MKTG13 Marketing Mix @
U
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1.
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
Element and Performance Criteria
2.
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
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
4P’s Marketing Mix – from the
perspective of the buyer
Solution / Value / Benefit
Product
Convenience
Place
Consumption
Promotion
Communication
Price
Inform
Cost / Investment Value
Persuade
Remind
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).
Product
Products/Service Elements
6 Elements of Product
Physical
Quality
Packaging
Brand
Product
Warranty
Purpose
Identifying Key Features
Colour
Sensory elements
Shape
Product
features
Working
components
Outputs/Capacity
Material
A Product that a Customer may
needs and wants

Can be grouped Industry Sector:
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Health
Admiration
Amusement
Wealth
Security
Self-improvement
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:




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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.
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
The three Product Levels
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.
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.
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.
Product Life Cycle
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.
Product/Service Life Cycle

The concept - products /services evolve and grow by going through four
distinct phases over a period of time
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.
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.
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.
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.
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 pricecutting and many more products are withdrawn from the market.
Profits can be improved by reducing marketing and cutting other costs.
Communications In The Product Life Cycle
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.
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.
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.
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.
Price
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
Business Objectives
Their Effect on Pricing
Increase sales
Lower prices to raise the number of products sold
Increase your market share
Lower prices to raise the number sold, thereby
increasing the market share
Maximise cash flow
Raise prices, or reduce costs
Maximise profit
Raise prices, or Lower prices and increase number
sold, or decrease costs and overheads
Set up entry barriers to competition
Lower prices based on efficient production methods
Define image
Set higher prices based on higher perceived and or
actual quality
Control demand
Set prices at a level which discourages sales to a
particular degree (if you do not have the resources
to meet demand at a particular time), or give a high
quote and delay another customer if the quote is
accepted
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?
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
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
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
Place
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
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.
Conventional Vertical Distribution
Manufacturer
Wholesaler
Retailer
Consumer
Depending on the product there
might be a better option
Manufacturer
Manufacturer
Wholesaler
Wholesaler
Retailer
Retailer
Consumer
Consumer
Finding a more DIRECT approach
Depending on the product there
might be a better option
Manufacturer
Agent
Wholesaler
Retailer
Adding some intermediaries
Consumer
Depending on the product there
might be a better option
Manufacturer
Manufacturer
Manufacturer
Wholesaler
Consumer
Retailer
Retailer
Consumer
Consumer
Using Multi Channel Distribution
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
Distribution Intensity - Strategy
Depending on the product and the customers needs and wants you may select
one of three options
Intensive
through every
reasonable
outlet
in a market
Selective
Exclusive
through multiple
but not all outlets
in a market
through single
wholesaling middleman
and/or retailer in a
market
Promotion
Objective of Promotion
Inform
Communication
Persuade
Remind
A Communication Model
Sender
Needs to encode
the message
Communication
Channel
Can be face to face,
TV, Radio, Print,
Electronic...
Receiver
Needs to decode
the message
Feedback
May be in the form
of buying your
product
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.
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)
Elements you need to consider when
choosing the right form of promotion
• The target market
• The stage of the product’s life cycle
• The nature of the product
• Money available for the promotion.
Reaching the target market (continued)

Determine where the customers are located
 geographic location and access to the message

Determine the types of customers
 retail, wholesale, intermediaries, business

Determine how many customers there are
 size of the potential customer and choice of suitable communication, e.g.
personal selling.
Amounts of funds available

Percentage of sales method
 Company might determine past or anticipated sales and apply a percentage
of sales as the promotional budget.

All available funds
 Company might use all available funds on the promotional campaign.

Matching the competition (also known as ‘share of voice’)
 Promotional expenditure based on market share of competitors, or actual
expenditure, if known.

Task or objective method
 Determine what tasks or objectives the promotion must accomplish.
 Determine what it will cost to perform the task or meet the objective.
Push versus Pull strategy
Push strategy
• Producer creates demand for product.
• Aims promotional activity to channel member(s).
• Channel member promotes to next channel member.
• Demand ‘pushed’ down distribution channel.
• Consumer influenced by retailer’s advertising.
Manufacturer
Wholesaler
Retailer
Consumer
Push versus Pull strategy
Pull strategy
 Producer creates demand for product.
 Aims promotional activity directly at end user.
 Consumer demands product from retailer.
 Demand ‘pulled’ up the distribution channel.
Manufacturer
Wholesaler
Retailer
Consumer
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Adamany & Gonsalves 1994 (2011)
Oulu University Library – (2011)
NetMBA.com –(2011)
A White Paper by Paul Hague (2001)
Marketing in Black and White, Brian Monger, (2011) Pearson
Wiley – Title Unknown (2011)
Marketing a Practical Approach, Peter Rix,( 2011) Mc Graw Hill
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