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marketing mix
a set of controllable and connected variables that a company gathers to satisfy a customer better than its competitors ; also known as the "PsP in marketing ; originally, there were only 4ps but the model has been continually modified until it became 7P's.
the 7P's of Marketing
1. product
2. place
3. price
4. promotion
5. people
6. packaging
7. positioning
Products
the first p in the marketing mix ; marketing strategy typically starts with this ; marketers can't plan a distribution system or set a price if they don't know exactly what the -- will be offered to the market ; refers to any good or services that is produced to meet the consumer's wants, tastes and preferences
two types of products
1. goods
2. services
goods
these are physical items that can be touched and stored ; they are products that people buy to use or consume (ex. food, clothes and electronics)
Services
these are actions or tasks performed for someone ; they are not physical items, and you can't touch or store them (ex. teaching, healthcare, and cleaning services)
two types of goods
1. consumer goods
2. business goods
consumer goods
direct demand; buyers are scattered in different parts of the world; each purchase will generally be of a small value; the number of buyers is great; buying is influenced by emotions ; after-sale service is important; buyer may not have thorough knowledge of the goods he buys and uses
business goods
derived demand; buyers are concentrated in certain regions only; each purchase involves very high amount of money ; buyers are only limited ; buying are not influenced by emotions ; buyers has complete knowledge of the goods he buys and uses
two types of services
1. consumer services
2. professional services
consumer services
services provided to individuals for personal use or enjoyment ; help meet everyday needs or provide convenience Ex. haircutes (salon services)
professional services
specialized services provided by experts or professionals in a particular field; usually require special training or qualifications Ex. Legal Advice (Lawyers)
place
it matters for a business of any size; it is crucial part of the marketing mix; the main function of a distribution channel is to provide a link between production and consumption
stages of distribution chanel
1. channel 1, contains two stages between producer and consumer - a wholesaler and a retailer
2. channel 2, contains one intermediary; in consumer markets, this is typically a retailer
3. channel 3, a direct-marketing channel, since it has no intermediary levels, manufacturer directly sells to costumers
price
value of money in exchange for a product or service ; the amount or value that a customer gives up to enjoy the benefits of having or using a product or service
price is determined by
1. a buyer is willing to pay
2. a seller is willing to accept
3. the competition is allowing to be charged
different pricing strategies
1. penetration pricing
2. skimming pricing
3. competition pricing
4. product line pricing
5. bundle pricing
6. premium pricing
7. psychological pricing
8. optional pricing
9. cost plus pricing
10. cost based pricing
11. value based pricing
penetration pricing
price charge for product and services is set artificially low in order to gain market share, once achieved, the price is increased
skimming pricing
company charges higher price then slowly lowers the price to make the product available to a wider market because it has a considerable competitive advantage
competition pricing
sellers uses prices of competing products as a benchmark instead of considering own cost or customer demand; it has three options (price lower, price the same or price higher than competitors)
product line pricing
practice of reviewing and setting prices for multiple product that a company offers in coordination with one another; aim to maximize the sale of different product by creating more complementary rather than competitive product
bundle pricing
the act of placing several products or services together in a single package and selling for a lower price than would be charged if the items were sold separately
premium pricing
setting the price of a product higher than similar products; goal is to create the perception that the products must have a higher value than competing product because the prices are higher
pyschological pricing
the practice of setting prices slightly lower than rounded numbers, in the belief that customers do not round up these prices and so will treat them as lower prices that they really are; based on the belief that customers tend to process a price from left-most digit to the right and thus will tend to ignore the last few digits of a price
optional pricing
company earns more through cross-selling product along with a basic core product ; the main product does not have many features (and is priced low), which can be enhanced through optional or accessory products which are sold at premium by the same company
cost-plus pricing
involves adding a markup to the cost of goods and services to arrive at a selling price ; you add together the direct material cost, direct labor cost, and overhead cost for a product and add to it a markup percentage in order to derive the price of the product
cost-based pricing
pricing method which a fixed sum or a percentage of the total cost is added (As income or profit) to the cost of the product to arrive at its selling price
value based pricing
prices are set primarily on consumers’ perceived value of the product or service
