The Role of Pricing & Product Development Process

Marketing Mix

You are all familiar with the 4 P’s of marketing – “the right product at the right price, offered in the right place , and promoted in the right way” (Ehmke, Fulton, & Lusk, 2005, p. 5). The marketing mix becomes an analysis of the interaction between these four elements to determine how an organization will achieve advantages versus the competition and remain profitable. While this is the traditional terminology used to describe the marketing mix, newer interpretations of the mix have evolved.

4 P’s

Your text examines the traditional 4 P’s and recommends strategies that can be implemented throughout the product’s life cycle – from introduction and growth to maturity and decline (Mullins & Walker, 2010).

Consider for example: sales and marketing experiences in the pharmaceutical industry,The product introductory stage is typically the first six months after launching the new drug. During this time period, there is focus on heavily promoting the product to the medical community and introducing the product to consumers with promotional advertising. Samples are offered to health care professionals so that they could evaluate the product prior to writing prescriptions. To ensure the place component, the new product would be stocked at the wholesale and retail level. Pricing was determined by cost to produce, competitive parity, and to ensure return on investment (ROI).

During the growth stage of the product, new line extensions may be introduced (for example, if the product was introduced in pill form, during the growth stage, the product may be offered in liquid or injectable forms). In addition, new indications for usage may be introduced at this point.

The goal for the mature product is to maintain market penetration and sales. Sometimes during this stage, price incentives are offered at the wholesale and retail levels.

For pharmaceutical products, the decline stage comes either when newer, more innovative products are introduced, or when the patent on the product expires. During this stage, the product is slowly phased out of the promotional strategies.

Other Perspectives:

5 P’s

One addition to the product mix is the incorporation of people  or emphasis on relationship marketing. This is a paradigmatic shift from a mere transactional exchange to a more personalized, customer-focused framework (Möller, 2006). In other words, marketing decisions focus additional efforts to ensure the mix includes satisfying customer needs and then, nurturing a continuing relationship to build and retain each customer’s loyalty (Gilaninia, Almani, Pournaserani, Mousavian, 2011).

6 P’s

A key enhancement to the 5 P’s is the inclusion of process. This refers to the “systems used to deliver services…” for example, having a formalized and established protocol for “implementing an open dialogue with customers, resolving complaints received, and keeping customers informed of changes to product and service offerings” (Neilson, 2008, p.209),

7 P’s

The 7 P’s framework maintains product, price, promotion, place, people, process, and adds proof or physical evidence to the mix. This is important in service marketing in order to evaluate the actual tangible elements related to customer satisfaction or dissatisfaction so that proper steps can be taken to implement positive changes (Neilson, 2008).

8 P’s

Non-profit organizations integrate 8 P’s into the marketing mix. They follow the first 5 P’s and add partnerships, policy changes, and paid marketing. Partnering with other organizations or entities enhances strategic alliances, which help to further the goals of the non-profit organization. The non-profit organization’s marketing department must also continue to work closely with government policy makers to ensure changes support or are compatible with the mission and goals of the particular organization. Finally, part of the marketing mix must ensure that sufficient funds are allocated for paid marketing campaigns that promote the non-profit organization (Crossley, 2010).

References