2.4 Marketing mix

• Design


  When a business plans what a product will do (function) and look life (style). Important in products where style and tech work together.
• Invention


  Introduction of new product or service
• Innovation


  Improvement of original idea , often involves new processes
• Product life cycle


  Life of a product , usually shown as graph in 4 stages: introduction, growth, maturity, decline
• Advertising at different stages of product life cycle 


  Introduction - high to ensure customers know about product

  Growth - used to reinforce product

  Maturity - additional advertising may be used to keep sales high

  Decline - buyers encouraged with special offers to buy leftover stock(firm could also find new uses to extend sales and life cycle)
• Businesses must consider what when deciding what price to charge for a product?


  how new, quality, no and nature of competition, how well product known, stage of product life cycle, costs of production
• Pricing methods


  Skimming , cost-plus pricing , penetration pricing , competitor pricing and promotional pricing
• Skimming


  High price charged for a new better product to make a large profit then reduced when competitor products sold
• Cost-plus pricing 


  Cost of product calculated and amount of profit added to decide price. Often used to make sure business making a profit.
• Penetration pricing


  Low price charged for a new product to persuade customers to try. Then increased when sales grow
• Promotional pricing

  Price lowered to persuade customers to buy stock that remains or buy a product whose sales are slowing
• Competitor pricing


  Business looks at prices charged by competitors before deciding its price. May be slightly cheaper or more expensive or the same based on how good product is and how it wants customers to think about it - higher lower or same quality as competitors
• Point of sale promotion


  Benefit customer recieves when buying product e.g. loss leaders, competitions , price reductions, free samples
• Advertising 


  Giving customer info about product and persuading to buy it e.g. social media, websites, television, print media , radio
• Price reductions/sales


  To sell off old stock. Disadvantage is business will make less profit or a loss than if product sold higher.
• Competitions


  Person who buys product entered into a competition
• Loss leaders


  Some goods sold at a loss to encourage customers to come to shop in hope they will do all shopping there
• Free samples


  Given to tempt to buy product
• Social media


  Cheap way of communicating with large no of people as well as targeting customers. However, not everyone uses it
• Websites


  A lot of info can be provided for potential customers. Costs money to keep up to date
• Television


  Often expensive but good for reaching wide audience. Know what channels and programmes potential customers watch
• Print media


  Can target market however most don't read newspapers and leaflets often ignored
• Radio


  Cheaper than TV and usually suitable for local ads but products can't be seen
• When a business wants to promote a product, influenced by?


  What they can afford , target audience and aim of promotion
• Physical distribution


  Movement of goods from producer to consumer
• Channel 1 - producer - consumer


  Advantage is by missing out wholesalers and consumers , producer makes more profit rather than sharing with wholesaler and or retailer
• Channel 2 - producer - retailer - consumer


  Advantage is selling directly to retailer means producer benefits from keeping some of profit that would have been made by wholesaler while being confident retailer can market goods to consumers
• Channel 3 -producer - wholesaler - retailer - consumer

  Advantage is wholesaler can break up bulk stock and offer retailers goods in quantities they can afford and sell so more retailers willing to sell goods
• Digital distribution


  When product downloaded by consumer directly from seller
• Advantages of digital distribution


  Consumer can buy product 24/7, method of selling without costs of physical shops or transport
• When making decisions about marketing mix (4 P's ), business must consider?


  type of product being sold, cost of product, stage of product life cycle, target market, funds available for marketing
• Marketing mix during introduction of a phone


  Product - new high tech phone

  Price - price skimming to make high profits bcs some willing to pay high prices

  Place - sell thru exclusive shops to stress quality and be able to sell at high price

  Promotion - use targeted advertising to generate interest and stress quality and exclusivity to people interested in new tech
• Marketing mix during growth of a phone


  Product - phone doesn't change, begin process of innovating and designing replacement model

  Price - reduce to maintain sales

  Place - sell thru wider range of shops and online to increase custom

  Promotion - advertise widely to stress benefits of phone to wider market
• Marketing mix during maturity of a phone


  Product - add new styles to atrract more , continue design and development

  Price - maintain stable

  Place - continue sales thru wide range of outlets

  Promotion - continue to advertise to highlight differences to competitors
• Marketing mix during decline of phone


  Product - introduce new features to attract sales , be ready to introduce new model once sales can't be extended

  Price - use promotional to extend sales

  Place - continue thru wide range but reduce in outlets not selling much

  Promotion - advertise to raise awareness of price reductions , give special offers
• How to judge effectiveness of marketing mix 


  Have total sales increased and by how much?

  Has stock been sold off?

  Has no of people who buy increased and by how many?

  Has business been able to increase price or reduced it?

  Has sales revenue increased or decreased?

  Has profit made increased or decreased?
• Market Data 


  Info that can help marketing decisions like market share , changes in demand and effect of promotions
• Use of data of changes in demand 


  Data shows if demand risen , falling or unchanged.

  Helps inform changes to price, how much advertising needed, type of advertising, promotional offers and introduce new product
• Use of data of target market


  Says who customers are and what they want, any changes in target market.

  Helps decide design, price to charge, advertising, which retail outlets and which promotional offers if any
• Use of market share data 


  Percentage of total sales in a market of a business and how this may be changing

  Helps decide whether to change or maintain current marketing mix