Unit 3 - Marketing
Creating Strategies that meet Customer Needs
The Marketing Mix
The marketing mix is basically combining the 4 aspects of an organisation’s
marketing policy in order to meet its objectives. The 4 aspects of an organisation’s
marketing policy can also be referred to as ‘The 4 Ps’, these include:
Influences on Pricing
There are two types of pricing decisions to be made:
• Setting a price for a completely new product
• Setting a price for an existing product
When an organisation has decided to develop and market a new product, or are
producing and marketing an existing product, there are a number of internal and
external factors that have an influence on the pricing strategy used:
• The objectives of the organisation
• The pattern of direct and indirect costs
• Existing prices of similar and other products produced internally by the
• The strength and behaviour of the organisation’s competitors
• The attitudes and influences of others involved in the chain of production and
• Pressure from suppliers of raw materials and components used in the product’s
• Elasticity of demand for the product
• Motivation of customers
• Existing and anticipated government policies
• General conditions in different markets
Unit 3 - Marketing
This pricing strategy is used by organisations that want to maximise their profits.
Price = Cost of production + Mark-up (Profit)
For this method to be successful all the organisation’s costs need to be accurately
accounted for. However, a disadvantage of this pricing strategy is it ignores the
demand for the product and competition.
This is where prices are set that reflect the consumers’ views of the product. E.g.
Champagne prices would be set quite high as if the prices was low consumers would
think that the product was of a poor quality and therefore not buy the product.
This pricing strategy is where prices are set coordinating with their perception of what
consumers are prepared to pay for the product. Meaning prices will go up and down
according to demand. E.g. Easy Jet sell flight seats very cheaply when demand is low.
This is where the organisation sets their prices roughly relating to their competitors’.
This strategy depends on the extent of the competition and the number of consumers.
This method is where the organisation purposely sets their prices low to make their
product or service competitive. Once the company has established itself the
organisation may decide to start to slowly raise prices. This method is effective if the
demand for the product or service is elastic meaning that customers are tempted away
from the usual product or service by the cheap price.
This pricing strategy can be described by the term ‘skim the cream’. The price is set
high to take advantage of people’s desire for the product. This method is often used in
fashion where a high fashion item is sold at an extremely high price. This is effective
if the price is inelastic.
Unit 3 - Marketing
This is where discounts are offered below the normal price, this sort of pricing is used
in business-to-business transactions where the organisations will deal with the
supplier in the future. This is good for quickly boosting sales.
This strategy is where different prices are charged for the same product/service at
different times. E.g. mobile phone calls, public transport and holidays.
A product can either be a good or service provided by an organisation. A good is
tangible, meaning it can be touched and passed on to other people, e.g. trainers. A
service cannot be touched or passed on to others, e.g. a haircut; as once the service
has been performed it cannot be passed on to another person.
There are three different types of goods these include:
• Producer Goods, where an organisation manufactures a good for another
organisation to use in the production of their product, e.g. Pirelli may supply
the tyres for Ford cars.
• Consumable Goods, these are goods that are used up quickly, for example
food and toiletries are the ain areas of consumable goods.
• Durable Goods, these are goods that don’t need to be purchased on a regular
basis as they last for a long time, e.g. kitchen appliances such as dishwashers
and fridge freezers.
Adidas football boots fall into two categories, durable and consumable goods, as they
can last for a long time, but they can also last for a short amount of time depending on
how often they are used. For example, a person that plays football three times a week
would use up the product in a maximum of six months, which would fall into the
consumable goods category. Whereas someone that only plays football once a month
would probably be able to use the same pair for 3 or 4 years, which would fall into the
durable goods category.
Unit 3 - Marketing
There are several different method that organisations use to promote their products,
• Sales Promotion
• Point of Sale
• Direct Selling
• Direct Mail
• Public Relations
Advertising can be varied widely, from visual and audio advertisements to paper-
based ads. Generally, advertising is a public promotion of a product or service
through many different mediums, these mediums include:
Advantages of newspaper advertisements are the ads will get high exposure as lots of
people read newspapers, there will be even high exposure on national newspapers as
they are available to everyone in the country, so potentially the whole population
could see the advert. Secondly, a high scope of detail can be used, where a lot of
information can be input into the advert. In addition to these advantages, it can be
easily aimed at the right audience. For example, if the product being advertised was
an expensive, high quality pen, aimed at higher class people, then the ads would be
put in papers like The Times and The Independent, as these papers are read generally
by higher class people, therefore the ad would be placed in these newspapers. Also,
the timing that the adverts are published in newspapers is flexible, as newspapers are
produced on a daily basis and therefore ads can be put in on any day and at any time
Disadvantages of newspaper advertisements include, the advertisement may be in
black and white, meaning that it may lack impact. Also there is no movement in a
newspaper, therefore products cannot be demonstrated as easily as a TV
Advantages of flyers include lots of people will get to see them if they are put
up/given out in the right places, products and their price can be displayed on the flyer.
