The four P’s of the marketing mix
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Marketing Mix is a combination of factors that can
be controlled by a company to influence
consumers to purchase its products
The importance of a marketing mix is to make
businesses or organizations meet the needs of
customers and to satisfy them.
The marketing mix is made up of four P's which
are promotion, price, product and place.
This means the goods should be taken to the
correct places, the goods should be promoted in
order to be known, the products should satisfy
customer needs and they should have the correct
prices.
Product
Product variety, quality, design, features,
brand name, packaging, sizes, services,
warranties, returns…
Price
List price, discounts, payment period, credit
terms…
Promotion
Sales promotion, advertising, sales force,
public relations, direct marketing…
Place
Channels (direct, indirect, exclusive, selective,
intensive), coverage, assortments, locations,
inventory, logistics, transport…
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“A product is anything that can be offered to a
market to satisfy a want or need” (Kotler)
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Physical goods
Services
Persons
Places
Organizations
Ideas
Common product problems:
 Developing new products
 Managing life-cycle strategies
 Managing product lines
 Managing brands…
Product
policy,
product mix
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Product lines
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Width: how many product lines the firm carries
Length: how many items in each product line
Depth: how many variants are offered of each
product in the line
Consistency: how closely related the various
product lines are (end use, production, distribution
channels, etc…)
Branding
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Identifies the company at six different levels:
attributes, benefits, values, culture, personality and
user
Brand awareness, brand acceptability, brand
preference, brand loyalty
Global branding and international coherency
Degree of adaptation in FMCG
Augmented
product
Installation
Tangible
product
Packaging
Delivery
and credit
Brand
name
Core
product
Features
Core
benefit
or
service
Quality
Aftersale
service
Styling
Warranty
Global
variations,
adapt or
standardize?
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Country of origin, made in effect
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Preference for national brands
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Global branding (mono, line, umbrella)
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Brand equity and extension
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International standards
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Product protection
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Product adaptation
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Existence of global product? International
standard?
Three common strategies
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Straight extension
Product invention
Product adaptation
 Technical adaptation
 Commercial adaptation
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Consumer products vs. industrial products
Select pricing
objective
Determine
demand
Select pricing
method
Select final
price
Estimate costs
Analyze competitors’
costs, prices, and offers
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Mark-up pricing: add a standard mark-up to the product’s cost
Target-return pricing: determine price that would yield its target
rate of return (ROI)
Perceived-value pricing: buyers’ perception of value, not the seller’s
cost, is the key to pricing
Value pricing: low price for fairly high-quality (EDLP)
Going-rate pricing: prices are largely based on competitors’ prices,
rather than on costs or demand
Sealed-bid pricing: competitive-based pricing based on
expectations of how competitors will price
Yield pricing: discriminatory pricing depending on customer
segment and inventory level
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International price escalation problem
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Four types of strategies
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Uniform price everywhere: different profit rates, too high
in some countries
Market-based price: ignores costs, parallel importations
Cost-based price: standard markup everywhere, too high
in some countries
Identical pricing position: compare to local competition in
each market
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Transfer prices and dumping
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Gray-market problem, copies…
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Identify target audience: research, image analysis…
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Determine communication objectives: awareness,
knowledge, liking, preference, conviction, purchase…
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Design message: content, appeals, structure, format,
source…
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Select communication channels: personal, non-personal
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Promotion budget: weight of promotion in marketing
mix…
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Promotion mix: allocation between advertising, sales
promotion, public relations, sales force and direct
marketing…
