sectrion 3 - marketing mix and strategy

Marketing Mix

The marketing mix (4Ps of marketing) provides a framework for businesses to create and implement successful marketing strategies.

4Ps of Marketing

The 4Ps represent the key elements of a marketing strategy: product, price, place, and promotion.

Marketing Strategy

These four components work together to satisfy the needs and wants of a target market while achieving the company's objectives.

Differentiation

By understanding and manipulating the marketing mix, businesses can differentiate themselves from competitors.

Design Mix

The product design mix refers to the combination of elements that make up a product's design.

Elements of Design Mix

These elements include function, aesthetics, and cost.

Function

The function of a product refers to its intended purpose and the specific tasks it is designed to perform.

Importance of Function

A product's function is the most important aspect of its design because it determines how well the product will meet the needs of its intended users.

Aesthetics

Aesthetics refers to the product's visual and sensory appeal, including its form, shape, colour, and texture.

Balancing Design Elements

Balancing the elements of function, aesthetics, and cost helps the product design to be both functional and attractive, while also being cost-effective for both the manufacturer and the consumer.

Product Quality

E.g. A multi-plug adaptor that breaks after one month of use will be seen by customers to fulfil its function.

Cost-Effectiveness

Some manufacturers aim to balance all three elements e.g. Fentimans ginger beer is relatively affordable and is packaged in eye-catching bottles and the product itself is very good quality.

Marketing Impact

A marketing mix is an essential tool for any company looking to maximize its marketing impact and achieve long-term success.

Profitability

Each business combines the different elements of the marketing mix in unique ways to maximize their profitability.

Aesthetics

Aesthetics play an important role in attracting customers, creating brand loyalty, and generating word of mouth recommendations.

Cost of Production

The cost of production must be considered when designing a product, as it directly affects the price point at which it can be sold.

Social Trends

Social trends refer to changes in attitudes, behaviours and lifestyles of people.

Design Mix Adaptation

Changes to any of these require companies to adapt their products to remain relevant to their customers.

Durability in Design

Companies may choose to design products that use fewer materials, are more durable, and can be easily disassembled for recycling or repair.

Sustainable Materials

Companies may change their product design mix to incorporate sustainable materials and production processes.

Advantage of Sponsorship

Can help to build brand awareness and credibility.

Disadvantage of Sponsorship

Can be expensive, especially for high-profile events or properties.

Public Relations (PR)

Building relationships with the public and managing reputation.

Advantage of PR

Can enhance a business's reputation and credibility.

Disadvantage of PR

PR can be time-consuming and is difficult to measure the direct impact of PR activities on profits.

Digital Communications

Can be highly targeted to specific customer segments.

Investment in technology

May require significant investment in technology or data infrastructure.

Digital marketing

Any form of marketing or communication that is delivered electronically, such as social media, search engine optimisation (SEO), or mobile apps such as Instagram and Twitter.

Brand awareness

Can be used for building brand awareness, generating leads, or driving sales.

Branding

Branding is the process of creating a unique and identifiable name, design, symbol, or other feature that differentiates a product or company from its competitors.

Emotional connection

Branding creates an emotional connection with customers which helps to generate repeat purchases.

Economies of scale

It helps build economies of scale by promoting multiple products under one brand, which can reduce marketing costs and increase profitability.

Product branding

This refers to the use of a unique name, design, or symbol to promote a specific product.

Examples of product branding

E.g. KitKat, Coca-Cola, and McDonald's Big Mac.

Advantages of product branding

Creates a distinct identity for the product, which can help to differentiate it from competitors and increase brand loyalty.

Disadvantages of product branding

The cost of creating and promoting a new brand for each product can be expensive.

Own brand product

Own brand or private label branding refers to the use of a retailer's name to promote a specific product or service.

Examples of own brand products

E.g. ASDA chocolate, Tesco's Finest range, and Sainsbury's Basics range.

Unique Selling Points (USPs)

USPs are the features that make a product/service stand out from its competitors.

Strong Branding

Strong branding can add value to a product by creating a perception of quality, reliability, and trust.

Ability to Charge Premium Prices

Customers may be willing to pay more for a product that is associated with a well-established brand.

Reduced Price Elasticity of Demand

Strong branding can reduce the price elasticity of demand for a product, making customers less sensitive to price changes.

Building Customer Loyalty

Strong branding can help to build customer loyalty by offering exclusive products that are not available elsewhere.

Advertising

Brands can create compelling ads that resonate with their target audience, raise brand awareness, and communicate their value proposition.

Sponsorship

Partnering with events, organisations, or individuals can help brands gain exposure and build their reputation.

Social Media Strategy

With the right social media strategy, brands can build a loyal following and create a community around their brand.

Benefits of Branding

Strong branding can provide several benefits to a business, including added value, the ability to charge premium prices, and reduced price elasticity of demand.

Retailer Differentiation

It can help retailers differentiate themselves from their competitors by offering unique products.

Perceived Quality of Own Brand Products

Own brand products may have a lower perceived quality than branded products, which can affect customer loyalty and trust.

Lower Cost of Own Brand Products

It allows retailers to offer products at a lower cost than branded products, which can help to increase sales and profitability.

Building a Brand

Brands can be built using any one, or a combination of methods such as developing unique selling points, advertising, sponsorship, and social media.

