Chapter 3 Marketing Mix PDF

INTRODUCTION TO MARKETING MARKETING MIX  Marketing Mix The marketing mix is the set of tactical marketing tools that the firm blends to produce the response it wants in the target market. The marketing mix consists of everything the firm can do to engage consumers...

INTRODUCTION TO MARKETING MARKETING MIX  Marketing Mix The marketing mix is the set of tactical marketing tools that the firm blends to produce the response it wants in the target market. The marketing mix consists of everything the firm can do to engage consumers and deliver customer value. AN EFFECTIVE MARKETING PROGRAM Blends the marketing mix elements into an integrated marketing program designed to achieve the company’s marketing objectives by engaging consumers and delivering value to them. IT HOLDS THAT THE FOUR PS CONCEPT TAKES THE SELLER’S VIEW OF THE MARKET, NOT THE BUYER’S VIEW. FROM THE BUYER’S VIEWPOINT, IN THIS AGE OF CUSTOMER VALUE AND RELATIONSHIPS, THE FOUR PS MIGHT BE BETTER DESCRIBED AS THE FOUR AS: Marketing Mix Marketing Mix 1) ________ refers to the amount of money charged for a product or service. A) Value B) Cost C) Price D) Wage  Marketing Mix 2) Which of the following marketing mix activities is most closely associated with newsletters, catalogues, and invitations to organization-sponsored events? A. Pricing B. Promotion C. Distribution D. Product Marketing Mix 3) The term marketing mix refers to________ a) An analysis of the micro and macro environment of the organization b) A mixture of various decisions to sell more products at any cost c) A customer relationship for long-term profit and gain d) A combination of strategic elements to satisfy market needs Marketing Mix 4) Place in marketing is also known as _____ A. Physical distribution B. Channel of distribution C. Intermediary D. All of the above Marketing Mix 5) Management of the company is trying to decide on the innovation of their service and they have decided on introducing the new range of athletic wear and equipment. What marketing mix are they using: a) Product b) Place c) Price d) Promotion  WHAT IS PRODUCT? Anything that is offered to a market for attention, acquisition, use, or consumption and that might satisfy a want or need. A product can be: physical objects, services, persons, places, organizations, ideas, or mixes of these entities. To differentiate their offers, beyond simply making products and delivering services, they are creating and managing customer experiences with their brands or companies. Today, however, all kinds of firms are recasting their traditional goods and services to create experiences.  Apple’s retail stores are very attractive places, where “life-feels-good” experiences abound.  The store design is clean, simple and style. THE THREE LEVELS OF PRODUCTS Core product consists of the core, problem-solving benefits that consumers seek. Actual products may have as many as five characteristics: a quality level, product and service features, styling, a brand name, and packaging. Augmented products around the core and actual products by offering additional consumer services and benefits. Marketing Mix 1) We define a ________ as anything that can be offered to a market for attention, acquisition, use, or consumption and that might satisfy a want or need. A) private brand B) service variability C) service D) product Marketing Mix 2) ________ are a form of product that consists of activities, benefits, or satisfactions offered for sale that are essentially intangible and do not result in the ownership of anything A) private brand B) service variability C) service D) product Marketing Mix 3) Product planners need to consider products and services on three levels. Each level adds more customer value. The most basic level is the ________, which addresses the question, "What is the buyer really buying? " A) actual product B) augmented product C) core customer value D) co-branding Marketing Mix 4) "Product planners must design the actual product and find ways to ________ it in order to create the bundle of benefits that will provide the most satisfying customer experience. A) actual product B) augmented product C) core customer value D) co-branding Marketing Mix 5) To differentiate themselves, many companies are going beyond products and services, they are developing and delivering customer ________. A) quality B) experiences C) brands D) product lines THE THREE LEVELS OF PRODUCTS Core product consists of the core, problem-solving benefits that consumers seek. Actual products may have as many as five characteristics: a quality level, product and service features, styling, a brand name, and packaging. Augmented products around the core and actual products by offering additional consumer services and benefits.  CORE PRODUCT IKEA's core product isn't just furniture, it's creating a comfortable and personalized home. This appeals to a broad audience, especially young adults and families, who seek affordable and stylish solutions to furnish their homes. THE THREE LEVELS OF PRODUCTS Core product consists of the core, problem-solving benefits that consumers seek. Actual products may have as many as five characteristics: a quality level, product and service features, styling, a brand name, and packaging. Augmented products around the core and actual products by offering additional consumer services and benefits.  