Download unit 4 - ch 7 marketing mix PP summary

The Marketing Mix
Marketing Defined
Marketing refers to all of the business activities necessary to
establish and maintain positive relationships with one’s
customers
• Marketing encompasses each of the steps involved in the
delivery of goods and services from producer to consumer
• Ultimate goal of marketing is to sell the products produced by
businesses and to effectively manage a business’s brands
• Marketing includes research & development, distribution,
advertising, promotion and sales
•
Marketing Mix
• Most famous phrase in marketing
• Sometimes known as the ‘four Ps'
• Marketing mix consists of price, place,
product and promotion
The Marketing Mix
The Marketing Mix - Price
• There are many strategies available when
pricing a product
The Marketing Mix - Price
Premium Pricing
Maintaining an artificially
high price (above
equilibrium) whether
competition exists or not in
order to encourage
favourable perceptions
among consumers
• Predicated on consumer
myth that high price equals
superior quality and/or
strong reputation
• Also referred to as luxury
pricing or prestige pricing
•
The Marketing Mix - Price
Penetration Pricing
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Maintaining an artificially low
price (below equilibrium) on
newly-introduced goods or
services in order to grow
market share (share of overall
product sales within given time
and jurisdiction)
Once objective is achieved, price
is returned to market levels
Should not be confused with
dumping or predatory pricing
which refers to pricing goods in
foreign markets below cost in
order to eliminate domestic
competition and establish
monopolies
The Marketing Mix - Price
Economy Pricing
• Refers to no frills
low-price strategy
where production,
marketing and
distribution costs
are kept to a
minimum
The Marketing Mix - Price
Price Skimming
Maintaining an artificially
high price (above
equilibrium) given lack of
competition or due to
significant competitive
advantage via product
differentiation in terms of
superior quality or unique
product features
• This pricing strategy is
unsustainable as higher
selling prices and profit
margins tend to attract new
competitors into the
market, thus leading to
price declines as supply
gradually increases
•
The Marketing Mix - Place
• Place refers to channels of distribution, or
the path through which goods are moved
from the manufacturer to the consumer
(final user)
• Goods often move through one or several
intermediaries along this path, e.g.,
wholesaler, retailer, importer, agent,
etc.
The Marketing Mix - Place
There are several basic channel decisions
that must be made by producers:
1. Do we employ direct or indirect channels, i.e.,
direct to the consumer or indirect via a
wholesaler, retailer or agent?
2. Do we employ single or multiple channels to
move our goods to the consumer?
The Marketing Mix - Place
Place Centralized Marketing Strategy
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This strategy focuses on the production, marketing and
sale of goods and services in one country which are then
exported to other countries
“Think local, act global”
Advantages include brand building, combined synergies
and cost savings due to avoidance of duplication
Place Decentralized Marketing Strategy
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This strategy takes advantage of local production facilities,
distribution centres, advertising agencies, market research firms
and/or retail partnerships in foreign countries in order to target
specific overseas markets
Companies that employ decentralized strategies may leave all
advertising, sales and promotional decisions to local sales and
marketing representatives
“Think global, act local”
Advantages include flexibility, cultural sensitivity and shipping cost
savings given proximity to foreign markets
The Marketing Mix - Product
• Product refers to goods or services that
satisfy consumer needs or wants
• Product may possess unique features
related to size, shape, colour, smell, taste,
quality, design, material, variety, etc.
