Marketing Mix

The marketing mix The marketing mix is also known as the 4Ps: Product Price Place Promotion

Product

‘ Product’ refers to the functions and features of a good or service Should satisfy the needs of the customer May have a Unique Selling Proposition (USP) ‘Product’ also includes a range of factors such as packaging, quality, warranties, after-sales service and branding Products and brands may suggest certain images e.g. sporty, sophisticated, value

Product lifecycle The product lifecycle looks at the sales of a product over time

Stages of the product lifecycle Development – high costs but no sales Launch – high expenditure on promotion and product development, low sales Growth – sales increase and product should break even Maturity – sales stabilise, less expenditure on promotion needed, revenue & profit should be high Decline – sales decline, extension strategies can be adopted or the product withdrawn

Extension strategies Extension strategies should maintain or increase sales. They include: Modifying the product Reducing the price Adding a feature Promoting to a different market sector Extension strategies

Price

The price of a product will depend on: The cost to make it The amount of profit desired The price competitors charge The objectives of the business The price customers are willing to pay  Is there a high demand?  Is demand sensitive to changes in price?

Pricing strategies and tactics SkimmingLaunching with a high price when there is little competition, then reducing the price later. Often used with technology. PenetrationA low price is charged initially to penetrate the market and build brand loyalty. The price is then increased e.g. introductory offers on magazines. CompetitiveA similar price is charged to that of competitors’ products. Loss leaderProducts may be sold at a price lower than the cost to produce it. Often used by supermarkets to encourage people into the store where it is hoped they will buy other products.

Pricing strategies and tactics PsychologicalA price is set which customers perceive as lower than it is e.g. £39.99 instead of £40. DifferentialDifferent prices are charged for the same product e.g. bus fares for children are cheaper than adult prices. Cost plus pricing An additional ‘mark-up’ is added to the cost of producing a good or service. Strategic pricing Price is set to position an exclusive product or brand to make it more desirable for consumers, generate demand or demonstrate value

Place

Products should be conveniently available for customers to buy ‘Places’ include:  Stores  Mail order  Telesales  Internet The use of e-commerce (promoting and selling on the internet) has grown massively over the last few years The use of e-commerce (promoting and selling on the internet) has grown massively over the last few years

Channels of distribution Manufacturer Wholesaler Retailer Consumer

Promotion

The aims of promotion are to: Raise awareness Encourage sales Create or change a brand image Maintain or increase market share

Types of promotion Above-the-line promotion This uses mass media advertising over which a firm has no direct control e.g. television, radio and newspapers Below-the-line promotion This uses promotional media which the firm can control e.g. direct mail, sales promotions, sponsorship and social media

Promotional activities Advertising e.g. TV, billboards and internet. Sales promotions e.g. loyalty cards, BOGOF, discounts & free gifts Sponsorship – a business pays to be associated with another firm, event or cause Direct mailing – promotional material is sent to potential customers by post/ Public relations – building the relationship between the firm and the public by enhancing its reputation

Promotional mix Most businesses use a combination of different promotional activities. The chosen promotional mix will depend on: Cost Target market Product Competitors

AIDA Promotional campaigns often take into account the AIDA model: A wareness - raising awareness of a product I nterest – exciting interest in the product D esire – creating desire for the product A ction – encouraging a purchase