The four tools a business can use to persuade
customers to buy its product or service: Product, Price,
Promotion, Place
Ms. Marshall 6th Year Business
1
Overview of Marketing Mix
1. Brand Name
Product
2. Packaging
3. Product Life
Cycle
Ms. Marshall 6th Year Business
2
Brand Name
 For this topic you will need to know the definition, the
benefits, and some examples of global brands.
 Branding means creating an identity for a product
that makes it easily identifiable and clearly
distinguishes it from competitors. It usually consists
of a brand name and logo. E.g. McDonald’s and their
Golden Arches.
Ms. Marshall 6th Year Business
3
Recognition
Bargaining
Tool
Desire
Advantages of
Branding
Higher Price
Loyalty
Ms. Marshall 6th Year Business
4
Benefits of Branding
 1. Recognition: Branding improves recognition of the
product and the business name and differentiates
them from competitors. This makes it easier to
advertise a particular product. It is cheaper and
easier to launch new products if they are associated
with an existing well-known brand name. e.g.
Johnson’s & Johnson’s would be best known for baby
care products but have diversified into products for
adults too.
 2. Desire: Branding helps to promote a desired
image of a product to the target market. E.g. J&J look
after sensitive skin…
Ms. Marshall 6th Year Business
5
Benefits of Branding
 3. Loyalty: Easy recognition and familiarity to
consumers increases sales and promotes long-term
customer loyalty. Brand loyalty occurs when
customers repeat-purchase a particular product on a
regular basis. They stick with the product even when
the price goes up, which helps defend against price
wars with competitors. E.g. Coca-Cola has a high level
of brand loyalty in the soft drinks market.
 4. Higher Price: Businesses can charge a higher price,
thus increasing profits. Many customers perceive
branded goods to be of better quality than own
brands so they are willing to pay more. E.g. you would
pay more for Coca-Cola than Tesco Cola
Ms. Marshall 6th Year Business
6
Branding- Benefits
 5. Bargaining tool: Branding can be used as a
bargaining tool against retailers. Businesses can
get a good price from shops for their goods because
they know customers expect the product to be
in stock. Pepsi and Coke will often enter into
contracts whereby if you stock one you cannot
stock the other, e.g. Coke and Mc Donald’s.
Ms. Marshall 6th Year Business
7
Own Brands
 Own Brands: brand names which are registered by retailers





