Marketing mix KA

• What are the 4 P’s?


  Product, Place, Price and Promotion
• The marketing mix is a comb of product, price, place and promotion for any business venture which influences weather a customer buys a product
• A successful marketing mix will:

  • Sell a product that satisfies a customers needs
  • At right price which customers are willing to pay and which makes a profit
  • In the right place allow customers to access it
  • With effective promotion which informs and persuades the customer to buy it
• Product differentiation (USP)

  • organic nature
  • Free delivery
  • Made in the uk
  • Colour (e.g cadburys)
  • Packaging(Pringles)
  • Shape/design (Kitkat/ chocolate orang)
• A unique selling point (USP) is where a business will try to develop some aspect of the production that makes it unique from competitors
• Product differentiation is used by businesses to make their product different from other products they’d sell and make them different from those offered by competitors
• Customers will recognise the uniqueness of the product and will be prepared to pay a higher price

  HOWEVER: The level of differentiation depends on accurate market research otherwise money will be wasted
• Product portfolio is collection/range of all goods and services offered by a business
• Product portfolio

  • most businesses produce a range of products as different groups of consumers want different products.
  • A business can sell more and make more profit by satisfying different consumers wants by targeting different market segments
  • A large product portfolio also protects business against a fall in demand for one of their products (spreading the risk)
• Product portfolio (disadvantage)

  Developing a wide range of products is expensive which reduces the size of shareholders dividends and retain profit available for reinvestment
• Product innovation: in order to differentiate products from their competitors a business will want to adapt/ change and introduce new products over time as customers needs and wants change
• Product life cycle

  • Introduction
  • Growth
  • Maturity
  • (extension sometim)
  • Decline
• Introduction stage

  • Sales are zero or low as customers don’t know about product
  • Revenue will be low as promotional pricing (low price) encourages buyers
  • Costs are high to cover promotional expenditure
• Growth stage

  • Sales will be rapidly rising as more customers know the product
  • Revenue will increase with sale and because customers are keen to buy even at higher prices
  • Costs are used to pay to produce the good. Less advertising is required. Cost of production are increasing
• Maturity stage

  • Sales will continue to rise at a slower rate as more competitors enter the market and customers needs change
  • Revenue is at it highest point
  • Costs will be continued to be paid to produce the goods, but little advertising is required
• Satiation stage (maturity)

  • Goods are still be sold but sales will not rise or fall
  • Revenue will be maintained but may start to fall as selling strategies may lead to fall in price
  • Costs may rise as more money is needed to promote the product to avoid decline
• Decline stage

  • Goods are still being sold but:
  • Sales fall
  • Revenue will fall as result of fall in sales
  • Costs are uncertain as advertising may be reduced and output will fall
• An extension strategy is a method used to increase the life of a product and prevent in falling into decline. They renew customers interest in the product
• Extension strategies are introduced at the end of the maturity section where sales are at its highest and before it goes into decline. Businesses try to keep the sales of a product at this high level for as long as possible in order to maximise sales and profit
• Common extension strategies

  • New brand name
  • New flavours
  • New design
  • New packaging
  • increase advertising
  • Adding new features e.g quality/ texture
  • Lowering the price
  • Finding new markets
  • Finding new uses and persuading consumers to use the product more frequently
• Common extension strategies

  • Price reduction
  • Adapting the product
  • New packaging
  • Explore new market(e.g international)
• Penetration pricing - setting low price for a new product to encourage sales. The price maybe reduced later with increased customer loyalty and market share

  Advantage - low price attract customers who stay w business over time

  Disadvantage - when prices rise people not willing to purchase
• Price skimming - selling a product at high price in order to earn high initial profits. Profits maybe reduced later to increase sales at lower prices

  Advantage - attracts early adopters

  Disadvantaged- customers unwilling/unable to pay high price
• psychological pricing - offering goods and services at prices below whole numbers such as £5.99 or £499
• Cost plus pricing - the producer adding a sum of money to the cost of producing goods to determine the selling price of the goods or service

  Advantage- adding profit to cost ensures that a profit is made on each good

  disadvantage - may not work in competitive market
• Competitive pricing / market orientated - produce offering goods for sale at a price at or below that set by competitors

  Advantages - ensures that the firm is price competitive

  Disadvantage- customers may Not switch to rivals (loyal)
• Price discrimination- charging different prices to different market segments

  Advantage - customers attracted to lower pricing

  Disadvantage- some customers excluded and may choose rival retailors
• Loss leader - products put on sale usually in supermarkets at prices which make no profit and may even make losses in order to attract customers in to shop to buy other goods

  Advantage - boost sales or other, more profitable products

  Disadvantage- customers may get used to and expect low prices so can only really be used in the short term
• Why might a business charge higher prices?

  • Higher costs/ better ingredients/ higher rent/ cost plus
  • Wants more exclusive market / customers willing to pay a higher price
  • May be well known/ quality brand > people will to pay higher prices . High marketing costs > need to be regained from sales of product
• Promotion is a type of communication used to inform the public of a product and persuade them to buy it
• Reasons for promotion

  • Create or increase awareness
  • Inform / remind customers about the product
  • Create or change the image of the product
  • Persuade customers to buy the product
• what are the three main promotion techniques that a business can use to promote their products and services?

  • Point of sale promotion
  • Direct marketing
  • Advertising
• Advertising is defined as any “paid for method of promotion” to communicate a message to existing and/or potential customers through a form of media
• Television advertising

  Advantages:

  • reaches large audiences
  • Can link advert to particular programmes to reach certain types of viewers

  Disadvantages

  • expensive to create and book advertising slots
  • more suitable for mass market products
• Radio advertising

  Advantages

  • Cheaper than tv advertising
  • Can use sounds and music to appeal to the audience

  disadvantages

  • limited coverage -> limited audience
  • sound only no visuals
• Newspaper advertising

  Advantage

  • Can be kept

  disadvantages

  • may be ignored
• Posters and billboards

  Advantages

  • High visual impact -> eye catching
  • Can stay in place for a long time -> seen daily by large number of people

  Disadvantages

  • easily missed in busy traffic
  • vulnerable to wind, rain and graffiti
• magazines

  Advantages

  • Targeted-> colour -> kept for a long time

  Disadvantages

  • limited coverage
• Leaflets and flyers

  Advantage

  • Will provide detail
  • Cheap to produce and distribute

  Disadvantages

  • easy to throw away
  • static adverts -> can make it hard to stand out
• Cinemas

  Advantages

  • Local/ captive audience

  disadvantages

  • Can be ignored