Module 2.1 - Marketing mix 1 The SENSES project co-funded by the European Union funds (ERDF and IPA) For more information check the official website: http://www.interreg-danube.eu/senses

1. Module 2.1.
Practical marketing tools for social
enterprises
Ing. Iveta Brouckova, Ph.D
RERA - Regional Development Agency of South Bohemia
CZECH REPUBLIK
2018
Project co-funded by the European
Union funds (ERDF and IPA)

2. 2.1.3. Marketing mix 1

3. Marketing mix
Marketing mix constists of four elements – 4P
• Product
• Price
• Place
• Promotion (marketing communication)
Marketing mix is the most important foundation on which the company
marketing strategy is based and developed
Project co-funded by the European
Union funds (ERDF and IPA)

4. Marketing mix
4P is often extended according to the needs:
– 6P – extension by People and Packaging
– 7P – extension by People, Processes and Physical evidence
– 8P – extension of 7P by Productivity and Quality
– 8P – extension by People, Packaging (service package), Programming
(programme creation) and Partnership – extension used in tourism
industry
Marketing mix 4P is the entrepreneurial view, alternatively, 4C mix is used
which is the customer perspective:
• Customer value (satisfying customer needs = product)
• Costs (costs to get the product = price)
• Convenience (distribution channels = place)
• Communication (marketing communication = promotion)
Project co-funded by the European
Union funds (ERDF and IPA)

5. Product
• Everything that is available on the market to be purchased, consumed or
used to satisfy customer needs or wishes
• Comes in tangible or intangible form
• Includes physical items (goods), services, experience, events, persons,
places and regions, features, organizations, information and ideas
• Includes not only product itself but the overall perception of customers – the
brand is key factor in this case
Brand
• Is an important part of the product. It is the key aspect of how customers perceive
and identify with the product
• Is about the creation of product value in the minds of customers
• Helps to create visibility. Associations with the brand, loyalty and perceived quality are
an important part of brand management which is the marketing field on its own
Project co-funded by the European
Union funds (ERDF and IPA)

6. Product
Product levels
Five hierarchically ordered levels/layers according to increasing utility
value of the product
• Core – general benefit or usefulness = reason to buy the product (e.g.
accommodation)
• Specific product or service = the hotel offer is composed of a room
with a bed, bathroom and other amenities
• Idealized expected product = automatically expected quality of the
product (e.g. the hotel room is clean, quiet…)
• Extended product = something extra that exceeds the customer
expectations (flowers in the hotel room, fast check-in, quality catering
– the strongest competition takes place on this level)
• Potential product = potential future extensions, innovations
Project co-funded by the European
Union funds (ERDF and IPA)

7. Product
Classification of the product
• By the lifespan and tangibility
 Non-durable goods – a product for one-time use
 Durable goods – a product used for some time
 Services – the result of a production process of intangible nature
• By shopping patterns
 Daily use products – products purchased on daily basis, frequently and with
minimal comparison and purchasing effort
 Long-term use products/durable goods – products purchased occasionally,
strong comparison and purchasing effort (price, quality, specifications)
 Special products – products with unique features or brands targeting specific
customers, maximum purchasing effort
 Unknown or unwanted product – products that customers either do not know
or they do but they never considered a purchase under normal conditions
Project co-funded by the European
Union funds (ERDF and IPA)

8. Product
• By industrial use within the production process
 Raw materials, semi-finished inputs – inputs that are part of the final product
 Capital investments – inputs that are only partially present in the final product
 Auxiliary materials and services – inputs that are not part of the final product
Project co-funded by the European
Union funds (ERDF and IPA)

9. Product
Product lifecycle
Product sale and profit development over its lifecycle
Every product undergoes different life cycle but in the following steps:
• Product development – the producer works on a new product – zero sales,
investment increase
• Market introduction – introductory phase – slow increase of sales, profit is low, the
sales do not cover productions costs, high risk of failure = higher marketing needs
• Growth – phase of increasing sales, competition appears, product price is the same
or slightly lower, already generating profit
• Maturity – slower sales increase, profit is stable or slowly declining due to increased
competition-induced costs of marketing, high product visibility, increasing competition,
innovations and modifications to prolong this phase
• Decline – profit and sales volume decrease, can be slow, fast or even immediate
Project co-funded by the European
Union funds (ERDF and IPA)

10. Product lifecycle
The course of product lifecycle can be diverse
• Evergreen products – maturity phase prevails, no decline phase
• Products going straight from the introduction to decline – there is no growth or
maturity phase
• Renewed products – product re-introduction after decline phase – innovation
Project co-funded by the European
Union funds (ERDF and IPA)

11. Product
Services
• Economic activity satisfying certain needs
• The result is desired effect, not a tangible product
Characteristics
• Inability to stockpile – impossible to storage
• Indivisibility – services are not possible to be divided into smaller
constituents
• Intangibility – services are an intangible product
• Changeability – depends on when, where and by whom the service
is provided
• Inability to be owned – the customer has the right the be provided
with the service, no product ownership follows
Project co-funded by the European
Union funds (ERDF and IPA)

12. Price and Pricing policy
• The monetary value of the goods and services, its volume, quantity
and quality
• It is a money equivalent of the advantage of owning or using the
product
• Based on price-formation – a process of setting the price for which
the company is willing to sell the product
Project co-funded by the European
Union funds (ERDF and IPA)

13. Price and Pricing policy
Pricing strategies
• Consumer-based pricing
 Based on sales volume estimates in regard to the price level
 Basic principle – high price at high demand, low price at low demand
 Price is formed according to the value the customer attributes to the product, the
costs are considered only when attributed price is too low
• Cost-based pricing
 Most frequent method of price-formation
 Based on calculation per item plus profit margin
 Advantage – simplicity
 Disadvantage – market demand and competition policy are not taken into
account
• Competition-based pricing
 The price is formed according to what the competition offers
 The price is based on competitor price, often used in the introduction phase
 Such price is used as a baseline to set acceptable production costs
Project co-funded by the European
Union funds (ERDF and IPA)

14. Price and Pricing policy
Price-influencing factors
Internal and external factors
Internal factors
• Company goals – orientation on:
 Reaching specific profit
 Reaching specific turnover
 Keeping status quo – keeping the current market share, product image, stable
prices
• Price policy organization – centralized or de-centralized decision approach
• Marketing mix – linkage to overall company strategy, interconnection of the price
level with other elements of the marketing mix
• Product differentiation – the bigger is the difference from the competition offer, the
broader options are available when setting the price
Project co-funded by the European
Union funds (ERDF and IPA)

15. Price and Pricing policy
External factors
• Demand – big impact on pricing, dependent on many factors, e.g. availability of
competitive products, customer satisfaction, quality level
• Competition – important factors: intensity, pricing, reaction to a new market player
• Distribution – important factors: interest and demands of distribution channels, the
more intermediaries are in the chain, the lower impact on the final price they have
• Economy conditions – economy cycle stage of the field, e.g. long-term depression
leads to lower stockpiles
• Legislative regulations – e.g. government regulation or law influencing price levels
Project co-funded by the European
Union funds (ERDF and IPA)