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Marketing Mix –
Introduction to 4 Ps
Part 1 – Product
1
Marketing
• Marketing is a
process by which
people obtain
what they need
and want through
creating, offering,
and exchanging
products and
value with others.
Needs &
wants
Market
Exchange
transaction
Products
Value &
satisfaction
2
Marketing Concept
• Matching the customer needs and wants with company’s capability to
meet and satisfy them.
Matching
Company
capabilities
Customer needs &
wants
3
Marketing Mix
• Marketing mix are the
techniques used by
marketing people to apply
the marketing concept in
order to match the products
with customers’ wants.
Product
Place
Marketing
Mix
Price
Promotion
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Marketing Mix – Components
Product
Price
Promotion
Place
• Quality
• Features
• Brand name
• Packaging
• After-sale service
• Warranty
• List price
• Discounts
• Allowances
• Credit terms
• Payment period
•
•
•
•
•
•
•
•
Advertising
Personal selling
Sales promotion
Public relations
Outlets
Channels
Coverage
Logistics
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The Use of
Marketing Mix
Use the right
distribution
channel to make
the product
available to
customers
The company
chooses the
product to meet
the identified
need of the
target customers.
Marketing
Mix
Set the price that is
acceptable to both
the customers and
the company.
Make the target
customers aware
of the existence
of the product.
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Product
• Anything (goods or services) that can be offered to satisfy the needs
or wants of the customers.
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Product Strategy
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Product Strategy
• Quality
• Good quality indicates the product is reliable and able to perform its
intended function.
• Customers may compare the quality of a product/service with different
brands in the market and make their buying decision.
• Design
• The idea generation and concept development of a product can help
attracting customers.
• Feature
• A function which is capable of satisfying consumers’ need and is therefore
seen as a benefit of owning it.
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Activity 1 – What do you feel about these brands?
• Describe the following car brands with the descriptions provided.
Rolls Royce
Luxury
Ferrari
Volvo
Toyota
Sporty
Good design
Smart
Comfortabl
e
Speed
Cheap
Good quality
Safety
Practical
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Product Strategy
• Product Variety
• There are various types of products produced (or services rendered) by a
company.
• Each company has a product that is distinguishable in some way from its
competitors. Therefore, it is able to make profits from product differentiation.
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Activity 2 – Debate
• Students are divided into two groups.
• Compare the product strategy of the two largest smartphone
manufacturers: Apple & Samsung Electronics.
• Apple: only one type of smartphone i.e. iphone
• Samsung: produce different types of smartphone such as Note series
and S series and from low-end to high-end.
• Which one you think is successful?
vs
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Product Strategy
• Brand name
• Exclusively identifies the product from others.
• Improve the company prestige of products and expand the market share.
• Packaging
• Good packaging can attract customers’ attention and stimulate customers to
buy.
• After-sale service
• Not just warranty but also consultation and support service after sale.
• Warranty
• Guarantee for repairs and maintenance for a specified period.
• E.g. 3-year warranty on electronic products.
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The End
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Marketing Mix –
Introduction to 4 Ps
Part 2 – Price & Promotion
1
Price
• Price is the amount of money a customer pays for the product.
• It is determined by a number of factors including market share,
competition, costs etc.
2
Pricing Strategy
• Pricing is important as it will affect the followings of the company:
• Product positioning.
• Market share.
• Profitability.
3
Pricing Strategy
• Economy Pricing
• Always set at a low price. E.g. supermarkets often have economy brands for
household products.
• Price Penetration
• Set at artificially low price in order to gain market share, then increase the price
when target market share is achieved. E.g. desk-top printer.
• Price Skimming
• Set at a high price when the product is less price sensitive. It will attract new
competitors into the market, and then the price will fall due to increased supply and
competition. E.g. high-tech products, medical products.
• Premium Pricing
• Always set at a high price. It is used where there is a unique brand such as for luxury
products.
4
Activity 1
• Which pricing strategy may best fit the following products?
•
•
•
•
New model of digital camera
Famous brand handbag
Toilet paper
Telephone service fee
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Activity 1 – Answer
Pricing Strategy
Products
Economy Pricing
Toilet paper
Price Penetration
Telephone service fee
Price Skimming
New model of digital camera
Premium Pricing
Famous brand handbag
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Price Setting
• Marketers have to determine prices to customers because it will
affect the sales volume.
• The price setting issues include:
• List Price
• The price regularly quoted to customers.
• Usually printed on the price tags, catalogs etc.
