A-Level Business: Marketing Mix & Strategy

• Study notes for "1.3 Marketing Mix & Strategy" from an A-Level Business perspective.

Marketing Mix Introduction

• The marketing mix, or the 4Ps, is a framework for creating and implementing effective marketing strategies.
• The 4Ps: Product, Price, Place, Promotion, satisfying a target market's needs while achieving company objectives.
• Businesses can differentiate themselves by understanding and manipulating the marketing mix.
• A marketing mix maximizes marketing impact and achieves long-term success.

The Design Mix

• Includes function, aesthetics, and cost.
• Balancing function, aesthetics, and cost results in products that are functional, attractive, and cost-effective.
• Some manufacturers aim to balance all three, but may focus on one aspect more
• E.g. Fentimans focuses on all three elements of the product design while Asda focuses on cost

Function

• The product's function refers to its intended purpose and specific tasks it is designed to perform.
• Function is the most important aspect of its design.

Aesthetics

• Aesthetics refers to the product's visual and sensory appeal, including its form, shape, color, and texture.
• Aesthetics play an important role in attracting customers, creating brand loyalty, and generating positive word of mouth.
• E.g. Apple products are known for their pleasing looks and use of quality materials

Cost

• Production cost must be considered when designing a product, as it directly affects the price point.
• Well-designed products balance cost and value.

Changes in Design Mix Due to Social Trends

• Social trends: changes in people's attitudes, behaviors, and lifestyles.
• Companies adapt products to remain relevant to the current social trends.
• Social trends can significantly impact the product design mix, mainly regarding concerns over resource depletion and ethical sourcing

Social Trends Which Require Adaptation of The Design Mix

• Resource Depletion: Customers becoming more aware of conserving natural resources and reducing waste.
• Change product design mix aiming for waste minimization, re-use, and recycling
• Ethical Sourcing: Products produced without worker exploitation or environmental damage.
• Companies change product design mix including sustainable materials and production methods.
• E.g. Tony's Chocolonely produces chocolate from cocoa farmed with 100% slave-free labor.

Branding and Promotion: Types of Promotion

• Creating customer awareness, interest, and desire for a product/service.
• Communicating business's value proposition to potential customers, differentiating from competitors.
• Building brand awareness and loyalty leads to repeat purchases and referrals.
• Promotion element includes a variety of promotional methods.
• Each method has its own advantages and disadvantages.
• Businesses select the most appropriate methods for their product/service, target audience, and budget.

Promotional Strategies: Advertising

• Advertising: promotion through channels such as television, radio, print media, and online ads.
• Advantages: can reach large audiences and increase brand awareness.
• Disadvantages: can be expensive, and often difficult to measure the effectiveness.

Promotional Strategies: Direct Marketing

• Direct Marketing: communication with customers through email, text, social media, or post.
• Advantages: target specific audiences and personalize the message to individual customers.
• Disadvantages: can be intrusive (perceived as spam) and costly, especially without an established customer database.

Promotional Strategies: Sales Promotions

• Sales Promotions: techniques encourage product purchase by offering incentives or discounts.
• Advantages: boosts sales/customer engagement, clears out stock, and encourages impulse purchases.
• Disadvantages: can be expensive and attract deal-seeking, not loyal, customers.

Promotional Strategies: Personal Selling

• Personal Selling: salesperson interacts with potential customers one-on-one.
• Advantages: build relationships with customers, understand their needs, and provide personalized service.
• Disadvantages: can be expensive, limited as it's difficult to scale to large audiences

Promotional Strategies: Sponsorship

• Sponsorship: financial or other support to an event, team, or organization for marketing exposure.
• Advantages: builds brand awareness, credibility, and emotional connections.
• Disadvantages: can be expensive and may not directly drive sales.

Promotional Strategies: Public Relations

• Public Relations: building relationships with the public and managing reputation.
• Advantages: enhances reputation/credibility and leads to increased customer loyalty/sales.
• Disadvantages: can be time-consuming, difficult to measure for direct impact on profits

Promotional Strategies: Digital Communications

• Digital Communications: marketing delivered electronically, like social media, SEO, and mobile apps.
• Advantages: highly targeted, provides real-time engagement and feedback.
• Disadvantages: can be easily ignored, requires investment in technology/data infrastructure.

