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Business · Making the business effective

The marketing mix

The marketing mix is the four Ps - product, price, promotion and place. A small business succeeds when all four fit together for its target market, and when it changes the mix as customer needs, technology and competition change.

  • 7 key terms
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Teacher resources

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Student handouts

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Last Lesson

Answer from memory before the answers appear.

  • Name the four location factors.

    Proximity to the market, labour, materials and competitors.

  • What is e-commerce?

    Buying and selling goods and services online.

  • Give one advantage of selling online instead of from a shop.

    Lower costs, reaching more customers, or being open 24 hours.

  • Why does a hairdresser still need fixed premises?

    Customers must visit in person.

Learning Objectives

  1. 1Explain what the marketing mix is.
  2. 2Explain the importance of each of the four Ps: product, price, promotion and place.
  3. 3Explain how the elements of the marketing mix work together.
  4. 4Explain how changing customer needs, technology and competition affect the marketing mix.

THE BIG IDEA

The right product, at the right price, promoted in the right way, in the right place.

That is the whole of the marketing mix - and all four have to be right at once.

The marketing mix

The marketing mix

  • Product

    • what the business sells
    • its features, quality and appearance
    • how it meets customer needs

  • Price

    • how much customers pay
    • must suit the target market
    • must cover costs

  • Promotion

    • how customers find out about it
    • social media, leaflets, adverts, special offers

  • Place

    • where and how customers buy it
    • shop, market stall, website, app

Product

The good or service the business sells.

  • What it includes

    What the product does, its quality, how it looks, its size and its packaging.

  • Why it matters

    If the product does not meet customer needs, no amount of promotion will make customers keep buying it.

  • Standing out

    A small business often needs something that makes its product different from competitors' - a unique selling point.

  • Example

    A bakery's product is not just bread: it is fresh, baked on site each morning, with local ingredients.

Price

The amount customers pay for the product.

  • Cover costs

    The price must be high enough to cover costs and make a profit.

  • Suit the target market

    It must be a price the target customers are willing and able to pay.

  • Match the product

    Customers expect a high-quality product to cost more; a very low price can make them doubt the quality.

  • Look at competitors

    Customers compare prices, so a business charging more than rivals must give them a reason to pay it.

Promotion

How the business tells customers about its product and persuades them to buy.

  • Why it matters

    Customers cannot buy a product they have never heard of.

  • Reaching the target market

    Promotion must appear where the target customers will see it.

  • Small-business options

    Social media posts, a website, leaflets, local newspapers, word of mouth and special offers.

  • Cost

    Small businesses have small budgets, so they choose cheap methods that reach the right people.

Place

Where and how customers can buy the product.

  • Why it matters

    Customers need to be able to buy the product easily, when and where they want.

  • Options for a small business

    Its own shop, a market stall, other shops that stock its products, its own website or an online marketplace.

  • Match the customer

    Place must suit how the target market likes to shop - older customers may prefer a shop; younger customers may prefer an app.

  • Convenience

    The easier it is to buy, the more customers will buy.

An Integrated Marketing Mix

The four Ps must support each other and suit the same target market.

  • Consistency

    Each P sends the same message. A luxury product needs a high price, stylish promotion and an upmarket place to sell.

  • Mismatches confuse customers

    A premium chocolate brand sold cheaply in a discount shop, with cheap-looking adverts, would not be believed.

  • Changing one P affects the others

    Improving the product's quality may mean raising the price and promoting the new quality.

  • Balancing the mix

    A small business may not be able to afford everything, so it balances the four - for example a good product sold at a fair price, with cheap social media promotion.

One Café, Two Target Markets

  • Product

    Budget student café: Simple coffee, toasties, big portions. Upmarket brunch café: Speciality coffee, fresh brunch dishes

  • Price

    Budget student café: Low - £2 coffee, meal deals. Upmarket brunch café: High - £4 coffee, £14 brunch

  • Promotion

    Budget student café: Student discount, Instagram, flyers on campus. Upmarket brunch café: Food bloggers, a stylish website, local magazines

  • Place

    Budget student café: Near the university, fast takeaway counter. Upmarket brunch café: Quiet, stylish street with table service

Changing Customer Needs

When customers want something different, the mix has to change.

  • Product

    Businesses add new products as tastes change - vegan options, low-sugar drinks, eco-friendly packaging.

  • Price

    If customers have less money to spend, a business may offer smaller, cheaper versions or value deals.

  • Promotion

    The message changes to show the business meets the new need, such as "plastic-free" or "locally sourced".

  • Place

    As more customers shop online, small businesses add websites, delivery and click-and-collect.

The Impact of Technology

E-commerce and digital communication have changed every P for small businesses.

  • Place: e-commerce

    A small business can sell online to customers anywhere, through its own website or an online marketplace.

  • Promotion: digital communication

    Social media, email and websites let a small business promote itself cheaply and target exactly the right customers.

  • Price

    Customers can compare prices online in seconds, so businesses must keep their prices competitive.

  • Product

    Customers leave online reviews, so product quality matters even more - one bad review can put off many buyers.

The Mix in a Competitive Market

When there are many competitors, the mix must give customers a reason to choose this business.

  • Product

    Make it different - better quality, a unique feature or better service.

  • Price

    Keep it close to competitors, unless the product is clearly better.

  • Promotion

    Tell customers what makes the business different, not just that it exists.

  • Place

    Be easier to buy from than rivals - open longer, deliver faster or sell online.

Build a Mix

You are launching a small business selling healthy smoothies to secondary school students. Plan all four Ps, making sure they fit together for your target market. Then explain one change you would make if a rival smoothie bar opened next door.

