Marketing Mix: The 4Ps

• Marketing mix (4Ps) is a framework to create successful marketing strategies.
• The 4 Ps are product, price, place, and promotion.

Overview of the Four P's:

• Product involves identifying features, design, quality, branding, and packaging, E.g., HSBC offers different current accounts to meet customer needs.
• Price involves identifying the best pricing strategies after considering customer willingness to pay, production costs, competition, and expected demand, E.g., Netflix changed its pricing structure.
• Standard subscriptions have the lowest fee but include adverts.
• Premium Subscription costs 3x as much but comes with no ads and Ultra HD.
• Place refers to distribution channels, physical location, logistics and supply chain management.
• Products for the mass market are sold in many popular outlets.
• Exclusive distribution targets high-end customers by limiting sales outlets, Porsche sells cars through licensed retailers.
• Promotion Activities are used to communicate and increase product awareness in the target market, including advertising, public relations, and sales promotions. E.g., Southwestern Airlines uses humor in advertising with discounts and baseball team sponsorships.
• The premier account offers free worldwide travel insurance and preferential interest rates on mortgages.
• A business's target market can be achieved by the company's objectives and 4Ps.
• Businesses can differentiate themselves from competitors by manipulating the marketing mix

Stages of the Product Life Cycle

• The product life cycle describes different stages a product experiences from conception to decline in sales.
• Four typical stages: introduction, growth, maturity, and decline.
• Implications for cash flow and marketing vary at each stage.
• Companies tailor marketing strategies and manage cash flow for profitability.

Stages

• Introduction: Cash flow is negative due to promotion costs;
• Growth: Cash flow turns positive as sales rise;
• Maturity: Cash flow is positive due to revenue and economies of scale;
• Decline: Cash flow turns negative as sales decline and costs increase.
• Marketing Strategy at Introduction focuses on creating awareness and interest.
• Marketing Strategy during Growth differentiates the product and builds brand loyalty.
• Marketing Strategy during Maturity aims to maintain market share and increase profit.
• Marketing Strategy during Decline may involve product discontinuation, reduced pricing, or new uses.

Extension Strategies

• Extension strategies involve techniques to extend a product's life beyond its natural cycle.
• Designed to boost sales and maintain profitability.
• Two types of extension strategies: product-related and promotion-related.

Extension strategy comparison

• Product-related involves changing/modifying the product to appeal to customers. Samsung releases new Galaxy Smartphone versions yearly with upgrades, Coca-Cola introduced Diet Coke and Coke Zero as line extensions, When IBM's PC division lost market share, it repositioned products as high-end business machines.
• Promotion-related involves changing promotional activity. Kellogg's continues to advertise Corn Flakes. Cyber Monday offers price promotions. Coffee shops offer loyalty programs.

Product Design and Branding

• Product's features, function, design, and image are essential for customer appeal.
• Features and functions include size, dimensions, capacity, color, aroma, texture, and capabilities.
• Design relates to product appearance and packaging in relation to cost and function.
• Image refers to the impression a product makes, e.g., luxury or fashionable.
• Branding is creating a unique name, design, symbol, or feature to differentiate a product/company.
• Logos, slogans, color schemes, and personality are all brands aspects

Branding benefits

• Strong branding adds value and improves product recognition, identity, and differentiation
• Strong branding can add value by creating a perception of quality, reliability, and reputation, E.g., Jaguar Land Rover is known for reliability and style.
• Customers are often willing to pay for brands they recognize and trust.
• Brands can create strong emotional connections, Patagonia and TOMS built their brands around ethical causes.
• Customers may pay more for products associated with well-established brands.
• Strong branding gives better recognition, E.g., Coca-Cola and Pepsi are instantly recognizable due to logos/packaging/colors.
• Brands can gain exposure and build reputation by aligning with events, organizations, and people of positive value.
• E.g., Nike sponsors many high-profile athletes and sports events.
• Branding differentiates a business from its competitors, creating a strong USP.
• Apple is known for innovative design and use of quality materials.

Invention and Innovation

• Invention is creating something entirely new.
• Inventions emerge from research, experimentation, and technical knowledge.
• Innovation improves an existing invention, idea, or business process for practicalness, efficiency, ease of use or cost effectiveness.
• Invention of the internet resulted in countless online innovations.
• E-commerce exists due to wide access to the internet.
• UK e-commerce accounted for over 30% of retail sales, worth over £2,000 billion in 2023.
• Almost 90% of UK consumers shop online regularly.
• Over 90% of the UK population uses online banking and high street branches have closed.
• 70% of UK gamers used the internet to connect with opponents online.
• Gaming increased the internet provided online connections.
• UK has the third-highest number of subscribers to online services like Netflix and Amazon.
• Traditional TV channels (BBC, ITV) offer on-demand content.

The Importance of Price

• Price directly relates to sales revenue.
• Suitable prices helps businesses maximize revenue and profits.
• If prices are too high means reduced sales.
• If prices are too low means reduced profit.
• Pricing should meet customer needs and expectations and reflect brand and quality.
• The wrong strategy might potential limit profit.
• Low priced goods of high-end brands might deter many consumers.
• Businesses can use more than one pricing method across product ranges.
• Price is related to the level of demand.
• An increase in price results in a fall in demand.
• Well-known brands with strong USPs, do promotional activity, can raise prices, and essential goods or minimal competition can increase prices.

Price: Methods of Pricing

• Price Skimming sets a high price for new products when introduced to the market, which is gradually lowered for sales to continue. Apple Macbooks sell at high prices initially.
• Price skimming helps businesses recover development and marketing costs and establishes a premium image.
• Cost-Plus Pricing calculates production costs and adds a percentage markup to determine the final price. Commonly utilized by manufacturers producing standardized goods like fencing panels.
• Penetration Pricing sets a low price for new products for increased sale, which is used to capture market share and attract price-sensitive customers.
• Competition Pricing maintains similar prices to that of rival products in highly competitive markets.
• Promotional Pricing considers customer emotions and behaviours in response to promotions (e.g., BOGOF) for short volumes of sales.

Applying Pricing Methods

• When determining pricing methods, businesses should consider factors like amount of USPs, the use of platforms/ new markets has new pricing, remaining competative etc.
• Products with many USPs and high differentiation can command higher prices E.g., Dyson vacuum cleaners have unique features
• The use of online and development of new markets has created new pricing methods.Mobile game Two Dots uses a freemium strategy
• In competitive markets, businesses may set lower prices E.g., The budget airline industry keeps prices to increase demand
• A strong brand with a loyal customer base can command higher prices E.g., Nike's strong brand allows it to charge prices
• In the introduction, prices may be set to attract customers

Place: Physical Distribution

• Place refers to where customers purchase products and the distribution channels used to move the product.
• Businesses can gain advantage by with location and distribution.
• Businesses could locate in high foot to achieve high sales and the use of online channels might also reach customers.
• Physical distribution channels: various intermediaries through which goods/services move.

Distribution channels

• Three-stage which involves the producer, wholesaler, and retailer that is used for products with high profit margins.
• Two-stage which involves a retailer and manufacturer.
• One-stage which involves direct from the manufacturer.

Telesales and mail order

• Sells products/services directly to over the phone, E.g. Trailfinders sells adventure holiday packages exclusively. Or By mail, E.g. The Book People accepts purchases, issuing brochures online;

Place: Digital Distribution

• Growth of the internet has made products capable of being delivered digitally.
• Commonly includes financial services, entertainment and media.
• Goods are available as soon as they are bought and can be accessed anytime.
• Some goods not suitable (e.g. household) and may lack facilities can access the goods.