ACTUAL PRODUCTS Features: IKEA furniture is known for its modular design, functionality, and affordability. Pieces often have multiple uses, are easy to assemble, and come in a variety of styles and colors. Design: IKEA focuses on minimalist and functional design with a Scandinavian aesthetic. This caters to a modern and budget-conscious audience. Branding: IKEA emphasizes affordability, sustainability, and do-it-yourself (DIY) assembly. This resonates with their target audience and creates a sense of accomplishment and empowerment. THE THREE LEVELS OF PRODUCTS Core product consists of the core, problem-solving benefits that consumers seek. Actual products may have as many as five characteristics: a quality level, product and service features, styling, a brand name, and packaging. Augmented products around the core and actual products by offering additional consumer services and benefits.  AUGMENTED PRODUCTS In-store experience: IKEA stores are designed to be interactive and inspiring, with showrooms and room setups that showcase furniture usage in real-life settings. Online planning tools: Customers can plan their furniture layout virtually before making purchases. Assembly services and tutorials: IKEA offers assembly services for a fee and provides free online tutorials to guide customers through the DIY process. After-sales services: IKEA offers returns, exchanges, and spare parts, ensuring customer satisfaction. PRODUCT AND SERVICE CLASSIFICATIONS PRODUCT AND SERVICE CLASSIFICATIONS PRODUCT AND SERVICE CLASSIFICATIONS  TYPES OF CONSUMER PRODUCTS  Types of Consumer products A convenience product is an inexpensive product that requires a minimum amount of effort on the part of the consumer to select and purchase it. Examples of convenience products Convenience product are bread, soft drinks, pain relievers, and coffee. A specialty product is a product that certain consumers will actively seek to purchase because of unique characteristics or loyalty to a specific brand. Examples; luxury cars, Specialty Product professional photographic equipment, and high-fashion clothing A type of product that requires consumer research and comparison of brands. Examples; Shopping furniture, electronics, clothing product Unsought goods are the goods that require more aggressive marketing. This is what brings awareness to consumers about their needs and benefits. Example; Car insurance, Unsought product encyclopedias, and reference books.  What Is a Price? In the narrowest sense, price is the amount of money charged for a product or a service. More broadly, price is the sum of all the values that customers give up on gaining the benefits of having or using a product or service.  Major Pricing Strategies Customer Value-Based Pricing When customers buy a product, they exchange something of value (the price) to get something of value (the benefits of having or using the product). Customer Value-Based Pricing Rolex watch Though Rolex doesn’t bring any tangible monetary benefits to its wearers, it does bring certain psychological benefits to its owners, such as the unique feeling of beauty and prestige Cost-Based Pricing Involves setting prices based on the (costs of producing, distributing, and selling) the product + a fair rate of return for the company’s effort and risk (profit margin) Customer Value-Based Pricing Small Batch Bakery Imagine a small bakery specializing in handcrafted sourdough bread. The owner meticulously sources high-quality ingredients and uses traditional techniques, resulting in higher production costs. Here's how cost-plus pricing helps them: Calculating Costs: The baker meticulously tracks all expenses - flour, yeast, water, electricity, labor (including their own time for baking), and even packaging. Adding Markup: They decide on a desired profit margin, say 30%. This markup percentage is added to the total cost per loaf to arrive at the selling price  Competition-Based Pricing Involves setting prices based on competitors’ strategies, costs, prices, and market offerings. Consumers will base their judgments of a product’s value on competitors’ prices for similar products.  Competition-Based Pricing Shopify Shopify is an ecommerce platform that helps businesses manage their stores and sell their products online. There are a number of ecommerce software options on the market today — Shopify differentiates itself by the features they provide users and the price at which they offer them. They have three thoughtfully-priced versions of their product for customers to choose from with a number of customizable and flexible features. With these extensive options tailored to any ecommerce business' needs, the cost of Shopify is highly competitive and is often the same as or lower than other ecommerce platforms on the market today. Market-Skimming Pricing Market-Skimming Pricing Apple Apple successfully carried out the skimming strategy with several of its products. For example, they applied it to the launch of the original Apple iPhone, which was initially set to $599 and then cut to $399 three months later. Despite high prices, the lines of customers in front of Apple stores were quite long on the launch day, and there was an additional boost in demand after the price cut Market-Penetration Pricing  Market-Penetration Pricing Toyota Toyota launched its new premium brand Lexus in the US with an initial price of $35,000. WHY? It turned out a success, as it helped Toyota build foundations for the long-term success that followed. Over the next 6 years, the price of Lexus rose by a total of 48%. In this case, the low initial price helped the new and then unknown brand enter the market and build a reputation.  