Key learning outcomes:

  • Establish that the marketing department has a key role in a business’s success or failure.
  • Recognise that a new product or service should be designed with customers’ needs and preferences in mind.
  • Acknowledge the importance of a pricing strategy that considers value for the customer and the opportunities for discounting.
  • Identify the ideal distribution channel for a new product or service and the most appropriate method of promotion.


There is so much more to marketing than just advertising and promotion. While it is true that the marketing department is responsible for getting the customer’s attention, there are a number of other components that make up what is known as the “marketing mix”. No matter whether your business is large or small, success or failure will often, to a large degree, rest firmly in the hands of the marketing department. Marketing is responsible for determining the customers’ needs, identifying the target market and working out how to get the products to the customer. Pricing and promotion also come into the mix. The “four P’s” is a framework developed in the 1960s by the US University of Notre Dame’s Professor EJ McCarthy. It is still used and taught extensively, and remains as relevant today as it was then. In this article we explain each of the four P’s in detail and show you how you can apply the theory to your business.


The product might be a good, service or even a message such as the Cancer Council’s “Slip, Slop, Slap” campaign. This element of the marketing mix determines what is going to be offered to the market. A number of key questions need to be answered at this stage to ensure the product is designed to satisfy customer needs:[wlm_ismember]

Let’s look at a new car being developed for inner city markets as an example. The new product is most likely to be small, economical and trendy in design, and have features such as self-parking and side mirrors that retract. Customers would use it to travel short distances and be able to park it in tight parking spots. The customers are likely to be young professionals rather than couples with children.  The aim is to design a product that closely aligns with your customers’ needs and wants.


Once the product design has been finalised, price is the next element to be considered. Marketers need to determine how much customers would be willing to pay for the product and at what price point it represents value for the customer. This is the element in the marketing mix that will determine how much income the product can generate. Price should be weighed up against potential market share. How would lowering or increasing  the price affect market share?

Pricing strategies also need to be determined. A low price may be offered in the launch phase in order to generate brand awareness and loyalty. On the other hand, the product may be offered at a higher price to capitalise on being a new offering into the market. A discounting strategy will also be determined at this time. Will the product be offered at a lower price at any stage or will the price be fixed over a long period of time?

When looking at our example of the new car, the pricing strategy might look something like this. As for many new car models, discounting is likely to be very limited in the early stages while the model is still new and demand is at its highest. Special offers might be developed, for example at the end of the financial year or when the current model is due to be refreshed or superseded. Discounting will become more frequent as the car becomes more common in the marketplace or when competitors enter the market.


The place element of the marketing mix determines how the product is going to be distributed. It is about ensuring that the product is in the right place at the time the consumer wants to purchase it. Marketers need to determine the most appropriate distribution channel.

Distribution channels can be direct from the manufacturer to customers through an outlet, by mail order or online. For many small businesses, direct distribution is the most cost-effective option as 100% of the income flows directly back into the business. More indirect channels, such as distributing through wholesalers and retailers or some other third party, will expose the product to a wider market but will reduce the profit margin, as each layer in the distribution chain will need to be able to generate income.

Consideration also needs be given to how selective the distribution channels should be. An exclusive product may only be offered through a very select number of outlets, yet a high- volume product may be offered to any retailer that wants to stock it. When designing the distribution channel, marketers also need to look at the physical logistics, such as transportation, warehousing and order processing and how they would work in each scenario.

With our new car, distribution will be through the dealer network. The bigger the purchase, the more likely the customer wants to be able to touch and feel the product; therefore, online sales are rare for items such as new cars. The car will be wholesaled to the dealer who will then sell direct to the customer. Dealers are part of a selective distribution network where only one dealer is nominated in a specific geographical territory.


This is the element of the marketing mix that most people are most familiar with – it is where marketers work to persuade customers to buy the product. Decisions need to be made in regards to what information should be communicated to potential customers and how the message should be delivered.

Promotion is often classified as above or below the line. Above-the-line promotion includes advertising where commission is paid, such as television, radio, press, billboards and internet advertising. Below-the-line promotion may still have a cost but no commission is paid, for example sponsorship and trade exhibitions. Public relations is also considered below-the-line promotion. The important thing is to determine where you will gain the greatest reach and to which medium your customers are likely to respond most favourably.

In our new car example, marketers may look to gain publicity and hype through the press and events such as motor shows. Advertising will be more targeted rather than widespread, with advertisements placed in specific publications and on radio stations that appeal to the target demographic. The more niche your target market, the more specific your advertising and promotion needs to be.


The four P’s framework can be effective when you are considering taking a new product to market or when reviewing your current marketing mix. Use it to review your marketing efforts on a regular basis and to test the ongoing validity of your current strategies. Always remember that you will also need to review your competitors and consider the strategies that they are employing. For example, if sales for our new car hit a slump, we may assume more money needs to be spent on promotion or that the promotion is not working. However, further investigation might reveal that a competitor is now offering a similar car at a lower price or that some modifications need to be made to your product to enhance its appeal in the market.[/wlm_ismember]

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