Marketing Mix: The 4P's and Extended Mix

Marketing Mix

• Marketing mix is a business tool marketers use
• Marketing mix determines a product or brand's offer
• Marketing mix is linked to the four P's: price, product, promotion, and place

4 P's (McCarthy, 1960)

• The offer to a customer can be changed by varying mixed elements
• High-profile brands increase focus on promoting and desensitize price weight

Extended Marketing Mix

• Booms and Bitner added three Ps: People, Process, Physical Evidence
• These additional Ps accommodate trends in service or knowledge-based economies

7 Ps & 7Cs

• The 7 Ps are Organisation Facing
• The 7 Cs are Customer Facing
• Product is Customer/Consumer
• Price is Cost
• Place is Convenience
• Promotion is Communication
• People is Caring
• Processes is Co-ordinated
• Physical Evidence is Confirmation

Product

• There is no point in developing produce people do not want
• Successful companies find out customer needs to develop the right product with right level of quality
• The perfect product must give value for the customer, value is derived through customer perception
• Products can be intangible; insurance policies are a product
• A system should be implemented to check what customers think about product and services

Price

• A product's worth equates to what customers will pay
• Prices needing to be competitive does not mean they need to be cheapest
• Small businesses can compete by adding services for better more valuable offering
• Pricing must yield a profit, it is the only aspect of the marketing mix that generates revenue
• Considering price as a cost to customers emphasises importance
• Price positions product in the marketplace, higher prices set higher expectations of quality
• Existing customers are less sensitive than new customers to price
• Price 'positions' in the marketplace when implementing a higher-priced added-value

Skimming

• Producers set a high price for high-end product (perfume) or uniquely differentiated technical product
• Its objective is maximum revenue before substitutes emerge
• The producer can drastically lower price to capture low-end buyers and frustrate copycat competitors

Penetration Pricing

• Firms use a marketing strategy to attract customers to a new product/service.
• This is achieved by offering a low price for product/service initial offering in order to attract customers away from competitors
• Customers are drawn by the lower price in the marketplace compared to rivals and become aware of product

Product mix pricing

• Setting prices across an entire product line is Product Line Pricing
• Pricing optional or accessory products sold with the main product is Optional Product Pricing
• Pricing products used with the main product is Captive Product Pricing
• Pricing low-value-by-products to get rid of is By-product Pricing
• Pricing bundles of products sold together is Product Bundle Pricing

Price Adjustment Pricing

• Reducing prices to reward customer responses to paying early/promoting product is Discount and allowance pricing
• Adjusting prices to allow for differences in customers, products, or locations is Segmented pricing
• Adjusting prices for psychological effect is Psychological pricing
• Temporarily reducing prices for short-run sales is Promotional pricing
• Adjusting prices for the geographic location of customers is Geographical pricing
• Adjusting prices to meet customer's characteristics and needs is Dynamic pricing
• Adjusting prices for international markets is International pricing

Place

• The location customers purchase product, and ways to distribute product need to be appropriate and convenient
• Product must be in the right place, time, and quantity, while balancing storage, inventory, and distribution costs
• Customer surveys find that delivery performance is one of the critical criteria when choosing a supplier
• Products/services means to get from producer to consumer
• The more places and the easier buying is, the better for business and consumer
• Examples of stores include Mcdonalds and Sherza venture

Types of Place

• Retail: Business/person sells to the consumer, the selling of goods straight to consumers
• Wholesaler: Buys goods from producers/vendors, keeping in warehouses, and reselling to retailers
• Direct selling: Face-to-face presentation, demonstration, product and service sales at the home/office with independent direct sales representative

Promotion

• Promotion enables a company to communicate what it can offers customers
• Activities include branding, advertising, PR, sales management, special offers, and exhibitions
• Promotion must gain attention, be appealing, convey consistent message, and provide reason to choose product

Promotion Qualities

• Should enable dialogue with customers, not be one-way
• Should communicate benefits that customer get from product
• Must grab attention, be easy to read and assist customer to identify why they should buy products

Different types of Promotional Activities

• Advertising: Generating info for promoting product/service sales
• Branding: Distinguishes product/company. Brands get trademarked and can't be used freely.

