Marketing Mix The Marketing Mix is a term used to describe the combination of tactics used by a business to achieve its objectives by marketing its products or services effectively to a particular target customer group. It is also referred to as the 4 Ps. Product, Price, Promotion and Place, or the 7 Ps the 4 Ps with the addition of People, Process and Physical Evidence.

How is the Marketing Mix used? Can be used by new businesses to develop ideas about how and where to market a product or service. A very small business start-up may look no further than leaflets to be handed out or posted in neighbours front doors In larger businesses there will be a maximum budget and individual marketing managers who look at each ingredients of the mix. To be effective each ingredient needs to be considered. Managers try to find an ideal combination and balance between cost and effectiveness

Marketing Strategy Balanced Marketing Mix PriceProductPlacePromotion

Price - Theory Price generates profit so is an important element of the mix. You need to consider – What your target group of customers are prepared to pay – Degree of quality – Value for money What it costs you to produce it – What you need to charge instead of what you could charge – If priced wrong you could find a situation where the more you sell means the more you lose What your competitors charge – Important to compete otherwise customers will not buy your product

Price – Customer Sensitivity to Pricing (Theory) Customers have an idea of the correct price for a product. They balance price with other considerations. These include: – The quality of the product – higher quality products can carry a price premium this can be real or perceived quality – How much they want it – all purchasers are personal; customers will pay more for goods they need or want – Their income – customers buy products within their income range; consumers with more disposable income are less concerned about price.

Price – Strategies (Theory) New Products: Skimming Penetration Explain and then Include Advantages and Disadvantages please! Existing Products: Price Leader Price Taker Tactics: Psychological Pricing Loss Leaders Special Offer Pricing Explain each

Price Taker SkimmingPrice Leader Penetration New ProductsExisting products Level of Competition Low High Factors affecting choice of pricing strategy

4Ps For Your Product - Price Set the Price Explain the strategies used Does your price cover cost? How does your price compare to your competitors? Does your price link in with your marketing objectives? How will your pricing strategy affect the product’s image, does that link to your objectives and target market? Will your product’s price change throughout its lifecycle.

Tasks – Complete 6, then 1 and begin 2 6 and 1 – Explain what the marketing mix is. Use the slides and other business studies sites to help you (Bized/ Times100/ Business Studies Online) -Explain the 4Ps. 2 – Write up the theory on price, and pricing strategies. - Apply the theory to your product (see previous slide).

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