MKTG13 Marketing Mix @

1. MKTG13 Marketing Mix @

2. Element and Performance Criteria • Evaluate each component of the marketing mix 1.1. Identify key characteristics of products or services and estimate their significance to the market 1.2. Review pricing policy and analyse pricing variables to determine their effect on demand 1.3. Analyse promotional methods to determine their importance to marketing outcomes 1.4. Review channels of distribution and estimate their significance in relation to marketing outcomes 1.5. Identify and analyse level of customer service provision to determine its significance to marketing outcomes 1.6. Identify potential customer base and key pressure points for success 1.7. Analyse and test the effect of the components of marketing mix on each other, and establish their relative importance to customer base

3. Element and Performance Criteria • Determine marketing mix for specific markets 2.1. Identify and asses environmental factors for their impact on marketing mix 2.2. Identify consumer priorities, needs and preferences that affect marketing mix 2.3. Consider product, pricing, promotional, distribution and service variations, and evaluate these against marketing objectives, target market characteristics and desired positioning 2.4. Select marketing mix that best satisfies target market and meets marketing objectives 2.5. Ensure marketing mix decision meets organisational, strategic and operational marketing objectives

4. Element and Performance Criteria 3. Monitor and adjust marketing mix 3.1. Monitor marketing mix against marketing performance and isolate components for testing 3.2. Evaluate implications of altering one or more components of marketing mix in relation to market factors and consumer response 3.3. Adjust components of marketing mix in response to test results and evaluation of market response 3.4. Ensure adjusted marketing mix meets budgetary requirements 3.5. Ensure adjusted marketing mix continues to meet organisational, strategic and operational marketing objectives, and desired positioning

5. 4P’s Marketing Mix – from the perspective of the buyer Solution / Value / Benefit Product Convenience Place Consumption Promotion Communication Inform Price Persuade Cost / Investment Value Remind

6. Perhaps We Need 7 P’s? A number of writers have suggested the possible extension of the 4 P's. For example to include: • People - Particularly in service centre value offerings, people (Employees, Management) as well as the participating consumers often add significant value to the total offering. • Process- Procedure, mechanisms and flow of activities by which services are consumed (customer management processes) are an essential element of the marketing strategy. • Physical Evidence - The tangible elements of the environment in which the value offer is delivered. It is about the tangible aspects (things you can see and touch) that communicate and deliver the intangible value (the service experience of customers).

7. Product

8. Products/Service Elements 6 Elements of Product Physical Brand Product Quality Warranty Purpose Packaging

9. Identifying Key Features

10. A Product that a Customer may needs and wants • Can be grouped Industry Sector: • Health • Admiration • Amusement • Wealth • Security • Self-improvement

11. Benefits of a Product/Service A Benefit, describes how a product/service will be of advantage. Benefits may meet a goal, satisfy a need, or solve a problem for the customer. Benefits include: • increased safety • increased efficiency • saved expense • improved appearance • greater comfort • enhanced image • You can use the features and benefits of your product/service to differentiate your business.

12. Product/Service • Can be grouped on the basis of: • function • price range • the customer group they satisfy • the way in which they are promoted • The product/service mix is measured by: • width: the number of product/service lines, and • depth: the number of individual products/services offered

13. The three Product Levels Core Product Computer Actual Product Augmented Product Support MacBook

14. Core Products • The core products are the central sets of benefits that the consumer is buying to meet their needs. • When buying a car, the core value of the product is the transport it provides to the owner.

15. Actual Product • The actual product is the physical good or intangible service that delivers the core product. This is represented in the physical features of the good, or the performance components of the service, and the concepts involved in the idea product. • Actual product is the make (Suzuki), model (Swift), colour (red) and features (air-conditioning, car radio, hatchback) included in the price.

16. Augmented Product • The augmented product is the bonus component of the product consisting of any additional benefits such as prestige or implied social meanings that arise from owning the product. • For cars, this can include 24-hour road-side assistance, 100,0000 km warranty and the social prestige associated with driving a red Suzuki Swift versus that of driving a red Porsche 921.