Endorsement

• A written or public statement by a group extolling the virtues of a product and suggesting the public to use
• Product endorsement from authoritative figure is key in advertising and marketing
• It is important to ensure staff are aware of the value of products and communicating this value

People

• Refers to those directly or indirectly involved in trade of product or service, mainly customer contact employees
• Employee attitudes and behavior forms customer perception of service
• Highly important because these influence customer satisfaction in turn affecting purchase intentions

Process

• The activities, procedures, protocols by which the service gets delivered to the customer
• Managing process accounts for the fact that services cannot be inventored, stored, etc
• Customer feedback tightens the process for customer needs

Physical Evidence

• Refers to the intersection between employee-customer interaction combined with tangible product
• Consists of representations of service: brochures, company stationery, business cards, reports, websites, etc
• It's most important to make service tangible even if it's intangible

Product Strategy

• Forms the foundation for a product roadmap and releases
• Enables company focus on target market instead of 'everything to everyone'

Defining Your Product Qualities

• Define target customer/market you are selling to
• Describe customer's perception vs alternatives, understand what makes yours unique
• Determine customer problem solutions, create a benefit
• State pricing and model
• Describe how you will sell product, and how target market will acquire it

Creating your Product Strategy

• Begins identifying market problems you would like to solve: interviewing target market, understanding the competition
• Will change as you learn about the market, and potentially enter others

Product Innovation

• Is the creation and the intro of a product that is new or improved
• Can include new specification, features and desirable components for an existing product

Product Development

• Also known as new product management
• Involves a series of steps containing conceptualization, design, development and marketing

7 Stages of New Product Development

• (1) Idea Generation: Develop ideas for new product to be developed in a meeting, alternatives are needed
• (2) Idea Screening: selecting an ideas. Base on if it Utilisation. Resources. Ethical Aspect
• (3) Product Concept Development: the product's concept is developed based on product needs
• (4) Marketing Strategy Development: developing the strategy that introduces the product to the market
• (5) Business Analysis: includes a review of sales, cost, and profit on a product.
• (6) Product Development: testing of product concept in physical form
• (7) Commercialization: product successfully passed testing market, and properly introduced to the market and PLC begin

Product Diffusion

• This is the process by which to market accepts a new innovative project
• The rate of diffusion is the amount of time to do that
• Consumers grouped on quickly adopt new project and new product

Innovators

• Willing to to unproven product, representative of 2.5%

Early Adopters

• 13.5% representative, early and after careful thought

Early majority

• 34% who tend to rely on what is "socially acceptable", they adopt if early adapters were right

Late majority

• 34% they are skeptical and only use product if well known

Laggards

• 16% representative that are the very very last to get project, avoid change

Product Life Cycle

• Course of product's sales and profit over time
• Deals with life of a product, commercial coast and sales measures
• The 5 stages product development, introduction, grow, maturity and decline

Why PLC

• Compnay's positioning strategy needs to shift for competitors and products
• Product need to be marketed, financially, purchasing for the life stage

Introductory stage

• low sales
• high cost per customer
• Negative profit
• Create product awareness and trial
• Offer basic product
• Use cost-plus formula
• Build selective distribution
• Persuade the product trail

Growth Stage

• Rapidly rising sales
• Average cost per customer
• Rising profit
• Maximize marketing share
• Offer extension, service, warranty
• Penetration of strategy
• Intensive distribution build
• Reduce the advantage of demand

Maturity Stage

• Peaking
• Low cost per customer
• High profits
• Maximizing profit, defending marketing
• Diversifying brand models
• Beat competitors
• Intensive distribution
• Encourage brand shifting

Decline Stage

• Declining sales
• Low costs per customer
• declining profit
• Reducing Expenditures, milking the brand
• Phase out weak items
• Outprice
• Phase out unprofitable outlets
• reduce

Categories of PLC

• Style is a basic and distinctive mode of expression; styles appear in homes, clothing, art, etc
• Fashion is accepted, and popular style passed for stages: Distinctiveness, emulation, mass fashion, and the clime
• Fads are fashions adopted and fast, and decliming at quick rate

Four Introductory Marketing Strategies:

• Rapid skimming
• Rapid Penetration
• Slow skimming
• Slow penetration

Marketing strategies for growth stage

• Improves product qualities
• Add new models and flank product
• Inter new marketing strategies
• Increase
• shifts from market awareness to product preference advertising
• Lower prices

Marketing stage for Maturiity stage

• Expand the brands
• Covert nonusers
• Enter New Market segment
• Attract competitors
• Increase the rate of usage
• Have consumers on occasion

Product Modifications

• Quality
• Increase functional performance
• Features increases safety
• Style; improving aesthetic appeals

Product and service

• increase investment
• Harvesting
• divested
• Establish way for identifying way products
• Abandon Market

Product Mix

• All products and companies will sell
• Related products that have products and service
• e.g. Bata in 1999
• Num of product lines for mix, example 10 lines with HUL
• Mix has to be items that make
• Total length and number

Depth Product

• the assortment for sizes, varieties and colors

consistency

• Closeness of production, requirements and end usage
• HUL, consumer goods using similar channels and have facilities