THE MARKETING MIX

The 4ps PRICE PLACE PRODUCT PROMOTION

Why are the 4Ps so important? To ensure a successful product an organisation must get the 4 elements of the marketing mix just right. For example if they don’t get the price right eg too expensive then people may not buy the product.

PRICE For most people price is a deciding factor in whether they will buy a product or not – so the price set has to be just right – also depending upon where a product is in its life cycle might help a business decide the price. Demand and supply of the product can also determine price

Pricing Strategies – what to consider What are competitors charging for their product How can you use price to promote your product and so increase sales What the price needs to cover eg what are the costs of production Where is the product on its product life cycle

Competitors’ prices Orgs can undercut competitors – but have to be careful – as too cheap might make your product seem poorer quality Or you can set your price at the same as your competitors and so you are matching them – if you do this you have to give your product more promotion or a USP (Unique Selling Point)

Destroyer Pricing Large orgs who are pretty stable and have good finance may sometimes use this strategy of undercutting competitors to try and remove them from the market – they may sustain a short term loss – once the competitor is removed then the price will be put up to a realistic level

Penetration Pricing Mainly used on new products entering a highly competitive market – to attract customers to your new product – once you have captured a market share and people have become brand loyal – then the price is put up to a realistic price eg remember Golden Grahams

Skimming This involves setting a high price for a new product as it is launched onto the market – used a lot with new technology products – once the people who want to have new techno products have got one (saturated the market) – the price is lowered – then others can afford it – saturate that market – then price lowered again (and competitors may now be in the market) – high prices helps orgs to recover some of the research and development costs

Cost Plus Pricing You calculate how much it costs to produce the product – for each unit – then you say want to earn a 10% profit – you add on 10% to the unit cost and you then have your price.

PRODUCT Product most important part of marketing mix – no point in having other 3 elements correct if your product isn’t right. If your product is of poor quality it will not sell.

Decisions to make about the Product What product are they going to sell? What are they going to call the product? – it has to be pronounceable and remembered easily How is the product to be packaged – eg design, colour, distance it has to travel, information about contents Should it be branded? Should it be seen to be environmentally friendly? What will its product life cycle be?

Product Life Cycle Go onto website www.bized.co.uk From the website we can see that organisations have to be aware that each product has a different life cycle. For example technology products tend to have quite a short life cycle, as do confectionary products

Find out about how organisations can extend the life cycle of their product – the strategies that they use. Opal Fruits, Coco Pops, Kit Kats, Dyson just some examples to look up.