1. Thought for the day:
“The aim of marketing is to know and understand the customer so well the product or service fits him and sells itself.” Druker 1

2. L/O: Identify and explain the elements of the marketing mix Show knowledge and awareness of the four main elements of the marketing mix [product, price, place and promotion]

3. To see how much you know already
Pre-Quiz – you are NOT expected to get these all right!
Do each of the tests –Product, Price, Place, Promotion only
When marking indicate which you go correct or incorrect on the handout
Hand in to teacher with your name

5. A company needs to consider the marketing mix in order to meet their consumers' needs effectively.
Elements of the marketing mix
The marketing mix is the combination of product, price, place and promotion for any business venture.

6. Marketing mix·
The marketing mix is probably the most famous marketing term. Its elements are the basic, tactical components of a marketing plan.

7. No one element of the marketing mix is more important than another – each element ideally supports the others.
Firms modify each element in the marketing mix to establish an overall brand image and unique selling point that makes their products stand out from the competition.

8. Marketing mix·
Product
Place
Price
Promotion

9. PRODUCT

10. Demonstrate an understanding of the product life cycle • Knowledge and understanding of the importance of packaging • Awareness of the concept of a brand name in influencing sales • Knowledge of the stages of a product life cycle • Draw and interpret a product life cycle diagram • Understanding of the significance of the four main stages of the product life cycle • Show awareness of extension strategies

11. What is a product?
A business can adjust the features, appearance and packaging of a product to create competitive advantage.
Brands use packaging and logos to create a brand image
A product is a good or a service that is sold to customers or other businesses. Customers buy a product to meet a need.
This means the firm must concentrate on making products that best meet customer requirements.
Pg 143 ‘Stages in creating a product’
A business needs to choose the function, appearance and cost most likely to make a product appeal to the target market and stand out from the competition. This is called product differentiation.

12. • Awareness of the concept of a brand name in influencing sales • Knowledge and understanding of the importance of packaging

13. How product differentiation is created:
Establishing a strong brand image (personality) for a good or service.
Making clear the unique selling point (USP) of a good or service, for example, by using the tag line quality items for less than a pound for a chain of discount shops.
Offering a better location, features, functions, design, appearance or selling price than rival products.
Having a brand image helps products to stand out in a competitive market
Packaging

14. How product differentiation is created:
Firms face a dilemma if they choose to launch a premium brand. Improving the quality or appearance of a product adds to the cost of making it. In turn, this means that the business must charge higher prices if they are to make a profit.
An alternative marketing strategy is to produce a budget brand. If a mobile phone has limited functions and a standard design then it can be manufactured cheaply. The low production costs allow for discount pricing.

15. -pg 143
Define branding
What is the benefit?
How does packaging help market and sell a product?

16. The Product Life-Cycle
These are:
Introduction (launch)
Growth
Maturity
Saturation
Decline
Pg 144
In the launch and growth stages sales rise. In the maturity stage, revenues flatten out.
Getting a product known beyond the launch stage usually requires costly promotion activity.
At some point sales begin to decline and the business has to decide whether to withdraw the item or use an extension strategy to bolster sales. Extension strategies include updating packaging, adding extra features or lowering price.

17. The Product Life-Cycle
Activity 25.2
pg 145

19. MARKETING MIX
PRODUCT P
PRICE P
PLACE P
PROMOTION P

21. Product
Brand loyalty – what makes customers stick to a particular brand?
Product differentiation created by:
Unique design
Unique product function e.g. iphone
Unique taste e.g. Dr Pepper
Superior performance e.g. Dyson

22. Product Life Cycle
Shows the different stages in the life of a product and sales that can be expected at each stage.

23. Sales Sales are low Product is being designed Profits will be negative
Product may
be unknown
Sales
increasing
rapidly
Profits will
reach their
highest at the
end of this stage
Sales reach
its highest point
Rate of growth
Slows
Competitors enter
the market
Similar
products enter
the market
Price lowered
Some
businesses
my be forced
out of the
market
Sales falling
Profits continue
to fall
Time
Introduction
Growth
Maturity
Decline
Development
Saturation

