MARKETING FUNDAMENTALS
Marketing Mix Tools
Key Concepts
Theories relating to the analysis of :
- Product
- Physical Evidence
- Price
- People
- Place
- Process
- Promotion
1. Product
Product Offer
Potential Product
Augmented Product
Tangible Product
Core Product
Source: Brassington,F. & Pettitt,S. (2000) Principles of Marketing 2nd ed, UK:FT/Prentice Hall
SALES VOLUME
Product Life Cycle
Introduction
Growth
Maturity
Saturation
Decline
TIME
Source: Palmer, A. (2000) Principles of Marketing UK:Oxford
Introduction:
New product launched to innovators and early adopters.
Growth:
Maturity:
Saturation:
Decline:
Rapid rate of growth, targeting early majority.
Rate of growth begins to slow down.
Market has ceased to grow. Mainly replacement demand.
Changes in consumers’ preferences or technology lead to a fall in
sales.
SALES VOLUME
(Rogers 1962)Pattern of Adoption
for a New Product
Innovators
Early
Adopters
Early
Majority
Late
Majority
Laggards
TIME
Source: Palmer, A. (2000) Principles of Marketing UK:Oxford
World’s Most Valuable Brands
Brand
Coca-Cola
Marlboro
IBM
Brand Value ($ millions)
47,978
47,635
23,701
UK’s Top 10 Brands, 1998
Brand
Owner
Coca-Cola
Coca-Cola
Sales (£m)
Advert Spend (£m)
580+
31.41
Walker’s crisps
Nescafe coffee
PepsiCo
400 – 405
6.88
Nestle
285 – 290
6.24
Andrex toilet tissue
Kimerley-Clark
205 – 300
9.25
Ariel laundry products
Procter & Gamble
200 – 205
21.91
Persil laundry products
Lever Bros
195 – 200
20.59
Pampers nappies
Proctor & Gamble
190 – 195
11.62
Pepsi
PepsiCo
190 – 195
10.91
Stella Artois lager
Whitbread
165 – 170
3.92
Muller yoghurt
Muller
160 - 165
2.46
Source: Brassington,F. & Pettitt,S. (2000) Principles of Marketing 2nd ed, UK:FT/Prentice Hall
Packaging
An important part of the product that not only serves a functional purpose, but also acts as
a means of communicating product information and brand character.
Source: Brassington,F. & Pettitt,S. (2000) Principles of Marketing 2nd ed, UK:FT/Prentice Hall
Functions of Packaging
Functional: packaging must protect the product in storage, in shipment and often in
use
Promotional: packaging used to add value to the brand. Can be achieved through a
combination of materials, shape, graphics and colour
Source: Brassington,F. & Pettitt,S. (2000) Principles of Marketing 2nd ed, UK:FT/Prentice Hall
2. Price
Factors Influencing Customers’ Price
Assessments
Functional
Quality
PRICE
ASSESSMENT
Financial
Operational
Personal
Source: Brassington,F. & Pettitt,S. (2000) Principles of Marketing 2nd ed, UK:FT/Prentice Hall
External Influences on the Pricing
Decision
Demand & price elasticity
Customers & consumers
PRICE
DECISION
Competitors
Legal & regulatory
Channels of distribution
Source: Brassington,F. & Pettitt,S. (2000) Principles of Marketing 2nd ed, UK:FT/Prentice Hall
Factors Affecting Price Decisions
External Factors
Internal Factors
- Marketing objectives
- Marketing mix strategy
Pricing
decisions
- Nature of the market and
demand
- Competition
- Costs
- Other environmental
factors (economy,
resellers, government)
- Organisational
considerations
Source: Kotler.P & Armstrong.G (2001) Principles of Marketing 9th ed, USA:Prentice Hall
Price/Quality Strategies
Low
ECONOMY
QUANTITY
High
SUPER VALUE
General Pricing Approaches
A) Cost-Based Pricing:
- Cost-plus pricing
- Break-even pricing
B) Value-Based Pricing
C) Competition-Based Pricing
Source: Kotler.P & Armstrong.G (2001) Principles of Marketing 9th ed, USA:Prentice Hall
New-Product Pricing Strategies
Market-Skimming Pricing: setting a high price for a new product to skim maximum
revenues
Market-Penetration Pricing: setting a low price for a new product in order to attract a
large number of buyers and a large market share
Source: Kotler.P & Armstrong.G (2001) Principles of Marketing 9th ed, USA:Prentice Hall
Price-Adjustment Strategies
STRATEGY
DESCRIPTION
Discount & allowance
pricing
Reducing prices to reward customer responses such as
paying early or promoting the product
Segmented pricing
Adjusting prices to allow for differences in customers,
products or locations
Psychological pricing
Adjusting prices for psychological effect
Promotional pricing
Temporarily reducing prices to increase short-run sales
Geographical pricing
Adjusting prices to account for the geographical
location of customers
International pricing
Adjusting prices for international markets
Source: Kotler.P & Armstrong.G (2001) Principles of Marketing 9th ed, USA:Prentice Hall
3. Place
See Session 3 notes Plus
Sorting activities conducted by
channel members
Source: Dibb,S, Simkin, Pride, Ferrell (2001) Marketing: Concepts & Strategies 4th ed, USA:Houghton Mifflin
Value Added Services Provided by
Intermediaries
Value Added Services
Facilitating Value
Transactional Value
-Financing
-Training
-Information
-After sales
-Risk
-Marketing
-Administration
Logistical Value
-Assortment
-Storage
-Sorting
-Bulk breaking
-Transportation
Source: Brassington,F. & Pettitt,S. (2000) Principles of Marketing 2nd ed, UK:FT/Prentice Hall
4. Promotion
Advertising
“Any paid form of non-personal communication of ideas, goods or services delivered
through selected media channels.”