Changes in Branding & Promotion

Businesses which respond quickly to changing social trends can better meet the needs of their customers.

Adaptation of Branding Strategies

Being able to quickly adapt their branding and promotion strategies will ensure that they maximise communication opportunities with their customers, which will help to develop brand loyalty and increase profits.

Current Social Trends

Three current social trends businesses are aware of and adapting to include viral marketing, the use of social media, and emotional branding.

Viral Marketing

Is a strategy where businesses use online platforms to promote their products by creating content at specific times, which can easily be shared and commented on.

Social Media Strategy

As social media platforms evolve, businesses must also adapt their social media strategies to keep up with the latest trends.

Emotional Branding

Emotional branding is a strategy where companies build strong emotional connections with their customers by appealing to their values, beliefs, and emotions.

Price elasticity of demand

A business needs to consider the price elasticity of demand when setting its prices.

Competition level

In highly competitive markets, businesses may need to set their prices low to remain competitive.

Unique Selling Propositions (USPs)

Products with many USPs and high differentiation can command higher prices.

Price elasticity and revenue

E.g. If a business is in a highly competitive market with many substitutes, lowering prices will increase revenue.

Budget airline pricing

E.g. The budget airline industry is highly competitive and airlines keep their prices low to increase demand.

Premium pricing example

E.g. Dyson vacuum cleaners have unique features which allow the company to charge a premium price.

Price elasticity and pricing strategy

Businesses should set lower prices if the product is price elastic.

Less competitive markets pricing

In less competitive markets, businesses may be able to set higher prices.

Price inelasticity pricing strategy

Businesses should set higher prices if the product is price inelastic.

Brand strength and pricing

A strong brand with a loyal customer base can command higher prices.

Cost considerations in pricing

Prices must cover the cost of production and provide a reasonable profit margin.

Product life cycle pricing

In the introduction stage, prices may be set lower to attract customers and build market share.

Growth stage pricing

In the growth stage, prices can increase as demand for the product increases.

Maturity stage pricing

In the maturity stage, prices may need to be lowered again.

Price Skimming Strategy

A pricing strategy used to recover research and development costs by setting a high initial price for a new product with a strong brand identity.

Dynamic Pricing

A pricing strategy where retailers adjust prices in real-time based on factors such as demand and competition.

Online Sales

Sales conducted over the internet that offer customers convenience and 24/7 accessibility.

Price-Matching Policies

Policies where retailers agree to match the prices of their competitors to prevent customers from switching to a lower-priced competitor.

Pricing Algorithms

Automated systems used by retailers to monitor competitors' prices and adjust their own prices accordingly.

Four Stage Distribution Channel

A traditional distribution channel consisting of four stages: producer, wholesaler, retailer, and consumer.

Three Stage Distribution Channel

A distribution channel that eliminates the wholesaler stage, allowing the producer to sell directly to the retailer.

Retailers' Cost Reduction

The decrease in costs for retailers achieved by requiring fewer physical stores due to increased online sales.

Impact of Online Sales

The significant influence that online sales and price comparison sites have on retailers' pricing strategies.

Consumer Incentives

Different pricing strategies used to encourage customers to shop online rather than in physical stores.

High Demand Products

Products that often utilize a three stage distribution channel due to their high demand or high distribution costs.

Traditional Channel Example

An example of a four stage distribution channel where The Coca-Cola Company sells its product to a wholesaler, who sells it to a retailer, and then to the end customer.

Adaptation to Online Market

The necessity for retailers to continually adjust their pricing strategies to remain competitive in an online marketplace.

Real-Time Price Adjustment

The ability of retailers to modify prices instantly based on current market conditions.

Convenience of Online Shopping

The advantage of being able to shop at any time and from anywhere, which is a key feature of online sales.

Retailer Competition

The competitive pressure retailers face from price comparison sites that allow customers to easily find lower prices.

Consumer Switching

The behavior of customers moving to a competitor due to lower prices, which retailers aim to prevent through various pricing strategies.

Intermediaries in Distribution

Various entities involved in the distribution process that facilitate the movement of goods/services from manufacturers to end customers.

Pricing Strategy Justification

The process of providing reasoning for the selection of a particular pricing strategy based on data analysis.

Two Stage Distribution Channel

The two stage distribution channel eliminates both the wholesaler and retailer stages, with the manufacturer selling directly to the end consumer.

E-commerce

Online distribution has become increasingly popular due to the convenience and accessibility it offers to consumers.

Third-party logistics provider (3PLs)

Amazon is known as a third-party logistics provider.

Product Life Cycle

The product life cycle describes the different stages a product goes through from its conception to its eventual decline in sales.

Stages of Product Life Cycle

There are typically five stages in the product life cycle: development, introduction, growth, maturity, and decline.

Development Stage

The focus is on designing and developing the product.

Cash Flow in Development Stage

Cash flow is usually negative during this stage, as the company is investing heavily in the product without generating any revenue.

Marketing Strategy

Companies should tailor their marketing strategies and manage their cash flow to ensure long-term profitability and success.

Implications of Product Life Cycle

The implications for cash flow and marketing vary at each stage of the product life cycle.

Growth of E-commerce

Many businesses now generate the bulk of their sales selling on Amazon.