Types of Branding

• Branding: creating a unique and identifiable name, design, or symbol to differentiate a product/company from competitors.
• Branding is important for establishing recognition/identity, building trust/credibility, differentiating a business, emotional connection with customers and improving support to marketing/advertising efforts.

Types of Branding: Manufacturer/Corporate

• Manufacturer/Corporate Branding: company name/logo to promote all products/services offered.
• Used by companies like Nestlé, Nike, and Apple.

Advantages of Corporate Branding

• Creates strong brand recognition and reputation to increase customer loyalty/trust.
• Allows leveraging existing reputation/customer base to introduce new products easily.
• Builds economies of scale through promotion of multiple products, reducing marketing costs and improving profitability. Disadvantages of Corporate Branding
• Damages reputation if an individual product has an issue.
• Intense competition in one market can affect sales in others.

Product Branding

• Product Branding refers to the use of a unique name, design, or symbol promoting a specific product.
• Used by KitKat, Coca-Cola, and McDonald's Big Mac.

Product Branding: Advantages

• Creates distinct identity for the product, differentiating from competitors and increasing brand loyalty.
• Allows the company to market products to different market segments.
• Can build customer loyalty/trust by associating the product with a specific quality/benefit.

Product Branding: Disadvantages

• Creating/promoting a new brand for each product is expensive.
• Introducing new products under different brands is difficult as businesses must build it from scratch.
• Varying quality levels among different brands can affect customer satisfaction.

Own Brand vs Private Label Branding

• Own Brand: retailer's name promoting a specific product or service.
• Often used by supermarkets.

Own-Brand Advantages

• Allows retailers to differentiate from the competition offer unique products.
• Offers products for lower cost than branded improving sales and increasing profitability.
• Builds customer loyalty to exclusive products.

Own-Brand Disadvantages

• Products may have lower perceived quality than branded.

The Benefits of Branding

• Added Value: Strong branding can add value to a product by creating a perception of quality, reliability, and trust.
• Ability to Charge Premium Prices: Customers are more willing to pay more for products associated with a well-established brand.
• Reduced Price Elasticity of Demand: Customers are less sensitive to price changes.

Building a Brand

• Achieved through unique selling points (USPs), advertising, sponsorship, and social media.

Social Trends Impacting Branding & Promotion

• Companies that quickly respond to changing social trends better meet customer needs.
• Adapting strategies maximizes communication, develops brand loyalty, & increases profits.
• Current trends: viral marketing, social media, and emotional branding.

Viral Marketing

• When businesses use online platforms to promote their products by creating content which can easily be shared and commented on
• Campaigns emphasizing community ran by Coca-Cola and McDonald's during the COVID-19 pandemic.

Social Media

• Social media enables businesses to promote their products through influencer partner

Emotional Branding

• Strategy where companies build strong emotional connections with their customers by appealing to their values.
• E.g. Patagonia and TOMS have built brand identities around their commitment to environmental/social causes.

Pricing Strategies

• Choosing the right strategy is essential for profitability, competitiveness, and long-term success.

Cost-Plus Pricing

• Cost-Plus Pricing: business calculates production cost and adds a markup.
• Works by covering the cost of production plus the business's desired profit margin.
• Simple to calculate; commonly used by manufacturers of standardized goods

Price Skimming

• Price Skimming: business sets high price for new product/service when first introduced to market.
• Effective for established brands introducing new products with high demand.

Penetration Pricing

• Penetration Pricing: business sets low price for new product/service with initial introduction.
• Effective when capturing market share quickly, attracting price-sensitive customers.

Predatory Pricing

• Driving competitors out of the market.
• Illegal in many countries due to anti-competitive effects.

Competitive Pricing

• Business aligns prices with competitors'.
• Effective in highly competitive markets.
• Requires continuous monitoring and adjustments.

Psychological Pricing

• Considers customer emotions, beliefs, and attitudes.
• Ending prices in .99 to make the price seem lower.

Influencing Price Strategy

• Understanding customers, competitors, and costs.
• Pricing positions the brand in the market.

Choosing a Pricing Strategy

• Number of USPs/differentiation.
• Price elasticity of demand.
• Level of competition.
• Strength of the brand.
• Stage in the product life cycle.
• Costs and need to make a profit.

