed toward the customers. The restructuring of the HRM system can also be utilized as a provider of greater understanding and communication as its personnel will be more equipped to establish long term relation with their customers.
Utilizing the company’s marketing mix also results to the improvement of its reputation based on the public’s perception. For instance, its efforts of showing the customers their sincerity of serving them better through their customer-oriented marketing mix, generally gives a good impression. The significance of using the marketing mix to improve public perception can be further explained through an actual corporate case.
One of the well-known cases was that of Nestlé, a Swiss multinational conglomerate. The company manufactures the best chocolate as they claim. To supplement breast milk, the company also makes infant formula. After the World War II, company sales were good. However, due to the birth rate in developed countries, sales started to decline. In response to the problem, the company decided to find a new market within third world countries. Eventually, the company was able to market their formula aggressively, achieving dominance in the market share in a billion-dollar industry. At first glance, there is no apparent reason for this marketing mix to go wrong ( 1991). However, according to (1986, p. 47-61), Nestlé used several promotional strategies that would have been appropriate with a different population but harmed third world consumers. Specifically, it employed missionary sales agents under the guise of milk nurses to give away samples and discourage breast feeding. Nestlé also promoted heavily through physicians. In addition to their marketing practices, Nestlé was criticized for bad quality control and for not ensuring that customers knew how to properly use the formula. Many infant illnesses and deaths resulted. This triggered responses from health agencies and concerned citizens around the world. The media blasted Nestlé. Consumer boycotts of Nestlé products were organized--with notable success. A worldwide boycott started in 1977 and was in full swing by 1981 when the World Health Organization came down on infant formula advertising. At first, the company did not do anything about it but the negatively publicity went on. Eventually, the company agreed to be monitored by a special committee. By 1984, several consumer groups have dropped the issue and Nestlé products revived its status on the worldwide market. In spite of this, there were people who have remained unconvinced, thus significantly affecting the company’s reputation to the public.
According to (1986), giant corporations should remember the importance as well as the vulnerability of their image to the public. Their marketing strategies should be carefully constructed in such a way that sincerity is implied. (1986) also recommended that companies devote a good deal of energy to creating and communicating a positive public image that fits the company's mission. He believes that this needs to be done on all levels, from physical facilities to dealers to prices to advertising and public relations.
From this case, two significant points were neglected by the company. One is that it created strategies without thinking about the perception of the public and that the company was unable to use its strategies to communicate well with its consumers. Thus, this case emphasizes on the significance of utilizing the extended uses of marketing mix. Indeed marketing mix is not only for the satisfaction of the customer needs and profit-gaining. The extended uses of marketing mix imply the significance of using the concept to preserve a good image to the public and create long term relations.
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