• Marketers may increase depth of existing
product line or expand number of product
lines
The Marketing Mix - Product
Product Life Cycle –
Introduction Stage
During this stage, product is
heavily promoted to create
consumer awareness
• If product has few
competitors, price
skimming strategy is
employed to maximize
profits
• If product has numerous
competitors, penetration
pricing strategy is employed
to maximize market share
•
The Marketing Mix - Product
Product Life Cycle –
Growth Stage
During this stage,
competitors offering similar
products are attracted into
the market
• Production become more
and more profitable due to
economies of scale (cost
efficiencies resulting from
optimal production levels)
• Companies may also form
strategic alliances or joint
ventures, or simply
acquire one other in order
to eliminate competition
altogether
•
The Marketing Mix - Product
Product Life Cycle –
Maturity Stage
During this stage, revenues
grow at a decreasing rate
and eventually stabilize
• Producers attempt to
differentiate products via
branding by creating a
favourable image of one’s
offerings in the minds of
consumers
• Intense competition and
price wars continue
throughout this stage
•
The Marketing Mix - Product
Product Life Cycle –
Decline Stage
• During this stage there is
a downturn in the
market as more and
more innovative
products are introduced
and/or consumer tastes
change
• Intense price-cutting
occurs and many
products are ultimately
withdrawn from the
market altogether
The Marketing Mix - Promotion
• Promotion refers to the various aspects of marketing
communication with the goal of generating positive
customer response. Promotion includes paid
advertising, public relations, free publicity, direct
marketing, personal selling and sales promotions
Promotion – Paid Advertising
• Advertising refers to paid-for promotion of
commercial products using a variety of media sources
directed towards particular target markets
• Advertising is designed to create favourable image
of company products in the minds of consumers
• Examples of paid advertising includes television
commercials, radio spots, newspaper and magazine
ads and company websites
Promotion – Public Relations
• Most large firms host public relations
departments which attempt to manage
the image and reputation of not only
the products but also the firm itself
within the larger community
Promotion – Publicity
• Publicity refers to media promotion of firms
and their products that the company did not
pay for directly, e.g., newspaper article or
televised news report
• Firms may attract either good or bad publicity
within the media depending on the media
source’s point of view
Promotion – Direct Marketing
• Direct marketing allows firms to
communicate directly with their
customers (often against their will) and
includes telemarketing, junk mail, email
spam, online pop-up ads and outdoor
advertising such as billboards
Promotion – Personal Selling
• Personal selling (or point-of-sale
merchandising) refers to face-to-face
salesmanship such as that seen in retail
outlets between salesperson and potential
customer
• Ultimate goal of personal selling is to either
close the deal, upsell or cross-sell to the
customer
Promotion – Sales Promotions
• Sales promotions are designed to increase
consumer awareness and sales volumes and
may include coupons, special events, free
samples, contests and premiums or
conditional giveaways such as BOGO offers
and customer loyalty cards
The Marketing Mix Summary
Marketing Mix – The Two Cs
• The marketing mix also refers to
the two Cs: consumers and
competition
The Marketing Mix - Consumers
• Marketers must determine the demographic
characteristics (e.g., age, gender, income
and education levels, etc.) of their target
market, or most typical potential consumers
The Marketing Mix - Consumers
• Marketers must offer significant customer
value proposition, which refers to the
benefits that consumers derive from the use
of certain goods and services
The Marketing Mix - Competition
• Marketers must also be cognizant of their
direct (similar product) and indirect
(discretionary income) competition
The Marketing Mix - Competition
• Marketers must attempt to gain competitive
advantage through (i) lower production costs
per unit via economies of scale (ii) lower
marketing and distribution costs (iii) product
differentiation in terms of price, quality and unique
features and (iv) brand equity (awareness, loyalty
and insistence)
Activity: Put the following products
on the Product Life Cycle (PLC)
• CD
• DVD
• iPhone
• iPad
• Cell phone
• Cigarettes in
North America
• Cigarettes in the
developing
world
Activity: Put the following products
on the Product Life Cycle (PLC)
• MS-DOS
• Play Station 3
• Fax machine
• Kit-Kat and Aero
chocolate bars
• PC greenest
shopping bag
Group Activity
• You will be divided into groups of 4
• Each group will be assigned a different
company from www.thetimes100.co.uk/
• You are to list and explain the 4 Ps for each
company. In addition, identify competitors
and describe the typical consumer (target
market) according to: income, age, gender,
lifestyle, attitudes and beliefs