3.4 marketing mix

marketing mix def

combination of elements used by a business to enable it to meet the needs and expectations of customers

7 Ps

product

place

price

promotion

people (who makes contact with the customers)

process (processes that make and deliver the product)

physical environment

what is an effective marketing mix

• achieves marketing objectives

• meets customer needs

• is balance and consistent

• creates competitive advantage

influences on the marketing mix

• business resources - finance

• technology

• importance of customer relationship

• political and legal factors - laws

• economic factors - growth

• social factors - environmental concerns

• technological factors - social media marketing

• competition factors - enhancing the products features

consumer products

brought by final consumers for personal consumption

• convenience product - brought frequently

• shopping product - brought less frequently, require thought

• speciality products - unique characteristics, buyers make special effort

industry products

brought for further processing

• materials and parts - raw materials

• capital items - goods used for production or operations

• supplies and services - energy

introduction stage

• new product launched

• low sales

• low capacity utilisation

• high unit cost

• heavy promotion

• negative cash flow

growth stage

• expanding market

• fast growing sales

• rise in capacity utilisation

• cash flow may become positive

• unit costs fall in economies of scale

maturity stage

• slower sales as rivals enter the market

• high capacity utilisation

• high profits

• prices and profits start to fall

decline stage

• falling sales

• decline in capacity utilisation

• market saturation

• decline in profits

why products decline

• technological advancements

• changes in consumer habits

• increased competition

• failure to innovate

extension strategies

• lower prices

• change promotion

• change product

• develop new market segment

• reposition the product

boston matrix

• an example of product portfolio analysis

• helps firms decide on appropriate market strategies

problem child / question mark

• high growth, low market share

• requires large investment

• heavy promotional spending

• expensive to maintain

• future cash cows

stars

• high growth, high market share

• heavy promotional spending, expensive to maintain

• future cash cows

cash cows

• high market share, low growth

• constant stream of profit

• reinvest in new product ideas

dogs

• low market share low growth

• limited growth potential

• fulfil niche market

• can generate profits

what are price takers and makers

• price taker - have no option but to charge the current market price

• price makers - able to fix their own prices

• price leaders - market leaders whose prices are followed by rivals

• price followers - follow the market leaders price

what is price skimming

• set a high price to maximise profit (can drop it later)

• objective is to maximise profit to recover development cost

ADV of price skimming

• works well for products that create excitement amongst early adopters

• best used in introduction or growth stage

what is penetration pricing

• offer a product at a low price to start

• aim is to gain market share and build customer loyalty

• price is increased when target market share has increased

uses of promotion

• main aim is to ensure customers are aware of the product and let them know its better than rival products

• increased sales

• attract new customers

• launch new product

• create an image

advertising

• used for mass marketing

• TV, radio, newspaper

• consumers see many adverts each day

personal selling

• person on person

• two way communication

• high prices low volume

direct marketing

• promotional material directed through

  • email, social media

• allows business to generate a specific response

• ADV

  • increasing sales to existing customers

  • building customer loyalty

  • generating new business

value of Boston matrix

• useful tool for analysing product portfolio decisions

• ignores issues like developing a sustainable competitive advantage

DIS price skimming

• potential alienation of customers due to high initial prices

• limited sales volume if product isn’t accepted widely by the market

• vulnerability to competitors who enter the market with lower prices alternatives

ADV penetration pricing

• rapid market growth

• highly competitive

• customer loyalty

DIS penetration pricing

• low initial profit margins

• difficulty of raising price after initial period

  • especially if product is price elastic

sales promotion

short-term incentives aimed at boosting sales, such as discounts, coupons, or special offers

ADV direct marketing

• increasing sales to existing customers

• building customer loyalty

• generating new business

public relations

• crate goodwill towards a business or product

• achieve favourable publicity

• improves brand image and reputation

sponsorship

takes place when a payment for an event, person or organisation is given in return for direct promotional benefits and brand exposure

branding def

• establishing a distinctive and lasting identity for a product or service in the minds of consumers

• needs to be carefully managed

• a successful brand can create desirability

• provides business with a USP

ADV branding

• encourages repeat purchases

• differentiates a businesses

• easier to get retailers to stock your product

• reduce price elasticity

DIS branding

• high advertising cost

• high R and D costs

value of new product development

• process of creating and introducing new products to meet consumer needs and enhance market competitiveness

• increased sales and brand growth

distribution def

to make products available in the right place at the right time in the right quantities

distribution channel

moves a product though the stages from production to final consumption

direct distribution channel

sells products directly from manufacturers to consumers without intermediaries

indirect distribution channel

involves intermediaries such as wholesalers or retailers to sell products to consumers

multi channel distribution

a strategy that uses multiple channels to reach consumers, combining both direct and indirect distribution methods for product delivery

retailer

• final step in the distribution chain

• deals directly with customer

• choose final price

• hold stock

wholesalers

• buy in large quantities to sell to retailers

• reduce producers transport costs

• make money buy bulk buying at a low price from producers and adding a margin

distributor

• an intermediary that sells products to retailers or directly to consumers, providing a critical link in the supply chain

• usually specialise in a particular industry

• offer products from many producers

• hold stock

• producer - distributor - consumer

agents

• specialist type of distributor

• does not hold stock

• tend to work in tertiary sector (services)

• earn commission based on sale achieved

• producer - agents - consumer

what type of distribution

• channel length channel to use (direct or indirect)

• choice of intermediary

• one or several channels

• control over channel

• geography - where do customer live

• better se of resources

• retailing expertise

• segmentation

• business size

• nature of product - perishable, fragile

importance of an integrated marketing mix

a unified approach that aligns product, price, place, and promotion strategies to effectively meet customer needs and maximize impact on the market

ecommerce

the buying and selling of goods and services over the internet, facilitating transactions through online platforms

ADV ecommerce

• allows businesses to reach a global audience, breaking geographical barriers

• reduced overhead costs compared to traditional stores

• convenience, customers can shop 24/7 from anywhere with internet access

• e-commerce platforms can offer personalised shopping experiences based on consumer data

• businesses can easily scale operations without the need for physical locations

DIS ecommerce

• increased competition

• dependency on technology

• limited customer interaction

• start-up cost

digital marketing

• promoting products or services using digital channels, such as social media and email

• aims to reach consumers where they spend a significant amount of their time online

ADV digital marketing

• large customer base

• cost effective

• allows for targeting market segments

DIS digital marketing

• including rapid technological changes

• high competition

• need for continuous adaptation

social media marketing

promoting products or services through social media platforms, engaging with customers directly and building brand awareness

ADV social media marketing

• reaches a wide audience

• fosters customer relationships

• allows for real-time feedback

Disadvantages social media marketing

• can result in negative feedback

• requires constant attention

• can be time-consuming to manage