Marketing Mix and Production Decisions

The Marketing Mix

The marketing mix is the combination of factors (the '7Ps') which affect a customer’s purchasing decision. Customers may buy a product if they find each of the marketing mix factors satisfactory.

People

• People is one of the 7 Ps and includes customer-facing staff, such as customer service assistants, and the employees involved in a transaction when a customer purchases a product or service.

  • For example, Marks & Spencer prides itself on the quality of its customer service which suggests that the ‘People’ factor of the marketing mix is valued by the customers of this business.

Process

• Process is one of the 7 Ps and includes the systems in place to support the transaction which the customer must deal with to complete the transaction successfully.

• For example, some doctor’s surgeries have now introduced on-line booking systems which suggests that the ‘Process’ factor of the marketing mix is valued by the customers wishing to visit the surgery.

Physical environment/evidence

• The physical environment or physical evidence is one of the 7 Ps and includes physical premises, the design, and layout of premises and the condition and placement of products within a store.

4 Ps

• These three Ps are in addition to the existing 4Ps in the marketing mix:

  • Product.

  • Place.

  • Price.

  • Promotion.

Changing the marketing mix

• As market conditions and customer tastes and preferences change, a business may update its marketing mix.

• For example, Morrisons used to emphasise the importance of its physical stores, which relates to ‘Physical evidence’, but now offers online shopping, which suggests it has re-focussed some of its effort on the importance of ‘Process’.

Factors Influencing the Marketing Mix

When a business is deciding its marketing mix, it may consider the type of product being sold and the influence this may have on the overall decision.

Availability

• Convenience items, such as basic groceries, need to be accessed quickly by customers so businesses may focus on marketing mix factors related to speed and availability.

Product information

• Shopping items, such as computer tablets and clothes, may be considered for purchase by customers for a longer period so a business may focus on the customer service ‘people’ factor so that customers can access product information easily.

Luxury products

• Specialty products, such as cars and jewellery are luxury purchases for customers. Consumers who buy luxury goods may expect sophisticated stores and customer service processes to support the transaction. Businesses operating in luxury or specialty goods is likely to focus on processes & physical evidence, whilst making sure the other Ps are consistent with their brand.

The Product Life Cycle

The product life cycle is the series of stages that a product goes through over its lifetime. Not all products last forever. They start somewhere and most products and services experience a fall in sales after a certain period of time. The stages of the product life cycle are:

Research and development

• Research and development is the stage before a product has actually been made.

• Businesses will invest in researching a certain area of the market and if they discover a business opportunity, they may then take the time and resources to develop a product or service that fits a gap in the market.

  • A pharmaceutical company may invest into researching a certain disease to see if there is a drug that might help cure it.

Introduction

• The introduction is the stage where a business introduces or launches the new product (or service) to the market.

• Marketing and advertising are important in this stage of the product life cycle because a business needs to find a way to let consumers know what the product is and that the product exists.

Growth

• Successful products often undergo a period of growth as more and more customers discover and buy the product.

• In the early days, just after introduction, the rate of growth tends to increase.

Maturity

• At this stage, the number of new customers buying the product has slowed down and the market for the product can be considered mature.

• But sales of the product are still rising, just less quickly than before (they are rising at a decreasing rate).

  • People grow a lot less between the ages of 13 and 18 when compared to age 1 and 6.

Saturation

• At this stage, the sales of the product have reached its peak and no longer increase but remain steady.

• Essentially all consumers who want the product or service have bought or acquired it.

Decline

• Changes in fashion, consumer tastes/preferences, technological advances and new competition offering similar products can all mean that the demand for a product begins to fall.

The Boston Matrix

The choice of marketing mix may depend on a product’s location in the Boston Matrix.

The Boston Matrix

Types of product in the Boston Matrix

• A dog product has a low market share and is in a market of low growth, for example DVD and CD discs.

• A cash cow product has a high market share and is in a market of low growth, for example Apple TV products.

• A star product has a high market share and is in a market of high growth, for example new iPhone smartphones.

• A question mark product has a low market share and is in a market of high growth.

Factors influencing decisions on the marketing mix

• The business’ marketing objectives may affect decisions made about the marketing mix.

• The target market may affect decisions made about the marketing mix.

• The presence and size of competitors may affect decisions made about the marketing mix.

• The type of product may affect decisions made about the marketing mix, for example whether the product is a convenience good.