rather than manufacturers, e.g. Dunnes Stores (Savida) to
put on products which are for sale exclusively in their
shops.
Benefits of own brands
Retailers benefit from cheaper products which helps to
attract extra customers.
Consumers benefit from lower prices and a greater choice
of products.
Producers benefit from extra sales which are achieved with
lower manufacturing and marketing costs.
Drawback – lower profit margin
Ms. Marshall 6th Year Business
8
Packaging
 Packaging involves designing and making the container or
wrapper for the product.
 Functions of Packaging:
 Protection: products must be protected from damage as
they change hands through the channel of distribution.
E.g. Tetra Pak makes sure liquids do not spill.
 Image: packaging should look good to encourage
consumers to buy the product. Design has been referred to
as “the silent salesperson” because it can strongly influence
sales. E.g. Pepsi carefully researched packaging for Pepsi
Max. Research showed that red, blue and silver were the
most appealing combination to the young male market.
Ms. Marshall 6th Year Business
9
Packaging
 Information: the packaging often contains information
on the use of the product or the ingredients. E.g. most food
products now display the calorie content on the box.
 Convenience: it is used to make the product a convenient
size or shape for the consumer. E.g. 2 litre bottle of coke for
home, 500 ml for carrying around.
Protecting Product Design
 Patent: provides legal protection of an invention or a
design of a product to the inventor or designer.
 Trademarks: are logos that are registered by businesses to
distinguish them and their products from competitors.
Ms. Marshall 6th Year Business
10
Product Life Cycle
 The Product Life Cycle charts the six stages of a
product’s sales over time.
Ms. Marshall 6th Year Business
11
Product Life Cycle
1. Development: much time will be spent designing and testing
the product concept. A prototype will often be test-marketed, in
order to assess the potential sales and profitability of the new
product. A decision will then be made whether or not to launch
the product based on the market research conducted. The
business will, therefore, incur many expenses during the
development stage of the product lifecycle and the product will
produce a large, negative cashflow.
2. Introduction: this is when the product is first launched. Sales
grow very slowly and large amounts must be spent on
advertising and promotion. Companies usually are making a
loss at this stage. Price Skimming may occur.
3. Growth: The product becomes known and sales and profits
begin to increase rapidly. New competition enter the market at
this stage.
Ms. Marshall 6th Year Business
12
Product Life Cycle
6. Decline: Sales of the product fall
4. Maturity: The rate of sales
growth slows. Sales of the
product are at their highest
rate. The business is
making large profits. There
is intense competition.
off rapidly. This could be due to
advances in technology, a change in
consumer tastes or increased
competition. E.g. Walkman
replaced by Discman replaced by
MP3 Players and Ipod’s…
5. Saturation: Sales growth stops
and sales remain at their peak
for some time. The market is
now full of similar products.
To maintain sales businesses
will cut their price or update
the product.
Ms. Marshall 6th Year Business
13
Extension Strategies
 Product Development
Strategies: seek to
modify and revamp the
existing product to make
it more appealing or to
develop the number of
products in the product
line. “New and
improved”
Ms. Marshall 6th Year Business
 Market Development
Strategies: attempt to
find new markets or new
uses for existing
products through market
segmentation or niche
marketing. E.g. Lucozade
used to be given to
people who were ill, and
when sales began to
decline it was targeted at
athletes.
14
Factors that influence the length of
a product life cycle
 Fashion
 Technology
 Marketing
Ms. Marshall 6th Year Business
15
Overview of Marketing Mix
1. Factors that
determine the price
Price
3. Break Even
Chart
2. Strategies for
setting the price
Ms. Marshall 6th Year Business
16
Factors that determine the price
 The price is the amount of money the business charges
the consumer for its product.
1. Cost of the Product: The business must charge a
price that is at least equal to the total cost of making
and selling the product. This is called the breakeven
price. It they charge less than this they will make a
loss.
2. Competitors’ Prices: If the competitor has a better
quality product, you must charge a lower price. If
your product is better, then you can charge a higher
price than them.
Ms. Marshall 6th Year Business
17
Factors that determine the price
 Consumers’ Perception of Prices: the business
must be aware of what consumers are willing to
pay for the product. They should be aware that a
high price is often associated with high quality and
a low price with low quality.
 Legal Regulations: The government can set a
maximum or minimum price that a company can
charge. For example, until March 2006 it was
illegal to sell food below cost price.
Ms. Marshall 6th Year Business
18
Strategies for setting the price
 Price Skimming Strategy: The business charges a high
price for the product when it comes out initially. This helps
recoup the cost of developing the product. The price drops
later on as competition enters the market. New technology
such as phones, Ipod’s, games consoles tend to adopt this
strategy.
 Penetration Pricing Strategy: the business deliberately
charges a low price so that it is cheaper than competitors.
The aim is to get as many customers to switch over as
possible to increase market share, e.g. Airtricity promise
rates 20% lower than Bord Gais if you switch both
electricity and gas to them.
Ms. Marshall 6th Year Business
19
Strategies for setting the price
 Price Discrimination Strategy: The business charges
different prices to different consumers for the same
product. E.g. Going to the cinema the price changes
depending on whether you are a child, student, adult
or OAP. Some cinema’s have now introduced an
“unemployed rate” which operates 9 a.m. until 5 p.m.,
Monday to Friday.
 Loss Leader: The business sells one product at below
cost price in order to attract consumers into the shop
so they will buy other products. E.g. Supermarkets
selling beers below cost price.
Ms. Marshall 6th Year Business
20
Strategies for setting the price
 Psychological Pricing: means setting the price based
on the expectations of the customers in the target
market. Many companies will charge a high price to
create a luxurious, exclusive image e.g. for perfume.
Setting prices below psychological barriers also exists,
e.g. €9.99 seeming less than €10.
 Mark-up: Cost-plus pricing, means adding a
percentage profit to the cost of sales.
Ms. Marshall 6th Year Business
21
Recent Exam Questions
 2013/2009
 Q7 Outline the factors a marketing manager might





