THE MARKETING MIX
HIGHER BUSINESS
MANAGEMENT
•
This is often referred to as the 4 Ps!
1.
2.
3.
4.
Product
Price
Place
Promotion
•
Each of these factors will influence the
customer buying a product.
PRODUCT
• This is the good or service that the customer
will buy.
• It must meet the needs of the customer, both
actual and potential.
• A PRODUCT MUST BENEFIT THE
CUSTOMER.
CORE PRODUCT
• The basic benefit of the product.
PRODUCT
Shampoo
Trainers
Video Recorder
BASIC FUNCTION
To clean hair
To protect feet
To record TV programmes
ACTUAL PRODUCT
• Most products are not bought to meet just a
single need.
• There are a number of factors which make
up a product concept.
• Will have characteristics such as brand
name, design and packaging.
AUGMENTED PRODUCT
• Producers often add an element of attraction to
their product to gain a competitive edge.
• Additional features include:
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–
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High after sales service
0% credit terms
Style
Colour
Quality
Brand name
PRODUCT LIFE CYCLE
• Markets are constantly changing due to
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–
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Technology
Fashion
Politics
Economics
• Because of this products become obsolete
eventually.
• Every product will go through a number of stages
over a period of time.
• From the birth of the product until the end of it’s
life.
• Some products will have a short life cycle e.g. Pop
Record
• Others will have a very long life e.g. Mars Bars,
Coca Cola.
Sales
DECLINE
SATURATION
MATURITY
GROWTH
INTRODUCTION
R&D
Time
RESEARCH AND DEVELOPMENT
• At this stage of it’s life the product is not
yet on the market.
• There are no sales and the product is
probably making a loss for the firm.
INTRODUCTION
• This is when the product is first put onto the
market.
• Sales are low because there is limited customer
awareness and brand loyalty for other products.
• Cost are also high at this stage due to heavy
advertising and holding stocks.
GROWTH
• Sales at this stage are increasing quickly.
• There is heightened awareness of the
product.
• At this stage the product is making it’s
highest amount of profits due to little
competition.
MATURITY
• More and more competition is coming on to
the market.
• Sales begin to slow down. Price is likely to
be cut to attract customers.
SATURATION
• Here there is lots of competition that the
market is flooded with similar products.
• Sales will begin to dip.
• Supply will outstrip demand.
DECLINE
• At this stage the product the product is not
fashionable, becoming obsolete.
• Everyone has one and there are new and
better products on the market.
• Sales fall away as does profits.
PRODUCTS AT DIFFERENT STAGES
R&D
Introduction
Maturity
Saturation
PS3 Games
PS3, Iphones, Blue
Ray DVDs
Video Mobiles,
Recordable DVDs
MP3 Players, IPODS
DVD Players
Decline
Video Recorders
Growth
EXTENDING THE LIFE CYCLE
• Not all products will go into decline.
• Some companies will alter elements of the
marketing mix in order to inject new life
into a old product.
STRATEGIES
• Changing the product – shape, size, colour e.g.
diet drinks
• New variants – fun size
• Altering the package to appeal to a different
segment of the market. E.g. Pepsi cans to blue
• Altering where the product is sold, e.g. selling
online
• Changing the price
• Altering the advertising or promotions e.g.
special offers, free gifts.
• Changing the use of the product e.g.
Luzocade
• Change the name of the product.
Extension Strategies
Sales
Time
PRODUCT MIX/PRODUCT
PORTFOLIO
• This is a range of products that a firm may
have.
• E.g.
– Cadbury – chocolate sweet range
– Virgin – records, banking, insurance, flights.
• By having a range of products you can
spread the risk.
• If they had only one product and that failed,
the firm would be in trouble.
• Wide range means that you can target
different market segments, which can also
increase profits.
• A firm may introduce a new product just as
an older product is going into decline.
• This way they will always have products at
the various stages of the Product Life Cycle.
Sales
Product 3
Product 2
Product 1
Time
BOSTON MATRIX
• This is used by some firms to look at their
product mix.
• It places products into one of four
categories.
• These categories are based on:
• The market share each product has – ie the
percentage of the market they hold.
• and
• Market Growth – the potential for the
product to experience growth in it’s market.
MARKET SHARE
MARKET
GROWTH
HIGH
LOW
HIGH
STAR
PROBLEM
CHILD
LOW
CASH
COW
DOG
• Firms want to have a few problem children.
These are products that have a low market
share but there is potential for growth.
• Firms want a lot of stars, products with both
high market share and high market growth.
• They want a few cash cows, where the
market share is high but there is not a lot of
potential for growth. MILK THE CASH
COW.
• And no or very few dogs, these products do
not make a lot of money. PUT DOWN
DOGS.
PRODUCT INNOVATION
• Coming up with new products is extremely
important for businesses, to replace those
going into decline.
STAGES
•
•
•
•
•
•
Generation of the idea
Analyse the idea (will customer buy?)
Produce a prototype and test it
Test market
Adapt and review
Launch
• There is a high failure rate with product
innovation.
• Only 1 in 50 are successful!
• A lot of time and money is spent on
producing new products.
BENEFITS TO R&D
• New products developed give a competitive edge.
• Can develop new production techniques
• Improve efficiency and productivity which reduces costs
• May gain a patent which gives you a competitive
advantage
• Staff are highly motivated as they are allowed to be
creative.