Marketing mix

The marketing mix The marketing mix is also known as the 4Ps: Product Price Place Promotion

Product

‘ Product’ refers to the functions, features and design of a good or service Should satisfy the needs of the customer May have a Unique Selling Proposition (USP) ‘Product’ also includes a range of factors such as packaging, quality, warranties, after-sales service and branding Products and brands may suggest certain images e.g. sporty, sophisticated, value

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

Stages of the product lifecycle Development – high costs but no sales Launch – high expenditure on promotion and product development, low sales Growth – sales increase and product should break even Maturity – sales stabilise, less expenditure on promotion needed, revenue & profit should be high Decline – sales decline, extension strategies can be adopted or the product withdrawn

Extension strategies Extension strategies should maintain or increase sales. They include: Modifying the product Reducing the price Adding a feature Promoting to a different market sector Extension strategies

New product development (NPD)

Reasons for new product development New product development (NPD) is the process which identifies, develops & tests new product opportunities NPD is carried out for a number of reasons: To replace declining products To add to the current portfolio To fill a gap in the market To maintain competitive advantage To compete with rival products To attract new customers

Invention & innovation New products may be developed as a result of invention or innovation. Invention – the formulation of new ideas for products or processes Innovation – the practical application of new inventions into marketable products or services

Market & product orientation Where do the product ideas come from? Market orientation – new products are developed based on customer wants which are found through market research Product orientation – ideas are developed from scientific investigation and technical research within the company

Price

The price of a product will depend on: The cost to make it The amount of profit desired The price competitors charge The objectives of the business The price customers are willing to pay  Is there a high demand?  Is demand sensitive to changes in price?

Pricing strategies and tactics SkimmingLaunching with a high price when there is little competition, then reducing the price later. Often used with technology. PenetrationA low price is charged initially to penetrate the market and build brand loyalty. The price is then increased e.g. introductory offers on magazines. CompetitiveA similar price is charged to that of competitors’ products. Loss leaderProducts 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.

Pricing strategies and tactics PsychologicalA price is set which customers perceive as lower than it is e.g. £39.99 instead of £40. DifferentialDifferent prices are charged for the same product e.g. bus fares for children are cheaper than adult prices. Cost plus pricing An additional ‘mark-up’ is added to the cost of producing a good or service. Strategic pricing Price is set to position an exclusive product or brand to make it more desirable for consumers, generate demand or demonstrate value

Place

Products 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 The use of e-commerce (promoting and selling on the internet) has grown massively over the last few years

Channels of distribution Manufacturer Wholesaler Retailer Consumer

Promotion

The aims of promotion are to: Raise awareness Encourage sales Create or change a brand image Maintain market share

AIDA Promotional campaigns often take into account the AIDA model: A wareness - raising awareness of a product I nterest – exciting interest in the product D esire – creating desire for the product A ction – encouraging a purchase

Types of promotion Above-the-line promotion This uses advertising media over which a firm has no direct control e.g. television, radio and newspapers Below-the-line promotion This uses promotional media which the firm can control e.g. direct mail, sales promotions and sponsorship

Above-the-line promotion Above-the-line promotion: Uses paid-for mass media for advertising Is often used to inform an audience of a product and persuade them to purchase Can reach a very large audience May reach people beyond the target market Is difficult to measure in terms of its impact Tends to be more expensive than below-the-line methods

Media used in above-the-line promotion Newspapers & magazines Television Radio Cinema Internet Billboards and other types of outdoor media

Below-the-line promotion Below-the-line promotion: Tends to be less expensive than above-the-line methods Is generally used for short to medium term incentives Can be used to target specific audiences or even individuals Is often aimed at the consumer (as opposed to business customers)

Methods of below-the-line promotion Methods of below-the-line promotion include: Sales promotions e.g.  Discounts  Buy one get one free (BOGOF) Competitions Sponsorship Public relations e.g. through press releases Direct mail Point-of-sale displays

Promotional activities Advertising e.g. TV, billboards and internet. Sales promotions e.g. loyalty cards, BOGOF, discounts & free gifts Sponsorship – a business pays to be associated with another firm, event or cause Direct mailing – promotional material is sent to potential customers by post/ Public relations – building the relationship between the firm and the public by enhancing its reputation

Promotional mix Most businesses use a combination of different promotional activities. The chosen promotional mix will depend on: Cost Target market Product Competitors