17. Product Life Cycle

18. Why is PLC important? • Any for-profit business is constantly seeking ways to grow future cash flows by maximising revenue from the sale of products and services. • Positive cash flow allows a company to invest in development of new products and services, to expand production capabilities, to improve its workforce, and so on. • It is most companies' goal to acquire key market share and become a leader in its respective industry. • A consistent and sustainable cash flow from product that is well established and stabilised is the key to any long-term investment. And knowing the product life cycle can help with this.

19. Product/Service Life Cycle • The concept - products /services evolve and grow by going through four distinct phases over a period of time

20. PLC Process • First, a product is being developed. After we know what it is that we are selling and what the customer wants, we introduce it to the market. • As our product becomes known by consumers, it grows until it establishes a solid position in the market. At this point, our product is mature. • After a period of time, the product is overtaken by development and the introduction of superior competitors. • Then it goes into decline and is eventually withdrawn. All these phases together are called product life cycle.

21. Life Cycle - Phase 1 • Introduction • Consumer Resistance • Production Problems • Features are Important • Slow Growth and Little Direct Competition • High Cost / Low Profit • Product or a service is introduced to the market. This stage involves focused and intense marketing effort designed to establish a clear identity and promote maximum awareness. Consumers are testing the product in this phase.

22. Life Cycle - Phase 2 • Growth • Rapid Growth • More Competition • Improvements / Rationalisation of Products • Declining Prices • Economies of Scale • Sales are increasing and competitors are emerging. Products become more profitable and companies form alliances, joint ventures, and takeovers. Customers are accustomed to the product and are starting to purchase it repetitively. Marketing efforts and costs are still significant. Advertising costs are high. Market share tends to stabilise.

23. Life Cycle - Phase 3 • Maturity • Decline in Sales Growth • Expand Range • Further Differentiation (Minor) • Intense Competition • The market has reached saturation. Some producers at a later stage of the Maturity stage of the product life cycle begin to leave the market due to poor profit margins. Sales dynamics is beginning to decrease. Sales volume reaches a steady state supported by loyal customers. Producers attempt to differentiate their products. Brands, trademarks, and image are key tools in this production life cycle stage. Price wars and intense competition are common.

24. Life Cycle - Phase 4 • Decline • Permanent Sales Decline • Costs are Minimised • Competitors Exit • Product Eliminated • Continuous decline in sales signals entry into the Decline stage of the production life cycle. Competition is taking over your market share at this point. Economic and production conditions are becoming unfavourable. Introduction of innovative products or a change in consumer tastes is common reason for a decline. There is intense price-cutting and many more products are withdrawn from the market. Profits can be improved by reducing marketing and cutting other costs.

25. Communications In The Product Life Cycle

26. Trends in PLC • Short... • One most observable trend is that product life cycles are becoming shorter and shorter. This is given mostly by ever-increasing competition. • While a manufacturer of pots and utensils faced competition only from another manufacturer in the same city hundreds of years ago, a pot manufacturer these days faces competition from many companies on the other side of the globe in addition to other local manufacturers. Everyone is trying to come to the market with innovations.

27. Trend PLC cont… • Revitalisation... • Many products in mature industries are revitalized by product differentiation and market segmentation. It is not uncommon that companies try to find new niches and market segments when they see their product is about to enter the Decline phase. • Companies are becoming very flexible in their ability to reassess product life cycle costs and revenues.

28. Trend PLC cont… • Longer operating life... • Even though product life cycles shrink, the operating life of many products is becoming longer. While a 10 years old car would be considered a wreck in 60's, today's cars are relatively very durable and their life time is extending. • Companies have to take product operating life into account and adjust their planning accordingly. • Companies are attempting to optimise product life cycle revenue and profits through warranties and upgrades to existing products.

29. Limitations of the Product Life Cycle Concept • The term "life cycle" implies a well-defined life cycle as observed in living organisms, but products do not have such a predictable life and the specific life cycle curves followed by different products vary substantially. Consequently, the life cycle concept is not well-suited for the forecasting of product sales. • Furthermore, critics have argued that the product life cycle may become self-fulfilling. For example, if sales peak and then decline, managers may conclude that the product is in the decline phase and therefore cut the advertising budget, thus precipitating a further decline.

