The marketing mix
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Transcript of The marketing mix
The Marketing Mix
What is the marketing mix?
Combination of key activities to sell a product 4 elements:
Must consider all 4 elements in marketing strategy
Price Product Place Promotion
What is a product?
Intangiblefeatures
Tangiblefeatures
Branding
Packaging
Positioning
Product
Product
A product is a good, a service, an idea or any combination of the three which can be offered in an exchange
Not just an item on a shelf in a shop Consists of tangible and intangible features
Ipod: a good Advertising campaign for Apple Ipod: an idea Sales assistant in Myer who sells you the Ipod: a service
total product concept
Total product concept
The product is a combination of tangible & intangible features
Intangibles: ServiceSafetyWarrantyPrestigeConvenienceDelivery
Total product concept
How do consumers choose between similar, mass-produced products?
Intangibles:Reputation Advice Financing WarrantyMaintenance
Product positioning
Product imageHow a customer views the product
compared to competitionSony vs Teac
Nike trainers vs Target-brand trainers
Evoking an image of quality
Branding
names and images used to identify a product and distinguish it from competitors
Brand = logo and/or name
Branding
Powerful marketing toolLeverage for emerging productsExpected level of quality
Packaging
1. Functional – protects and stores product2. Branding – attracts consumer,
communicates information
Customers are prepared to pay for good quality packaging, even if this adds to the cost of the product.
Product life-cycle
Minimal product variation, basic quality
Increased product variation, improved quality
Maximum product variation, excellent quality
Few product variations, drop in quality
Pricing
The next of the 4 Ps
What is price?
Price is the value a product holds in monetary exchange
Businesses use price to: make a profitcreate a brand push a competitor out of market
Price
Plays an important role in influencing consumer choice
Used by consumers to measure quality – price creates perceptions of quality.Mercedes
Product life-cycle - Price
High price to recover costs. Or low to gain market share.
Price softens: gain popularity and sales rise
High price competition
Scarce: rising prices. Saturated: falling prices.
Cost-based methodMarket-based methodCompetition-based method
Methods of pricing
Amount added to cost of producing the product
Profit Margin: % added on top of cost priceFixed Profit Amount: specific $ return added
to cost price.
Cost-based method
Determined by market forces of demand and supply
Impossible to predict what the market price for a new product will be.
Businesses continually alter prices to stay in touch with market forces
Market-based method
Similar mass-produced productsPrices set according to competitors’
products – same, higher or lowerObjective: to gain market shareHigh degree of intangible product
differentiation Xbox, Playstation
Competition-based method
Pricing strategies
1. Price skimming New products Suppliers aim to sell to the
top end of the market Set price at a high level and
reduce over time Only successful with little or
no competition
Xbox first introduced at $999.95 in Feb 07.
Now available for $399
Pricing strategies
2. Penetration pricing Introductory low price
compared to competitors Gain sales quickly and
public/media interest Encourage trial and hope
for repeat purchase
Risks Enter market at a
loss hoping for long term revenues
Customers get used to low price and refuse to buy when price rises
Low price may create perception of low quality
Pricing strategies
3. Loss leader Price set so low that
competitors have to follow for fear of losing significant market share
Attracts customers into a store in the hope they will purchase other full-priced products
Pricing strategies
4. Price points Used when one base product/service
reaches numerous target markets. Base price set, but
additional features offered.
Higher prices charged for extra features Suzuki Swift currently advertised
at $15,990. Optional Extras include tinted windows, metallic paint, auto gearbox, DVD player, rear spoiler, alloy wheels
Place – the next P…
Getting the product to the customer
Price Product Place Promotion
Place
How does a product or service get to customers in the right place and at the right place?
Another word for place: DistributionPhysical distributionDistribution channels
Physical Distribution
Direct: manufacturer consumerManufacturer direct to consumer
Indirect:manufacturer retailer consumer
ormanufacturer wholesaler retailer consumer
Intermediaries involved in distributing products from manufacturer to consumer
Purchase goods from manufacturers to sell on to retailers. Store goods in warehouses. Deliver stock to retailers.
Sell to the end customer. Department stores, supermarkets, discount shops, franchises, convenience stores, market stalls
Physical Distribution
Purchase crate of apples directly from farm…
DIRECTmanufacturer consumer
Physical Distribution
Purchase a bag of apples from Elmer’s Fruit Barn…
INDIRECTmanufacturer retailer consumer
Physical Distribution
Distance between manufacturer and consumer
What are the costs involved?Convenience for customersIs the channel appropriate to the product?
Product life-cycle - Place
Sparse coverage
Good coverage
Wide coverage
Sparse coverage
Product is available through numerous outlets.
Usually used for low margin, high volume products and everyday purchases
Aim: Maximise sales through maximum market exposure
Channels – Intensive distribution
Supermarket
Corner store
Convenience store
Product is available through selected outlets.
This distribution choice provides greater control over the quality of service provided at point of sale.
Mambo clothing – where is it available?
Channels – Selective distribution
Product is only available through a limited number of outlets.
This choice of distribution is vital in the creation of a status or prestige related product.
Bose speakers – only 1 store in Brisbane, limited stock in Myer/David Jones
Ferrari Cars – can you buy a Ferrari in Brisbane?
Channels – Exclusive distribution
Promotion
Getting the word out about your product or service
Price Product Place Promotion
Promotion is the act of communicating with markets about a product or service.
Introduce Create interest Reinvigorate
Advertising Public relations Sales promotion Direct Marketing
Promotion
Product life-cycle - Promotion
Create primary demand & awareness
Develop selective demand
Heavy promotion spending. Focus on intangibles
Minimal promotion
Advertising
Paid non-personal communication about products and services.
Relatively low cost compared to other forms of promotion
Hit and miss, not personal Easy for consumers to ‘switch off’
Advertising - media
Advertising campaigns use media channels to communicate their messages
Examples: TV, radio, newspapers, magazines, billboards, direct mail,
yellow pages, internet, email, mobile phone Choosing a media channel dependant on your target
market
PR is focused on improving relationships between a business and its stakeholders, and improving the business’ image.
Serves 2 purposes: Free marketing tool through the general media –
increase sales, enhance image/reputation, create word-of-mouth.
Damage control – improve business’ image in the wake of negative public opinion, and release correct information to clarify facts.
Public Relations
Sales promotion
Enticing customers to purchase a product or service by offering an added extra.
Free samples, enter competition, special prizes and discounts, coupons, point-of-sale display.
Media channels: Supermarkets, magazines, TV programs
Direct marketing
Uses mail, phone or email to directly contact potential customers.
Mail-order catalogues, internet shopping sites,
Promotional staff - hand out leaflets and engage customers
Telemarketing Mailing lists to reach desired customers Very targeted form of promotion