1.3-Marketing mix and strategy

• A product is a good or service that a firm provides

  Tangible products are physical goods that can be held. For example a car.

  Intangible products are goods that do not have a physical form. Services are usually intangible such as haircuts.
• Standard products are used or accepted as normal or average, usually mass or generic products.

  Bespoke products are commissioned to a particular specification. It may be altered or tailored to the customs, tastes or usage of an individual purchaser.
• When designing a product a business needs to make sure the product is fit for purpose, has the right appearance, and isn’t too costly to produce. This is called the design mix.

  The three aspects of the design mix are:

  • Aesthetics- how our senses respond to the product
  • Function- must be capable of doing the job it is sold to do
  • Cost- how cost effective the product is for the business
• An ergonomically designed product is a product that is designed to enhance comfort and is tailored to a person’s needs
• The product life cycle is a technique used to track the stages a product goes through during its life.

  It tracks sales over time from the development stage of a product through launch and until it’s removed from the market.

  A business will want to have products at different stages.
• The five stages of the PLC are known as:

  • Research + development- Negative cash flow due to costs of R+D. No sales revenue before launch
  • Introduction- Production and promotion costs are high
  • Growth- sales revenue increases, but as more units are sold, production costs also increase. However, there will be economies of scale
  • Maturity- sales stabilise and the product acts as a cash cow 💰🐮
  • Decline- at some point, the product will start to lose sales
• Uses of the product life cycle:

  • Highlights the need to alter the marketing policy at different stages of the life cycle
  • Distinguishes between the life cycle of the product and that of the brand
  • A tool to help plan market strategies

  The drawbacks of the PLC are:

  • Only a prediction
  • Low applicability in certain markets- not all products neatly fit the life cycle model. Some products may defy the typical stages
  • Simple approach- not all products will follow a linear progression
• Price is reduced

  Existing customers are likely to continue buying, whilst other customers may switch from competitors
• Rebranding

  Refreshing the brand and packaging design
• Ways of extending the life cycle of a product

  • Product differentiation
  • Reducing the price of a product
  • Rebranding the product
  • Repositioning of the product
  • Increasing market activity
• Product differentiation

  Making a product stand out from its competitors by ensuring it has a USP
• Repositioning

  Exploring new markets for a product
• Extension strategy

  A series of techniques used to extend the period of time over which a product achieves high levels of sales
• Increasing market activity

  Running new advertising campaigns
• The Boston matrix is a means of measuring the position of products within a firms portfolio in terms of market share and their market growth.
• The 4 parts of the Boston matrix are:

  • Stars- high market share selling in a fast growing market 🌟
  • Question mark- may provide high profit in the future but sales not particularly good at the moment ❓
  • Cash cow- Mature market therefore slow growing. Within the market the product has a high market share 💰🐮
  • Dogs- Low share of a low growth market 🐶
• Uses of the Boston Matrix:

  • Good starting point when reviewing existing product lines to decide on future strategy and budgets
  • Market share compared to the largest competitor
  • Helps to analyse future opportunities/problems within a product portfolio
  • Helps to decide who to invest in

  Limitations of the Boston Matrix:

  • Doesn‘t use the middle ground of medium growth
  • High market share doesn’t always lead to profit
  • Ignores other indicators of profit
  • Simplistic approach
  • Difficult to know what stage each product is at
• Promotion is the activities designed to communicate with the market thereby increasing visibility and sales of a product.

  Promotion aims to tell consumers about a new product, remind them of existing products, reassure customers about product, show consumers that rival products aren’t as good and improve or develop the image of the business.

  It is designed to create awareness, interest, desire and action (AIDA)
• The promotional mix is the combination of promotional activities that a firm uses in order to create consumer awareness and generate sales.

  The promotional mix comprises of:

  • Advertising
  • Branding
  • Direct selling
  • Merchandising
  • Public relations
  • Sales promotion
• Factors that influence promotion decisions

  • Market segmentation and positioning- will the message appeal to the target market? Does the promotion support the rest of the marketing mix and correctly position the product relative to competitors?
  • Internal constraints- e.g. the size of the promotional budget or the firms ethical objectives
  • External influences- e.g. Technology, competitors actions, social trends
• Branding


  A name, sign, symbol, design or slogan linked to a particular product in order to differentiate from competition

  Pros:

  • Brand loyalty
  • Charge premium prices
  • Added value
  • Reduced PED

  Cons:

  • Costs 💰
  • Restrictions
  • Brand image could be damaged
• Merchandising


  The way in which a firm promotes its product at point of sale (POS). Allot of thought is put into the visual display of a product and the way that the product is presented within the selling location.