consider in determining the selling price of products at ‘All
Weather Wellies Ltd’. (20 marks)
2012
Q7. Within the product element of the marketing mix,
evaluate ‘product packaging’.
2011
Explain the meaning of the term ‘own brand products’
(b) Outline two reasons why retailers use ‘own – brand
products’
(10 Marks)
Ms. Marshall 6th Year Business
22
Recent Exam Questions
 2011
 Draw and label the ‘product life cycle’ diagram
 Illustrate the methods a business could use to extend a




product’s life cycle.
2010
‘Many businesses spend large sums of money developing a
brand name’. Illustrate the benefits of branding for the
business and the consumer. (25 marks).
2007
Explain four pricing policies that businesses can adopt as
part of their marketing strategy and apply one of them to a
product of your choice. (30 marks)
Ms. Marshall 6th Year Business
23
Recent Exam Questions
 2006
 Deirdre Moloney hopes to start up her own cosmetics
and personal beauty products business aimed at the
consumer market. She has approached you as a
marketing consultant for some marketing advice. In a
report, explain to her:
 The significance of ‘packaging’ ‘branding’ and ‘product
life cycle’ with reference to this business.
Ms. Marshall 6th Year Business
24
Break-Even Chart
 Definitions:
 Fixed Costs: are the costs that remain the same, regardless
of the number of products produced, e.g. rent,
insurance.
 Variable Costs: are costs that vary depending on how
many units are produced, e.g. raw materials.
 The break-even point is the minimum price a business
must charge for its product, it shows the amount of sales
needed to cover its costs and break even.
 The Margin of Safety refers to the amount by which a
firm’s sales can drop before reaching the break-even point.
Ms. Marshall 6th Year Business
25
Break-Even Formulae
 Break-even Point in units: Fixed Costs





Sales price pu – VC pu
Contribution per unit: Price – VC
Break-even point in €: BER in units * Price
Total revenue: Sales * Price
Total Costs: FC + VC
Margin of Safety: Forecast Sales in units – BEP in units
Ms. Marshall 6th Year Business
26
Break-Even Example
 2008 Q7
 (B) Motor Manufacturing Ltd. is considering the








introduction of a new product. The business has provided
the following figures.
Fixed Costs €200,000
Variable Cost PU €5
Selling Price
€15
Forecast Output (Sales) 30,000 Units
(i) illustrate by means of a break-even chart:
(a) The Break Even Point.
(b) Profit at forecast output.
(c)The Margin of Safety at forecast output.
Ms. Marshall 6th Year Business
27
Calculations 2008
 B/E Formula: 200,000/(15-5)= 20,000 units (or
€300,000).
Zero Sales
B/E Point
Forecast
Sales (as per
Q)
Sales
0
20,000
30,000
Price
15
15
15
TR
0
300,000
450,000
FC
200,000
200,000
200,000
VC
(units*€5)
0
100,000
150,000
TC
200,000
300,000
350,000
(200,000)
0
100,000
Profit
Ms. Marshall 6th Year Business
28
To Draw the B/E Graph
 Step One: Draw your horizontal (units) axis and





vertical (€) axis.
Step Two: Draw a Fixed costs line.
Step Three: Draw a Total Costs line.
Step Four: Draw a TR line starting at 0.
Step Five: B/E point is shown where TR=TC.
Step Six: Illustrate the Margin of Safety.
Ms. Marshall 6th Year Business
29
Break-Even Chart








€
450,000
400,000
350,000
300,000
250,000
200,000
150,000
 0
10,000
TR
TC
FC
20,000 30,000
Ms. Marshall 6th Year Business
Units
30
Is the Break-Even Chart Useful?
 They work out how many products you need to sell to




break even.
They give you an idea of the profit or loss expected at
different levels of sales.
The Margin of Safety shows you how much sales can
drop before you no longer break even.
They can illustrate the effect a change in price would
have on profits.
They can illustrate the effect a change in costs would
have on profits.
Ms. Marshall 6th Year Business
31
Overview of Marketing Mix
1. Advertising
4. Direct Selling
Promotion
3. Public Relations
Ms. Marshall 6th Year Business
2. Sales Promotion
32
Promotion - Advertising
 Promotion: refers to all the efforts (excluding price) made by the seller
to communicate and influence the target market to buy a product.
 Promotion helps with Product Positioning, i.e. creating an image for a
product in the mind of the consumers in the target market.
 Advertising: consists of messages designed to inform, persuade or