Finally, they can be very colourful therefore may have a high impact on potential
Disadvantages of flyers are if they are handed out a lot of people may just drop them
on the floor and not look at them, wasting the company’s money on what could have
Unit 3 - Marketing
been spent on another medium of advertising. Also, the amount of information that
can be put onto flyers is limited as they need to be eye catching and if there is too
much text on them they won’t appeal to people. Finally, they are only suitable if the
product/service is being aimed at a lot of people.
The main advantage of advertising in a magazine is that your product can be aimed at
a specific audience, for example if you wanted to advertise a computer game you
would put the advert in a specialist computer magazine, so that the audience the
product is aimed at are seeing the advertisement. Secondly, the advertisement will
have a long lifespan as most magazines are released weekly, monthly or bi-monthly,
therefore the advertisements will be viewed for a long period of time in comparison to
a newspaper, which is released on a daily basis. In addition to this, the advertisement
will be in colour, therefore will be more eye-catching than a newspaper
advertisement. Finally, if the magazine reviews the product as one of its articles then
this will be very good for sales if it receives a good review as the more good
information a customer receives, the more likely they are to buy the product.
Disadvantages of magazines include, the timing of the advertisements is less flexible
due to the fact that magazines are only released every week, month or 2 months
generally, as I mentioned above. Also, another disadvantage is the advertisement
doesn’t move, for the same reason as in the newspaper section.
Advantages of a billboard advertisement are it will be viewed by a lot of people as
anyone going past will see it, the product and its price can be displayed on it, it is high
impact as it is so big and can be in colour. Also, these advertisement are straight to the
point so that people know what the product is even when they drive past and don’t
have chance to properly look at the billboard.
Disadvantages of this method of advertising include it costs a lot of money, there is no
movement, with the odd exception, where movement is limited. Most people that
drive past billboards don’t pay much attention to them as they are concentrating on
The main advantage of a TV advertisement is the amount of people that will see the
advertisement, especially at peak times such as evenings and weekends. Secondly, the
product/service being advertised can be fully demonstrated. These adverts are also
very high impact as there is sound, movement and colour all at once. Also, adverts
can be aimed at the right type of people as if a company wanted to advertise a pair of
football boots they could advertise in between a football match as the right sort of
audience will be watching.
Disadvantages of TV advertisements are a lot of people either change the channel
when adverts come on, or go and do something else, such as make themselves
Unit 3 - Marketing
something to eat or drink. Also, people don’t pay much attention to the adverts in
Advantages of cinema advertisements include high quality picture and sound quality
on the adverts. The adverts can be aimed at specific categories of people depending
on what sort of film the advert is before. Also, the product/service can be
Disadvantages of cinema advertising includes, it is expensive and not as many people
see them as TV adverts. Also, people may arrive late for the film and miss the adverts.
Advantages of radio advertising include high exposure, as lots of people hear the ads,
also the advert can be aimed at different segments of people by using local radio
rather than national radio. People listen to radio advertisements while they are driving
and take in lots of facts. Finally, it is relatively cheap to advertise on the radio.
Disadvantages include, there is no visual content so products cannot be demonstrated.
There is a smaller audience than TV.
This method of promotion involves a series of planned events, which take place
throughout the year to attract customers, using special offers. There are two main
types of sales promotion:
This form of sales promotion is aimed at distributors (retailers), this basically covers
numerous offers on products sold to traders, such as trade discounts when bought in
bulk, bonuses and competitions.
