WELCOME
principles of marketing
marketing mix
elements
After going
through
the
module,
you are
expected
to:
• Define a product and
differentiate the product,
services, and experiences
• Identify and describe the
factors to consider when
setting prices and new product
pricing and its general pricing
approaches
After going
through
the
module,
you are
expected
to:
• Discuss the structure of
distribution channels, its
functions, and the nature of
supply chain management
• Define and identify relevant
promotional tools, namely,
advertising, sales promotion,
personal selling, public
relations, and direct marketing
to create awareness and
persuade the target market to
buy the product or patronize
the service.
TOPICS
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Product
Pricing
Distribution
Promotion
Marketing
Mix Elements
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Product Mix
Price Mix
Promotion Mix
Place Mix
• The constituents of marketing
mix are said as marketing mix
elements.
• Elements are also referred as
decision variables.
• Marketing mix consists of mainly
four elements.
• Each element is also referred as
mix, for example, product mix,
price mix, promotion mix, and
place mix.
• Each mix contains a set of
decisions.
• They are called as 4P’s.
Some writers have sited
more 4P’s, but other P’s
are not very practical
and popular.
• Additional P’s indicate
duplication of one or
more of basic 4P’s.
• Here, our discussion is
limited to 4P’s only. Figure
3 depicts four elements of
marketing mix.
product mix
Product (mix) consists of
various decisions relating to
product.
Product is the basic
element of marketing mix
because all other elements
are required only when
there is product.
Product is the center of all
the marketing activities.
• Here, product includes
both goods and services.
• Marketer can satisfy needs
and wants of consumers by
product.
• Product is the vehicle,
medium, or means by
which consumers can
satisfy their needs.
• Important and long-term
marketing decisions on
product may be termed as
product strategies.
product mix
concerns
with
following
decisions:
1.
Development and
introduction of new products
2.
Matching the products with
needs and wants of target
consumers
3.
Modifications (in term of
qualities, features, and
performance) on existing
products
4.
Product-related strategies
including branding,
packaging, labeling, color,
weight, grading, etc.
product mix
concerns
with
following
decisions:
5.
Product line decisions including
different varieties or models, and
product mix decisions including
width, depth, length, and
consistency
6.
Product-related services like
after-sales services, home
delivery, guarantee, warrantee,
and demonstration
7.
Study of competitive (or
comparative) advantages of
products
8.
Product life cycle, relevant
strategies for each of the stages
of product life cycle, and
consumer adoption process
price mix
• We need to set price
when we have a new
product, or when we
enter a new market
with an existing
product
• How? - Need to
decide what position
you want your
product to be in.
• Price mix is another
important element of
marketing mix.
• It is considered as very
critical element.
• Price can be defined
as the economic value
of product normally
expressed in form of
money.
• The price of product
should be set in such a
way that buyers can pay
and company can earn
adequate profits.
• In case of price-sensitive
customers on one hand
and the prestige-sensitive
customers on the other
hand, the pricing
decisions become vital in
marketing.
what are
pricing
objectives?
why we need
to change our
pricing
strategies
What are
Pricing
Objectives?
• To achieve return of
investment (ROI).
• To cover total and
fixed costs expenses
and salaries.
• To increase the sales
revenue.
• To maximize profit.
Why we need
to change our
pricing
strategies?
• Product Quality
Leadership
• Product Cost
Leadership
• Survival
normally,
pricing
decisions
involves:
1. Determining product
development costs
2. Determining manufacturing
(variable and fixed) costs the
product
3. Studying pricing policies and
strategies of the close competitors
4. Formulating appropriate pricing
policies for the products
5. Deciding on level or margin of
profits
normally,
pricing
decisions
involves:
6. Deciding on variable vs fixed
pricing, price discrimination,
discounts, allowances, and
seasonal effect
7. Identifying and analyzing of
various relevant factors
influencing pricing decisions
8. Pricing policies/strategies in
different stages of product life
cycle
9. Deciding on price-setting
methods
10. Pricing decisions for direct and
indirect distribution of products
Pricing
Strategy
Pricing Strategy is the
tactic that company
use to increase sales
and maximize profits by
selling their goods and
services for
appropriate prices.
Pricing
Strategy
Pricing strategy means
is a plan that
companies follow
when setting prices for
their products or
services to maximize
profits.
How to
Price your
product:
Five
Common
Pricing
Strategies
1.
2.
3.
4.
5.
Cost Plus Pricing
Competitive Pricing
Value-based pricing
Price skimming
Penetration pricing
Cost Plus Pricing
• simply calculating
your costs and
adding a mark-up
Competitive Pricing
• setting a price based on
what the competition
charges
• setting a price in
comparison with
competitors.
• a company has three
options and these are to
price lower, to price the
same or to price higher.