remind people to buy a product or service.
Functions of Advertising:
To provide information about the product.
To remind consumers that the product is still available.
To persuade consumers to buy the product.
To offset competitors advertising (defensive).
To increase sales and profits.
Ms. Marshall 6th Year Business
33
Types of Advertising
 Reminder: keeps the product in the consumer’s mind. E.g.




Guinness keep the product in people’s mind through a
combination of TV ads, sponsorship and Guinness merchandise.
Informative: gives factual information to the consumer. E.g. the
“science bit” of the ad’s for hair products.
Persuasive: convinces the consumer the product will make
him/her happier. E.g. “because you’re worth it” from L’Oreal
associates the product with being a worthwhile person.
Generic: advertises the product for an industry not just one
company, e.g. Buy Irish campaign.
Comparative: the ad directly compares the product to a
competitors. E.g. Tesco, Dunnes, Supervalu now show each
others prices for the goods they are cheapest for.
Ms. Marshall 6th Year Business
34
What type of promotion??
 http://www.youtube.com/watch?v=fDoDUC9M0Sg
 http://www.youtube.com/watch?feature=endscreen&v







=Ygf0gRQsUb4&NR=1
http://www.youtube.com/watch?v=Wy52yueBX_s
http://www.youtube.com/watch?v=xwndLOKQTDs
http://www.youtube.com/watch?v=69MpLiYhsXw
http://www.youtube.com/watch?v=3MUVMl2aE4E
http://www.youtube.com/watch?v=YYixDPfTn_c
http://www.youtube.com/watch?v=HuHV4gwSXn4
http://www.youtube.com/watch?v=LbHVH9_EZu0
Ms. Marshall 6th Year Business
35
Product Placement
 http://www.youtube.com/watch?v=wACBAu9coUU
 http://www.youtube.com/watch?v=naBRz1Y0cc8
Ms. Marshall 6th Year Business
36
Advertising Media
 The advertising media refers to the communication
channels available to a business for its advertising.
Where most spending on advertising
goes
8
TV
7
40
10
Magazines
Newspapers
15
Internet
20
Ms. Marshall 6th Year Business
Radio
37
Advertising Media
 TV
 Advantages: appeals to sense of sight and sound. Shows the




product in action. Watched by a lot of people. Easy to get to
target market by choosing what programmes to advertise during.
Disadvantages: very expensive. Less effective now that most
people change the channel during ads.
Radio
Advantages: costs less than TV. Can reach people when they are
driving or working unlike TV. Good for reaching your target
market, e.g. geographic segmentation – advertise on a local
station.
Disadvantages: only appeals to sense of hearing. Competing
with other radio ads within the same few minutes.
Ms. Marshall 6th Year Business
38
Advertising Media
 Newspapers
 Advantages: good for detailed information, e.g. job ad’s,