What is The Promotion Mix? A company’s total promotion mix—also called its marketing communications mix— consists of the specific blend of advertising, public relations, personal selling, sales promotion, and direct marketing tools that the company use to communicate customer value and build customer relationships. Advertising Any paid form of nonpersonal Personal selling Personal presentation and promotion of ideas, customer interactions by the goods, or services by an identified sponsor. firm’s sales force for the purpose of engaging customers, making sales, and building customer relationships Sales promotion Short-term incentives to encourage the Public relations (PR). Building purchase or sale of a product good relations with the company’s or service. various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, and events. Direct and digital marketing. Engaging directly with carefully targeted individual consumers and customer communities to both obtain an immediate response and build lasting customer relationships What is The Promotion Mix?  Unilever promotes its Axe grooming products directly to its young male target market using TV and print ads, web and social media brand sites, and other channels. If the push strategy is effective, consumers will then demand the brand from retailers such as CVS, Walgreens, or Walmart, which will in turn demand it from Unilever. Push strategy is that companies take its products to its consumers.  A pull strategy is a marketing technique that involves attracting customers to a company's product or service. Apple's iPhone Launches: Apple is known for creating significant consumer demand for its new products, such as the iPhone, through a combination of product announcements, media events, and advertising. Before the release of a new iPhone model, Apple often engages in strategic teases and previews that stir up anticipation and hype. What Is a Place? It stands for various activities the company undertakes to make the product easily available and accessible to target customers.  SERVICES MARKETING The Nature and Characteristics of a Service Example: Consulting, accounting, banking, marketing, education, and healthcare.  SERVICES MARKETING MIX EXAMPLE Let’s use the example of a university to see the Services Marketing Mix in action. Product In the context of a university, the product is the educational services offered, such as undergraduate and postgraduate programs, courses, and workshops. Price The pricing strategy involves tuition fees, scholarships, and payment plans. The university may offer different fee structures for various programs or provide financial aid options. Place This refers to the distribution channels or the availability of educational services. The university can have physical campuses, online courses, or a combination of both to reach a broader audience. Promotion Marketing efforts include promotional activities to attract students. This may involve social media campaigns, open houses, and collaborations with high schools to showcase the university's offerings. People The people aspect involves academic staff and administrative staff. Friendly and knowledgeable staff and qualified faculty contribute to the overall university experience. Process The process includes the admission procedure, course registration, teaching methodologies, and assessment methods. Streamlining these processes enhances the overall efficiency of the educational experience. Physical Evidence This relates to the tangible elements associated with the educational service, such as campus facilities, classrooms, libraries, and online learning platforms. A well-maintained campus and modern facilities contribute positively to the university's image.  SERVICES MARKETING MIX EXAMPLE Let’s use the example of a luxury hotel to see the Services Marketing Mix in action. Product The core product of the hotel is its rooms which customers stay in for a period of time. Of course, there is more to a luxury hotel than just it’s rooms, there are also its restaurants, free Wi-Fi, and the spa. Price In the case of our luxury hotel, the price will vary according to room size. So, as you might expect a large suite with a cityscape view costs significantly more than a small room with no view. This is because the value perceived by the customer is much greater. Place For our hotel, place concerns how the service is consumed. Typically, a place will be chosen for a strategic reason e.g. close to a city, business center, or tourist attraction. Obviously, the location of the hotel is in one fixed place. Promotion For our luxury hotel promotion