Marketing 101 - The Marketing Mix
The marketing mix is ‘’a set of marketing programme activities designed to implement an agreed target marketing strategy’’ – (Baker, 2006; p 25) It is designed to satisfy the target customers’ needs. Must be communicate the desired brand positioning strategy. Emphasises differentiated advantage of product/organisation over its rivals.
A product is ‘’anything that is offered to a market for attention, acquisition, use or consumption that might satisfy a want or need’’ – (Kotler et al, 2008: p. 500) A product can also be described as a bundle of benefits. For example a Laptop has dual screens, the benefits of this is increased productivity (data sharing) and reduced errors.
A product can be a good or a service, with goods having tangible benefits and services having intangible benefits. This idea can be put on a spectrum so products and services can have a mix of both tangible and intangible benefits.
Four levels of the product:
1. The Core product 2. The Tangible product 3. Augmented product 4. Potential products
There are 4 characteristics of services:
1. Perishability – services are unable to be stock-piled 2. Heterogeneity – Standardisation and quality are difficult to control 3. Inseparability – consumers involved in production, other consumers involved in production, centralised mass production is difficult 4. Intangibility – cannot be stored. Cannot be protected through patents, cannot be readily displayed or communicated, prices are difficult to set
Product life cycle:
Introduction -> growth -> maturity -> decline
Style (e.g. art, home decors) – Style has a cycle showing several periods of renewed interest.
Fads – Immediate product and brand popularity due to consumer enthusiasm; enter quickly, adopted with great zeal and peak early, then decline very fast.
Fashion – grows slowly, remains popular or a while and then declines slowly
Product types:
1. Convenience products: customer usually buys frequently, immediately, with a minimum comparison and buying effort
Shopping products: customers compares carefully on suitability, quality, price and style
Specialty products: have unique characteristics which influence a significant group of buyers to make a special purchase effort.
Unsought products: consumers don’t know about or know about but doesn’t think of buying
Product mix decisions:
Product line – group of products closely related (e.g. Procter & Gamble: Laundry detergent, toothpaste, Deodorant, shampoo and soap)
Product Item – Individual products make up the product line
Product line length – the total number of items with in product line
Product line depth – number of variants of each item within product line
Brands:
‘’A brand is a specific name, symbol, design or, more usually, some combination of these which is used to distinguish a particular seller’s product (Doyle, 1994) ‘’A successful brand is one which creates and sustains a strong positive impression in the minds of a buyer’’ (Fill, 1999)
Pricing:
Price is the only element of the marketing mix that generates revenue – the rest generate costs and therefore should merit the closest attention
Market-skimming pricing:
Setting a high price to skim maximum revenues (fewer volumes but higher profits) Enhances products quality and image. A sufficient size of customers who are price-insensitive. Cost of producing a small volume is not so high. Competitors cannot enter the market with a lower price.
Market-penetration pricing:
Set a low initial price to penetrate the market quickly. A large number of customers and a large market share. More volume -> scales of economies ->falling costs->cutting price even further
Product line pricing:
Set price based on cost differences. E.g. Tesco value, Tesco, Tesco Finest
Optional-product pricing:
Sell accessory products along with the main products e.g. a built in sat nav with a new car
Captive-product pricing or two part pricing
Pricing Types
Relatively low price for main products e.g. printers, razors, video game consoles) ->low margin
High prices for (razor blades, ink cartridges, video games)-> High margin
Mobile phone monthly charge plus variable usage charge e..g extra data
Amusement parks charge plus additional fees for food and and other features such as water park or speedy boarding
Product-bundle pricing:
Combine several products offered as a bundle at reduced price. To encourage purchase of products that might not otherwise sell, but combine price must be low enough to get customers to buy them
Psychological pricing:
Focus on psychology of prices rather than the economics, indicate high quality, prestige, something special and then to suggest a bargain price.
