Marketing Mix

Marketing Mix - Definition

Marketing mix is the combination of elements that go to make the marketing strategy for a company.

This helps achieve the marketing objectives of the company/brand

The mix needs to clearly differentiate your products from those of your competitors

Marketing Mix - Variables

The marketing mix focuses on 4 elements: Price Product Place (Distribution) Promotion

These variables are all interdependent “Controllable variables” as one can

choose, alter & control these

Product Mix

Product Mix - Definition

The physical features of the product, or the intangible aspects of the service

This covers things that make the product more attractive to buy

Product Mix

Product line/range Design, quality, feature, models, style,

appearance, size & warranty Packaging type, materials, size,

appearance & label Merchandising Service, pre-sale & after sales New products launches

Product Mix – Under A MicroscopeProduct mix & line : Launch Phase Blended Spices a mature market What variants to launch, which to push, how

to differentiate from competition ?? Brand the variants to be offered eg. Pindi

Chhole Masala, Dakshin Sambhar Masala, Khyber Tandoor Masala

Packaging : Introduced in standi poly pouches Resealable pouches

Product Variables – Under A MicroscopeLater Stage : More to create excitement around the

brand Relevant for high impulse buying category eg. Shampoos – Pantene’s oil fortified

shampoo Better the product - Maggi Wheat Atta

Reaction to competitors - Iodex launching white iodex

Product Variables – Under A Microscope

Reactions to market scenario : McDonalds has recognized the

preference for vegetarian foods among Indians thus they have included vegetarian food in its menu.

Pizza Hut outlets being purely vegetarian in places like Ahmedabad, Mumbai

Product Variables – Under A Microscope Merchandising done to create a buzz &

remain top of mind Eg.McDonald’s merchandising Nemo’s to coincide

with the release of Finding Nemo McDonalds agrees to distribute millions of Roger

Rabbit cups to its customers Luxor Writing Instruments Ltd. a JV of Gillette and

Luxor launched 500 "Gajgamini" range of Parker Sonnet Hussain special edition fountain pens, priced at Rs. 5000.

These pens were signed by M.F.Hussain

Price

Price

The exchange value of a product is “Price”

Going to sell at a high price and make a lot of profit in the short term

Going to sell at a low price to beat the competition and stay in the long term

Price

A well chosen price strategy should do 3 things:

1. Achieve the financial goals of the firm (eg.: profitability)

2. Fit the realities of the marketplace (will customers buy at that price?)

3. Support a product positioning

Price Variables

Pricing policies, levels of prices, levels of margins, discounts & rebates

Terms of delivery, payment terms, credit terms & instalment facilities

Resale price maintenance EG. Xerox's decision to "loan"

customers the Xerox 914 (the first commercial push-button office copier) and to charge them only $.05 per copy.

Types of Pricing Competitive/Penetration pricing: 3 policies – Premium, Discount & Parity pricing Eg. Akai Colour TV Discount Pricing Baron International the Indian JV of Akai sold

colour TVs that were priced below Rs 10,000/- alongwith exciting exchange offers & freebies

This changed the rules of the game in entertainment electronics.

His strategy was to make people buy rather than sell his product.

The strategy was built keeping in mind the price-sensitive and value-conscious Indian consumers

Types of Pricing

From 2,500 in 1994, Akai sold an amazing 4,50,000 TVs in 1998.

Akai sold at wafer-thin margins of 2%. Money was made because of high volumes but was not

enough for the manufacturer to take back some home Thanks to this even other manufacturers had to cut

back the price of their products forcing Baron to virtually work without profit, even at a loss at times.

Baron didn’t build any back-up strength in terms of after sales service or any credible infrastructure to maintain consumer confidence

If in 1996-97 Baron had clocked a net profit of Rs 28 crore, June 2001 saw it dip into the red with a net loss of Rs 74.51 crore

Types of Pricing

Competitive/Penetration pricing: The success of competitive pricing

strategy depends on achieving high volume and maintaining low costs.

Discount pricing that worked - Cavinkare’s Chik shampoo has a 20% market share as against HLL’s Clinic Plus – 28%

Types of Pricing

Cost-plus-profit: Add the profit you need to your cost. It is also called cost-orientated strategy

and is mainly used by the big contractor of public works.

This strategy is only good for a businesses where the customers are public collectivities or government agencies.

