Fundamentals of Marketing Mix PDF

MARKETING// CHAPTER-4 TOPIC: FUNDAMENTALS OF MARKETING MIX MEANING OF MARKETING MIX Marketing mix is the combination of four elements called the 4P’s-Product, Price, Promotion and Place that every company has the option of adding, subtracting or modifying in order to create a desired marketing s...

MARKETING// CHAPTER-4 TOPIC: FUNDAMENTALS OF MARKETING MIX MEANING OF MARKETING MIX Marketing mix is the combination of four elements called the 4P’s-Product, Price, Promotion and Place that every company has the option of adding, subtracting or modifying in order to create a desired marketing strategy CHARACTERISTICS OF MARKETING MIX Marketing mix is the core of marketing process Marketing mix has to be reviewed constantly in order to meet the changing requirements Changes in external environment facilitate alterations in the mix Changes taking place within the firm also necessitate changes in marketing mix Applicable to business and non-business organization Helps to achieve organizational goals Concentrates on customers 1. Marketing mix is the core of marketing process: Marketing mix involves important decisions relating to each element of the mix. The impact of the mix is best when proper weightage is allotted to each element and they are combined for attaining best results. 2. Marketing mix has to be reviewed constantly in order to meet the changing requirements: The marketing manager has to constantly review the mix and the market scenario and make necessary changes in the marketing mix according to changes in the conditions and complexity of the market. 3. Changes in external environment facilitate alterations in the mix: Changes keep on taking place in the external environment. For many industries, the customer is the most fluctuating variable of environment. Customers’ tastes and preferences change very fast. Brand loyalty and purchasing power also change over a period. The marketing manager has to carry out market analysis constantly to make necessary changes in the marketing mix. 4. Changes taking place within the firm also necessitate changes in marketing mix: Changes within the firm may take place due to technology or product line or in the size and scale of operation. All such changes call for corresponding changes in the marketing mix. 5. Applicable to business and non-business organization: Marketing mix is applicable not only to business organizations but also to non-business organizations, such as clubs and educational institutions. For example, an educational institution is expected to provide the right course (product), charge the right fee (price), promote the institution and the courses, and provide the course at the right place. 6. Helps to achieve organizational goals: An application of an appropriate marketing mix helps to achieve organizational goals like increased profits and market share. 7. Concentrates on customers: A clear focus point of marketing mix is the customer, and the marketing mix is expected to provide maximum customer satisfaction FEATURES OF MARKETING MIX Flexible Concept Help Achieve Constant Marketing Target Monitoring Features of Interdependent Customer as a variables Marketing focal point Mix 1. Interdependent variables The marketing mix is made up of four unique variables product, price, place and promotion. These four variables are interdependent and need to be aligned. 2. Help Achieve Marketing Target The company aims to achieve its marketing targets such as sales, profits, customer retention and satisfaction through the use of these variables. 3. Flexible Concept The marketing mix is a dynamic concept and the focus on any one variable may be either increased or decreased on the basis of existing marketing conditions and customer requirements. 4. Constant Monitoring It is necessary to keep continuous watch on the changing trends and requirements, within the company as well as in the market to ensure that the marketing mix elements stay relevant and useful. 5. Customer as a focal point The customer is the focal point of all marketing activity. The value of the product is determined by customer perception and the goal is to achieve a satisfied and loyal customer. STEPS IN DEVELOPING A MARKETING MIX Step 1 The first step on the marketing manager’s list is to define the unique feature, the product offers, the customer surveys or focus groups and identify the importance of unique feature to consumers and whether they can increase the sales of the product. Step 2 The second step is to understand the consumer that would purchase the product, what they need, what value they associate. All the other elements of the marketing mix will be designed in accordance with the customer. This understanding will enable the product offered be relevant and targeted. Step 3 The next step is to understand the competition. The prices and related benefits such as discounts, warranties and special offers need to be assessed. An understanding of the subjective value of the product and a comparison with its actual manufacturing distribution cost will help set an ideal price point. Step 4 At this point the marketing manager needs to evaluate the options of place to understand where the customer is most likely to make a purchase and the costs associated with using this channel. Multiple channels may help target a wider customer base and ensure easy access. Step 5 Based on the target audience and the price identified the communication strategy can be developed. The promotional methods need to appeal to the customers and ensure