Presentation on theme: "The Marketing Mix To market or sell its product successfully, a business must develop a strategy based on four key elements. PRODUCT PRICE MARKETING MIX."— Presentation transcript:
1The Marketing MixTo market or sell its product successfully, a business must develop a strategy based on four key elements.PRODUCTPRICEMARKETINGMIXPROMOTIONPLACEHow the elements are combined in the marketing strategy is called the marketing mix
3ProductThe actual item that a customer purchases, including the packaging, image, guarantee and after-sales service.It is the means by which a business provides benefits for its customers. It is useless unless it provides a benefit for the user.A good or service that the business is trying to sell must be one that actual or potential customers want, meets their needs and they are willing and able to buy.Tends to be most important part of marketing mix as it determines price, how it will be promoted and where it is sold.
4Core, actual and augmented product Level 1 - Corethis is the basic product or service - consists of the benefits customers are provided with when they buy and use a productLevel 2 - ActualThis consists of 5 elements - brand, quality, styling, features and packaging. These elements make up the product conceptLevel 3 - AugmentedThis includes additional features which help to enhance the product’s attractiveness and give a competitive edge - extended warranty, after-sales service, 0% credit
5Product Life CycleIn a modern industrial society changes are continually occurring in the market place.Technological developmentsFashionPolitical pressuresEconomic circumstancesMany other factorsThe consequence - products sooner or later become obsolete!
6Product Life CycleChanges dictate that their will always be demand for new products while, at the same time, others will be in decline.Product life cycle helps organisations anlalyse process by which products emerge, grow, stabalise and decline over time.
8Product Life Cycle Development Introduction Product undergoing research & developmentCostly and time-consuming periodDevelopment of prototypes & extensive testingNo revenue generated and high costsIntroductiongrowth slowvolume of sales lowlimited awareness of productnecessary to create demand - heavy advertisinglosses made
9The Product Life Cycle Growth Maturity higher product awareness rapid increase in saleslittle competitionhighest unit profitsMaturityfully established productsales level outmore competitionnew marketing strategy required to hold market share (cut prices, increase advertising)development costs should have been paid back and product at its most profitable
10The Product Life Cycle Saturation Decline Supply starts to outstrip demandDeclinesales and profit in declineproduct ‘old’new products enter marketconsumers may switch loyalty
11Marketing Task 1 Describe the three levels of product. (3 marks) Draw the product life cycle.(4 marks)Distinguish between the growth phase and the decline phase of the product life cycle.(2 marks)
12Solution Question 1The core product is the basic product or service and consists of the benefits customers are provided with when they buy and use a productThe actual product is what the consumer actually buys and consists of elements such as brand, quality, styling, features and packagingThe augmented product includes additional features which help to enhance the product’s attractiveness and give a competitive edge - extended warranty, after-sales service, 0% credit
13Solution 3During the growth phase, there is little competition from rival businesses whereas during the decline phase, new products are entering the market.During the growth phase, there is a rapid increase in sales whereas in the decline phase, sales have started to fall.During the growth phase, unit profits are high whereas during the decline phase, profits have started to fall.
14The exceptions to the rule…….. Some brands seem to go on for ever without any sign of decline:OxoBovrilHovisPersilHeinz Baked BeansKelloggs CornflakesSmarties
15Extension strategiesMethods employed to prolong life of the product and stop them going into decline stage - may lead to periods of sales growth.Promoting more frequent use of productDeveloping new markets for existing productsFinding new uses for existing productsDevelop a wider range of productsDeveloping style changesAltering packaging to appeal to different marketChanging channels of distributionChanging pricesAltering methods of promotion and advertising
16The Product Mix/Portfolio/Range A firm’s product mix or portfolio is the range of products that it produces.Very few single-product organisationsNo need for a direct relationship between items in an organisation’s product mix.e.g. Unilever - large multinational organisation with approx 400 brands worldwide. 40 in UK including Persil, Domestos, Birds Eye, Lynx, Knorr & Slim-Fast.
17Advantages & Disadvantages of a Product Mix Spreads risksMeets needs of different market segmentsIncreases profitsRaises profile of firm to become market leaderDisadvantagesIf firm only produced one product and it failed, firm would fail.
18The Product Mix/Portfolio/Range Doesn’t make sense to wait until products go into decline before launching a replacement.Loss of sales & profits.Launch new products before existing ones become unprofitable.Different stages in the life cycle allows profit levels to be relatively stable.Profits can support development and launch of new products.
20Marketing Task 2Explain why a good product mix would help a business to remain successful(3 marks)Explain how an organisation can extend the life of a product.
21SolutionThe business can spread the risk of failure among a range of products which means that should one product fail, they would have other profitable backups to take the financial impact.Profit levels will be more stable and easier to manager as the business does not have to contend with financial peaks and troughs which makes it difficult to budget.Profitable products can support the development and launch of new products as they profits can be reinvested into this area rather than the business having to seek external sources of finance which could be risky.
