4.5 - Marketing mix

Product life cycle

shows different stages that most products go through from R&D to their final removal from the market

R&D (pre launch)

Investigating, designing and developing a product before its launched, no sales.

Launch

Product will be promoted (? on BCG matrix) high price might be set to recoup prices from R&D

Growth

Sales revenue increases as marketing efforts make the product/brand known. Focuses on product development, brand preferences, and customer loyalty.

Maturity

Product is well known in market and marketing is extensive. Focuses on keeping product as a cash cow. Profit will be high and generally stable. brand loyalty and brand value are vital aspects of product differentiation.

Decline

Final stage, products eventually become dogs (low market growth and share). Customers have less interest. Pricing might need to be lowered to produce revenue. Profits are low at this stage.

Extension strategies

Tools used to length the PLC. Eg. New features, launching limited edition.

Star

High market growth, high market share, cash neutral, hold

Cash cow

Low market growth, high market share, cash generating to fund investments

Question mark

Low market share, high market growth, cash absorbing

Dog

Low market growth, low market share, cash neutral, divest

Branding

Used to give a product/business a unique name/identity

Brand development

Part of a firm’s marketing strategy in communicating the value of a bran and what it stands for. About building sales by making more people attracted to brand.

Brand awareness

About the extent to which potential and existing customers know about the firm.

Brand loyalty

Reoccurring customers

Cost plus (mark up) pricing

Adds profit margin to the costs of production in order to determine the selling price of good/service

Advantages of cost plus (mark up) pricing

Simple and quick, covers costs, suitable for almost all good/services

Disadvantages of cost plus (mark up) pricing

Ignores prices being charged by competitors, focuses on calculating price than on demand, gives few incentives to reduce costs.

Penetration pricing

Used when launching a product in existing market of similar product. Price is usually set lower and may increase once product is established.

Advantages of penetration pricing

Low prices attract consumers, higher sales, market share may be higher.

Disadvantages of penetration pricing

High sales doesn’t mean high profits, people may assume low price=low quality, only for price sensitive markets

Loss leader

Products offered at steep discounts to attract new customers.

Advantages of loss leader

May attract customers and firms will benefit from higher sales and higher overall profits, may be used a promotional strategy to encourage customers to switch brands

Disadvantages of loss leader

firms may be accused by competitors of undercutting rivals, could be seen as an unfair practice, Customers get used to pricing

Predatory pricing

Temporarily reducing price to force rivals out of the market as they can’t compete.

Advantages of predatory pricing

can gain dominant position in market, minimizes competition and excludes financially weaker rivals, Deters new entrants

Disadvantages of predatory pricing

a form of anti-competitive behaviour, illegal in many countries, short-terms strategy - difficult to maintain

Premium pricing

charging a high price for a product

Advantages of premium pricing

consumers willing to pay a higher price, firms can focus on improving product quality and features, as customers are willing to pay high prices, profits can be maximised, can increase brand value, Can attain high status in society (luxury)

Disadvantages of premium pricing

ignores price conscious consumers as price is too high, marketing costs can be high, can’t be applied to all products, can’t be applied to markets with high competition

Above the line promotion

Everything the company doesn’t control (TV, magazine, Radio, etc.)

Advantages of ATL promotion

Reaches a wide audience, making it effective for brand awareness, Builds brand credibility through mass media exposure.

Below the line promotion

Everything the company controls (Branding, packaging, slogans, publicity)

Disadvantages of ATL promotion

High costs associated with TV, radio, and newspaper advertisements, Difficult to measure effectiveness compared to targeted marketing strategies.

Advantages of BTL promotion

Highly targeted, ensuring marketing reaches the right audience, Better engagement through direct interaction with consumers (e.g., promotions, events).

Disadvantages of BTL promotion

Limited reach compared to ATL strategies, Time-consuming to execute personalized campaigns.

Through the line marketing

combines ATL and BTL strategies for a holistic approach. It ensures consistent messaging across all channels, maximizing reach and impact.

Advantages of TTL

Combines mass reach with targeted engagement, offering a balanced approach, Data-driven marketing allows for measurable results through digital tracking.

Disadvantages of TTL

Requires significant investment in both ATL and BTL strategies, Complex execution, needing careful coordination between mass media and direct marketing.

Social media marketing

Social media marketing leverages platforms like Facebook, Instagram, and TikTok to connect with audiences, build brand awareness, and drive sales.

Advantages of SMM

Cost-effective, offering affordable options compared to traditional advertising.

Highly targeted, allowing businesses to reach specific demographics.

Engagement-driven, fostering direct interaction with consumers through comments, shares, and likes.

Disadvantages of SMM

Requires continuous content creation, making it resource-intensive.

Algorithm dependency, meaning organic reach may be unpredictable.

Intermediary

Someone who acts as a middle man

Agents/brokers

Those who negotiate on behalf of the business

Retailer

A store/company that sells directly to consumers

Wholesaler

A person/company that buys and holds store in bulk

Advantages of zero channel distribution

Low cost, fast, ideal for perishable products, producer has most control

Disadvantages of zero channel distribution

Promotion is done by producer (time consuming and expensive), producer pays all storage and delivery costs.

Advantages of one channel distribution

Promotion and customer service by retailer, costs of holding stock are incurred by retailer, retailer assists in selling.

Disadvantage of one channel distribution

Retailer also has to get paid so product might be more expensive, producer may not be aware of promotional retailer.

Advantages of two channel distribution

Wholesaler incurs storage costs, breaks bulk for retailer, good for selling over long distances.

Disadvantages of two channel distribution

2 profit mark ups could lead to more expensive product, reduces control for producers.