Business / Marketing Minor Marketing Fundamentals M21439 Session 4: Marketing Mix Tools

Key Concepts Theories relating to the analysis of : - Product- Physical Evidence - Price- People - Place- Process - Promotion

Product

Product Offer Source: Brassington,F. & Pettitt,S. (2000) Principles of Marketing 2 nd ed, UK:FT/Prentice Hall Core Product Tangible Product Augmented Product Potential Product

Product Life Cycle Source: Palmer, A. (2000) Principles of Marketing UK:Oxford TIME SALES VOLUME Introduction GrowthMaturitySaturationDecline

Product Life Cycle Introduction: New product launched to innovators and early adopters Growth: Rapid rate of growth, targeting early majority Maturity: Rate of growth begins to slow down Saturation: Market has ceased to grow. Mainly replacement demand Decline: Changes in consumers’ preferences or technology lead to a fall in sales Source: Palmer, A. (2000) Principles of Marketing UK:Oxford

(Rogers 1962)Pattern of Adoption for a New Product Source: Palmer, A. (2000) Principles of Marketing UK:Oxford TIME SALES VOLUME Innovators Early Adopters Early Majority Late Majority Laggards

Major Elements of Brand Equity Source: Adapted with the permission of The Free Press, a division of Simon & Schuster, Inc., from Managing Brand Equity: Capitalizing on the Value of a Brand Name by David A. Aaker. Copyright © 1991 by David A. Aaker.

World’s Most Valuable Brands Source: Dibb.S, Simkin.L, Pride.W & Ferrell.O(2001) Marketing – Concepts and Strategies 5 th ed, US: Houghton Mifflin 47,978 47,635 23,701 19,939 17,069 14,464 14,442 13,274 11,992 11,985 Coca-Cola Marlboro IBM McDonalds Disney Sony Kodak Intel Gillette Budweiser Brand Value ($ millions)Brand

UK’s Top 10 Brands, MullerMuller yoghurt – 170WhitbreadStella Artois lager – 195PepsiCoPepsi – 195Proctor & GamblePampers nappies – 200Lever BrosPersil laundry products – 205Procter & GambleAriel laundry products – 300Kimerley-ClarkAndrex toilet tissue – 290NestleNescafe coffee – 405PepsiCoWalker’s crisps Coca-Cola Advert Spend (£m)Sales (£m)OwnerBrand Source: Brassington,F. & Pettitt,S. (2000) Principles of Marketing 2 nd ed, UK:FT/Prentice Hall

Packaging An important part of the product that not only serves a functional purpose, but also acts as a means of communicating product information and brand character. Source: Brassington,F. & Pettitt,S. (2000) Principles of Marketing 2 nd ed, UK:FT/Prentice Hall

Functions of Packaging Functional: packaging must protect the product in storage, in shipment and often in use Promotional: packaging used to add value to the brand. Can be achieved through a combination of materials, shape, graphics and colour Source: Brassington,F. & Pettitt,S. (2000) Principles of Marketing 2 nd ed, UK:FT/Prentice Hall

Price

Factors Influencing Customers’ Price Assessments Source: Brassington,F. & Pettitt,S. (2000) Principles of Marketing 2 nd ed, UK:FT/Prentice Hall PRICE ASSESSMENT Quality Financial Functional Operational Personal

External Influences on the Pricing Decision Source: Brassington,F. & Pettitt,S. (2000) Principles of Marketing 2 nd ed, UK:FT/Prentice Hall PRICE DECISION Demand & price elasticity Competitors Customers & consumers Legal & regulatory Channels of distribution

Factors Affecting Price Decisions Source: Kotler.P & Armstrong.G (2001) Principles of Marketing 9 th ed, USA:Prentice Hall Pricing decisions Internal Factors External Factors - Marketing objectives - Marketing mix strategy - Costs - Organisational considerations - Nature of the market and demand - Competition - Other environmental factors (economy, resellers, government)

Price/Quality Strategies Source: Adcock.D, Halborg.A & Ross.C (2001) Marketing – Principles & Practice 4 th ed, UK:Prentice Hall LowHigh Low QUANTITY PRICE ECONOMY PRICING SUPER VALUE (short-term penetration) PREMIUM STRATEGY EXPLOITATION (short-term skimming)

General Pricing Approaches Cost-Based Pricing: - Cost-plus pricing - Break-even pricing Value-Based Pricing Competition-Based Pricing Source: Kotler.P & Armstrong.G (2001) Principles of Marketing 9 th ed, USA:Prentice Hall

New-Product Pricing Strategies Market-Skimming Pricing: setting a high price for a new product to skim maximum revenues Market-Penetration Pricing: setting a low price for a new product in order to attract a large number of buyers and a large market share Source: Kotler.P & Armstrong.G (2001) Principles of Marketing 9 th ed, USA:Prentice Hall

Price-Adjustment Strategies Source: Kotler.P & Armstrong.G (2001) Principles of Marketing 9 th ed, USA:Prentice Hall Adjusting prices for international markets International pricing Adjusting prices to account for the geographical location of customers Geographical pricing Temporarily reducing prices to increase short-run sales Promotional pricing Adjusting prices for psychological effect Psychological pricing Adjusting prices to allow for differences in customers, products or locations Segmented pricing Reducing prices to reward customer responses such as paying early or promoting the product Discount & allowance pricing DESCRIPTIONSTRATEGY

