1.4.3 The marketing mix

the 4 Ps

• price

• product

• place 

• promotion

Product

• quality of raw materials

• packaging

• look, texture, taste

• function + reliability

• cost of making the product

• design mix → cost, functions, aesthetics

price: new product

• price skimming → high price due to USP

• can set this price if you are unique in the market (no competitors)

• set a high price and take advantage of high profits for as long as possible

• in longer term competitors will make similar products and sell cheaper so you will have to lower your price to stay competitive

price: penetration pricing

• when launching a product in a competitive market

• set initial price lower than competitors to gain a ‘foothold’ in the market and get customers to buy

• uin long term once you have loyal customers you can raise your price ‘in line’ with your competitors

Price war

• danger of price war in competitive market

• competitors keep lowering prices to be cheaper than each other

• no one wins

• weaker firms go bankrupt so reduces choice for customers

• firm left has power to raise prices

• firms lose profit and customers lose choice

Price: established in market

• competitor based pricing -. price inline with competitors in a highly competitive market eg pasta sauce

• cost-plus pricing → used in business where you can easily work out the cost and then and % profit margin on top eg restaurants

• premium pricing → used when you have no competition/product USP → high price set

Pricing technique’s seen everywhere

• psychological pricing → £4.99 instead of £5

• loss leader → cheap products at front of stores to draw in customers / cheap printer but expensive in

Place 

• proximity to customer/market

• proximity to raw materials

• proximity to labour

• proximity to competition

What guarantees a massive market with location?

• physical location - rent

• e-commerce - save costs

How does distribution work?

• producer direct to consumer (eg farm shop, Nike)

• producer to retailer to consumer (or E-tailer eg amazon)

• producer to wholesaler to consumer (eg costco)

• producer to wholesaler to retailer to consumer

• producer to agent to consumer

retailer (positives & negatives)

• many businesses sell their products through retailers with physical stores that customers can visit

• + customer can physically touch & test products before buying

• +shop assistants are on hand to help

• - physical shops have high running costs

• - cheaper to buy items online

• - difficult to compare prices across stores

E-tailers

• sell products online, enabling customers to shop without physically visiting a store

• + open 24/7

• + fixed costs are lower so lower prices

• - heavy competition can make it hard to find website

• - can’t physically touch & test products before buying

advertising

paying for messages about products/services to broad audiences

ways of promotion

• newspapers

• advertising

• magazines

• paid social media

• billboards

• television

• radio

• cinema

newspapers

• - not many people read physical copies of newspapers

• - can’t reach customers on a global scale

• falling circulation for physical newspaper but still online version

• + target audience

• - expensive

magazines

• + reach specific target audience depending on mag type eg fishing

• + good for target audience that reads magazine

• - missed opportunity to target other audiences

• - expensive

• - long time before printing

•  -lots off competitors 

• - falling circulation

paid social media

• + wide audience  

• +target audience

• - expensive 

• - can’t skip

• easily pass by

billboards

• + lots see it everyday

• + responsive to changes - now all digital

• + target audience

• - expensive

• - might miss them as passing by

• - easily forgettable

television

• + target audience Love Island , Coronation Street

• + big audience reach brand audiences

• + timing matters

• - skip ads 

• - don’t watch live TV

• - expensive

radio

• + reach nationwide audience

• + relatively cheap

• + can play on Tv

• - can turn of boring adverts

• - lots of competition

• -  don’t listen to radio as much

Cinema

• + cheap

• + target audience

Branding

• a brand is a name, symbol, design that identifies a business/product and differentiates it from competitors

• developing a recognisable brand, liked by consumers is vital to a brand’s success

• expensive but is done effectively can build customer loyalty & enable the firm to charge a premium price

Sponsorship

• involves a business paying to have its brand associated with a person, event/organisation

• + it raises firm/product profile

• + can reach a huge audience and develop an association with successful entity

• - sponsorship can be costly

• - brand damage can occur if the sponsored party receives negative publicity

sales promotions

• special offers involve discounts/deals that can run for a limited time (BOGOF)

• product trials → give customers a taste of a new product & and aim to entice them to buy the product

social media posts

• relatively cheap (updates, photos. IT staff)

• can go viral positively

• large audience

• can go viral negatively

• can damage brand

• loss of control 

• everyone can post on tripadvisor

uses of tech

• target online advertising

• → makes use of cookies to track websites people visit

• → allows firms to market product to people searching for similar items/within area

• viral advertising

• → users spread business message through sharing promotional ad 

• → calls for careful planning & high levels of creativity

• → if done well it can reach a huge audience

• E-newsletters

• → email updates sent to subscribers

• → cost effective means of communication

Integrated marketing

• the process of unifying all aspects of marketing communications

• → advertising, PR, social media

• → using the respective mix of media, channels & tactics to deliver seamless & customer-centric experiences

Examples of integrated marketing

• changing customer needs/social trends → products/services

• more people gluten/dairy intolerant/allergic → ‘free from’ foods + plant based milk

• vegetarian/vegan → more options in supermarkets/restaurants

• changing understanding of skin → makeup/creams

• globalisation/migration → world cuisines

benefits of e-commerce (6)

• cheaper costs

• lower fixed costs as don’t have to pay rent and utility bills

• more profit as costs are lower / could use money to expand business

• able to find range of customers worldwide

• products will reach a larger audience

• which increases sales revenue