24. Use of the PLC Illustrate the broad trends in sales revenue
Identify points at which the business may need to consider launching new products as older ones are in decline
Help business identify when and where spending is required e.g. advertising

25. Different life cycles Products with long life cycle?
Products with short life cycle?

26. Extension Strategies Find new uses for the products
Finding new markets for existing products
Develop a wider product range
Aiming the product towards specific target markets
Changing appearance or packaging

27. Boston Matrix
Not on syllabus, but useful
Star products have a high market share in a fast growing market.
Cash Cows have a high market share in a slow growing market.
Question marks or problem children products have a low market share in fast growing markets.
Dogs are products with a low market share in slow growing markets.
Firms with just a few items in their product portfolio – or who have all their products at the same stage in the product life cycle – are in the dangerous position of having ‘all their eggs in one basket’. Such firms may prioritise broadening their product range.

28. ACTIVITY TASK
Describe your product, the tangible things eg. Design, Size, colour, packaging
Why have these been chosen? (AO4)
Extra features – after sales service, customer care policy.
Additional features, what is your unique selling point (USP)
L/O Apply the elements of the marketing mix to given situations.

29. PRODUCT QUIZ
QUIZ:

30. PRICE Understand how pricing decisions are made
• Understand the main methods of pricing: cost plus, competitive,
psychological, penetration, price skimming
• Show awareness of the implications of the methods

31. PRICE
A business must take many factors into account before deciding on the price of a product.
Pricing strategies
Remember there is a big difference between costs and price. Costs are the expenses of a firm. Price is the amount customers are charged for items.
Firms think very carefully about the price to charge for their products.

32. PRICE
There are a number of factors to take into account when reaching a pricing decision:
Customers. Price affects sales. Lowering the price of a product increases customer demand. However, too low a price may lead customers to think you are selling a low quality ‘budget product’.
Competitors. A business takes into account the price charged by rival organisations, particularly in competitive markets. Competitive pricing occurs when a firm decides its own price based on that charged by rivals. Setting a price above that charged by the market leader can only work if your product has better features and appearance.
Costs. A business can make a profit only if the price charged eventually covers the costs of making an item. One way to try to ensure a profit is to use cost plus pricing. For example, adding a 50% mark up to a sandwich that costs £2 to make means setting the price at £3. The drawback of cost plus pricing is that it may not be competitive.
There are times when businesses are willing to set price below unit cost. They use this loss leader strategy to gain sales and market share.

33. Pricing new products
Half price sales are an example of penetration pricing
A business can choose between two pricing tactics when launching a new product:
Penetration pricing means setting a relatively low price to boost sales. It is often used when a new product is launched, or if the firm’s main objective is growth.
Price skimming means setting a relatively high price to boost profits. It is often used by well-known businesses launching new, high quality, premium products.

34. Some different pricing strategiesPg

35. Mindmap this answer… Middlesbrough PC developed a new processor
Sold very well, but is now passing from its growth stage into its maturity stage.
Competitors have already entered the market.
Suggest two promotional activities Middlesbrough PC might use. Give your reasons.

36. Sunderland PC Shop
My New PC Shop….
Hired a
Manager
(Recently fired)

37. Cost Plus Pricing Cost $10.00 Add 25% Mark up $2.50 Total Price $12.50
Setting a price which covers the cost of production plus a set amount of profit.
Mark up $2.50
Total Price $12.50

38. No Sales…. Competitive Pricing $12 Round the corner No Sales $12
If there is strong competition in a market, customers have choice,
business must set their prices competitively.

