Marketing Mix

Marketing Mix

Owning a business, working for a multi-million dollar company, or working for non-profit organization marketing is an important aspect. Marketing is a broad subject that can be defined by many people in different definitions. How does an organization tackle marketing and where would one begin? Most marketing texts will teach of marketing mix that is important to developing an effective organization. Marketing mix is not a mixture of marketing and public relations as one may think but elements that make up an effective method to market. This paper will describe the four elements of marketing mix and relate them to an organization.

Marketing mix and target market are the two pieces that make up marketing strategy. The controllable variables the company puts together to satisfy the target group is marketing mix (Kotler & Keller, 2004). Four specific variables create the marketing mix, product, place, promotion and price. Each variable should be surrounded by a goal of customer satisfaction. Product refers to a physical product or service offered to a customer. Some examples of a product are a brand name, styling, packaging, warranty, repairs, quality and more. The product variable is responsible for creating the products customers will want. Place is responsible for knowing where the customer needs to get the product. A product will travel a channel of distribution to reach the intended customer. A channel of distribution is any series of firms that participate in the flow of products from producer of the product to final intended customer (Kotler & Keller, 2004). Place can be market coverage, transportation, warehousing, inventory management, locations of stores and more. The promotion variable is common and is responsible for telling the customer about the product and possible places to obtain. Promotion of a product can be advertising, sales, public relations, motivation, training and more. This variable can be used for obtaining new customer or keep existing customers. Finally, the last variable is price. Price can be suggested retail, volume discounts, wholesale pricing, bundling, seasonal pricing and more. All the variables that make up the marketing mix, four P's, should be used together to be effective. Each element is valuable to development of a marketing strategy for any organization.

To further examine the elements of a marketing strategy let's take a look at an organization that has incorporated the four P's. Allstate Credit Division is an administrator for Guaranteed Auto Protection, GAP. This division of Allstate is in the auto industry specific to auto dealers, credit unions and lending institutions. Therefore the target market would be the auto dealership industry and the lending institutions. All of the elements that make up a marketing mix, product, place, promotion, and price impact Allstate Credit Division.

A product should involve a physical good or service and should satisfy the customer need. GAP is a product that meets the needs of the customer. It is a loan protection, in the event of a covered total loss the administrator will cover the difference between what it paid by the insurance company and what is remaining on the loan. The product was implemented in early 2002 when purchased from American Heritage Insurance Services. GAP was not a popular product at the time; obviously the elements of effective marketing mix were not used to grow the product. Allstate Credit currently offers standard coverage, plus and coverage for independent dealerships.

The channel of distribution for this type of product differs from an item purchased in a grocery store. A customer off the street can not purchase this product directly from Allstate; they would need to seek it from a dealership or lender at the time of the loan. Agents are responsible for offering the product to dealerships and lenders. Once signed, lender/dealer agreement is received they can offer the product to their customers. Since the product is a loan protection, the cost of the product must be included in the financing of the loan. Currently the only channel of distribution of the product is at the dealer or lender level.

How would one promote such a product? The channel of distribution, as stated above, is Allstate Credit to agent to dealer to customer. Allstate Credit offers promotions to the agents as well as the dealers / lenders. There are no commercials that advertise the product or billboards