1. Describe your product.

2. Set a price and explain it.

3. Choose how to promote it.

4. Choose where to sell it.

5. Plan your response to the new competitor.

A good answer shows: A product, price, promotion and place that all suit teenage students and support each other, plus a response to competition linked to one of the Ps.

Can I...?

  1. 1Name the four Ps.
  2. 2Explain why product matters.
  3. 3Explain why price matters.
  4. 4Explain why promotion matters.
  5. 5Explain why place matters.
  6. 6Explain what an integrated marketing mix is.
  7. 7Explain how changing customer needs affect the mix.
  8. 8Explain how technology affects the mix.
  9. 9Explain how competition affects the mix.

Summary & Exam Focus

  • The marketing mix is product, price, promotion and place.
  • Each element matters, and all four must fit together for the target market.
  • The mix changes as customer needs change.
  • E-commerce and digital communication have changed every P, especially for small businesses.

Exam focus

Explain one way that digital communication can help a small business promote its products. (3 marks) (3 marks)

Name the method (social media, email, a website), then explain the benefit for a small business specifically - low cost, targeting the right customers, reaching more people.

Key terms

The vocabulary this lesson expects you to use. Each one is linked from the first place it appears above.

Marketing mix
The four elements a business uses to market its product: product, price, promotion and place.
Product
The good or service a business sells.
Price
The amount customers pay for a product.
Promotion
How a business tells customers about its product and persuades them to buy.
Place
Where and how customers can buy a product.
Integrated marketing mix
A marketing mix in which the four Ps fit together and suit the same target market.
Digital communication
Promoting a business and talking to customers online, e.g. through social media, email and websites.

Questions and answers

9 questions set on this lesson, with the mark schemes and model answers open.

1. Exam question Define 1 mark Foundation

Define the term 'marketing mix'.

Mark scheme — 1 mark available

  • The four Ps / product, price, promotion and place — 1 mark

Model answer

The combination of product, price, promotion and place that a business uses to sell its product.

2. Exam question State 1 mark Foundation

State one element of the marketing mix.

Mark scheme — 1 mark available

  • Any one of: product; price; promotion; place — 1 mark

Model answer

Promotion.

3. Exam question Outline 2 marks Foundation

Outline one way e-commerce has affected the place element of the marketing mix.

Mark scheme — 2 marks available

  • A way identified, e.g. selling online / reaching customers anywhere / no need for a shop — 1 mark
  • Developed: the effect on the business or its customers — 1 mark

Model answer

Businesses can sell their products online (1), so customers can buy from anywhere at any time without visiting a shop (1).

4. Exam question Explain 3 marks Foundation

Explain one way that digital communication can help a small business promote its products.

Mark scheme — 3 marks available

  • A way identified, e.g. social media / email / website — 1 mark
  • First linked point of explanation — 1 mark
  • Second linked point of explanation — 1 mark

Model answer

A small business can use social media to promote its products (1). Posting is free and paid adverts can be shown only to people of the right age, location and interests (1). This means the business reaches its target market for much less money than traditional advertising, which suits its small budget (1).

5. Exam question Analyse 6 marks Core

Source: Kai runs a small shop selling handmade leather wallets and bags. His products are high quality and take many hours to make, but he prices them only slightly above mass-produced wallets in the high street. He promotes the shop with leaflets through local letterboxes. Most of his customers are young professionals aged 25 to 40, and sales are lower than he hoped. Analyse the importance to Kai of having an integrated marketing mix.

Mark scheme — 6 marks available

  • AO2 (Application, 3 marks): uses the context - handmade leather, low price, leaflets, young professionals — Level 1-3
  • AO3a (Analysis, 3 marks): chains of reasoning showing why the four Ps must fit together — Level 1-3

Model answer

Kai's product is high quality and handmade, but his price is only slightly above mass-produced wallets. This sends a mixed message: customers may doubt that the product is really special if it is priced like a cheaper one, and Kai earns too little on each item to cover the many hours it takes to make. If he raised his price to match the quality, his price and product would support each other and his profit per item would rise. His promotion also does not fit his target market. Young professionals aged 25 to 40 are more likely to see social media than leaflets through the door, so his leaflets may be reaching the wrong people. If Kai promoted his handmade quality online, where his target customers are, all four Ps would work together, which should increase his sales.

6. Multiple choice 1 mark Foundation

Which one of the following is one of the four Ps?

  1. A Profit
  2. B People
  3. C Place Correct
  4. D Planning

Why: The four Ps are product, price, promotion and place.

7. Multiple choice 1 mark Core

A small bakery starts posting videos of its cakes on social media. Which element of the marketing mix is it using?

  1. A Promotion Correct
  2. B Place
  3. C Price
  4. D Product

Why: Telling customers about the product and persuading them to buy it is promotion.

8. Multiple choice 1 mark Core

What is an integrated marketing mix?

  1. A A mix that uses only online promotion
  2. B A mix with the lowest possible price
  3. C A mix that never changes
  4. D A mix where all four Ps fit together for the target market Correct

Why: In an integrated mix the four Ps support each other and suit the same target market.

9. Multiple choice 1 mark Stretch

Customers can now compare prices online in seconds. What effect does this most likely have on small businesses?

  1. A They can charge much higher prices
  2. B They must keep their prices competitive Correct
  3. C They no longer need to promote their products
  4. D They must close their websites

Why: Easy price comparison means customers quickly spot a business charging more than its rivals, so prices must be competitive.