technical information, e.g. car ad’s. Cost less than TV. Can reach
target market, either geographically or by interests – often
particular segment in the paper such as “appointments” part of
the Independent.
Disadvantages: quality of picture may not be great. Newspaper
thrown out after one day.
Magazine:
Advantage: Kept longer than newspaper. Easy to reach target
market, e.g. beauty products advertise in women’s magazines.
Good quality pictures.
Other media includes billboards, Direct Mail, Internet etc…
Ms. Marshall 6th Year Business
39
Media Mix
 The combination of media chosen will depend on:
 The Target Market: advertise through media most likely to be seen by
your target market. E.g. Toys advertised during a children’s show.
 The Nature of the Product: If the product needs to be seen working
then TV is the best option. Some products are restricted from
advertising on TV, e.g. cigarettes. Alcohol ad’s are banned from
portraying the user as being enhanced in some way by the product.
 The Message: if the message is detailed or technical a written form of
ad may be best.
 The Cost: some media are more effective than others in term of cost
per 1,000 customers. E.g. if you are a local shop it is more cost-effective
to advertise in your local paper than the Irish Times.
Ms. Marshall 6th Year Business
40
Ethics in Advertising
 The Advertising Standards Authority of Ireland
(ASAI)is a voluntary organisation set up by people who
work in the advertising industry. It does not have the legal
powers to stop ads but if an ad is found to be offensive they
ask a company to withdraw it. Most companies will comply.
E.g. Hunky Dory’s ad with the female rugby players.
 National Consumer Agency: a State agency which can
ban advertisements that break the Consumer Protection
Act 2007 by misleading a consumer. E.g. Irish bakeries were
describing some bread as “light” despite the fact all bread is
low fat.
Ms. Marshall 6th Year Business
41
Dasani
 Coca-Cola would be in the saturation stage of the
product life cycle. This is one reason why they have
introduced new products. When the market for
bottled water was increasing they launched Dasani.
However, it later emerged that it was actually tap water
which became contaminated at a bottling plant. The
product had to be withdrawn from the market, losing
Coca-Cola millions in wasted marketing and
production expenditure.
Ms. Marshall 6th Year Business
42
Sales Promotions
 Incentives that a business offers
customers to encourage them to
buy more of its product and to
buy it sooner than they normally
would.
 Techniques include: free
samples, money-off vouchers,
free gifts e.g. Happy Meals,
Competitions, Loyalty Cards e.g.
Dunnes Value Club,
Merchandising.
 Merchandising refers to pointof-sale promotional displays
designed to attract attention to a
product and increase sales. It
relies on impulse buying.
Ms. Marshall 6th Year Business
43
Sales Promotion
 Sales promotion
techniques involve some
contact between the
customer and the seller. It
lasts for a short period of
time and may be repeated
at a later date.
 Sales Promotion is popular
in the large multiples such
as Tesco, Dunnes,
Superquinn in the current
climate in an effort to
increase market share.
Ms. Marshall 6th Year Business
 It adds to the attractiveness
 of the product.
 It is useful for stimulating
sales
 It aims to attract new
consumers for the product,
rewarding loyal consumers
and increasing buying
frequency among
occasional consumers.
44
Public Relations
 PR means communicating with the media using news




stories to create good publicity for a firm or its products or
to respond to negative publicity.
Functions of PR
To attract publicity when launching new products. E.g.
Apple when launching the new Iphone.
To target certain customers.
To build an image that reflects well on the company.
To defend the product/ company from bad publicity.
Negative product publicity can be a nightmare for
businesses e.g. Toyota recall of cars. It can lead to loss in
the market share and customers losing trust in the quality
of the product/service being offered.
Ms. Marshall 6th Year Business
45
Public Relations Techniques
 Events: roadshows, exhibitions, open
days. E.g. UCD Open Day is held to
encourage potential students to put the
college as their first choice.
 Media Relations: (i) Press releases:
news items about the company, sent to
the media. (ii) Press Conferences :
meetings where statements are made
and reporters can ask questions about
specific events. E.g. McDonalds after
Super Size Me.
Ms. Marshall 6th Year Business
 Public Service/ Charitable
Activities: Tesco’s Computers
for Schools Initiative increases
sales as people shop there to
support their local school.
Goodwill improves because
Tesco is seen as part of the
community. McDonald’s Ronald
McDonald Children’s Charities
donates money to Crumlin
Hospital.
 Sponsorship: the firm donates
money to an event or team in
return for exposure of their
name and logo. E.g. SuperValu
and the GAA.
46
Direct Selling
 Personal Selling: a salesperson meets with the customer
face to face to give them information about a product and
to persuade them to buy it. E.g. Representatives from
different publishers talk to teachers to get them to try their
school books.
 Telemarketing: means communicating with customers by
telephone to generate sales and deal with customer queries
and complaints.
 Direct Mail: involves sending promotional messages
directly to target customers, door to door leaflets or e-mail.
Considered junk mail or spam by many consumers.
Ms. Marshall 6th Year Business
47
Place
 Place focuses on where customers will be able to access




