The MAANZ MXpress ProgramThe Marketing Mix Developing Value OffersDr Brian MongerCopyright May 2013.This Power Point program and the associated documents remain the intellectual property and thecopyright of the author and of The Marketing Association of Australia and New Zealand Inc. Thesenotes may be used only for personal study associated with in the above referenced course and not in anyeducation or training program. Persons and/or corporations wishing to use these notes for any other purposeshould contact MAANZ for written permission.
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Dr. Brian Monger• Brian Monger is the CEO of MAANZ International and a Professional marketer and consultant with over 40 years experience.MAANZ International
MAANZ InternationalThe marketing mix strategy• To achieve the goal of developing desirable marketing exchanges, marketing managers are responsible for developing and managing an effective marketing strategy or business development plan. • A marketing strategy sets out a plan for the best use of the organisations activities and resources to meet its objectives. Specifically, this strategy will encompass selecting target segments, understanding their value perceptions and creating an appropriate marketing mix of value offer elements Product, Price, Promotion and Placement (create/configure value; communicate value and deliver value) that will satisfy those target groups.
MAANZ InternationalThe marketing mix strategy• The marketing mix which is the core of the marketing strategy consists of four major decision variables the most common version being: Product, Price Promotion, and Placement (distribution). The newer version is: Create/Configure Value; Communicate Value and Deliver Value (see topic 1) Both are very similar in their approach. These components are called marketing mix decision variables because a marketing manager decides what focus on each component to use and in what amount.
MAANZ InternationalThe marketing mix strategy• The marketing mix represents the parameters that a marketing manager can control, (subject to the constraints of the operating/marketing environment). • The objective is to create a proposition or offer to customers in the target segment of the best perceived value and generate a positive response.
MAANZ InternationalThe Variables of a Marketing Mix• Achieving marketing objectives requires a strategy that includes a number of different elements ‐ the various parts of a management model called the marketing mix or 4 P’s. Calling it a mix reminds us to create the right balance of the different elements that will be used.
MAANZ InternationalThe concept of the marketing mix• The concept of the "marketing mix" became popular after Neil H. Borden published his 1964 article, The Concept of the Marketing Mix. Borden began using the term in his teaching in the late 1940s after James Culliton had described the marketing manager as a "mixer of ingredients". • The ingredients in Bordens marketing mix included product planning, pricing, branding, distribution channels, personal selling, advertising, promotions, packaging, display, servicing, physical handling, and fact finding and analysis. • Eugene McCarthy later grouped these ingredients into the four categories that today are known as the 4 Ps of marketing. The marketing mix decision variables ‐ product, distribution, promotion, and price‐are factors over which an organisation has control.
MAANZ InternationalThe four Ps of the traditional marketing mix1. Product ‐ A product can be anything a prospective customer considers to be of value, a good, a service, a person a place or an idea. 2. The product variable is the aspect of the marketing mix that deals with satisfying a buyers wants and designing a value offering with the desired characteristics. It also involves the creation or alteration of packages and brand names and may include decisions about guarantees and repair services.
MAANZ International2. Price• Price is a critical component of the marketing mix because consumers are concerned about the value obtained in an exchange. Price often is used as a competitive tool; in fact, extremely intense price competition sometimes leads to price wars. • Price can also help to establish a products image. Deciding on a pricing strategy. A more useful concept is to focus on the markets view of Payment or Cost to the user. The price variable relates to activities associated with establishing pricing policies and determining product prices.
MAANZ International3. Promotion• Promotion is usually composed of a "promotional mix, which includes Advertising Personal Selling Sales Promotion and Publicity (Marketing Public Relations). Some time Direct marketing is also singled out as a separate element. • The modern approach to promotion is to see it as Communicating Value and incorporating it in the concept of Integrated Marketing Communications. The promotion variable relates to activities used to inform one or more groups of people about an organisation and its products. Promotion can be aimed at increasing public awareness of an organisation and of new or existing products. In addition, promotion can serve to educate consumers about product features or to urge people to take a particular stance on a political or social issue. It may also be used to keep interest strong in an established product that has been available for decades.