Measure results: research…
Advertising
Print and
broadcast ads
Packaging
Motion
pictures
Brochures
Directories
Billboards
P-P displays
Symbols and
logos
Sales
promotion
Contests
Sampling
Gifts
Fairs and trade
shows
Demonstrations
Coupons
Rebates
Entertainment
Loyalty
programs
Tie-ins
Public
Relations
Press kits
Speeches
Annual reports
Sponsorships
Publications
Community
relations
Lobbying
Company
magazine
Special events
Sales force
Direct
marketing
Sales
presentations
Sales meetings
Incentive
programs
Samples
Fairs and trade
shows
Catalogs
Websites
Mailings
Telemarketing
On-line sales
TV shopping
Three different levels of communication:
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Corporate communication: inform firm’s partners
(shareholders, administrations, suppliers, press, etc…)
Institutional communication: communicate the firm’s
values to the public and inside the organization
Brand or product communication: image, consumer’s
desires, technical characteristics, performance, etc…
Corporate and institutional communication are easily
standardized, but brand/product communication is harder
to standardize
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Advertising is a form of communication
A product’s position or difference is transmitted to
target segment through communication
Communication styles vary from country to country,
they are culture-bound
The role and importance of advertising/media also
vary from one country to another
Cultural factors affecting communication:
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High-context vs. low-context
Explicit vs. implicit
Direct vs. indirect
Informational vs. emotional
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Power distance
High: status symbols, presence and importance of elders, master-learner
relationships…
 Low: independence, “empowered” consumers
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Individualism/Collectivism
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IDV: low context, direct, explicit (you, we, I…), data, facts
COL: high context, indirect, symbols, entertainment, groups
Masculinity/Femininity
MAS: winning, success, domination, persuasion, comparative advertising, reverse
sexism…
 FEM: less endorsement, caring, less role differentiation
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Uncertainty avoidance
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High: explanations, testing, technology, design, structure, well-groomed
Low: results are important, change, subtle
LTO/STO
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STO: sense of urgency, direct style
LTO: build trust, nature, entertainment
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Sales-response model
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Persuasion model
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Simple stimulus-response model
Very direct, “buy now” strategy, short term effect
Low PDI, IDV, MAS, Low UAI (Anglo-Saxon model)
Short term shift in attitude, buying intention, and brand
preference through providing arguments
“Lecture” form (presenters, demonstrations, testimonials),
persuasive and direct
US, UK, Germany, Switzerland, Austria…
Involvement model
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Build relationships between consumers and brands by creating
emotional closeness
Brand becomes a “personality”, indirect style
FEM, IDV (Netherlands, Scandinavia, France…)
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Awareness model
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Create awareness to differentiate brands from similar brands
Associations, metaphors, humor, build trust, indirect
Low IDV (Spain, Asia, Latin America...)
Emotions model
Create positive attitude and brand loyalty
Builds connections between brands and emotions, emotion often
linked with product category
 Low IDV, low MAS (Spain, Latin America, Africa)
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Likability model
Liking the advertisement will lead to liking the brand
Indirect, entertaining/story, make friends to build trust and
dependence
 Japan, China
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Symbolism model
Turn the brand into a symbol/code, cohesion to subculture
Very culture specific (symbols of status, success, self-expression,
stability…)
 High PDI, High UAI, Low-Mid IDV (Asia, France, south of Europe)
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What is a marketing channel (or distribution
channel)?
“Marketing channels are sets of interdependent
organizations involved in the process of making a
product or service available for use or consumption
by the consumer or business user” (Kotler)
What about international marketing channels?
These interdependent organizations allow goods
and services to cross national boundaries.
SCM, BtoC and BtoB, IMM
Seller
Channels
between
countries
Channels
within
foreign
countries
Final
buyers
1.
Channels between countries: gets the products to the borders of the
foreign market; decisions concerning types of intermediaries
(agents, trading companies, etc…), types of transport, financing and
risk management…
2.
Channels within foreign countries: gets the products from entry
point to final buyers and users; decisions concerning types of
retailers (franchising, supermarkets, etc…), local channels
Channels of distribution vary considerably among countries.
Distribution, by its nature, is a marketing activity that is performed
close to the market.