Value-based
Pricing
• setting a price based
on how much the
customer believes
what you’re selling is
worth
Price Skimming
• setting a high price and
lowering it as the market
evolves.
• Involves setting high prices
when a product first enters the
market to ‘skim’ profit from
those willing to pay more
before gradually lowering the
price to reach the remaining
markets.
• Applies you new, distinctive
products, early in the Product
Life Cycle>
Penetration Pricing
• setting a low price to
enter a competitive
market and raising it later
• Penetration pricing is a
marketing strategy used
by businesses to attract
customers to a new
product or service by
offering a lower price
during its initial offering.
promotion mix
what is a
promotional mix?
• the different
advertising strategies
used to achieve
goals for your
product
• Promotion mix deals with
those activities directed to
increase sales volume.
• It is also known as market
communication.
• In today’s marketing
practices, market
promotion has much vital
role.
• Promotion mix involves all
those efforts directed to
increases sales of products
on a continuous basis.
• It includes providing
information to customers,
inspiring them to buy,
and offering incentives.
• Note that market
promotion is concerned
not only with raising sales
volume, but it is also a
tool for establishing longterm relations with the
parties involved and is a
matter of image,
reputation, and goodwill
for the company.
objectives of a
promotional
mix
Objectives of a
promotional mix:
Increase demand for
your product
Inform customer
about your product
distinguish your
product in the market
place
elements or
tools of
promotion mix
Elements or tools of
promotion mix
advertising
selling
direct/ personal
selling
sales promotion
Public relations/
publicity
• Any paid form of
non-personal
presentation and
promotion of ideas,
goods, or services
by an identified
sponsor.
• A short term
incentive offered to
encourage buying a
good or service.
• Can be directed at
the following parties:
manufacturer,
retailer, employees
• A promotional
method in which
one party (e.g. sales
person) uses skills
and techniques for
building personal
relationship with
another party (e.g.
involved in a
purchse decision)
that results in both
parties obtaining
value.
• An interactive
system of marketing
that uses one or
more advertising
media to effect a
measurable
response and/ or
transaction at any
location.
• Public Relations: Any
activity designed to
create a favorable
image toward a business,
its product, or its policies.
• Publicity: a non-paid
(free) form of placing
positive, newsworthy
information about a
business or its products in
the media.
• Press Release: an official
statement issued to
media giving information
on a particular matter,
place mix
• In the marketing mix, the
process of moving
products from the
producer to the intended
user is called place.
• In other words, it is how
your product is bought
and where it is bought.
• This movement could be
through a combination of
intermediaries such as
distributors, wholesalers
and retailers.
• Place mix is related to
distribution of product.
• This element of marketing
mix basically concerns with
physical distribution and
channel of distribution.
• This is the last element of
marketing mix but very
important as marketing
goals can be achieved
only if the products reach
the hand of consumers
conveniently.
• This element concerns
with making the
products available to
the customers
effectively.
• That means, the right
products can be
made available to the
right consumers, in the
right way, at the right
time and at the right
place, and in the right
form.
place
decisions
involve
1. Studying geographical
concentration of
customers
2. Studying types of
distribution channels and
channel members
3. Analyzing various relevant
factors affecting channel
decisions
4. Selecting suitable channel
of distribution.
place
decisions
involve
5.
Strategic decisions related to
distribution activities
6.
Physical distribution including
transportation, communication,
warehousing, inventory control,
insurance, banking, etc.
7.
Balancing distribution costs and
selling price
8.
Designing a suitable distribution
network, and long-term
distribution strategies
9.
Developing and adopting
logistics management for
effective distribution of products
Table 3 shows the summary of key decisions in each of
the marketing mix elements
.
Main
Marketing
Mix Elements
Key Decisions in Each of Marketing Mix Elements
Product Mix
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Product Mix, Product Line And Product Items
Product Qualities
Product Features
Product-related Services
Brand and Branding
Packing and Packaging
Labelling
Issues Relating to New Production
Development
• Product Life Cycle
• Consumer Adoption Process
Price Mix
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Pricing Objectives
Price Setting Responsibility
Component of Selling Price
Factors Affecting Pricing Policies
Price-Setting Methods
General Pricing Policies
Issues Relating to Discount, Price Allowance
and Rebate, Cash vs credit price, price
discrimination, etc.
(Market)
Promotion
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Promotion Objectives
Promotion Budget
Decisions on Market Promotion Tools:
Advertising
Personal selling and sales force
Sales Promotion
Publicity and Public Relations
Measuring Promotion’s Cost vs Contribution
Place
(Distribution)
Mix
Objectives of Physical Distribution
Key Decisions of Physical Distribution:
Transportation
Warehousing
Inventory Management
Insurance
Billing and Collection, etc.
Direct vs Indirect Distribution
Market Channel Options and Selection of
Suitable Option
• Channel Members’ Services
• Market Logistics Management
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