39. Psychological Pricing
Used to play on consumer perceptions
Classic example - $9.99 instead of $10.00!
Links with value pricing – high value goods priced according to what consumers THINK should be the price

40. We Got The Coolest Gadget…
Skimming
We’re the only ones to have it…
Cost $17

41. Price Skimming High price, Low volumes Skim the profit from the market
Suitable for products that have short life cycles or which will face competition at some point in the future (e.g. after a patent runs out)
Examples include: Playstation, jewellery, digital technology, new DVDs, etc.
Many are predicting a firesale in laptops as supply exceeds demand.
Copyright: iStock.com

42. Competition may get them soon
Penetration pricing
We’d better sell them quick, get an exclusive deal and then I’ll put the price up….
But I bought a warehouse full….

43. Penetration Pricing Price set to ‘penetrate the market’
‘Low’ price to secure high volumes
Typical in mass market products – chocolate bars, food stuffs, household goods, etc.
Suitable for products with long anticipated life cycles
May be useful if launching into a new market

44. Nobody Wants to Come in…
We still haven’t shifted all those pen drives…
Ok, we can make a loss on this one, but make sure they buy the other stuff too…
Loss-leaders

45. What Strategy and why? ASDA launches a new range of own-label soups.
DFDS Seaways launches two new cruise ships.
Virgin Media Cable television moves into a new area and needs to achieve a market share.
Sunderland Marriot try to fill their hotel during winter weekends.
Burger King introduces a new range of value meals.

46. Influence of Elasticity
Any pricing decision must be mindful of the impact of price elasticity
The degree of price elasticity impacts on the level of sales and hence revenue
Elasticity focuses on proportionate (percentage) changes

47. ACTIVITY TASK Discuss various pricing strategies? (AO1)
How much will you charge for your product and why? (AO3)
What is the implication for this decision? (AO3)

48. Knowledge….. Understand how pricing decisions are made
Understand the main methods of pricing: cost plus, competitive, psychological, penetration, price skimming
Show awareness of the implications of the methods
-pg 148

49. PRICE
Quiz:
(Uses pounds – UK)

50. PLACE
Appreciate the importance of distribution channels and the factors that determine the selection of them
• Knowledge and understanding of a distribution channel
• Recommend and justify an appropriate channel in a given
situation

51. Place
As part of its marketing strategy, a company needs to decide where best to distribute a product.
What is place?
Place is the point where products are made available to customers. A business has to decide on the most cost-effective way to make their products easily available to customers.

52. PLACE:
Place refers to the Distribution Channel of a Product - all aspects related to how a Product is ‘moved’ from the manufacturer to the customer.
The Distribution Channel can be Direct or Indirect:

54. Channel of distribution
Wholesaler vs retailer
-pg 152
Look at the different types of channel of distribution
Note benefits & issues
-pg

55. Typical marketing channels for consumer product

56. Channel of distribution
This involves selecting the best channel of distribution. Potential methods include using:
Retailers. Persuading shops to stock products means customers can buy items locally. However, using a middle man means lower profit margins for the producer
Producers can opt to distribute using a wholesaler who buys in bulk and resells smaller quantities to retailers or consumers. This again means lower profit margins for the manufacturer.

57. Channel of distribution
Telesales and mail order. Direct communication allows a business to get products to customers without using a high street retailer. This is an example of direct selling.
Internet selling or e-commerce. Online selling is an increasingly popular method of distribution and allows small firms a low cost method of marketing their products overseas. A business website can be both a method of distribution and promotion.
Developing new or improved channels of distribution can increase sales and allow a firm to grow.

59. ACTIVITY TASK How will you get your product to your customers? (AO1/2)
What is your channel of distribution? (AO1/2)
Justify this choice (AO4)
L/O Apply the elements of the marketing mix to given situations.

60. QUIZ: http://www. bbc. co

61. Promotion L/O: Understand the role of promotion
• Understand the aims of promotion
• Identify, explain and give examples of different forms of
promotions
• Understand how promotions influence sales
• Justify an appropriate method of promotion in a given situation

62. Promotion
There is much more to promotion than advertising. Businesses use various methods to gain publicity.
Customer awareness
Promotion refers to the methods used by a business to make customers aware of its product. Advertising is just one of the means a business can use to create publicity.

