Marketing mixMarketing mix

THE TIMES 100

THE TIMES 100

Marketing mixMarketing mixThe marketing mix is the combination of

variables that a business uses to carry out its marketing strategy and meet customer needs.

The marketing mix is often called the 4Ps:ProductPricePlacePromotion

THE TIMES 100

ProductProduct

‘Product’ refers to the functions and features of a good or service

Should satisfy the needs of the customerMay have a Unique Selling Proposition

(USP)‘Product’ also includes a range of factors

such as packaging, quality, warranties, after-sales service and branding

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Product lifecycleProduct lifecycle

The product lifecycle looks at the sales of a product over time

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Stages of product lifecycleStages of product lifecycleDevelopment – high costs but no salesLaunch – high expenditure on promotion and

product development, low salesGrowth – sales increase and product should

break-evenMaturity – sales stabilise, less expenditure on

promotion needed, revenue & profit should be high

Decline – sales decline, extension strategies can be adopted or the product withdrawn

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Extension strategiesExtension strategies

Extension strategies should maintain or increase sales. They include:

Modifying the productReducing the priceAdding a featurePromoting to a

different market sector

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PricePrice

The price of a product will depend on:The cost to make itThe amount of profit desiredOther objectives of the businessThe price competitors chargeThe price customers are willing to pay

◦Is there a high demand?◦Is demand sensitive to changes in price?

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Price leaders and takersPrice leaders and takers

Price leader – businesses that dominate the market can often dictate the price charged for a product. Other businesses follow this lead.

Price taker – businesses have to charge the market price. This is often the case where there are many small firms competing against each other.

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Pricing strategies & tacticsPricing strategies & tacticsSkimming Launching with a high price when there is little

competition, then reducing the price later. Often used with technology.

Penetration Low price charged initially to penetrate the market and build brand loyalty; prrice is then increased e.g. introductory offers on magazines.

Competitive A similar price is charged to that of competitors’ products.

Loss leader Products may be sold at a price lower than the cost to produce it. Often used by supermarkets to encourage people into the store where it is hoped they will buy other products.

Psychological A price is set which customers perceive as lower than it is e.g. £39.99 instead of £40.

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PlacePlaceProducts should be conveniently available

for customers to buy‘Places’ include:

◦Stores◦Mail order◦Telesales◦Internet

The use of e-commerce

(promoting and selling on the internet) has

grown massively over the last few years

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Channels of distributionChannels of distribution

Manufacturers

Wholesaler

Retailer

Consumer

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PromotionPromotion

The aims of promotion are to:Raise awarenessEncourage salesCreate or change a brand imageMaintain market share

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PromotionPromotion

Above-the-line promotionThis uses advertising media over which a

firm has no direct control e.g. television, radio and newspapers

Below-the-line promotionThis uses promotional media which the firm

can control e.g. direct mail, sales promotions and sponsorship

THE TIMES 100

Promotional activitiesPromotional activitiesAdvertising e.g. TV, billboards and internet.Sales promotions e.g. Loyalty cards,

BOGOF, discounts & free giftsSponsorship – a business pays to be

associated with another firm, event or causeDirect mailing – promotional material is

sent to potential customers by post/emailPublic relations – building the relationship

between the firm and the public by enhancing its reputation

THE TIMES 100

Promotional mixPromotional mix

Most businesses use a combination of different promotional activities.

The chosen promotional mix will depend on:CostTarget marketProductCompetitors

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How the marketing mix evolves How the marketing mix evolves over timeover time

The marketing mix will evolve over time. For example:

The product portfolio may grow as a business becomes more established

More expensive promotional activities may be adopted as a firm’s revenue increases

More outlets may be opened, or products sold via the internet

Price may increase as demand grows

THE TIMES 100

Marketing mix in contextMarketing mix in context

THE TIMES 100

Product range at McCainProduct range at McCain

McCain Food’s product range includes frozen vegetables, ready meals and desserts; McCain is also the world’s leading manufacturer of frozen potato products such as Oven Chips. What factors have driven changes in the product range?

Use the McCain Food’s case study to help you

THE TIMES 100

Pricing at McCain FoodsPricing at McCain Foods

McCain uses a range of pricing strategies associated with adding value for money. One of the factors it must consider is how much the consumer will be prepared to pay.

Why do you think consumers will pay more for Oven Chips than it would cost them to buy the potatoes and oil to prepare chips themselves?

THE TIMES 100

McCain distribution channelsMcCain distribution channels

McCain sells its products to both wholesalers and retailers. Draw these distribution channels.

How does McCain reduce the environmental impact of transporting its products?

Use the case study to help

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Promotion of McCain productsPromotion of McCain products

Are the following promotional methods used by McCain above-the-line or below-the-line?

TV advertisementsDiscount vouchersAdvertisements on supermarket trolleysE-mail newsletterLeaflet drops

THE TIMES 100

Useful resourcesUseful resources

Marketing mix lesson suggestions and activities (The Times 100)

McCain case study (The Times 100)McCain website