Social Trends Change Pricing To Account For

• Online Sales offer customers convenience and 24/7 accessibility.
• Retailers have shifted their focus adjusting to dynamic pricing.
• Real-time adjustment of prices based on factors such as supply, demand, and competition.
• Prices higher when supply is lower and vice versa
• Price comparison websites; customers compare prices easily (lower prices, price matching, and pricing algorithms)

Distribution Channels

• Distribution channels refer to various intermediaries where goods and services move from manufacturer to end customer.

4-Stage Distribution

• Traditional channel: producer, wholesaler, retailer, and consumer.
• Grocery, clothing, and electronics products.

3-Stage Distribution

• Producer sells directly to the retailer, eliminating the wholesaler stage.
• High-demand products or where distribution costs are high.

2-Stage Distribution

• Channel eliminates both wholesaler and retailer stages, with the manufacturer selling directly to the end consumer.

Social Trends Are Changing Distribution Strategies Too

• E-commerce growth: online distribution.
• Increased popularity due to convenience and accessibility.
• Use drop-shipping selling products without holding stock.
• Product to service; consumer value for experience.

The product life cycle Definition

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

The product life cycle stages

• Development, introduction, growth, maturity, and decline.
• Implications for cash flow and marketing vary.
• Tailored marketing strategies to manage cash flow for long-term profitability.

Product Life Cycle: Development

• Designing and developing a product.
• High costs for R&D, market research, and product testing with negative cash flow.
• Marketing focuses on awareness and interest.

Product Life Cycle: Introduction

• Begins when the product is launched.
• Slow sales growth/product is still new and unknown to potential consumers.
• Cash flow is usually negative with high promo, advertising and distribution.
• Marketing seeks awareness and interest.

Product Life Cycle: Growth

• Rapid rise in sales.
• Focus on increasing market share and production increase with positive cash flow.
• Marketing seeks competitive differentiation and brand loyalty.

Product Life Cycle: Maturity

• Slowing sales growth at its peak.
• Continued positive cash flow and reducing costs with low marketing costs.
• Marketing aims to maintain market share/profitability by cutting costs and reaching new markets.

Product Life Cycle: Decline

• Sales decline/the product is obsolete.
• Turns negative with sales revenue declines and costs increase.
• Possible strategies involve discontinuing, reduce prices to clear inventory, or find new uses.

Extension Strategies to Product Life Cycle

• Extend the life of a product beyond its natural life cycle.
• Designed to boost sales and maintain profitability.
• Product-related and Promotion-related.

Product Related Strategies

• Modification to make more appealing to customers.
• Product improvements/new software version/line extension/repositioning.

Promotion Related Strategies

• Change marketing/promotion to extend its life, and consider more changes.
• Advertising/price/sales promotion.

Boston Matrix and Product Portfolio

• The Boston Matrix is a tool used to evaluate the current state and future potential of a firm's product portfolio.
• The Boston Matrix classifies products into four categories based on market share and marketing and profitability.

Boston Matrix Sections

• Cash cow/Problem Child/Star/Dog/

Cash Cow Classification

• Products with a high market share in a mature market.
• They generate significant positive cash flow but have low growth potential.
• Cash cows are valuable assets and can be used to fund the development of new products.
• Companies minimize investments to maintain stable income

Problem Child Classification

• Problem child or question mark have a low market share in a high-growth market.
• There is often a negative cash flow needing investment to increase.
• Also known as a question mark needing higher investment or turn into stars and generate revenue.

Star Product

• Star have have products that are both high market growth and have both large market share.
• They generate significant positive cash flow and increase in profitability.

Dog Product

• Dogs have neither high market share or high growth.
• Company generates little revenue with these and usually look for areas to divest investment in production.

Mass / Targeted Markets

• Depends on marketing stratagies such as niche, business (B2C) etc...

Marketing Strategies For Mass Market

• Usually uses TV, radio, and print adds to make a strong brand resonation.

Niche Market Startegies

• Characterized with small targeted groups to build a loyal and targeted markeing strategy.

Business To Business Market Strategies

• Sell products or services to other business with a focus on building a relationshio with long terms partnerships.

Consumer Market Startegies

• Directly sell products with build and emphaize loyal customer loyalty.

Strategies for Costumer Loyaty

• Three commonly used methods of building customer loyalty include providing excellent customer service, offering loyalty cards, and offering saver schemes.