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Channel design: types of intermediaries, number of
intermediaries (exclusive, selective, intensive),
contractual arrangements…
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Managing retailing, wholesaling and market
logistics…
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Selecting, motivating and evaluating channel
members (cooperation, conflict, competition)
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Channel dynamics: traditional, VMS, HMS, multichannel marketing systems…
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Most difficult part of the mix to standardize
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Considered by many as the most important
aspect of a firm’s internationalization
strategy
Entry mode will determine long-term
success or withdrawal from foreign markets
Poor decisions can be very costly for the
firm
Target country
market factors
Target
country
environmental
factors
External factors
Target country
production
factors
Home country
factors
Entry mode
decision
Internal factors
Company product
factors
Company resource
and commitment
factors
Entry
operation
Choice of target
product/marke
t
Setting objectives
and goals
Choice of
entry mode
Control systems:
monitoring operations
/ Revising entry
strategy
Design the
marketing plan
Target
market
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Exporting (commercial strategy, commercial
modes)
Foreign direct investment (industrial strategy,
integrated modes)
Associated or contractual modes (contractual
strategy, competitive alliances)
Exporting
Contractual modes
FDI
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+
Commitment, risk, control, profit potential
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Indirect exporting
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Direct exporting
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Distributor / export merchants
Export agent
EMC
Export department
Export sales representatives
E-business
Cooperative exporting
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Export groups
Piggyback exporting
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The ultimate form of foreign involvement
Direct ownership of foreign-based assembly,
manufacturing or sales facilities
The company can buy part or full interest in a
local company (M&A) or build its own
facilities (GFI, ex nihilo)
Considered the “preferred” mode of entry
Advantages
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Cost economies (labor, raw materials, incentives, freight savings,
etc…)
Better image in host country
Deeper relationship with government, customers, local suppliers,
distributors
Better adaptation
Full control of investments
Long term objectives
Disadvantages
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High initial and operating costs
High level of risk
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Make-or-buy decision
Greenfield investment / Ex nihilo
 Mergers and acquisition
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Branch or subsidiary?
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Structure
Legal status
Analyzing FDI project
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Assessing profitability
Discounted cash flow analysis
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Newest, most recent forms of international business
Transfer of technology or know-how between two
firms
Shared risks
Only option in countries where the government
requires foreign firms to use local capital
Better access to local market knowledge
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Joint venture: foreign and local investors share ownership and
control of local operations
Licensing: licensor licenses a foreign company to use a
manufacturing process, trademark, patent, trade secret or other item
of value for a fee
Management contracts: firm exports management services instead
of a product, separation between ownership and management
International Franchising: contractual association between a
franchisor (manufacturer, wholesaler or service organization) and
franchisees (independent business people who buy the right to own
and operate units in the franchise system). Franchising is based on
some unique product, service or method of doing business.
 Industrial franchising
B.F.F.
 Distribution franchising
 Service franchising
Internal factors
External factors
Comparative profit
contribution analysis
All entry modes
Rejected entry
modes
All feasible entry modes
Comparative
risk analysis
Comparative analysis for
nonprofit objectives
Ranking by overall
comparative assessment
The right entry mode
Marketing channels within markets
Target
market
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What is a marketing channel or channel of
distribution?
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“an organized network of agencies and institutions which,
in combination, perform all the activities required to link
producers with users to accomplish the marketing task”
(AMA)
They perform functions that add utility to a
product or service:
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Place utility: availability of a product or service in a
location that is convenient to a potential customer
Time utility: availability when desired by a customer
Form utility: availability of the product processed,
prepared, in proper condition and/or ready to use
Information utility: availability of answers to questions
and general communication about useful product features
and benefits
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Business-to-consumer channels
Designed to put products in the hands of people
for their own use
 Alternatives: direct marketing, franchising, sales
force, agents/brokers, internal sales force,
wholesalers, retailers…
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Business-to-business channels
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Deliver products to manufacturers that use them
as inputs in the production process or in day-today operations
Alternatives: internal sales force, distributors,
wholesalers…