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The Marketing Mix


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The Marketing Mix


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Product


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CHARACTERISTICS

Primary characteristics (Standard)

Corebenefits: in common with its competitors

Auxiliary characteristics (Optional)

features and benefits: unique to the product.


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LEVELS OF PRODUCT

The core product benefits;

The actual product benefits;

The augmented product benefits.


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PRODU T LIFE Y LE


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Introduction phase:

- The products sales grow slowly- The profit is small or negative

The growth stage:- Sales increases rapidly

-

Profits begin to grow, but- Competition enters the market


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The maturity phase:

- The promotional spend eases off- Production economies of scale become

established

- Competitors have entered the market

The decline phase:

- The product is losing market share and

profitability rapidly.


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Question Marks

High growth, low shareBuild into Stars or phase outRequire cash to hold

market share

Stars

High growth & shareProfit potentialMay need heavy

investment to grow

Cash Cows

Low growth, high shareEstablished, successfulSBUs

Produce cash

Dogs

Low growth & shareLow profit potential

Relative Market ShareHigh Low

Market

GrowthRa

te

Low

High

Analyzing Current SBUs:

Boston Consulting Group Approach

?


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Product

Methods used toimprove/differentiatethe product and increasesales or target sales moreeffectively to gain

a competitive advantage e.g. Extension strategies

Specialised versions

New editions

Improvementsreal or

otherwise! Changed packaging

Technology, etc. Image copyright: www.freeimages.co.uk


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Price


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Setting Initial Product Prices

Market Skimming Market Penetration

> Setting a High Price for

a New Product to SkimMaximum Revenuesfrom the Target Market.

> Results in Fewer, MoreProfitable Sales.

> Intels $1,000 Chip

> Setting a Low Price for

a New Product in Orderto Attract a LargeNumber of Buyers.

> Results in a LargerMarket Share.

> Wal-mart


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MinimizesPriceCompetition

What is Cost-Plus Pricing and Why

is it Popular?

PerceivedFairness to

Both Buyersand Sellers

Sellers Are MoreCertain AboutCosts Than

Demand

Adding a Standard Markup to the Cost of the Product.


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Types of Cost Factors that

Affect Pricing Decisions

Total CostsSum of the Fixed and Variable Costs for a Given

Level of Production

Variable Costs

Costs that do varydirectly with the

level of production.

Raw materials

Fixed Costs(Overhead)Costs that dont

vary with sales orproduction levels.

Executive SalariesRent


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Product Line PricingSetting Price Steps

Between Product Line Itemsi.e. Lawnmowers at $299 & $399

Optional-Product PricingPricing Optional or Accessory Products

Sold With The Main Producti.e. Car Options such as a CD player

Captive-Product PricingPricing Products That Must Be

Used Along With The Main Producti.e. Razor Blades, Film, Software

By-Product PricingPricing Low-Value By-Products To

Get Rid of Themi.e. From Chemicals, Lumber Mills, Zoos

Product-Bundle PricingBundles Of Products Sold

Together at a Reduced Pricei.e. Season Tickets, Computer Makers

Product Mix Pricing Strategies

Product

MixPricing

Strategies


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Price-Adjustment Strategies

Adjusting Prices forPsychological Effect.

Price Used as a QualityIndicator.

Reference Prices i.e.Clothing.

Temporarily Reducing Pricesto Increase Short-Run Sales.

i.e. Loss Leaders, forSpecial-Events, Cash Rebates

Psychological Pricing

Promotional Pricing


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Price

Pricing Strategy

Importance of:

knowing the market

elasticity keeping an eye

on rivals

Image copyright: www.freeimages.co.uk


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Price Elasticity of Demand

Price

Quantity Demanded per Period

A. Inelastic Demand -Demand Hardly Changes Witha Small Change in Price.

P2

P1

Q1Q2

P

rice

Quantity Demanded per Period

P2

P1

Q1

Q2

B. Elastic Demand -Demand Changes Greatly Witha Small Change in Price.


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Promotion


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The Promotion Mix

The promotion mix is the specific blend of advertising,sales promotion, public relations, personal selling, anddirect-marketing tools that the company uses topersuasively communicate customer value and buildcustomer relationships.

Major Promotion Tools

Advertising

Sales promotion

Public relations

Personal selling

Direct marketing


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The Promotion Mix

Major Promotion Tools: Advertising

Advertising is any paid form of non-personalpresentation and promotion of ideas, goods, or services

by an identified sponsor.

Broadcast

Print

Internet

Outdoor


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The Promotion Mix

Major Promotion Tools: Sales promotion

Sales promotion is the short-term incentives toencourage the purchase or sale of a product or service.

Discounts

Coupons Displays

Demonstrations

Samples

Cash refund

Price packs

Premium


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The Promotion Mix

Major Promotion Tools: Public relations Public relations involves building good relations with

the companys various publics by obtaining favorable

publicity, building up a good corporate image, and

handling or heading off unfavorable rumors, stories, andevents.

Publicity - Press releases

Sponsorships

Special events Web pages


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14-26

The Promotion Mix

Major Promotion Tools: Personal selling Personal selling is the personal presentation by the

firms sales force for the purpose of making sales and

building customer relationships.

Sales presentationsTrade shows

Incentive programs


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14-27

The Promotion Mix

Major Promotion Tools: Direct marketing Direct marketing involves making direct connections

with carefully targeted individual consumers to both

obtain an immediate response and cultivate lasting

customer relationshipsby using direct mail,telephone, direct-response television, e-mail, and the

Internet to communicate directly with specific

consumers.

Catalog

Telemarketing

Kiosks

Direct mail


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Promotion

Strategies

to make the consumer

aware of the

existence of a productor service

NOT just advertising


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Promotion Mix Strategies

Push strategyinvolves pushing the productto the consumers by inducing channel

members to carry the product and promote it

to final consumers.

Used by B2B companies


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Promotion Mix Strategies

Pull strategyis when the producer directs itsmarketing activities toward the final

consumers to induce them to buy the product

and create demand from channel members.

Used by B2C companies


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Place


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Place

The means by which products and services

get from producer

to consumer and where they can be

accessed by the consumer The more places to buy the product and the

easier it is made to buy it, the better for the

business (and the consumer?)


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Wholesaler Jobber Retailer Consumer

Consumer

Retailer Consumer

Producer

0-level ch annel Direct

Wholesaler Retailer ConsumerProducer

2-level ch annel

Producer

3-level ch annel

1-level ch annel

Producer

Number of Channel LevelsChannel Level - Each Layer of Marketing Intermediaries that Perform

Some Work in Bringing the Product and its Ownership Closer to the Final

Buyer.


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SWOT is an acronym for strengths,

weaknesses, opportunities, and threats

A SWOT analysis is a method of

studying organizational resources andcapabilities to assess the firms

strengths and weaknesses and

scanning its environment to identify

opportunities and threats


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SWOT

A l i

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