could include advertising on travel websites related to the location of the hotel. It could also mean directly advertising to past customers, using social media, and press releases. People The people who interact with guests would include managers, receptionists, cleaners, spa staff, waiters etc. Process The key processes for our luxury hotel include the things that happen when a guests book a room, check-in, stay in the hotel, and check-out. Each of these will have a unique and formal process associated with them designed to delight the consumer. Physical Evidence For our luxury hotel, the physical evidence includes the customer service received before and after the stay, how the lobby looks, any music playing, the hotel’s website, and online reviews and photos, amongst other things.  SERVICES MARKETING MIX EXAMPLE Let’s use the example of a bank to see the Services Marketing Mix in action. Product Savings accounts, checking accounts, loans, credit cards. Price The interest rates on loans and savings accounts, fees for services, and charges for transactions. Place The bank branches, ATMs, online banking platforms, and mobile banking apps. Promotion Advertising campaigns on TV and online. Procedures Account opening procedures, loan approval processes, and customer service interactions. People The tellers, customer service representatives, financial advisors, and managers Physical evidence The tangible elements that customers interact with, such as the design and layout of bank branches, and the quality of printed materials. MCQ 1. Which pricing strategy sets prices based on production costs and desired profit margins? A. Market-Based Pricing B. Skimming Pricing C. Cost-Based Pricing D. Value-Based Pricing C MCQ 2- Value-Based Pricing focuses on: a) Competing with rivals on price to gain market share b) Setting prices based on production and distribution costs c) Capturing a premium price based on the perceived value of the product d) Offering discounts to attract price-sensitive customers C MCQ 3- Skimming Pricing is characterized by: a) Setting a low initial price to penetrate the market quickly b) Offering discounts to encourage bulk purchases c) Setting an initially high price and gradually reducing it over time d) Setting a low initial price to attract cost-conscious customers C MCQ 4-Penetration Pricing involves: a) Setting a high initial price to attract early adopters b) Setting a low initial price to gain market share quickly c) Offering discounts to loyal customers d) Setting prices based on the product’s value B MCQ 5- ______________ is short-term incentives to encourage purchase or sales of a product or service. a) Advertising b) Sales promotion c) Online advertising d) Public relation B MCQ 6- The personal presentation by the firm's sales force for the purpose of making sales and building customer relationships is called: a) Personal selling. b) Public relations. c) Direct marketing. d) Sales promotion A MCQ 7- Which of the following strategies is usually followed by B2B companies with respect to promotion strategy? a) Push strategy b) Pull strategy c) Blocking strategy d) Integrated strategy A MCQ 8-This P is not a part of the 7Ps of marketing mix? (A) Promotion (B) Price (C) People (D) Purpose D MCQ 9-Which among these is not the nature and characteristic of a service. (A) Intangibility (B) Durability (C) Variability (D) Perishability B MCQ 10- today's time marketing must be understood and developed as? A) Getting the first mover’s advantage B) Creating value for the customers C) Pushing for higher sales and profits D) Creating innovative products B Marketing Mix 1) Products and services fall into two broad classifications based on the types of consumers that use them. Which is one of these broad classes? A) industrial products B) specialty products C) supplies and services D) materials and parts Marketing Mix 1) Products and services fall into two broad classifications based on the types of consumers that use them. Which is one of these broad classes? A) industrial products B) specialty products C) supplies and services D) materials and parts Marketing Mix 2) ________ are less frequently purchased consumer products and services that customers compare carefully on suitability, quality, price, and style. Consumers spend much time and effort in gathering information and making comparisons about these products A) Shopping products B) Convenience products C) Unsought products D) Industrial products Marketing Mix 3) ________ are consumer products and services with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort. A) Shopping products B) Unsought products C) Specialty products D) Industrial products Marketing Mix 4) ________ are consumer products that the consumer either does not know about or knows about but does not normally think about buying. These products require a lot of advertising, personal selling, and other marketing efforts A) industrial products B) specialty products C) supplies and services D) Unsought products Marketing Mix 5) ________ are those products purchased for further processing or for use in conducting a business. A) Unsought products B) Specialty products C) Shopping products D) Industrial product THANK YOU