Source: Palmer, A (2000) Principles of Marketing UK:Oxford
Sales Promotion
Institute of Sales Promotions definition:
“A range of tactical marketing techniques designed within a strategic marketing
framework, to add value to a product or service in order to achieve a specific sales and
marketing objective.”
Source: Palmer, A (2000) Principles of Marketing UK:Oxford
Public Relations
Institute of Public Relations definition:
“Public relations is the deliberate, planned and sustained effort to establish and maintain
mutual understanding between an organisation and its publics.”
Source: Palmer, A (2000) Principles of Marketing UK:Oxford
Selling & Sales Management
“A sales force provides the personal interface between a company and its customers. This
contact may be face-to-face, telephone or utilising information technology.”
Source: Palmer, A (2000) Principles of Marketing UK:Oxford
Direct Marketing
UK Direct Marketing Association defines direct marketing as:
“Communications where data are used systematically to achieve quantifiable marketing
objectives and where direct contact is invited or made between a company and its
customers.”
Source: Palmer, A (2000) Principles of Marketing UK:Oxford
Promotional Mix
Public Relations
Sales Promotion
Advertising
Personal Selling
Capital Equipment
Organisational
Home Improvements
Raw Materials
Consumables/Stationery
White Goods
Consumer
fmcg
Source: Brassington,F. & Pettitt,S. (2000) Principles of Marketing 2nd ed, UK:FT/Prentice Hall
5. Physical Presence / Evidence
Shostack (1997) identifies two types of physical evidence:
1. Essential Evidence
2. Peripheral Evidence
Source: Brassington,F. & Pettitt,S. (2000) Principles of Marketing 2nd ed, UK:FT/Prentice Hall
Essential Evidence
Central to the service and is an important contributor to the customer’s purchase decision,
For example, the car fleet belonging to a car hire firm.
Source: Brassington,F. & Pettitt,S. (2000) Principles of Marketing 2nd ed, UK:FT/Prentice Hall
Peripheral Evidence
Less central to the service delivery and is likely to consist of items that the customer can
keep or use.
Source: Brassington,F. & Pettitt,S. (2000) Principles of Marketing 2nd ed, UK:FT/Prentice Hall
6. People
The nature of most services requires direct interaction between the customer/consumer
and personnel representing the service provider’s organisation.”
Source: Dibb.S, Simkin.L, Pride.W.M. & Ferrell.O.C. (2001) Marketing – Concepts & Strategies US:Houghton Mifflin
Service Organisations
“In many services, customers interact with one another, and the organisation’s staff also
interact with one another…Employee selection, training and motivation are central
considerations.”
Source: Dibb.S, Simkin.L, Pride.W.M. & Ferrell.O.C. (2001) Marketing – Concepts & Strategies US:Houghton Mifflin
Dependency of Personnel
“Many services businesses are totally dependent on their personnel, as Leo Burnett,
founder of the international advertising agency that bears his name, summed up: “Every
evening all our assets go down the elevator” – people!”
Source: Dibb.S, Simkin.L, Pride.W.M. & Ferrell.O.C. (2001) Marketing – Concepts & Strategies US:Houghton Mifflin
Service Marketing Effectiveness
Service marketing effectiveness is likely to be critically affected by the actions of front-line
employees who interact with customers.
7. Process
Purchasing & Consumption
“The acts of purchasing and consumption are important in all markets – consumer,
industrial or service.”
Source: Dibb.S, Simkin.L, Pride.W.M. & Ferrell.O.C. (2001) Marketing – Concepts & Strategies US:Houghton Mifflin
Direct Involvement
“The direct involvement of customers/consumers in the production of most services and
the perishability of these services place greater emphasis on the process of the
transaction for services.”
Source: Dibb.S, Simkin.L, Pride.W.M. & Ferrell.O.C. (2001) Marketing – Concepts & Strategies US:Houghton Mifflin
Aspects of Process
“Friendliness of staff and the flows of information affect the customer’s perception of the
service product offer. Appointment or queuing systems become part of the service. Ease
or difficulty of payment can enhance or spoil the consumption of the service.”
Source: Dibb.S, Simkin.L, Pride.W.M. & Ferrell.O.C. (2001) Marketing – Concepts & Strategies US:Houghton Mifflin