the goods or services.
Channel of Distribution describes the various paths
that goods may follow from producer to consumer.
Wholesaler: a business that buys products directly
from the manufacturer in huge quantities and then
sells them on to the retailer in smaller quantities. This
is called breaking bulk.
Retailer: the shop that sells to consumer.
Consumer: buys products/services for their own
personal use.
Ms. Marshall 6th Year Business
48
Traditional Channel of Distribution
Manufacturer
Wholesaler
Retailer
Consumer
 Benefits: wholesalers take responsibility for breaking
bulk. Simplifies distribution for the manufacturer.
 Costs are reduced for the manufacturer , e.g. transport
and storage costs, because they are selling in bulk to a
few wholesalers rather than many consumers.
 Problem: End product may be more expensive for
consumers as profit mark ups are added at each stage.
Ms. Marshall 6th Year Business
49
Alternative Channel of Distribution
Manufacturer
Retailer
Consumer
 The growth of large retailers such as Dunnes, Lidl,
Tesco etc means that manufacturers can bypass
wholesalers and go straight to retailers. E.g. Own
brand goods.
 Costs can be reduced for the consumer as there are less
channels adding a mark up for profit.
 Large retailers may demand a big reduction in price
from the manufacturers, reducing their profit.
Ms. Marshall 6th Year Business
50
Direct Channel of Distribution
Manufacturer
Consumer
 Sells straight from the factory/farm to the consumer.
 For instance, perishable goods such as produce at a farmers
market.
 The internet facilitates this channel of distribution, e.g.
Dell Computers.
 Profit is maximised for producers by cutting out the
middlemen. However, they must have the marketing skills
to sell the goods and provide an after sales service.
Ms. Marshall 6th Year Business
51
Choosing a Distribution Channel
Ms. Marshall 6th Year Business
52
Class work
 Evaluate the marketing mix of a company/product of your





choice, e.g. Guinness, Ryanair, Apple, McDonalds.
Consider the following under each heading:
Product: Stage in the Life Cycle (do they use extension
strategies?), Branding, Packaging
Price: Pricing strategies, factors that might determine the
price
Promotion: Advertising, Sales Promotions, PR, Direct
Selling – which ones do they engage in and to what extent?
Place: The main channel of distribution and why its
chosen?
Ms. Marshall 6th Year Business
53
Putting together a Promotional
Campaign
 Step One: Analyse the market situation.
 Step Two: Plan the campaign.
Identify your target market, set a budget and decide
what medium to use.
 Step Three: Implement the campaign.
 Monitor and review the campaign.
Ms. Marshall 6th Year Business
54
Recent Exam Questions
 2013
 In Break-even analysis a distinction is made between ‘fixed




costs’ and variable costs’. Explain these terms, and give one
example in each case (10 marks).
2012
Outline the factors a business should consider when
choosing a suitable Channel of Distribution. Provide
examples to illustrate your answer (20 marks).
2010
Evaluate ‘Sales Promotion’ and ‘Public Relations’ as forms
of promotion (20 marks).
Ms. Marshall 6th Year Business
55
Ms. Marshall 6th Year Business
56
Ms. Marshall 6th Year Business
57
Recent Exam Questions
Ms. Marshall 6th Year Business
58
Recent Exam Questions
 2007
 Explain, using a diagram, the stages in the product life
cycle. (ii) In the case of each stage, describe the
implications for the cash flow of a business (20 marks).
 Outline and illustrate the term ‘niche market’ (10 marks).
 2005
 In the case of a particular product/service of your choice,
evaluate the role of (i) Advertising (ii) Public Relations (iii)
Personal Selling in the promotion of the product/service
(30 marks).
Ms. Marshall 6th Year Business
59
Ms. Marshall 6th Year Business
60
Marking scheme for previous
question















Question 7
(A) Stages in new product/service
development process : 6 @ 3 marks (2 + 1) (in order) 20
(B) Significance of: Packaging
Branding
Product Life Cycle
9 marks (5 + 4)
9 marks (5 + 4)
9 marks (4 at 2 marks + 1)
30
(C) Channel of distribution and recommendation
Note: Report structure divided (A ~ C)
9 marks (5 + 4)
6 marks (2 + 3 + 1)
Ms. Marshall 6th Year Business
61