1. Marketing mix
THE TIMES 100

2. Marketing mix
The marketing mix is the combination of variables that a business uses to carry out its marketing strategy and meet customer needs.
The marketing mix is often called the 4Ps:
Product
Price
Place
Promotion

3. 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

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

5. Stages of 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needed, revenue & profit should be high Decline – sales decline, extension strategies can be adopted or the product withdrawn

6. 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

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

8. Price leaders and takers
Price leader – businesses that dominate the market can often dictate the price charged for a product. Other businesses follow this lead. Price taker – businesses have to charge the market price. This is often the case where there are many small firms competing against each other.

9. Pricing strategies & tactics
Skimming
Launching with a high price when there is little competition, then reducing the price later. Often used with technology.
Penetration
Low price charged initially to penetrate the market and build brand loyalty; prrice is then increased e.g. introductory offers on magazines.
Competitive
A similar price is charged to that of competitors’ products.
Loss leader
Products 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.
Psychological
A price is set which customers perceive as lower than it is e.g. £39.99 instead of £40.
Skimming -
Penetration
Competitive
Loss leader
Psychological
Price leaders
Price takers

10. 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

11. Channels of distribution
Manufacturers
Wholesaler
Retailer
Consumer
Wholesaler – buys in bulk from suppliers/manufacturers and then breaks this up to sell into smaller quantities to retailers
Retailer – a shop which sells products to the consumer. May be a customer of a wholesaler or manufacturer.
Consumer – uses the goods/services
Direct selling occurs when the consumer buys direcly from the manufacturer. The internet and factory shops allow this to happen.

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

13. Promotion
Above-the-line promotion This uses advertising media 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 and sponsorship

14. 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

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

16. How the marketing mix evolves over time
The marketing mix will evolve over time. For example:
The product portfolio may grow as a business becomes more established
More expensive promotional activities may be adopted as a firm’s revenue increases
More outlets may be opened, or products sold via the internet
Price may increase as demand grows

17. Marketing mix in context

18. Product range at McCain
McCain Food’s product range includes frozen vegetables, ready meals and desserts; McCain is also the world’s leading manufacturer of frozen potato products such as Oven Chips. What factors have driven changes in the product range? Use the McCain Food’s case study to help you
Factors affecting the product range include:
Changing lifestyles – microwaveable snacks are handy for consumers who do not want to take long preparing food
Increasing demand for healthy diets – only sunflower oil is used in the preparation of McCain chips

19. Pricing at McCain Foods
McCain uses a range of pricing strategies associated with adding value for money. One of the factors it must consider is how much the consumer will be prepared to pay. Why do you think consumers will pay more for Oven Chips than it would cost them to buy the potatoes and oil to prepare chips themselves?
Convenience – consumers may pay extra for the ease and speed of using Oven Chips instead of preparing them, themselves
Health – Oven Chips may be considered as a healthier option
Quality – the McCain brand indicated that the product will be of a high quality

20. McCain distribution channels
McCain sells its products to both wholesalers and retailers. Draw these distribution channels. How does McCain reduce the environmental impact of transporting its products? Use the case study to help
The environmental impact is reduced by:
Using local farmers when possible to reduce food miles
Using double-decker trucks to save lorry journeys
Having built-in solar panels in the lorries to provide power needed for internal lifting mechanisms

21. Promotion of McCain products
Are the following promotional methods used by McCain above-the-line or below- the-line?
TV advertisements
Discount vouchers
Advertisements on supermarket trolleys
newsletter
Leaflet drops
TV adverts – above
Discount vouchers – below
Trolley adverts – above
newsletter – below
Leaflet drops - below

22. Useful resources
Marketing mix lesson suggestions and activities (The Times 100)
McCain case study (The Times 100)
McCain website