that the key features and benefits of the product are clearly communicated and understood. Step 6 A last step needs to be taken at this point to see how all the elements identified and planned relate to each other. All marketing mix variables are interdependent and rely on each other for a strong strategy. It has to be seen whether the selling channels strengthen the perceived value of the product or the promotional material supports the selected distribution channels. IMPORTANCE OF MARKETING MIX Marketing Approach It contributes towards the formation of an effective marketing strategy and its practical implementation. Integrates the essentials of effective marketing, marketing and allows to analyse and asses the feasibility and role of the product or service that the organization offers. Identifies appropriate distribution channel for the proper placement of the product, sets a suitable price for the value that is offered to the consumers and identifies and employs suitable promotional media. Value Creation Marketing mix guides in identifying and assessing the diverse aspects of the products or services in relation to their importance and utility to customers and their preferences. Furthermore, it also provides direction for the selection of a suitable distribution channel, where the target consumer is more likely to look around for offered services or products. The platform may range from being a retail store to an online shop.  TYPES OF MARKETING MIX Marketing mix is mainly of two types. 1) Product marketing mix – It comprises of Product, price, place and promotions and is mainly used in case of tangible goods. 2) Service marketing mix – The service marketing mix has three more variables included which are people, physical evidence and process. MEANING AND CATEGORISATION OF PRODUCT Categorisation of Product Usage Durability Tangibility Non- Consumer Industrial Durable Tangible Intangible Durable Goods Goods Goods Goods Goods Goods Meaning of Product A product is an item that is built or produced to satisfy the needs of a certain group of people. Product can be tangible good or intangible service. It is defined as anything that can be offered to a market to satisfy a want. It not only includes physical objects and services but also the supporting services like packaging, installation, after sales services etc They can be categorized on the basis of 1. Usage (a) Consumer Goods: They are meant for personal consumption by the households or the final consumers like soaps, biscuits or books (b) Industrial Goods: They are meant for consumption or use as inputs in production of other products or provision of some service for example nuts and bolts, machinery etc. 2. Durability (a) Durable goods: Durable goods are products which are used for a long period i.e., for months or years together like mobile handsets, pressure cookers etc (b) Non-durable goods: Non-durable goods are products that are normally consumed in one go or last for a few uses. 3. Tangibility: (a) Tangible goods: They have a physical form and can be touched and seen. (b) Intangible goods: Intangible goods refer to services provided to the individual consumers or to the organisational buyers. PRICE The price of the product is basically the amount that a customer pays for consuming it. Price is a very important component of the marketing mix definition. When setting the product price, marketers should consider the perceived value that the product offers. Major pricing strategies followed are: 1. Market Penetration Pricing: The objective of penetration price strategy is to gain a foothold in a highly competitive market. The firm prices its product lower than the others in competition to achieve an early breakeven point and to maximise profits in a shorter time span or seek profits from a niche. 2. Market Skimming Pricing: Most commonly used strategy and refers to a firm’s desire to skim the market by selling at a premium price. 3. Differential Pricing: It involves in a firm differentiate its price across different market segments. 4. Geographic Pricing: It seeks to exploit economies of scale by pricing the product below the competitor’s in one market and adopting a penetration strategy in another. 5. Product Line: These are a set of strategies which a multi-product forms usually adopt. PROMOTION Promotion represents the different methods of communication that are used by marketer to inform target audience about the product. It is an essential component of marketing as it can boost brand recognition and sales. Promotion is comprised of various elements like: ✓ Advertising ✓ Sales Promotion ✓ Personal Selling ✓ Public Relation ✓ Word of mouth communication Advertising typically covers communication methods that are paid for like television advertisements, radio commercials, print media, and internet advertisements. In contemporary times, there seems to be a shift in focus from offline to the online world. Sales Promotion comprises of tools used to promote sales in a given territory and time. They are short term in nature and aim at stimulating quick sales. Advertising aims at creating awareness and also provides a rationale to buy a product; sales promotion induces him/her to buy the products. They include discount coupons, price offs, prizes, lucky draws, free trials etc. Personal Selling is a direct display of the product to the consumers or prospective buyers. It refers to the use of salespersons to persuade the buyers to act favourably and buy the product. Public relations, on the other hand, are communications