Types of Pricing

Value pricing: Base prices on the value you deliver to customers. For example, when a new technology has a very

large success, you can charge high prices to the customer.

This practice is also called “skimming”. It is easy when you are in the introductory phase of

the product life cycle. Value pricing is common in luxury items. Sometimes the higher the price, the more you sell Eg. Designer clothes

Types of Pricing

Proactive Pricing : Times of India offering the paper at Rs

2/- on certain days of the week Eventually it extended the pricing

through weekdays Circulation grew in leaps & bounds

Place

Place - Definition Decisions about where to sell the

product & how to get it there Depends about where the customers

are Includes the "channel of distribution" -

all the different middlemen

Place Variables

Channels of distribution Types of intermediaries Channel design Location of outlets Channel remuneration & dealer-

principal relations Physical distribution, transportation,

warehousing, inventory levels, order processing

Place Variables

Physical Distribution : Transportation Costs – Freight, rail, road cost

on the rise Need only the best solution as time and

reliability are key importance Warehousing & Inventory Cost- Warehousing

rent along with cost of labour have been going up

Inventory levels have been increasing due to competition & hoping to provide a better product delivery to the channel customers

Place Variables

Channels of Distribution : Manufacturer User Manufacturer Mail order User Manufacturer Door to Door Salesman

User Manufacturer Manufacturer’s

Showroom User Manufacturer Retailer User Manufacturer Stockist/Distributor

Retailer User

Place Variables

Proliferation of showrooms/ exclusive outlets

Maintain a synergy in ambience, experience, service

Sony World Titan Franchising : Manufacturer dos not need to make large

investments but a still have a strong network NIIT Oyzterbay

Place Variables

Modern Format Shops : Supermarkets, department stores & chain

stores are the new genre Wide variety at a touch and feel level The Co-operative Network : 3 distribution channels – Consumer co-

operative, Supermarkets & Agricultural credit societies

The Public Distribution System : Came into existence out of the need to be fair It seek to stabilize prices of essential goods

Place Variables

Non Store Marketing / Marketing without Distribution Channels:

Mail Order Marketing / Mail Order Business

Vending Machines Home selling Home Shopping

Place - Cases

Kitchens Of India available only at supermarkets

Ghadi detergent’s success only because it is easily available at all outlets

Platini bombed because of non availability of product at all outlets

Promotion Variable

Promotion -Definition

The function of promotion is to affect the customer behavior in order to close a sale.

Promotion includes mainly three topics: Advertisement Public Relations Sales Promotions.

Promotion Variable

Personal selling : Objectives, level of effort, quality of sales force, cost level, level of motivation

Advertising : media mix, budgets, allocations & programs

Sales promotional efforts, display, contests, trade promotions

Publicity & public relations

Promotions Mix Elements Advantages Disadvantages

Advertising Good for building awarenessEffective at reaching wide audienceRepetition of brand positioning helps build trust in the consumer

Impersonal does not answer all queries of TG

Does not get the TG to make the final decision

Promotions Mix Elements Advantages Disadvantages

Personal Selling Highly interactive – lots of communication between buyer & sellerExcellent at communicating complex/detailed product infoRelationships can be built especially when sales closing take a long time

Costly keeping a sales force that has many hidden costs apart from salary

Not suitable when there are thousands of buyers

Promotions

Mix Elements Advantages Disadvantages

Sales Promotion

Can stimulate quick increase in sales by targeting promotional incentives on certain productsGood short term tactical approach

If used long term customers may get used to the effect

Too much promotion may damage brand image

Promotions

Mix Elements Advantages Disadvantages

Public Relations

Often seems to be credible as its coming from a 3rd party (newspaper/TV)Cheap way of reaching many customers

Risk of losing control as no control on what people write

Case Study – Marketing Mix for Haldiram’s

Case Study – Marketing Mix for Haldiram’s

PRODUCTS : Haldiram's product range included namkeens,

sweets, sharbats, bakery items, dairy products, papad and ice-creams .

Namkeens remain the main focus area for the group contributing close to 60% of its total revenues.

Have a Nagpur unit manufactured 51 different varieties of namkeens, the Kolkata unit manufactured 37 and the Delhi unit 25

The raw materials used to prepare namkeens are of best quality and are sourced from all over India.

