Marketing 11.1

Chapter Overview The elements of the marketing mix The role of the customer The importance of the product in the marketing mix The product life cycle Types of pricing strategies The price elasticity Promotion methods Channels of distribution Using the internet in marketing The effective marketing mix

The Marketing Mix Comprises all the elements associated with a product that affect whether or not the customer decides to buy it. The four main P’s: Price Product Place Promotion

4 Marketing Mix: Product + Core Product + Financing Terms + Delivery Options = “Total Offering” The total offering is created by a partnership between the buying organization and the marketing organization. The process creates an augmented product that is specific to the buying unit’s needs and maximizes the value creation capabilities of the marketer.

5 Marketing Mix: Price Price… is the mutually agreed-upon amount that satisfies both sides in an exchange. often varies from fixed price, with more special discounts and allowances (in comparison to consumer markets). may involve things other than a one-time price payment (such as commissions). Price is the measure of value exchanged and is determined by the market (not by costs).

6 Marketing Mix: Place Place is about getting the product to the customer in order to maximize economic utility. Economic Utility Form Utility (having the product in the right size package, quantity, etc.) Time Utility (having product available at useful times) Place Utility (getting the product to the customer where & when it is expected) Possession Utility (making it easy to transfer ownership to the buyer)

7 Marketing Mix: Promotion Consumer marketing Emphasis is frequently on advertising. Communication with customers is often a monologue. Relationship is often brief. Business-to-business marketing Emphasis is frequently on personal selling. Communication with customers should be a dialogue. Relationship is often long-lasting. Business-to-business marketing requires a different emphasis on different parts of the promotional mix

The other 3 P’s Extended marketing mix can include: People – Well-trained, well-informed, polite staff can influence people to buy from one shop from another. Physical Environment – Layout, décor and parking can be important to a person. Especially in big cities. Process – Ease of ordering and paying for a product. (Amazon)

Homework Worksheet

Marketing 11.2

The Role of the Customer (the 4 C’s) Cost Convenience to the customer Communication with the customer Customer solution

The Role of the Customer (the 4 C’s) Consumer wants and needs (vs. Products) You can't develop products and then try to sell them to a mass market. You have to study consumer wants and needs and then attract consumers one by one with something each one wants. Author of the movie Field of Dreams, J.P. Cancilla may have exclusive rights to the phrase "build it and they will come". In most cases, you have to find out what people want and then "build" it for them, their way.

Cont. Cost to satisfy (vs. Price) You have to realize that price - measured in dollars - is one part of the cost to satisfy. If you sell hamburgers, for example, you have to consider the cost of driving to your restaurant, the cost of conscience of eating meat, etc. One of the most difficult places to be in the business world is the retailer selling at the lowest price. If you rely strictly on price to compete you are vulnerable to competition - in the long term.

Cont. Convenience to buy (vs. Place) You must think of convenience to buy instead of place. You have to know how each subset of the market prefers to buy - on the Internet, from a catalogue, on the phone, using credit cards, etc. Lands End clothing, Amazon Books and Dell Computers are just a few businesses who do very well over the Internet.

Cont. Communication (vs. Promotion) You have to consider the communication instead of promotion. Promotion is manipulative (ouch!) - it's from the seller. Communication requires a give and take between the buyer and seller (that's nicer). Be creative and you can make any advertising "interactive". Use phone numbers, your web site address, etc. to help here. And listen to your customers when they are "with" you. Developing a brand takes into account these considerations. Developing a brand is developing a promise. When you take into consideration the "4 C's" noted above you begin the process of developing a brand!

Marketing 11.3

Product The core benefit that the product meets. Companies need to keep track of their competitors and be aware of new technology that might affect their business. The nature of the product itself Product should be the best for that particular market. Markets that don’t have lots of energy might want low energy appliances. The augmented features. Guarantees, sales servicing.

Product Differentiation A marketing process that showcases the differences between products. Differentiation looks to make a product more attractive by contrasting its unique qualities with other competing products. Successful product differentiation creates a competitive advantage for the seller, as customers view these products as unique or superior. Why is your water better then other water – our water only comes from this lake.

Cont. Product differentiation can be achieved in many ways. It may be as simple as packaging the goods in a creative way, or as elaborate as incorporating new functional features. Sometimes differentiation does not involve changing the product at all, but creating a new advertising campaign or other sales promotions instead.

Homework Read 11.4 and 11.5 for tomorrow. Vocab Quiz on Monday Weeks 1-4