30. Price

31. Price • It is not possible to make pricing decisions in isolation. You need to consider a combination of factors such as: • your target market • your business objectives • your marketing mix • competitors’ prices • product/service cost • demand for the product/service • general market trends

32. Business Objectives Their Effect on Pricing

33. Method of Pricing • Cost based pricing – how much does it cost to produce and deliver? • Demand-based pricing – how much demand is there by the consumer? • Competition-based pricing – how much does the competition charge?

34. Some Pricing Strategy Options • market skimming pricing: involves charging comparatively high price for a product/service • market penetration pricing: involves charging a comparatively low price in order to secure growing sales and a high market share • target return pricing: involves setting a price which will give a specific target rate of return on the total investment, or a predetermined target profit • going rate pricing: involves setting the price according to prices usually charges by others in the industry • perceived value pricing: involves setting the price according to how the customer perceives the value of the product/service

35. Some Pricing Strategy Options • image pricing: involves setting the price according to the image being sought for the product/service • product line pricing: involves setting the same price for all products in a product line in order to provide the customer with a choice based on the product, rather than price • psychological pricing: involves the use of odd and even numbers to suggest a pricing position in the market. • loss leader pricing: involves setting a price on a particular product/service below market price, in order to attract customers to your outlet

36. Some Pricing Strategy Options • discount pricing: involves reducing the price for a product/service in order to attract new customers to the business • distress pricing: involves problem sales due to liquidation and closing down of the business • differential pricing: involves setting different prices for different groups of customers

37. Place

38. How will we get the product to the consumer? • The word place in marketing terms refers to where the exchange of a product/service occurs between the seller and the buyer. • Deciding on a “place” means finding the most effective and efficient way to get your product/service to your customers. • This decision involves three aspects: • the location • the premises and its layout, and • methods of distribution

39. Marketing channels and distribution management • Marketing Channel • A group of individuals and organisations that directs the flow of products from producers to customers. • Marketing Intermediary • An intermediary (or middleman) linking producers to other intermediaries or to ultimate consumers through contractual arrangements or through the purchase and resale of products.

40. Conventional Vertical Distribution Manufacturer Wholesaler Retailer Consumer

41. Depending on the product there might be a better option Manufacturer Manufacturer Wholesaler Wholesaler Retailer Retailer Consumer Finding a more DIRECT approach Consumer

42. Depending on the product there might be a better option Manufacturer Agent Wholesaler Retailer Adding some intermediaries Consumer

43. Depending on the product there might be a better option Manufacturer Wholesaler Retailer Retailer Online Online Consumer Using Multi Channel Distribution

44. Some of the issues in channel selection • Delivery time • How quickly a product can be moved through the channels • Delivery schedules • Monthly • Just in time • As needed • Warehousing • Storage • Responsibility for storage • Costs including • Total shippings costs • Warehousing • Delivery • Which institutions and individuals to deal with in the channel

45. Distribution Intensity - Strategy Depending on the product and the customers needs and wants you may select one of three options Selective Exclusive Intensive through everyreasonable outletin a market through multiple but not all outlets in a market through singlewholesaling middlemanand/or retailer in a market

46. Promotion

47. Objective of Promotion Inform Communication Persuade Remind

48. A Communication Model Sender Needs to encode the message Channel Can be face to face, TV, Radio, Print, Electronic... Communication Feedback May be in the form of buying your product Receiver Needs to decode the message

49. The role of promotion Promotion - communication to build and maintain relationships by informing and persuading one or more audiences. • Overall role of promotion is to stimulate demand by: • building and enhancing customer relationships. • focusing customers on information about company activities and products. • promoting programs that help selected groups to build goodwill (cause-related marketing). • sponsoring special events that generate positive promotion of an organisation and its brands.

50. Reaching the target market • Need to identify who are we trying to influence • Determining customer’s readiness to buy: • awareness • knowledge • liking • preference • conviction • purchase This is the hierarchy of effects (or buying stages)