Case Study – Marketing Mix for Haldiram’s

PRODUCTS : Customize its products to suit the tastes and preferences of

customers from different parts of India. For example, it launched 'Murukkus,' a South Indian snack, and

'Chennai Mixture' for South Indian customers. 'Bhelpuri,' was made for customers residing in western India.

The company offered certain products such as 'Nazarana,' 'Panchratan,' and 'Premium' gift packs only during the festival season.

This helped Haldiram's compete effectively in a market that was flooded with a variety of snack items in different shapes, sizes and flavors

Pricing : The company's pricing strategy took

into consideration the price conscious nature of consumers & the large unorganized market it was battling

Introduced small packets of 30 grams, priced as low as Rs.5.

The company also launched namkeens in five different packs with prices varying according to their weights

Pricing :

PACK WEIGHT PRICE (in Rs)

30 gms 5

85 gms 10

180 gms - 250 gms 18-35

400 gms - 500 gms 40-70

1kg 95-200

Source: ICMR

PLACE :Manufacturing Unit

Carrying & Forwarding Agent (C&F)

Distributors

Retail Outlets

C&F agents received a commission of around 5%, while distributors earned margins ranging from 8% to 10%.

The retail outlets earned margins ranging from 14% to 30%.

Apart from the exclusive showrooms owned by Haldiram's, the products were available at supermarkets, sweet shops, provision stores, bakeries and ice cream parlors.

The products were also available in public places such as railway stations and bus stations that accounted for a sizeable amount of its sales.

Haldiram's also offered its products through the Internet.

The company tied up with indiatimes.com , Giftstoindia.com, giftssmashhits.com, tohfatoindia.com and channelindia.com

This was to enable NRI’s residing abroad to send Haldiram's gift packs to specified locations in India.

Promotion : Magazines & print were used Point of sales (Posters, Danglers,

Buntings, Shelf Talkers) Mailers to corporates during Diwali for

bulk orders

Promotion : Since namkeens were impulse purchase items,

attractive packaging in different colors influenced purchases.

Haldiram's used the latest technology (food items were packed in nitrogen filled pouches) to increase the shelf life of its products.

While the normal shelf life of similar products was under a week, the shelf life of Haldiram's products was about six months.

The company projected the shelf life of its products as its unique selling proposition.

Posters highlighting the shelf life of its products carried the caption 'six months on the shelf and six seconds in your mouth.'

Promotion : The company established restaurants in Nagpur and

Delhi. In Nagpur an innovative strategy was undertaken to

increase its business It facilitated people who were traveling by train

through Nagpur station to order food from places where stockists of Haldiram's Nagpur unit were located.

The customers could order for lunch/dinner by sending a demand draft (DD) or cheque to the Nagpur unit or giving the same to specified local distributors belonging to the Nagpur unit.

Along with the DD/cheque, customers had to provide information such as the name of the train, its likely time of arrival at Nagpur, their names and coach and seat numbers.

Godrej Noble House&Chai Time

Marketing Mix Case Study

Godrej TeaProduct : Launched 2 new tea products : Godrej Noble House & Godrej Chai House Godrej Chai House is targeted at the popular and mid-

premium segment while Godrej Noble House is being positioned in the premium category.

A phased launch beginning with Andhra Pradesh, Tamil Nadu, Uttar Pradesh, New Delhi and Mumbai.

Tea being offered in different parts of the country is different.eg. In South it will be Dust, whereas the north would have Leaf tea.

These product variations reflect the fact that consumers in different parts of the country have heterogeneous taste.

Dust tea is very popular in the south, Gujarat prefers loose tea….

Godrej TeaPrice, positioning and packaging : Nobel House is priced at Rs 55 for a 250 gm pack

for its leaf varient and Rs 48 for the dust. Chai House is priced at Rs 40 for a 250 gm pack of

leaf and Rs 37 for dust. Tea available in in 2kg, 1kg, 500gm, 250gm,

100gm, 50gm and 25gm packaging at prices as low as Rs 3.

Plans to introduce Re 1 packs. The pricing on both products represents a 13%

discount to the Tata Tea and Hindustan Lever Ltd. counterparts.

Godrej Tea

Place :Godrej Tea is utilizing 50% to 60% the existing Godrej Group distributors, while it has appointed an additional 500 distributors on its own.

Promotion : Introductory offer of giving away Fair Glow soaps

and Cinthol Original for approximately 1-1.5 months.