The type of sales promotion is aimed at potential customers to attract them to buy a
product, this is done by offering customers things like:
• Special offers
• Free gifts
• Loyalty cards
• Loss leaders
• Free Samples
• Personality promotion
Unit 3 - Marketing
Point of Sale
Point of sale is also know as Product Presentation, and is basically the point where a
customer decides whether they are going to buy a product or not. There are a range of
point of sale techniques used to get customers to buy the product. These point of sale
techniques used include demonstrations of products, banners, posters, leaflets and free
samples. Point of sale displays are also used in areas such as entrances and checkouts
Sponsorship is where a one company gives money to another company, and the
company that pays the money has its name on the other company’s product/service
and advertises. E.g. Birmingham City are sponsored by Flybe, and this means that
Flybe promote themselves via having their name on the Birmingham City kit.
Purposes of this method of promotion include; to raise customer awareness of their
product/service, to gain more customer and increase their sales, and also create,
enhance and change the company’s image.
Companies can sponsor a range a different things such as; events, products, sports
teams, plays, films and TV programmes. Sponsorship is good for small companies to
get noticed and great for larger, established companies to make more money through
Advantages of sponsorship is if you sponsor a successful company then you will get
noticed more, e.g. Manchester United were in the Champions League final with over
2 billion viewers, therefore Vodafone, who sponsor Manchester United, will have
been seen by these 2 billion viewers. Also, sales can go up after a successful
A disadvantages of sponsorship is if you sponsor a company with a bad image, or who
are not successful, then your companies image will be in the same bracket as the
Branding is what companies use so that customers can identify their product from
another companies. Branding is also used to give off an image for the product or
company. This is done in a number of ways including:
• Slogans, e.g. the McDonalds slogan is ‘I’m lovin’ it’.
• Logos, e.g. Nike’s logo is the swoosh, this instantly identifies their products
from other companies’.
• Advertising, products are advertised in a way which gives customers the
image that the company want to give off.
Ultimate branding is where people call a product by a manufacturer’s name rather
than the name of the product, e.g. people sometimes say Levi’s when they mean jeans.
Unit 3 - Marketing
Branding is what determines the public image of a product/company. E.g. The public
view Nike as a high quality sportswear company, this is due to the logo and
Direct Mail is of form of direct marketing, in which mail is sent to potential customers
through the post, this form of promotion includes things like leaflets, flyers and
catalogues sent through the post.
This method of promotion requires a database of potential customers, who are either
previous customers or have signed up to receive information from the company, the
flyers/leaflets/catalogues are then addressed with these addresses and sent off. The
idea of this is that these potential customers will then reply via order forms, prepaid
response envelopes, company cards or free phone numbers.
An advantage of direct mail is the customers are receiving information that they have
an interest in, as they are either a previous customer or have signed up to receive
posted information. A disadvantage is that people treat it as junk mail and throw it
This method of promotion is one where the goods are sold directly from the company
to the customer, cutting out people like, retailers, wholesalers and agents, who are
sometimes referred to as ‘the middle man’. This is good as it means the company can
either maximise their profits or offer lower prices to the customers, as this eliminates
the costs that the ‘middle man’ imposes. There are three main methods of direct
selling that organisations use, these are:
This method of direct selling requires an employee of the company to go to potential
customers’ homes and demonstrates/displays the company’s range of products. If the
customer likes the product(s) then they can buy/order the product via the employee.
An example of this is door-to-door salesmen who sell Tupperware. However, Adidas
is too large is size to use this method of direct selling, as this is generally used by
smaller, local firms.
Mail order requires a company to send out catalogues by post to customers. The
customer can then browse through the catalogue and if they wish to purchase a
product they can either send their order by post, place an order over the phone or
sometimes they can use the companies Internet site to place an order. This could be a
successful method for Adidas, as customers could see an image of the football boots
and also a product specification, including things like new technologies used.
Unit 3 - Marketing
Telephone sales is the final method of direct selling, this requires an employee of a
company phoning a list of numbers, which will be given to them by their boss, and
trying to entice customers to buy their products over the phone. An example of where
telephone sales occur is double-glazing companies, who try and sell their windows
over the phone. Adidas would tend not to use this method, as again this is associated
with smaller firms.
This is where a company communicates its activities, such as upcoming products, to
the public. An example of this is when a games console is released, days are
organised where the public can come and test out the games consoles. This is good for
a company as the people that attend these events will pass on information about the
console and these events will get a high media coverage therefore promoting the
product even more.
Unit 3 - Marketing
Different places where an organisation’s products can sell their products include:
• Mail Order Catalogues
• Direct from the manufacturer
• Door to door salesmen
• Factory Outlets
A distribution channel is all the stages a product goes through to get from the
manufacturer to the customer. There are five main stages that a product can pass
through, these include: