The marketing mix


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The marketing mix

  1. 1. The Marketing Mix
  2. 2. What is the marketing mix? <ul><li>Combination of key activities to sell a product </li></ul><ul><li>4 elements: </li></ul><ul><li>Must consider all 4 elements in marketing strategy </li></ul>Price Product Place Promotion
  3. 3. What is a product? Intangible features Tangible features Branding Packaging Positioning Product
  4. 4. Product <ul><li>A product is a good, a service, an idea or any combination of the three which can be offered in an exchange </li></ul><ul><li>Not just an item on a shelf in a shop </li></ul><ul><li>Consists of tangible and intangible features </li></ul><ul><ul><li>Ipod: a good </li></ul></ul><ul><ul><li>Advertising campaign for Apple Ipod: an idea </li></ul></ul><ul><ul><li>Sales assistant in Myer who sells you the Ipod: a service </li></ul></ul><ul><ul><li>total product concept </li></ul></ul>
  5. 5. Total product concept <ul><li>The product is a combination of tangible & intangible features </li></ul><ul><li>Intangibles: </li></ul><ul><ul><li>Service </li></ul></ul><ul><ul><li>Safety </li></ul></ul><ul><ul><li>Warranty </li></ul></ul><ul><ul><li>Prestige </li></ul></ul><ul><ul><li>Convenience </li></ul></ul><ul><ul><li>Delivery </li></ul></ul>
  6. 6. Total product concept <ul><li>How do consumers choose between similar, mass-produced products? </li></ul><ul><li>Intangibles: </li></ul><ul><ul><li>Reputation </li></ul></ul><ul><ul><li>Advice </li></ul></ul><ul><ul><li>Financing </li></ul></ul><ul><ul><li>Warranty </li></ul></ul><ul><ul><li>Maintenance </li></ul></ul>
  7. 7. Product positioning <ul><li>Product image </li></ul><ul><li>How a customer views the product compared to competition </li></ul><ul><li>Sony vs Teac </li></ul><ul><li>Nike trainers vs Target-brand trainers </li></ul><ul><li>Evoking an image of quality </li></ul>
  8. 8. Branding <ul><li>names and images used to identify a product and distinguish it from competitors </li></ul><ul><li>Brand = logo and/or name </li></ul>
  9. 9. Branding <ul><li>Powerful marketing tool </li></ul><ul><li>Leverage for emerging products </li></ul><ul><li>Expected level of quality </li></ul>
  10. 10. Packaging <ul><li>Functional – protects and stores product </li></ul><ul><li>Branding – attracts consumer, communicates information </li></ul>Customers are prepared to pay for good quality packaging, even if this adds to the cost of the product.
  11. 11. Product life-cycle Minimal product variation, basic quality Increased product variation, improved quality Maximum product variation, excellent quality Few product variations, drop in quality
  12. 12. Pricing The next of the 4 Ps
  13. 13. What is price? <ul><li>Price is the value a product holds in monetary exchange </li></ul><ul><li>Businesses use price to: </li></ul><ul><ul><li>make a profit </li></ul></ul><ul><ul><li>create a brand </li></ul></ul><ul><ul><li>push a competitor out of market </li></ul></ul>
  14. 14. Price <ul><li>Plays an important role in influencing consumer choice </li></ul><ul><li>Used by consumers to measure quality – price creates perceptions of quality. </li></ul><ul><ul><li>Mercedes </li></ul></ul>
  15. 15. Product life-cycle - Price High price to recover costs. Or low to gain market share. Price softens: gain popularity and sales rise High price competition Scarce: rising prices. Saturated: falling prices.
  16. 16. <ul><li>Cost-based method </li></ul><ul><li>Market-based method </li></ul><ul><li>Competition-based method </li></ul>Methods of pricing
  17. 17. <ul><li>Amount added to cost of producing the product </li></ul><ul><li>Profit Margin : % added on top of cost price </li></ul><ul><li>Fixed Profit Amount : specific $ return added to cost price. </li></ul>Cost-based method
  18. 18. <ul><li>Determined by market forces of demand and supply </li></ul><ul><li>Impossible to predict what the market price for a new product will be. </li></ul><ul><li>Businesses continually alter prices to stay in touch with market forces </li></ul>Market-based method
  19. 19. <ul><li>Similar mass-produced products </li></ul><ul><li>Prices set according to competitors’ products – same, higher or lower </li></ul><ul><li>Objective: to gain market share </li></ul><ul><li>High degree of intangible product differentiation </li></ul><ul><ul><li>Xbox, Playstation </li></ul></ul>Competition-based method
  20. 20. Pricing strategies <ul><li>Price skimming </li></ul><ul><ul><li>New products </li></ul></ul><ul><ul><li>Suppliers aim to sell to the top end of the market </li></ul></ul><ul><ul><li>Set price at a high level and reduce over time </li></ul></ul><ul><ul><li>Only successful with little or no competition </li></ul></ul>Xbox first introduced at $999.95 in Feb 07. Now available for $399
  21. 21. Pricing strategies <ul><li>Penetration pricing </li></ul><ul><ul><li>Introductory low price compared to competitors </li></ul></ul><ul><ul><li>Gain sales quickly and public/media interest </li></ul></ul><ul><ul><li>Encourage trial and hope for repeat purchase </li></ul></ul><ul><li>Risks </li></ul><ul><ul><li>Enter market at a loss hoping for long term revenues </li></ul></ul><ul><ul><li>Customers get used to low price and refuse to buy when price rises </li></ul></ul><ul><ul><li>Low price may create perception of low quality </li></ul></ul>
  22. 22. Pricing strategies <ul><li>Loss leader </li></ul><ul><ul><li>Price set so low that competitors have to follow for fear of losing significant market share </li></ul></ul><ul><ul><li>Attracts customers into a store in the hope they will purchase other full-priced products </li></ul></ul>
  23. 23. Pricing strategies <ul><li>Price points </li></ul><ul><li>Used when one base product/service reaches numerous target markets. </li></ul><ul><li>Base price set, but additional features offered. </li></ul><ul><li>Higher prices charged for extra features </li></ul>Suzuki Swift currently advertised at $15,990. Optional Extras include tinted windows, metallic paint, auto gearbox, DVD player, rear spoiler, alloy wheels
  24. 24. Place – the next P… Getting the product to the customer Price Product Place Promotion
  25. 25. Place <ul><li>How does a product or service get to customers in the right place and at the right place? </li></ul><ul><li>Another word for place: Distribution </li></ul><ul><li>Physical distribution </li></ul><ul><li>Distribution channels </li></ul>
  26. 26. Physical Distribution <ul><li>Direct: manufacturer  consumer </li></ul><ul><ul><li>Manufacturer direct to consumer </li></ul></ul><ul><li>Indirect: </li></ul><ul><li>manufacturer  retailer  consumer </li></ul><ul><li>or </li></ul><ul><li>manufacturer  wholesaler  retailer  consumer </li></ul><ul><ul><li>Intermediaries involved in distributing products from manufacturer to consumer </li></ul></ul>Purchase goods from manufacturers to sell on to retailers. Store goods in warehouses. Deliver stock to retailers. Sell to the end customer. Department stores, supermarkets, discount shops, franchises, convenience stores, market stalls
  27. 27. Physical Distribution <ul><li>Purchase crate of apples directly from farm… </li></ul><ul><li>DIRECT </li></ul><ul><li>manufacturer  consumer </li></ul>
  28. 28. Physical Distribution <ul><li>Purchase a bag of apples from Elmer’s Fruit Barn… </li></ul><ul><li>INDIRECT </li></ul><ul><li>manufacturer  retailer  consumer </li></ul>
  29. 29. Physical Distribution <ul><li>Distance between manufacturer and consumer </li></ul><ul><li>What are the costs involved? </li></ul><ul><li>Convenience for customers </li></ul><ul><li>Is the channel appropriate to the product? </li></ul>
  30. 30. Product life-cycle - Place Sparse coverage Good coverage Wide coverage Sparse coverage
  31. 31. <ul><li>Product is available through numerous outlets. </li></ul>Channels – Intensive distribution <ul><li>Usually used for low margin, high volume products and everyday purchases </li></ul><ul><li>Aim: Maximise sales through maximum market exposure </li></ul>Supermarket Corner store Convenience store
  32. 32. <ul><li>Product is available through selected outlets. </li></ul>Channels – Selective distribution <ul><li>This distribution choice provides greater control over the quality of service provided at point of sale. </li></ul><ul><li>Mambo clothing – where is it available? </li></ul>
  33. 33. <ul><li>Product is only available through a limited number of outlets. </li></ul>Channels – Exclusive distribution <ul><li>This choice of distribution is vital in the creation of a status or prestige related product. </li></ul><ul><li>Bose speakers – only 1 store in Brisbane, limited stock in Myer/David Jones </li></ul><ul><li>Ferrari Cars – can you buy a Ferrari in Brisbane? </li></ul>
  34. 34. Promotion Getting the word out about your product or service Place Promotion Price Product
  35. 35. <ul><li>Promotion is the act of communicating with markets about a product or service. </li></ul><ul><li>Introduce </li></ul><ul><li>Create interest </li></ul><ul><li>Reinvigorate </li></ul>Promotion <ul><li>Advertising </li></ul><ul><li>Public relations </li></ul><ul><li>Sales promotion </li></ul><ul><li>Direct Marketing </li></ul>
  36. 36. Product life-cycle - Promotion Create primary demand & awareness Develop selective demand Heavy promotion spending. Focus on intangibles Minimal promotion
  37. 37. Advertising <ul><li>Paid non-personal communication about products and services. </li></ul><ul><li>Relatively low cost compared to other forms of promotion </li></ul><ul><li>Hit and miss, not personal </li></ul><ul><li>Easy for consumers to ‘switch off’ </li></ul>
  38. 38. Advertising - media <ul><li>Advertising campaigns use media channels to communicate their messages </li></ul><ul><li>Examples: </li></ul><ul><li>TV, radio, newspapers, magazines, billboards, direct mail, yellow pages, internet, email, mobile phone </li></ul><ul><li>Choosing a media channel dependant on your target market </li></ul>
  39. 39. <ul><li>PR is focused on improving relationships between a business and its stakeholders, and improving the business’ image. </li></ul>Public Relations <ul><li>Serves 2 purposes: </li></ul><ul><li>Free marketing tool through the general media – increase sales, enhance image/reputation, create word-of-mouth . </li></ul><ul><li>Damage control – improve business’ image in the wake of negative public opinion, and release correct information to clarify facts. </li></ul>
  40. 40. Sales promotion <ul><li>Enticing customers to purchase a product or service by offering an added extra. </li></ul><ul><li>Free samples, enter competition, special prizes and discounts, coupons, point-of-sale display. </li></ul><ul><li>Media channels: Supermarkets, magazines, TV programs </li></ul>
  41. 41. Direct marketing <ul><li>Uses mail, phone or email to directly contact potential customers. </li></ul><ul><li>Mail-order catalogues, internet shopping sites, </li></ul><ul><li>Promotional staff - hand out leaflets and engage customers </li></ul><ul><li>Telemarketing </li></ul><ul><li>Mailing lists to reach desired customers </li></ul><ul><li>Very targeted form of promotion </li></ul>