Chapter 19: The marketing mix - product and price

• Marketing mix

  the four key decisions on the 4 P's that must be taken to enable the effective marketing of a products.
• Why is product important in the marketing mix?

  If product fails to meet the expectations of customers in terms of quality, durability, performance and

  appearance the product will not sell successfully in the long term.

  This will be the case no matter the how low the price or how much promotion is done
• Brand

  an identifying name, symbol or image trademark that distinguishes a product from its competitors
• USP

  a special feature of a product that makes it different from competitors products.
• product differentiation

  the unique qualities of a product that leads to difference from competitors
• product positioning

  consumers view of a product in comparison to its competitors, showcasing unique identity and benefits to target audience
• product life cycle

  traces a products stages from its introduction, growth, maturityand decline phases
• Introductory Stage:- A branded product can be sold at a high price.

  Growth Stage:- Prices are likely to be higher than those of competitors.

  Maturity Stage:- Prices are likely to be reduced as competitors may have launched newer

  versions of their own products.

  Declining Stage:- Price discounts are offered at this stage.
• Boston Matrix

  analysing the relationship between market share and market growth in a business

  
  

  uses:

  analysing performance

  planning action

  planning introduction

  
  

  limitations:

  cannot predict what will happen to a product

  only plans

  assumes that higher rates of profit are directly related to high market shares
• Star product

  HIGH Market Growth

  HIGH market share

  
  

  Holding
• Cash cow product

  LOW Market Growth

  HIGH market share

  
  

  Milking
• Question mark product

  HIGH Market Growth

  LOW market share

  
  

  Building
• Pet product

  LOW Market Growth

  LOW market share

  
  

  Deinvesting
• chfdk j
• Determinants of price for any product

  Costs of productio

  Competitors’ prices

  Objectives

  Price elasticity of demand
• Cost-plus pricing

  cost of manufacturing the product plus a profit markup
• Competitive pricing

  when the product is priced in line with or just below competitors' price to try to capture more of the market
• Penetration pricing

  when the price is set lower than the competitors' prices to be able to enter a new market
• Price skimming

  when a high price is set for a new product on the market.
• promotional pricing

  when a product is sold at a very low price for a short period of time e.g sales.
• dynamic pricing

  when prices are different based on the mode of payment or time of payment. (online price vs instore price)
• pyscological pricing

  setting a price that matches the view of consumers to the product
• mark up pricing

  adding a fixed markup for profit to the unit cost of buying in a product
• new product development: the design, creation and marketinf of new goods and services

  Importance:

  -changing consumer tastes

  -competition

  -technological advancements

  -improved brand image

  -use of excess capacity
• product portfolio analysis


  analysing the range of existing products of a business to help allocate resources effectively between them
• price discrimination


  charging different groups of consumers different prices for the same good or service
• .