Place

Channel Structure for Consumer Goods CONSUMER PRODUCER Retailer Wholesaler Agent Source: Brassington,F. & Pettitt,S. (2000) Principles of Marketing 2 nd ed, UK:FT/Prentice Hall

Channel Structure for Organisational Markets Source: Brassington,F. & Pettitt,S. (2000) Principles of Marketing 2 nd ed, UK:FT/Prentice Hall Distributor Agent MANUFACTURER USER

Sorting activities conducted by channel members Source: Dibb,S, Simkin, Pride, Ferrell (2001) Marketing: Concepts & Strategies 4 th ed, USA:Houghton Mifflin

Value Added Services Provided by Intermediaries Source: Brassington,F. & Pettitt,S. (2000) Principles of Marketing 2 nd ed, UK:FT/Prentice Hall Value Added Services Facilitating Value Transactional Value Logistical Value -Financing -Training -Information -After sales -Risk -Marketing -Administration -Assortment -Storage -Sorting -Bulk breaking -Transportation

Promotion

Advertising “Any paid form of non-personal communication of ideas, goods or services delivered through selected media channels.” Source: Palmer, A (2000) Principles of Marketing UK:Oxford

Sales Promotion Institute of Sales Promotions definition: “A range of tactical marketing techniques designed within a strategic marketing framework, to add value to a product or service in order to achieve a specific sales and marketing objective.” Source: Palmer, A (2000) Principles of Marketing UK:Oxford

Public Relations Institute of Public Relations definition: “Public relations is the deliberate, planned and sustained effort to establish and maintain mutual understanding between an organisation and its publics.” Source: Palmer, A (2000) Principles of Marketing UK:Oxford

Selling & Sales Management “A sales force provides the personal interface between a company and its customers. This contact may be face-to-face, telephone or utilising information technology.” Source: Palmer, A (2000) Principles of Marketing UK:Oxford

Direct Marketing UK Direct Marketing Association defines direct marketing as: “Communications where data are used systematically to achieve quantifiable marketing objectives and where direct contact is invited or made between a company and its customers.” Source: Palmer, A (2000) Principles of Marketing UK:Oxford

Promotional Mix Source: Brassington,F. & Pettitt,S. (2000) Principles of Marketing 2 nd ed, UK:FT/Prentice Hall Public Relations Sales Promotion Advertising Personal Selling Organisational Consumer fmcgWhite GoodsHome Improvements Capital EquipmentRaw MaterialsConsumables/Stationery

Physical Evidence

Physical Presence / Evidence Shostack (1997) identifies two types of physical evidence: 1.Essential Evidence 2.Peripheral Evidence Source: Brassington,F. & Pettitt,S. (2000) Principles of Marketing 2 nd ed, UK:FT/Prentice Hall

Essential Evidence Central to the service and is an important contributor to the customer’s purchase decision, For example, the car fleet belonging to a car hire firm. Source: Brassington,F. & Pettitt,S. (2000) Principles of Marketing 2 nd ed, UK:FT/Prentice Hall

Peripheral Evidence Less central to the service delivery and is likely to consist of items that the customer can keep or use. Source: Brassington,F. & Pettitt,S. (2000) Principles of Marketing 2 nd ed, UK:FT/Prentice Hall

People

The nature of most services requires direct interaction between the customer/consumer and personnel representing the service provider’s organisation.” Source: Dibb.S, Simkin.L, Pride.W.M. & Ferrell.O.C. (2001) Marketing – Concepts & Strategies US:Houghton Mifflin

Service Organisations “In many services, customers interact with one another, and the organisation’s staff also interact with one another…Employee selection, training and motivation are central considerations.” Source: Dibb.S, Simkin.L, Pride.W.M. & Ferrell.O.C. (2001) Marketing – Concepts & Strategies US:Houghton Mifflin

Dependency of Personnel “Many services businesses are totally dependent on their personnel, as Leo Burnett, founder of the international advertising agency that bears his name, summed up: “Every evening all our assets go down the elevator” – people!” Source: Dibb.S, Simkin.L, Pride.W.M. & Ferrell.O.C. (2001) Marketing – Concepts & Strategies US:Houghton Mifflin

Service Marketing Effectiveness Service marketing effectiveness is likely to be critically affected by the actions of front-line employees who interact with customers. Source: Palmer, A (2000) Principles of Marketing UK:Oxford

Process

Purchasing & Consumption “The acts of purchasing and consumption are important in all markets – consumer, industrial or service.” Source: Dibb.S, Simkin.L, Pride.W.M. & Ferrell.O.C. (2001) Marketing – Concepts & Strategies US:Houghton Mifflin

Direct Involvement “The direct involvement of customers/consumers in the production of most services and the perishability of these services place greater emphasis on the process of the transaction for services.” Source: Dibb.S, Simkin.L, Pride.W.M. & Ferrell.O.C. (2001) Marketing – Concepts & Strategies US:Houghton Mifflin

Aspects of Process “Friendliness of staff and the flows of information affect the customer’s perception of the service product offer. Appointment or queuing systems become part of the service. Ease or difficulty of payment can enhance or spoil the consumption of the service.” Source: Dibb.S, Simkin.L, Pride.W.M. & Ferrell.O.C. (2001) Marketing – Concepts & Strategies US:Houghton Mifflin