63. Promotion The main objectives of promotion are
To inform prospective customers of the product and the business
To show the benefits of the product
To persuade potential customers to buy the product
To present a good image

64. Promotion Your businesses objectives may include
To increase market share
To enter a new market or market segment
To extend the life of a product
To launch a new product into a market
The success of a promotional campaign must be measured against these objectives

65. Methods of promotion
Price reductions, special offers and free gifts persuade new customers to try a product and can give a boost to sales and that lasts longer than the promotion
Free samples can increase awareness of a new product
Competitions attract customers to new and existing products

66. Methods of promotion
Brochures and catalogues inform customers about a product and present an image of the business
Point of sale promotion such as in-store displays encourage impulse buying
Internet based using a web site and depends on customers knowing where to look and providing an address
After sales involves providing service backup and information as well as warranties and guarantees

67. Methods of promotion Advertising should be targeted using
Television: expensive and wide coverage
Radio: cheaper and smaller audience; no visual stimulus
Cinema: local audience
Newspapers and magazines: can be expensive but more specialised; if kept can be long lasting
Posters: cheaper; have impact but may be ignored; little opportunity for targeting
Leaflets: delivered to peoples homes or distributed in the street; cheap but little opportunity for targeting

68. Methods of promotion Public relations
Press releases and news stories released to the press can provide cheap promotion that can be targeted by using trade press
Sponsorship of events and television programmes bring the product or business to peoples’ awareness but can be expensive
Endorsement by celebrities associates the product with the celebrity

69. Methods List the difference between ‘above’ and ‘Below’ the line.
-pg 158 – 162
QUIZ:

70. Creating a marketing Mix
A theme and consistency should run throughout the marketing mix plan
It must suit the target market

71. You may chose to emphasis one of the four Ps

72. ACTIVITY TASK Why do you need to promote your product? (AO3)
What aspects of the product are you promoting? (AO2)
What are the different types of promotion and why are they likely to be successful? (AO1/AO3)
Justify your choice of promotion (AO4)

73. affecting the marketing mix -Marketing Strategy & Budget
Other factors
affecting the marketing mix
-Marketing Strategy & Budget

74. Objective: Marketing Strategy
-Understand how the mix can be used to influence consumer purchasing
-Understand how the marketing mix can change as the product goes through its life cycle
-Select and justify marketing methods appropriate to a given situation
-Understanding of the importance of the different elements of the marketing mix and the ways in which they can be used separately or together to influence consumer purchases
-Recommend and justify a marketing strategy in a given situation

75. Mixing & Strategy
Why Plan?
Planning process
-Analysis of Business
-Objectives
-pg 163

76. Analysing the Business
PEST
SWOT

77. Factors affecting the choice of marketing mix
PESTLE:
Political
Economic
Social
Technological

78. SWOT
Strengths
Weakness
Opportunities
Threats

79. Setting Objecitves Once done SWOT – able to set marketing objectives.
Identify what you want to achieve over a period of time – covered by the marketing plan
Market penetration
Market development
Product development

80. Marketing Planning Different products marketed in different ways.
Methods depends on who you are targeting
Bullet point different ways for:
Market penetration
Market development
Product development
(pg 165)

81. BUDGET Awareness of the need for a marketing budget
Knowledge of the concept of a marketing budget
Understanding of the importance of such a budget in terms of money available for the marketing function
Awareness of the concept of cost effectiveness

82. Marketing Budget BUDGET - a financial plan for the future
Based on forecasts and estimates
- Master budget – The WHOLE BUSINESS (targets for income and expenditure)
Time
People
Materials & equipment
Costs

83. Factors affecting the choice of marketing mix
Costs
All marketing activity costs money and the availability of finance may restrict methods used
Changes in price affect profitability and the ability to cover costs
The cost of a marketing campaign must be less than additional revenue generated