And the Marketing Mix (4p’s)

Marketing: The activities required to provide a product or service to satisfy a customer's needs or wants

Target Market All the characteristics of the market segment (customers) that you are selling to.

Marketing Mix Target Market Product What product(s) or service(s) should we sell? How should product/service be branded? What is the best positioning? Price What are the pricing objectives? How much should we charge? Product Price Target Market Marketers have essentially four variables to use when crafting a marketing strategy and writing a marketing plan. They are price, promotion, product and distribution (also called placement). They are sometimes referred to as the four Ps. A marketing mix is a combining of these four variables in a way that will meet or exceed organizational objectives. A separate marketing mix is usually crafted for each product offering. When constructing the mix, marketers must always be thinking of who their target market are. Mix coherency refers to how well the components of the mix blend together. A strategy of selling expensive luxury products in discount stores has poor coherency between distribution and product offering. Promotion What value does our product add for consumers? What is the best way for us to convey our message to consumers? Place Promotion Place Where, when and how will consumers access products? How will we distribute? 4

(4ps) 4 Ps

Marketing Mix (4 P’s) PRODUCT/SERVICE – the actual product, (design, colour, materials, taste, scent) or service the company sells.

Marketing Mix (4 P’s) PLACE (CHANNELS OF DISTRIBUTION) - the methods of how goods or services are distributed to and reach the consumer (Ex. transportation and stores).

Marketing Mix (4 P’s) PRICE – how much it costs to make? variable and fixed costs desired profit

Marketing Mix (4 P’s) Promotion – increase awareness to potential customers convince customers the product/service is better than anyone else’s (competitors). Branding

(4ps) Product Product/Service Planning – the process through which a businesses makes decisions about the features needed to sell their products, service or ideas.

Product Mix Includes all the different products that a company makes or sells. What company makes these products?

Developing Existing Products Line Extensions – new product lines, items, or services Original Product Newer Products

Developing Existing Products Product Modifications – an alteration in a company’s existing product

Deleting a Product or Product Line Obsolescence Loss of appeal Replacement with new products Lack of profit

PRODUCT PACKAGING Protect preserve product Safety for product/ consumer convenience factors for retailer and consumer Product labeling- safety and use instructions Universal Product Code (UPC) Product promotion – the silent seller

(4ps) Place Distribution The paths of ownership that goods follow as they pass from the producer to the consumer In other words…. How a product gets from the producer to the customer.

Wholesalers the selling of goods in large quantities to be retailed by others.

Retailers A business or person that Sells goods/ services to the customer (as opposed to wholesaler or distributor)

Specialty Channels Any indirect channel of distribution that do not involve a retail store. Ex: distributors, Vending machines, internet, catalogues, TV

Modes of Transportation Trains Trucks Planes Ships Pipeline

Direct Distribution Direct link between the producer and the consumer Direct distribution is more common than it used to be. Why? Producer Consumer

Indirect Distribution Intermediaries take possession of the goods, add a mark-up, and then resell them to consumers. Importers/ manufacturers Wholesalers Retailers Consumer

Indirect Direct Manufacturer Manufacturer Wholesaler Retailer Consumer

Which do you think works better? (4ps) Price? Pricing is one of the 4Ps of the marketing mix: The price of the product or service affects How much demand there will be How much you will sell How consumers will view your product How much competition you will have * * Price too high, risk not selling * * Price too low, risk not selling Which do you think works better?

Discount Pricing Selling products at a reduced price Cash 2% off if you pay bill early OR coupon on box Get more in terms of quantity If the Bay buys 10,000 Diesel t-shirts they’ll get them cheaper Seasonal discounts Christmas cards and off-season vacations Promotional discounts and allowances Rebates and trade-in old merchandise

Guess the price !

Guess the price ! $17.93 $3.49 $19.99 $18.83 $17.89 $1490.00 $6.96 $179.00 $20.00

Imagine you want to buy some chocolate. Which of these will you buy Imagine you want to buy some chocolate. Which of these will you buy? Move to the corner of the room that matches your choice. Discuss why you chose that product. Broken chocolate bar pieces from the bulk food store. Price: $1 for about 2 bars Toblerone bars. Price: $6.99 for a large “gift size” bar. GODIVA chocolates – considered by many to be “the best” Price: $20 for a small box of about 12 chocolates Widely available chocolate bars. Price: $1 each

Imagine you are going to buy a car. Which of these will you buy Imagine you are going to buy a car. Which of these will you buy? Move to the corner of the room that matches your choice. Discuss why you chose that product. Lamborghini Gallardo – often mentioned in rap songs. Price: $250,000 Audi TT – a cool design featured in several movies. Price: $60,000 A sporty and economical new Toyota Echo Price: $15,000 1983 used Datsun Price: $600

