Marketing Mix Flashcards

Marketing Mix

Introduction

The marketing mix consists of the key decisions that must be made for the effective marketing of a product. It is composed of four interrelated decisions, often called the 4Ps: product, price, promotion, and place.

The 4Ps of Marketing

1. Product

• Definition: A good or service produced to satisfy consumer needs and wants.
• Includes both consumer and industrial goods and services.
• Tangible Attributes: Measurable features of a product that can be easily compared with other products.
• Intangible Attributes: Subjective opinions of customers about a product that cannot be measured or compared easily.
• Brand: The distinguishing name or symbol used to differentiate one manufacturer’s products from another.

2. Price

• Definition: The amount of money customers must pay to purchase a good or service.
• Determines the degree of value added by the business to bought-in components.
• Influences revenue and profit due to the impact on demand.
• Reflects the marketing objectives of the business and can help establish the psychological image and identity of a product.

Importance of Pricing

Pricing is important because it directly impacts revenue and profitability. It also plays a significant role in shaping consumer perception of a product.

Determining Appropriate Prices

Managers consider various factors to determine appropriate prices:

• Costs of production.
• Competitive conditions in the market.
• Competitors’ prices.
• Business and marketing objectives.
• Price elasticity of demand (PED).
• Whether the product is new or existing (skimming or penetration pricing).

Price elasticity of demand (PED): Measures the responsiveness of demand following a change in price.

3. Promotion

• Definition: The use of marketing communication methods to inform, persuade, and remind potential and existing customers about a product or brand to increase sales and brand awareness.
• Involves communicating with customers or potential customers to persuade them to purchase the good or service.

Importance of Promotion

Promotion is important because it:

• Increases awareness of products.
• Creates images and product ‘personalities’ that consumers can identify with.

Promotion Objectives

• Increasing sales by raising consumer awareness of a product.
• Increasing consumer recall of an existing product and its distinctive qualities.
• Increasing purchases by existing consumers or attracting new consumers to the brand.
• Demonstrating the superior specification or qualities of a product.
• Creating or reinforcing the brand image or personality of the product.
• Correcting misleading reports about the product.
• Improving the public image of the business.
• Encouraging retailers to hold inventories of the product and actively promote products to the final consumer.

4. Place

• Definition: The methods and channels used to ensure that products are available to customers at the right location and time.
• Involves decisions about how products should pass from manufacturer to the final customer through channels of distribution.

Importance of Place Decisions

• Consumers may need easy access to a firm’s products to allow them to try them and see them before they buy.
• Manufacturers need outlets for their products that give as wide market coverage as possible.
• If price is very important, using few or no intermediaries would be an advantage.

Product Development

Importance of New Product Development

1. Changing consumer tastes and preferences
2. Increasing competition
3. Technological advancement
4. New opportunities for growth
5. Risk diversification
6. Improved brand image
7. Use of excess capacity

Product Differentiation and Unique Selling Point (USP)

A feature of a product that makes it different from and better than other similar products and that can be emphasized in advertisements for the product.

Product Positioning

• Definition: The consumer perception of a product or service as compared to its competitors.
• Businesses analyze how the new brand will relate to the other brands in the market, in the minds of consumers.
• The first stage is to identify the features of this type of product considered to be important to consumers – as established by market research.
• Key features might include price, quality of materials used, perceived image, and level of comfort offered.

Promotion Mix

• Definition: The combination of promotional techniques that a firm uses to sell a product.
• Includes advertising, sales promotion, direct promotion, publicity, and public relations.

Brand Awareness and Brand Image

• Brand Awareness: The level of recognition and association by a potential customer towards your products and services.
• Brand Image: Image or identity given to a product to give its own personality and differentiation from other brands.

Integrated Marketing Mix

An integrated marketing mix ensures that all elements of the 4Ps align to create a cohesive and effective marketing strategy. A poorly integrated marketing mix can lead to consumer confusion and reduced sales.