  Pros:

  • Increased sales
  • Brings customers in
  • Makes spaces attractive

  Cons:

  • Can be expensive
  • Reliant on staff
• Sales promotion


  Short term offers used by firms in order to increase sales for their products e.g. BOGOF

  Pros:

  • Allows potential customers to try something new with low risk
  • Raises awareness
  • The effect of sales promotion is immediate

  Cons:

  • Short term
  • Hidden costs
  • Decrease in brand loyalty
• Direct selling 


  Occurs when a business sells direct to consumers

  Pros:

  • No need to share profit margins
  • Producer has complete control over the sales process
  • Products aren’t sold alongside those of competitors

  Cons:

  • May be a need for an expert sales force
  • Retailers, distributors, dealers and other intermediaries may be unwilling to sell the product
• Public relations (PR)

  PR involves communicating with the media such as newspaper, television and radio in order to get favourable publicity for the organisation.

  Pros:

  • No direct charge is made for PR, though a business will need to pay for its own PR department or external PR consultant
  • PR is arguably more powerful because the message the business communicates through PR is often more believable than paid for advertising

  Cons:

  • No guarantee that PR will reach its target audience (the media may fail to feature the story) whereas advertising must be displayed since the space is paid for
• Advertising

  When firms pay for the promotion of their product through the main media such as television, radio and the press. This is known as ‘above the line’ promotion.

  Pros:

  • Increase sales and profits because it encourages people to buy
  • Provides information to consumers on product
  • Creates employment in the advertising industry
  • Encourage people to buy products they don’t really need

  Cons:

  • They may be misleading
  • Very costly
  • Small firms find it difficult to complete so may be forced out of the market
• Product brands- Brands associated with specific product. The product has a unique logo or packaging which the customers are familiar with as well as the corporate brand

  Service brand- Brands that add perceived value to services

  Umbrella brand- Brands that are assigned to more than one product.

  Corporate brand- Promoting the brand name of a corporate entity, as opposed to specific products

  Own-label brand- Brands associated with a retailer. They tend to have a less attractive logo so cheaper to produce

  Global brand- Easily recognised and operating worldwide
• Benefits of a strong brand:

  • Stimulate sales by increasing desirability
  • Add value- allows a higher price to be charged
  • Develop barriers to entry for newcomers
  • Aid new product development
  • Insulate against the business cycle
• Ways to build a brand

  • USP- creating a feature or characteristic within a brand that makes it stand out.
  • Advertising- creating awareness of and desire for a brand by communicating a clear brand message
  • Sponsorship- Associating a brand name with an event to raise its profile in the public eyes.
  • Social media- Use of targeted newsfeeds/for you pages
• Price


  The amount of money that a customer pays for a good or service

  Incorrect pricing could:

  • Lose customers
  • Lose revenue
• Pricing strategies- cost plus pricing

  Percentage mark up is added to the cost of producing a good or service to calculate the selling price. This way the firm can choose how much profit they want to make from each unit sold.
• Pricing strategies- price skimming

  Involves setting a high initial price for a new product in order to recoup costs spent on R+D. This is to target people who are eager to get the new product and are willing to pay more for it. The price will then be reduced after everyone that was willing to buy at that price has bought it.
• Pricing strategies- penetration pricing

  Setting a low initial price for a new product in order to get a foothold in the market and gain market share. Once the product has been launched and built up a customer base, the firm may raise the price.
• Pricing strategies- predatory pricing

  When prices are set low for a short period of time to force competitors out of the market. Prices are then put back to where they were previously or even higher.
• Pricing strategies- competitive pricing


  Prices are based on the prices charged by competitors, maybe the same or slightly lower, firms will try to compete on other aspects of the marketing mix.
• Pricing strategies- Psychological pricing


  When a firm sets a price for the product in order to entice the customer into making a purchase by making it sound cheaper than it actually is. For example, a product at £9.99 seems way cheaper than a product at £10 even though it is only a 1p difference
• Place defines both the physical location where a product is available as well as the distribution channel it has travelled through to get from the manufacturer to the customer.

  Place can be a physical market where buyers and sellers meet face to face or a virtual location.
• Distribution refers to how the product gets to the customer. Many products use multi-channels methods to reach the customer. The key is to make distribution easy and convenient for the customer in order to maximise sales.

  The most important parts of distribution are the 4 C’s: Cost, control, convenience, coverage
• Cost refers to the cost of getting the product to the consumer. This includes all costs associated with transporting the goods such as fuel, labour etc. It also includes any storage costs that occur when the product is held in warehouses waiting to be sold. Firms need to balance these costs against their profit margins so that they do not lose money on every sale made.
• Convenience refers to how easily customers can access the product. If the product is difficult to find, people are less likely to buy it. Therefore, businesses must consider whether they want to sell directly to consumers (B2C) or indirectly via retailers (B2B). They must also decide which channels to use to distribute their products. Some companies choose to sell online while others prefer traditional bricks and mortar stores.