Imagine you are going to buy ketchup. Which of these will you buy Imagine you are going to buy ketchup. Which of these will you buy? Move to the corner of the room that matches your choice. Discuss why you chose that product. Annie’s Organic Ketchup Price: $5.00 Great Value Price: $2.00 Heinz Ketchup Price: $4.27 Hunt’s Ketchup Price: $2.99

What influences a price? Convenience Status and image (positioning) Trends Competition Quality Cost to make and sell it How much the target customer will spend for it Profit that a company wants to make How much a company wants to sell How quickly they want/need to sell Others? Pricing is one of the 4Ps of the marketing mix: The price of the product or service affects How much demand there will be How much you will sell How consumers will view your product How much competition you will have * * Price too high, risk not selling * * Price too low, risk not selling

COMPETITIVE PRICING Examples: VS. Our lowest price guarantee Benchmark pricing (p.264) Our lowest price guarantee The lowest price is the law

COST-ORIENTED PRICING Price = cost of making product/service + all other expenses (fixed and variable) + desired profit

The cost of doing business Variable Costs Expenses that change depending on the level of production or sales. e.g. raw materials, employee wages, sales commissions, shipping costs, etc. Other examples? Fixed costs Expenses that stay the same regardless of how much is produced or sold. e.g. Rent, phone bill, heating, insurance, etc. Other examples? Fixed costs are also called overhead. Variable costs are also called direct costs. The price of goods/service must cover all the costs and make a surplus (profit) on top. To cover fixed costs it makes a good deal of difference whether you sell one item or 100. Since the entire fixed costs have to be recovered regardless of the number of sales. Total costs = fixed costs + variable costs

Psychological Pricing Refers to techniques that create an illusion or impression for customers that make them buy

Psychological Pricing Techniques Odd-even pricing $2.99 or $100 Odd numbers convey bargain! Even numbers convey quality Prestige Pricing expensive $1000+ Rolex watches Conveys status You’ll look rich or cool

Psychological Pricing Techniques Multiple Unit pricing 4 chocolate bars in a pkg You think you’re getting a bargain Increases sales volume Bundle Pricing shampoo and conditioner bundle Price is lower than if you bought separately Getting a bargain

Psychological Pricing Techniques Promotional Pricing Loss leaders – sell products at cost or below to get customers in to the store Prices reduced for a certain time, ie. at holidays Everyday Low Prices (ELDP) Low prices every day with no intention of raising them or offering more discounts

(4ps) Promotion Branding is establishing an identity for a product that differentiates it from the competition. It is made up of a brand name, logo, slogan, and trademark and creates brand loyalty. What is branding?

Brand Name A brand name is the letters, words or numbers that can be verbalized Guess the Logo Font

Types of Brands A National Brand is a product which is branded by a manufacturer's brand and is typically supported by heavy advertising. Coca Cola and Heinz Ketchup would be examples of this.

Types of Brands A private Brand or “Store Brand” label is a brand that a retailer creates to exploit their corporate image Only that retailer can sell it It allows them to differentiate themselves (And control price and quality) Examples: Loblaw’s “President’s Choice” Shopper’s Drug Mart’s “Life” brand HBC’s “togo” brand

Types of Brands Generic Brands or “No Name Brands” The lowest cost because the labeling and packaging is cheaper There is no promotion for this type of brand.

LOGO A logo is the part of the brand in the form of a symbol that is usually registered A brand mark and trademark are examples of a logo

SLOGAN A slogan is a catchy phrase used to remind the consumer of a company or brand Harvey’s makes a hamburger a beautiful thing”

What is it?

Target Market All the characteristics of the market segment (customers) that you are selling to.

Demographics Age range Income range Gender Marital status Number of Children Occupation Geographic Location

Psychographics Attitudes Opinions Interests Lifestyle Needs to be filled What or who influences the purchase decision How will find out about your product

PROMOTION TECHNIQUES ADVERTISING: ex. ads on Web, TV, radio, newspaper, magazines, smart phones, flyers, junk mail. SALES PROMOTION: ex. sales coupons, free gifts or samples, games of chance, demonstrations.

PROMOTION TECHNIQUES PUBLICITY: ex. news report - free advertising. PRODUCT PACKAGING: ex. The container/wrapping in which the product is sold in.

PROMOTION TECHNIQUES Personal Selling – one on one communication to persuade a customer to buy AIDA Selling formula, the four steps Attract attention Hold interest Arouse desire Take action to close the sale