• Discounts & allowances
• Reductions to a list/basic price of goods or services
• Include: quantity discount; seasonal discounts; cash discounts;
promotional discounts etc.
• Credit terms & payment period
• Allow customers to pay later e.g. 30-day credit period.
7
Promotion
• All means of communications that a marketer may use in the market
to communicate that the product attributes / benefits to customers
and persuade them to buy the product.
• The four major methods promotions (or known as promotion mix):
•
•
•
•
Advertising
Personal selling
Sales promotion
Public relations
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Objectives of Promotion
• To create awareness
• To inform about a feature or benefit
• To support sales increases
• To create an image
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Advertising
• In mass media such as
• radio,
• TV,
• newspaper,
• Internet,
• street, etc.
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Personal Selling
• Face-to-face
• Tele-marketing
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Sales Promotion
• Free samples
• Discount coupons
• Free gifts with company logo/product
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Public Relations
• Publics relations are where the communication is not direct delivery
but by the following methods:
•
•
•
•
•
Press conference/release
Exhibition/Trade show
Brand Ambassador (star power)
Sponsorship
Word of mouth (internet forum)
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Activity 2
• Can you give examples of different public relations promotion
methods for any brands?
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The End
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Marketing Mix –
Introduction to 4 Ps
Part 3 – Place
1
Place
• Place represents the location where a product is sold.
• It is often referred to as the distribution channel a company chose to
deliver the product.
• Include physical store and virtual stores (e.g. internet).
2
Physical Distribution
• Activities involved in transporting products from the Manufacturer to
the consumer which include:
• Mode of transport
• Warehousing & storage
• Order processing
• Inventory control
3
Distribution Channels
• Distribution channels are the routes through which the goods flow
from the manufacturer to the customer.
• Types of distribution: Direct vs Indirect
Direct distribution:
Manufacturer
Agent
Indirect distribution:
Manufacturer
Consumer
Wholesaler
Retailer
Consumer
4
Channel intermediaries - Wholesalers
• A wholesaler buys large amounts of goods from a manufacturers and
then sells them to retailers.
• Provides storage facilities.
• Acting as an agent between manufacturers and consumers.
• Wholesaler takes some of the marketing responsibility e.g. sales force
(sales team), promotions etc.
5
Channel intermediaries - Retailer
• Retailer is a business that sells goods to the
consumers who
• has stronger personal relationship with
the consumer.
• holds a variety of products.
• promotes and sells products.
6
Product Life Cycle
• A sequence of stages to describe the life of a commercial product
from introduction, growth, maturity and decline. This sequence is
known as the product life cycle.
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Impact of Product Life Cycle on Marketing Mix
• Introduction Stage (the manufacturer seeks to build up the
awareness of the product and develop the market):
• Product branding and design starts to establish, company may
register the patent for their product.
• Pricing strategy may be low penetration in order to build the market
share, or use high skim pricing to recover development costs (e.g.
high-tech products).
• Promotion cost is high in order to build up the awareness of the
product.
• Placing is selective as the company commences implementation of
the distribution plan.
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Impact of Product Life Cycle on Marketing Mix
• Growth Stage (a period of rapid revenue growth with increase in the
market share):
• Product brand is maintained and additional support and improvement of
quality are required.
• Pricing strategy is maintained at high level as the company enjoys increasing
demand during this stage.
• Promotion cost is increased in order to keep the customers’ awareness.
• Placing is started to increase the distribution channels.
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Impact of Product Life Cycle on Marketing Mix
• Maturity Stage (most profitable but competition appears):
• Product features is enhanced in order to differentiate the product from
competitors.
• Price may be reduced in response to the competition.
• Promotion cost is increased to emphasize the product differentiation.
• Placing is more intensive to compete in the market and incentive may be
provided to resellers in order to avoid losing sales channel.
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Impact of Product Life Cycle on Marketing Mix
• Decline Stage (sales decline as market because saturated):
• Product is no longer be interesting by the consumer which production should
be reduced and new product should be developed.
• Price may be even lower to sell out the remaining inventory.
• Promotion cost is decreased and switched to promote another new product.
• Placing strategy is to reduce the distribution channel as some channels are
not profitable anymore.
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Activity
• State and explain the following items are in which stage of the
product life cycle.
• 3D LED HD TV
• VCD
• Google glasses – Head-mounted display, HMD
• Smartphone
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Activity – Answer
Introduction
Growth
Maturity
Decline
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The End
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