that are typically not paid for. This includes press releases, exhibitions, sponsorship deals, seminars, conferences, and events. Word of mouth is an informal communication about the benefits of the product by satisfied customers and ordinary individuals. Word of mouth can also circulate on the internet. When effectively used it has the potential to be one of the most valuable assets we have in boosting the profits online. An extremely good example of this is online social media and managing a firm’s online social media presence. PLACE Place or distribution refers to making the product available for customers at convenient and accessible places. The distribution structure refers to the channel design and structure, and management of channels while logistics refers to the physical aspect of distribution. Organizations can employ distribution alternatives on the basis of their products and they, include: Intensive distribution: It involves making the product available at all possible outlets, example of soft drinks which are available through multiple outlets to ensure easy availability to the customer. Exclusive distribution: The firm decides to distribute through one or two major outlets, example of designer wear or high priced automobiles. Selective distribution: This is the middle path approach to distribution as the firm selects some outlets to distribute its products thereby enabling the manufacturer gain optimum market coverage and more control. 4C'S - CONSUMER-ORIENTED MODEL OF MARKETING MIX Consumer - In this model the Product is replaced by Consumer. Marketers focus more on the needs, wants and demands of consumer. The product is designed and produced considering the requirements of consumer. Cost - Price is replaced by Cost. The cost refers to the total cost of owning a product. It includes cost to use the product, cost to change the product, and cost of not choosing the competitor's product. Communication - Promotion is replaced by Communication. According to Lauterborn promotion is manipulative while communication is cooperative. Communication includes advertising, public relation, personal selling, and any method that can be used to encourage proper, timely, and accurate communication between marketer and consumer. Convenience - Place is replaced by Convenience. It focuses on the convenience in getting product information, convenience in reaching to the store/product, and ease of buying. MARKETING MIX FOR SERVICE SECTOR 7 P’s OF THE SERVICE MARKETING MIX 1. Product Most of the services are not visible because they are performances rather than objects, specific manufacturing procession concerning uniform quality can rarely be set. Because of this intangibility, the firm may find it difficult to understand how consumers perceive their services. To develop a good customer service, the service marketer should focus on tangible cues and also create a strong organisational image. 2. Price Due to the intangible nature of the service–price becomes an important quality indicator in conditions where other information is unavailable. It is essential that the service firm provide competitive pricing, thereby get an edge over competitors. In the case of services, like medical or legal services, price is the deciding factor because the customer makes a final choice among several competing service organizations on the basis of price at which the service is offered. 3. Place Services are performances which cannot be stored; hence businesses offering services find it difficult to balance between the supply and demand. A service firm must make simultaneous adjustments in demand and capacity to achieve a closer match between the two. The firm could choose to use multisite locations to make the service more reachable to the users as a service regardless of the numerous advantages might not be selected if it is focused in far off places. 4. Promotion The service marketer should constantly work towards developing word- of-mouth communications apart from using the regular advertising. Communication involves informing the customers in a language they can best understand, especially in the case of services, post-purchase communication is very important, because retaining existing customers is as important, or even more important than attracting new customers. 5. Physical Evidence Physical evidence, like the environmental surroundings greatly affect the customer’s expectations of the service. As services cannot be readily displayed, a conducive environment should be created so as to help the customers develop a positive opinion of the service. People would not like to wait if the surroundings of the place they are made to wait are unpleasant. 6. People Most of the services are labour intensive; the behaviour of the staff providing the service and the customers involved in production (due to the inseparable nature of services), have an effect on providing efficient customer service. Dissatisfied customers affect employees and similarly untrained staff reduce customer satisfaction. This mutual dependence influences the customer’s perception of the service. 7. Process The quality, or the ‘how’ of service delivery is more important in the case of service industries, as it is difficult to separate the technical quality, or the ‘what’ of service delivery. It is essential in service sector to train the front line employees, whose actions and behaviour influence the customer’s opinions of the organisation and the actual service provided. _______________________________________________________