Managing the Marketing Mix: Product, Price, Place, and Promotion

Introduction

  • The material discusses the marketing mix including the aspects of product, price, place, and promotion.

  • Emphasis on how learning is foundational in understanding marketing strategies.

Learning Objectives

  • Objective 12-1: Explain the concept of a total product offer and summarize the functions of packaging.

  • Objective 12-2: Contrast brand, brand name, and trademark, discussing brand equity.

  • Objective 12-3: Describe the product life cycle.

  • Objective 12-4: Identify various pricing objectives and strategies, and explain the growing importance of non-pricing strategies.

  • Objective 12-5: Explain marketing channels and the value of intermediaries.

  • Objective 12-6: Differentiate wholesale and retail intermediaries and explore non-store retailing.

  • Objective 12-7: Define promotion and list traditional tools of the promotional mix.

  • Objective 12-8: Assess the effectiveness of various sales promotions.

Case Study: Katrina Lake

  • Founder of Stitch Fix:

    • Background: Grew up in San Francisco and Minnesota, initially aspired to be a doctor, shifted to economics, and became a consultant.

    • Developed Stitch Fix by merging online retail with physical stores for a unique shopping experience.

    • Utilizes in-house stylists who combine expertise with data analytics to recommend products based on customer profiles.

    • Over four million clients served, highlighting the long development process for this business model.

Product Development and Total Product Offer

  • Customer Value Perception:

    • Affected by many factors, indicating ongoing challenges in market adaptation.

    • Product development is a critical function within modern businesses.

  • Products Consumers Won't Give Up:

    • Internet service, cell phone service, discount apparel, haircuts and coloring, fast food.

  • Expendable Products:

    • Luxury handbags, satellite radio, specialty apparel, high-end cosmetics, spa treatments.

Developing a Total Product Offer

  • Evaluation Factors:

    • Products undergo evaluations on different dimensions: tangible and intangible.

    • Marketers must engage with consumers to ascertain important product features.

  • Historical Product Innovations (Great Depression):

    • Notable introductions:

    • 1929: Electric Razors

    • 1930: Car Radios, Supermarkets

    • 1933: Chocolate Chip Cookies, Laundromats

  • Product Replacement Trends:

    • Examples include:

    • Friendster → MySpace → Facebook

    • Nokia → Blackberry → iPhone

    • TiVo → Blockbuster → Netflix

Total Product Offer Components

  • Components include:

    • Access, speed of delivery, service, brand image, consumer's past experience, and packaging.

  • Product Lines and Mix:

    • Product line: Group of items for a similar market facing similar competition.

    • Product mix: A manufacturer's collection of product lines.

  • Product Differentiation:

    • Creating real or perceived differences in products, requiring a unique image to help small businesses capture market share.

Innovative Packaging

  • Innovative packaging enhances product appeal.

  • Functions include:

    • Attracting attention, protection, information provision, and presentation of benefits and warranties.

  • Increasing Role of Packaging:

    • Has a growing promotional responsibility; includes legislative aspects such as the Fair Packaging and Labeling Act and bundling strategies.

Branding and Brand Equity

  • Brand Definition:

    • A means of identifying a product.

  • Brand Name:

    • Distinguishes products, increasing attractiveness.

  • Trademark:

    • Provides legal protection for a brand.

  • Brand Equity:

    • Value of the brand name and associated symbols, with brand loyalty at its core.

    • Advertising and sponsorships are crucial for brand awareness.

Product Life Cycle

  • Stages of Product Life Cycle:

    1. Introduction: New products enter the market.

    2. Growth: Sales increase, product gains acceptance.

    3. Maturity: Product's market saturation.

    4. Decline: Decrease in sales.

  • Marketing Mix Adaptation:

    • Each stage requires strategic changes in product, price, place, and promotion.

  • Figure Analysis:

    • Variations in sales and profits during the product life cycle illustrated with examples (e.g., electric cars, smartphones).

  • Strategies Across Life Cycle Stages:

    • Introduction: Market testing, skimming/penetration prices, limited promotion.

    • Growth: Product improvement, competitive pricing, increased distribution.

    • Maturity: Differentiation and aggressive advertising.

    • Decline: Reduce product mix and distribution while focusing on loyal customers.

Pricing Strategies

  • Pricing Objectives:

    1. Achieving target returns.

    2. Building traffic.

    3. Growing market share.

    4. Fostering a brand image.

    5. Supporting social objectives.

  • Competitive Pricing Strategies:

    • Methods include cost-based, demand-based, and competition-based pricing.

  • Break-even Analysis:

    • Analyzes profitability across varying sales levels, examining fixed and variable costs.

  • Additional Strategies:

    • Skimming, penetration, everyday low pricing, high-low pricing, psychological pricing.

  • Non-price Competition:

    • Focuses on product differentiation and consumer benefits, particularly with services and value-added offerings.

Channels of Distribution

  • Definition of Marketing Intermediaries:

    • Organizations that facilitate the distribution of goods from manufacturers to consumers (agents, wholesalers, retailers).

  • Channels of Distribution Efficiency:

    • Intermediaries perform essential tasks in a cost-efficient manner, adding value exceeding their costs.

  • Wholesale vs Retail:

    • Retail sales (direct to consumers) vs wholesale sales (business-centric).

  • Retail Distribution Strategies:

    • Intensive, selective, and exclusive distribution strategies are utilized based on product type.

  • Types of Retail Stores:

    • Defined by their product offerings and pricing strategies: department stores, discount stores, supermarkets, etc.

Non-store Retailing

  • Growth in online retailing, brick-and-click stores, telemarketing, and vending machines presents modern retail challenges and opportunities.

Promotion and Promotion Mix

  • Promotion Mix Definition:

    • The set of promotional tools used by an organization to support marketing objectives.

  • Integrated Marketing Communication:

    • Combining promotional tools to create a cohesive strategy.

  • Traditional Promotion Elements:

    • Advertising, public relations, personal selling, sales promotion.

  • Advertising Strategies:

    • Involves reaching audiences through various media, evaluating advantages, and examining effectiveness.

  • Social Media and Online Advertising:

    • Measure engagement, target specific audiences, adapt to trends.

  • Public Relations and Personal Selling:

    • Importance of building relationships and managing consumer perceptions.

  • Sales Promotion Techniques:

    • Used to boost sales through incentives, sampling, and events.

Conclusion

  • Manage the promotion mix effectively to meet diverse consumer needs and adapt to changes in retail environments, leveraging technology for optimal outcomes.