MAANZ InternationalFigure 1 ‐ the four Ps (variables) of the marketing mixPromotion PricePlace Product
MAANZ InternationalFigure 2 Three different marketing mixes (one for each target segment)PromotionPriceProductPlacePromotionPriceProductPlacePlaceProductPricePromotion
MAANZ International4. Place or Placement• This is about Delivering Value and focuses on distribution. It looks primarily at logistics, and channels of distribution and achieving convenience or accessibility value for the customer. To satisfy consumers, products must be available at the right time and in a convenient location. • In dealing with the distribution variable, (also known as Place or Placement) a marketing manager seeks to make products available in the quantities desired to as many customers as possible and to keep the total inventory, transport, and storage costs as low as possible. A marketing manager may become involved in selecting and motivating intermediaries (wholesalers and retailers), establishing and maintaining inventory control procedures, and developing and managing transport and storage systems.
Perhaps we need more P’s?• Over the past four decades, many folk have tried to add in more “P’s”• Most do not seem to actually understand what a Marketing Mix Strategy is about• None appreciate that a good working model does not need to get bigger to make it better• The 4 P’s model has very effectively stood the test of time. It works well• Certainly each element of the marketing mix can be extended in the areas (such as those which follow) to give emphasisMAANZ International
MAANZ InternationalPerhaps we need more P’s?• A number of writers have suggested the possible extension of the 4 Ps. For example the fairly common 7 Ps approach which includes: • People: ‐ Particularly in service centre value offerings, people (Employees, Management) as well as the participating consumers often add significant value to the total offering.• Process: Procedure, mechanisms and flow of activities by which services are consumed (customer management processes) are an essential element of the marketing strategy.
MAANZ InternationalPerhaps we need more P’s?• Physical Evidence: The tangible elements of the environment in which the value offer is delivered. It is about the tangible aspects (things that can be seen and touched) that communicate and deliver the intangible value (the service experience of customers).• While acknowledging that these additional 3 elements can be useful concepts, they are in fact already accommodated in the existing, simpler 4 P’s marketing mix model. There have even been suggestions of a 17 P model and the Jefkins model had 20 elements: (Jefkins F "Modern Marketing" ISBN 0 7121 0853 X).
MAANZ InternationalAnother approach ‐ the 4 Cs• Place becomes Convenience• Price becomes Cost to the user• Promotion becomes Communication• Product becomes Customer motivation• These Cs perhaps reflect a more client‐oriented marketing philosophy. The Cs are also not nearly as memorable as the P‐words.
MAANZ InternationalFigure 3 The Marketing MixProduct Price/PaymentDelivering ValuePlace(ment)Communicate ValuePromotionEnvironment InfluencesEnvironment InfluencesConstraints ConstraintsThe Value OfferThe MarketingMixTargetSegment
MAANZ InternationalMore Ps for a Social Marketing Mix?• Publics• To be most effective when planning and managing a social marketing campaign, one must take into account all of the people who can affect the success of the program. This includes the external publics—the target audience, groups that influence the target audience, policymakers, the media, and others outside the organisation. Just as importantly, not‐for‐profit social marketers must involve their internal publics in the development and preparation for the program implementation. • These are the people within the organisation—everyone from the Board members and management staff who must approve the plans, down to the receptionist who answers the phones and needs to know what to do when someone calls in response to the campaign.
MAANZ InternationalPartnerships• Many social marketing issues are so big that one organisation cannot address them alone. Potential partners include organisations (other not‐for‐profits, government agencies and businesses) that have one or more of the following attributes: similar goals to yours, access to the target audience, credibility with the target audience, interest in sponsorship of the program, or resources that fill gaps in the organisations capabilities.
MAANZ InternationalPolicy• Governmental or organisational policies can act as a catalyst for social change on a large scale. When policies are put into place that provide an environment of support for a particular behaviour, individuals are much more likely to sustain that behaviour change. • For example, workplace non‐smoking policies make it easier for smokers to quit by ensuring that they do not see others lighting up around them and removing those social cues to smoking.
MAANZ InternationalFigure 4 Combining the Marketing Mix with the Buyer/User PerspectiveProductPromotionPricePlaceSolution/ValueConvenience CommunicationCost/InvestmentValueMarketingMix
MAANZ InternationalDeveloping marketing mixes• A marketing mix is specific to each target segment. That is, since each segment is different to the others it will need a Value offer that is different for each segment. If it is possible to use exactly the same mix for two segments, the likelihood is that either the segmentation parameters have gotten confused or that they are in fact not separate segments.• The marketing mix is the combination of elements that make up the entire marketing process. It requires the right combination, so be careful when putting it together.
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