11 Marketing mix © Malcolm Surridge and Andrew Gillespie 2016

Marketing mix The marketing mix comprises all the elements associated with a product that affect whether or not the customer decides to buy it. A broad range of factors may affect customers’ purchasing decisions. Cambridge International AS and A Level Business © Malcolm Surridge and Andrew Gillespie 2016

Cambridge International AS and A Level Business © Malcolm Surridge and Andrew Gillespie 2016

4 Cs Cost – how much does the product cost the customer? (Price) Convenience to the customer – how easy is it to buy the product? (Place) Communication with the customer – what do we know about the product? (Promotion) Customer solution – what benefits does it offer? How does it meet a customer need to solve a customer problem? (Product) Cambridge International AS and A Level Business © Malcolm Surridge and Andrew Gillespie 2016

Product life cycle The product life cycle traces the sales of a product over its life. The typical path for a product can be divided into five stages. Cambridge International AS and A Level Business © Malcolm Surridge and Andrew Gillespie 2016

Extension strategy Cambridge International AS and A Level Business © Malcolm Surridge and Andrew Gillespie 2016

Cambridge International AS and A Level Business IntroductionGrowthMaturityDecline PriceMay be low to introduce May be able to increase with demand May holdMay cut to boost sales DistributionMay be limited as stores unsure whether to stock May increase to gain access to the market May holdMay focus on best performing outlets PromotionMay focus on awareness May try to increase awareness May highlight differences with competitors who may have entered May try to reinforce existence and benefits of the product The productMay be limited number of models/varieties May widen range with demand May stop developing new models/varieties May focus on best performers © Malcolm Surridge and Andrew Gillespie 2016

Product portfolio analysis – The Boston matrix Cambridge International AS and A Level Business © Malcolm Surridge and Andrew Gillespie 2016

Building a balanced portfolio – The Boston matrix (2) Cambridge International AS and A Level Business © Malcolm Surridge and Andrew Gillespie 2016

Factors influencing on price Cambridge International AS and A Level Business © Malcolm Surridge and Andrew Gillespie 2016

Pricing strategies Cambridge International AS and A Level Business © Malcolm Surridge and Andrew Gillespie 2016

Price elasticity of demand Cambridge International AS and A Level Business © Malcolm Surridge and Andrew Gillespie 2016

Cambridge International AS and A Level Business © Malcolm Surridge and Andrew Gillespie 2016 Factors influencing the price elasticity of demand

Price elasticity and revenue Cambridge International AS and A Level Business Price decreasePrice increase Price elastic demandRevenue increasesRevenue decreases Price inelastic demandRevenue decreasesRevenue increases © Malcolm Surridge and Andrew Gillespie 2016

What is promotion? The promotion of a product involves communicating about it to existing or potential customers. These messages may be intended to: – inform customers (e.g. tell them about modifications to the product, promotional offers or new releases) – persuade them (e.g. highlighting the product’s benefits compared with the competitors’ products) – reassure buyers they did the right thing by buying the product in the first place. Cambridge International AS and A Level Business © Malcolm Surridge and Andrew Gillespie 2016

Promotional mix The promotional mix refers to the combination of ways in which a business can communicate with its customers. Cambridge International AS and A Level Business © Malcolm Surridge and Andrew Gillespie 2016

Promotional methods Cambridge International AS and A Level Business Method of promotionAdvantagesDisadvantages Advertising Wide coverage Control of the message Can be used to build brand loyalty Can be expensive, e.g. TV advertising Public relations Can be relatively cheap Cannot control the way the story is covered by the media Direct mail Relatively cheap May not be read Sales promotions Can entertain and interest the consumer Often short-term effects Can encourage brand switching Personal selling Two-way communication Can answer customer enquiries Can be expensive Can only reach a limited number of customers Branding Can enable higher pricing Can launch other products by building on brand loyalty Brands may get damaged (for example, through poor quality) and this affects any products sold under this name Merchandising Can make the shopping experience better through the displays May encourage purchase of items that were not originally intended (impulse buys) There will be a cost involved in providing displays in terms of both money and time © Malcolm Surridge and Andrew Gillespie 2016

Distribution The distribution of a good or service refers to the way in which the ownership of it passes from the producer to the consumer. Cambridge International AS and A Level Business © Malcolm Surridge and Andrew Gillespie 2016

Impact of the internet on marketing Cambridge International AS and A Level Business Element of the marketing mix Impact of the internet PriceThe internet allows prices to be changed according to when people order (for example, how far in advance of an event), what time of day they order, whether they have visited the site before, whether they have bought from you before. The ability to adjust the price based on many factors so there is no ‘one’ price is known as ‘dynamic pricing’. Businesses such as airlines and online retailers such as Amazon use dynamic pricing very effectively. PromotionBusinesses can promote their products online and target who their adverts reach depending on, for example, where you are searching from and which terms you are using to search. Businesses can get others to help promote their products through viral marketing where their own campaign is forwarded via social media such as Twitter and Facebook by individuals to their friends. Methods of promotion such as blogs and Twitter are cheap ways of communicating. DistributionBusinesses can now sell direct to the customer online rather than selling through intermediaries. By selling directly through e-commerce, a business may need fewer physical stores. This is known as ‘clicks rather than bricks’. ProductSome products can now be downloaded rather than having to be physically produced, for example music and e- books. PeopleInterestingly, people are not necessarily removed from marketing due to the internet. In fact, many businesses now promote in their websites the ability to talk to a customer service representative at any time. The internet can interest you in an item and the sales representative can help you with enquiries or to make your choice. ProcessThe internet can make the buying process more convenient in that you can search more widely than in a main shopping street. Physical evidence The design of a store may be less significant with the internet but the design of the website becomes key. The appearance, the ease of finding information and navigating the site affect the customer experience.