Segmented prices:
No to little cost differences between different segments, museums: lower admissions for kids, student and senior citizens
Three C’s for determining price:
Customer demand - effectively set upper price limit or price ceiling
Cost – lower limit or floor price
Competition – strength of the competition set price you can actually achieve
Price Change Summary:
- Little and often is best
- Easier to cut than to raise
- Allow for inflation and other cost increases
- Price in relation to competition and costs
- Consistent pricing = consistent image
- Price sensitivity of customers is important
- Psychological pricing can be useful
4 P's of Marketing
P for Place:
‘Getting the right product to the right place at the right time in the right quantity’
Intermediaries put buyers and sellers together without taking ownership of the product, service or property. They act as go-betweens. They are not wholesalers or distributors, which buy products and then resell them. They are usually paid on a percentage of the total transaction.
Functions of an intermediary:
Providing a delivery hub for multiple producers. Breaking bulk quantities from producers into smaller quantities for individual customers. Aggregating smaller product quantities into more efficient shipments for customers. Combining collection of products to appeal to particular target markets. Adding value by improving contact efficiency.
Advantages:
- Improved distribution efficiency
- Ability to stock a range of products
- Accessibility
- More efficient use of producers time
- Efficient dissemination of information
- Ability to provide specialised services
Disadvantages:
- Cost
- Lack of control
- Intermediary motivation
- Intermediaries may be susceptible to competitor influence
- Ultimate lack of distribution flexibility for producer
- Distance from end user
Distribution channels:
A distribution channel (or marketing channel) is the pipeline through which products and their ownership flow from the producer to the consumer.
- Distribution channels can be used for both B2C and B2B marketing
- Distribution channels can be simplex or complex
- In reality, companies may use a multi-channel strategy as it allows greater flexibility and access to consumers
Exclusive distribution is through a single intermediary. Selective distribution is through multiple but not all reasonable outlets. Intensive distribution is through all reasonable outlets.
Distribution channels can have conflicts of interests between partcipants. Wholesaler->retailer is called vertical conflict. When there is a conflict between two retailers who share the same producer this is a horizontal conflict. Conflict can be caused due too; incomparable goals, unclear rights/responibilities, misperceptions and poor communication. Franchising helps avoid conflict, a franchsie is a continuing relationship in which a franchisor grants the business rights to a franchisee to operate or to sell a product.A VMS is a vertical marketing system where the producer delivers to the wholesaler and retailers who work in tandem to deliver to the consumer. A Corporate VMS is when a single organisatition owns and controls most most or all of the chaneel. An administered VMS is where one organisation tends to dominate the channe by virtue of its relative power. A contractual VMS where channel members come together and are linked by a legal contract.
P for Promotion:
Marketers communicate too; persuade, inform, remind, educate, resure and pre-empt competition
There are two approaches too the promotional mix
Mass communication methods which include Advertising, sales promotion, public relations and sponsorship
Direct communication methods which include direct marketing, digital marketing, social meia and personal selling
Advertising – ‘’advertising is any paid form of non-personal communication of idea or products in the prime media (TV, press, posters, cinema and radio)’’ advertising can be viewed as Awareness, interest, desire and action at its simplest.
Pull strategy encourages customers to pull products through the distribution channel
Push strategy encourages channel members to promote products to the consumer
‘’sales promotion are the incentives to customers or the trade that are designed to stimulate purchase’’
Public relations is ‘’ a non-personal form of communication used by companies to build trust, goodwill, interest and ultimately relationships with a range of stakeholders (Bains, Fill and Page, 2013:398)
Sponsorship is ‘’a marketing communications activity in which one party permits another an opportunity to exploit an association with a target audience in return for funds, services or resources (Bains, Fill and Page, 2013:400)
Direct communications methods – Direct marketing, Digital marketing/social media, personal selling
Traditional direct marketing methods – Direct mail, telemarketing, direct response advertising, catalogue marketing
Digital marketing forms – Email marketing, mobile marketing, interactive TV advertising, viral marketing and social media marketing
Summary:
Marketers communicate with customers for a variety of reasons. Communication methods range from those with a mass-market appeal to the more personal and direct. The chosen combination of communication methods is known as the promotional mix. The decision over which promotional mix tools to use – and in what precise balance is something that needs careful consideration based on both macro-environmental. Micro-environmental and internal company factors. P for promotion is not the only element of the marketing mix that communicates a message. In fact all of the Ps will communicate a message in some way. Hence the need for overall co-ordination in marketing activity.