22SolutionA business could extend the life of a product by changing the price of it. If it reduced the price, it could lead to an increase in sales and sale revenue as more people are likely to buy it.They could also extend the life by developing new markets for existing products. This would give the business access to a whole new market segment which would in turn increase sales.They could also update the packaging or alter the packaging to appeal to a different market. This could renew the products popularity amongst a different market segment e.g. teenagers, and extend the products life.
23Product line The product mix may contain product lines. These are groups of products that are similar.For example, Procter & Gamble manufacture a hair care product line that includes Pantene, Herbal Essences and Head & Shoulders.
24Costs & benefits of having a product line Spreads the riskGives consumers impression that organisation is a specialist producer in particular line of productsAllows new products to be launched as existing customers willing to try themCostsBad publicity for one product could affect sales across rangeComplicated operations with different machinery and processes for each different product
25Adding new product lines Tends to happen over time:In response to new trends e.g. healthy eatingTo make more profitsTo show innovation to retailersTo add interesting new tastes for consumersProducts may also be dropped to increase profitability if product line is too long!
26Keeping product line fresh… Important that organisations invest in research & development.New products give competitive edgeImprove quality and safety of productsIf product first on the market, allows monopoly situation for a period and higher prices.Very important to meet changing needs of customers
27Product innovationDevelopment of new products is essential if businesses are to replace those in decline.Generation of idea from research or brainstormingAnalyse ideaProduce a prototype and test itTest marketAdapt product - solve any problemsLaunch productExtremely high failure rate - 50:1 and costs huge sums of money and time
28Marketing Task 3 Distinguish between a product mix and a product line. Explain the costs and benefits of a business having a product line.(4 marks)
29SolutionA product mix is the range of products that a business produces whereas a product line is a group of products that are similar.
30SolutionHaving a product line allows new products to be launched as existing customers are more willing to try them which increases the chance of them being successful.It also spreads the risk because if one product is unsuccessful and ultimately fails, the business has other lines to fall back on.A cost of having a product line is that any bad publicity for one product could have a detrimental affect on affect sales across range.Another cost is that complicated operations with different machinery and processes for each different product would have a huge financial impact on the business.
32Branding This can be a very successful marketing tool. Business chooses a word or symbol then registers them so they can only be used on its products.A brand is a product with a ‘personality’The aim of branding is todistinguish a product from it’s competitorsmake it instantly recognisable to the consumer
33Well known brands Name of the company Name of the product Baxters Oxo CadburyHeinzName of the productMr KiplingFairy
34Benefits of branding Allows instant recognition Increased customer loyaltyRepeat purchasesStable level of demand allows for better production planningPossibility to charge premium pricesOpportunity to enter new marketsCan convey image to consumer - ‘snob value’Money value of brand as an intangible asset on balance sheetEasier to launch new products on strength of the brand name.
35Drawbacks of branding Takes a great deal of time to establish High promotion costs to establish and maintainBad publicity can affect whole brandPossibility of imitators and ‘fake’ products - premium priced goods most vulnerableDanger of fashion change
36Marketing task Explain the costs and benefits of branding. (4 marks) (ID then explain why it is a cost or benefit)
37Solution - PositivesBranding allows instant recognition of the product This is a benefit because consumers are more likely to buy the product instead of a competitors ensuring sales are maintained.A branded product enables a business to charge premium prices as it is seen by the consumers as being of higher quality and thus worth paying a little bit extra for. This should increase turnover/profitabilityBranding encourages increased loyalty from consumers who are less likely to be enticed away by rival products, in turn ensuring sales remain high.
38Solution - NegativesIt takes a great deal of time to establish a brand name and during this time, sales may remain low which could have a detrimental financial impact on the business. Time could be better spent elsewhere.There is also a danger of fashion changing and the product no longer being regarded as worth having. This in turn would lead to reduced demand and reduced sales. Money spent establishing the brand would be wastedHigh promotion costs to establish and maintain the brand could outweigh the possible income from sales and put negative financial pressure on the organisation.
39Types of brands There are 2 main types of brands: Manufacturers: Heinz Own brands: Tesco, Boots, Sainsburys
40Unique Selling Point (USP) A feature that allows a product to stand out from its rivals.Should offer the consumer some unique benefit that may motivate them to switch brands.e.g. Dyson
41Own brandsMost major supermarket and retail chains offer a wide range of products under their own brand name.High-volume selling products would be considered.Retailers have reputation for value and/or quality e.g. Sainsburys, BootsOffers customers an additional choice.
42Benefits & costs of Own Brands They can have goods made to their specification and priceOwn-brands often cheaper and attract more customers and therefore sales.CostsMay be seen as lower quality than established brandBad publicity will be associated with the supermarket or retailers name, not the manufacturer
43Marketing Task Describe the advantages of selling: branded and own label goodsfor the supermarket and its consumers(4 marks)
44Solution Branded goods Consumers perceive these goods to be of higher quality and are more likely to purchase them which will increase the supermarkets sales.Consumers will enjoy the image of using branded products which give an additional ‘snob’ value.Own label goodsBy selling own label products, the supermarket may be able to have a higher mark up as they may be able to resource products cheaper and do not have to spend as much on packaging.Consumers will benefit as they will have access to cheaper alternatives.