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.

Promotion

Promotion is an important element of the marketing mix as it plays a crucial role in generating customer awareness, interest and desire for a product/service.

Brand Awareness

Promotion helps to build brand awareness and loyalty which can lead to repeat purchases and referrals.

Promotional Methods

The promotion element of the marketing mix includes a variety of promotional methods.

Target Market Communication

The different types of promotional methods available to a business to communicate with their target market.

Advantages and Disadvantages of Promotion

Each method has advantages and disadvantages associated with their use.

Appropriate Promotional Methods

Businesses must select the most appropriate methods for their product/service, target audience and budget.

Advertising

Promotion through paid channels such as television, radio, print media (magazines), and online advertising.

Advantage of Advertising

It can reach large audiences and increase brand awareness.

Disadvantage of Advertising

The effectiveness of advertising can be difficult to measure.

Direct Marketing

Communicating directly with customers through email, text message, social media or post.

Advantage of Direct Marketing

Businesses can target specific audiences and personalise their message to individual customers.

Disadvantage of Direct Marketing

Can be intrusive as customers may perceive it as spam.

Sales Promotions

Techniques that encourage the purchase of a product by offering temporary incentives or discounts.

Advantage of Sales Promotions

Can quickly boost sales or customer engagement.

Disadvantage of Sales Promotions

Can be expensive especially if the promotion requires a heavy discounting.

Sponsorship

An agreement where a company provides financial or other support to an event, team, or organization in exchange for marketing exposure.

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.

Pricing Strategy

Choosing the right pricing strategy is essential for a business to be profitable, competitive, and successful in the long run.

Cost Plus Pricing Strategy

The business calculates the cost of production and then adds a markup to determine the final price.

Cost-Plus Price Formula

The formula to calculate the cost-plus price is Unit cost + (Markup percentage x Unit cost).

Price skimming

The business sets a high price for a new product/service when it is first introduced to the market.

The high price helps the business recover its development and marketing costs quickly.

Price skimming effectiveness

This is effective when an established brand is introducing a new product and there is a high demand for it, e.g. successive models of Apple's Macbook Air.

Price penetration

The business sets a low price for a new product/service when it is first introduced.

Once they have enough customers, the business will start to raise the price.

Price penetration effectiveness

This is effective when a business wants to quickly capture market share and attract price-sensitive customers, e.g. many new perfumes launch using penetration pricing.

Predatory pricing

The business sets prices so low that it drives its competitors out of the market.

Competitive pricing

The business sets its prices based on its competitors' prices.

Competitive pricing effectiveness

This is effective when a business is in a highly competitive market and wants to maintain its market share.

Psychological pricing

This pricing strategy takes into account the customer's emotions, beliefs, and attitudes towards the product/service.

Psychological pricing example

E.g. a business may set its prices at £9.99 instead of £10 as customers perceive the former as a better value.

Factors influencing pricing strategy

By understanding their customers, competitors, and costs, businesses can set prices that maximise revenue and profitability.

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.