One of the most critical components to pricing is what economists refer to as price elasticity. Given the bottom-line impact pricing can have on overall profitability, it’s a critical concept for all marketers to understand.
Marketing managers around the world have been utilizing the “marketing mix” for years. The term was coined in 1949 by Neil Borden, a professor of advertising. E. Jerome McCarthy provided the framework for the marketing mix in 1960 with the 4 P’s model—product, promotion, price and place (distribution). Since then, there have been many variations, including the 7 P’s model, which added three drivers to include physical evidence, people and partners. A founder of Creative Solutions created the 4E’s Model—earn, engage, evolve and energize, which is an adaptation of the 4P’s providing a lifecycle dimension to the marketing mix.
In any industry, you can’t create value unless you understand what the customer needs—and how to satisfy that need at a price that’s both acceptable to the customer and profitable to the company––all before your competitors beat you to it. That means supply and demand management are crucial.
For more than half a century, marketers have relied on the 4 Ps of marketing, a framework first written by E. Jerome McCarthy in his book Basic Marketing: A Managerial Approach. McCarthy’s formulation, which includes price, product, promotion and place (distribution), has informed the bedrock of product and marketing management since 1960.