3.3 (Market mix-. product and price)

• Marketing Mix: A common classification that began as the four P's: Product, price, place, promotion
• Brand image: How audiences perceive your brand and how customers feel about their experience with you
• Product life cycle: The length of time from a product first being introduced to customers until it is removed from the market
• Extension strategies: Attempt by a company to increase sales of a product by, for example, making changes to it or finding new users for it
• Cost + Pricing: Basic pricing strategy that involves determining the cost of goods or services and adding a fixed % as the markup
• Competitive pricing: When you create a product price based on the prices being offered by your competitors
• Penetration pricing: Business introduce a low price for their product/ service. A strategy that aims to attract customers
• Price elasticity of demand: A measure that captures the responsiveness of a good's quality demanded to a chan ge in its price.
• Inelastic PED: If the price change for a product doesn't lead to much, if any,change in its supply or demand, it is considered inelastic.
• Elastic PED: Change in quantity demanded due to a change in price is large.
• The market mix:

  Product, price, place and promotion for any business venture

  • No element of the marketing mix is more important than another each element ideally supports the others
  • Firms modify each component of the marketing mix to establish an overall brand image and unique selling point that makes their products stand out
• What makes a successful product?

  • Purchasing of customers is usually driven by a need/ want --> So by satisfying customers
  • A product can create new wants/ needs
  • Product design, performance, reliability and quality must allign with product abilities and bran image.
  • Product is peculiar from its competitors and so stands out
  • Product competes with its competitors
  • Production cost less than selling cost (Creates profit)
• Product line: A group of related products all marketed under a single brand name that is sold by the same company
• Costs and Benefits of developing new products:

  Costs:

  • R&D costly and time consuming. Research data could be misleading
  • Rise- No guarantee of success if very new
  • If not well received could affect brand/ company image
  • Tough when competing with similar products

  Benefits:

  • Spread risks by developing product portfolio
  • Additional revenue streams which potentially could increase profits
  • Could enhance company and brand image if successful
  • Could increase customer loyalty
  • Economies of scale--> more competitiveness and more consumer choice
• Brand: A name, symbol, or other marker that businesses use to distinguish their products from competitors' and foster a public identity
• An overview:

  
• Types of brands(1):

  The creator =

  
• Types of brands(2):

  The innocent =

  
• Why is brand image so important?


  -> An identity given to a product that differentiates from competitors

  -> Brand loyalty is the tendency of customers to keep buying the same brand continuously instead of switching

  -> Consumers recognise the product more easily when looking at similar products

  -> The product can be charged higher than less well-known brands

  -> Launching new products is easier if the brand image is established
• Why is packaging important?

  • Protects product
  • Provides product info --> ingredients, price, manufacturing, expiry dates, etc
  • Helps consumers recognise the product --> brand name & logo on the packaging will help identity
  • Keeps product fresh
• The 4 life cycle stages and their marketing implications

  1. Introduction

  • Low sales
  • High cost per customer
  • Financial losses
  • Innovative customers
  • Few (if any) competitors
• The 4 life cycle stages and their marketing implications

  2. Growth

  • Increasing sales
  • Cost per customer falls
  • Profits rise
  • Increasing No. of customers
  • More competitors
• The 4 life cycle stages and their marketing implications

  3. Maturity

  • Peak sales
  • Cost per customer lowest
  • Profits high
  • Mass market
  • Stable number of competitors
• The 4 life cycle stages and their marketing implications

  4. Decline

  • Falling sales
  • cost per customer low
  • Profits fall
  • Customer base contracts
  • Number of competitors fall
• The 4 life cycle stages and their marketing implications

  
• Product lifestyle extension strategies

  -> Approaches for product life cycle to prevent production from going into decline stage

  There are 5 main approaches
• Product lifestyle extension strategies

  1. Marketing activity enhancement

  • Conduct new advertising campaign and sales promotion
  • Run product reminder advertisement for existing customers
• Product lifestyle extension strategies

  2. Product rebranding

  • Refresh brand and packaging deign
  • Build website and online presence
  • Develop marketing plan to communicate customers about product presence
• Product lifestyle extension strategies

  3. Repositioning

  • Conduct survey to identify new market
  • Regularly modify positioning strategies
  • Adjusting changes to products as per customer needs
• Product lifestyle extension strategies

  4. Price structure

  • Reduce production cost to increase profit margin by 10%
  • Revise pricing policies to attract competitors clients
• Product lifestyle extension strategies

  5. Product differentiation

  • Develop products with attractive design
  • Set prices 15% les than competitors
  • Ensure product has unique selling point
• Theory of price: An economic theory that states that the price for a specific good or service is determined by the relationship between its supply and demand at any given point
• Pricing:

  ✩Cost based

  • cost plus, markup, breakeven, target pricing & marginal cost

  ✩Demand based

  • Price skimming, price penetration

  ✩Competition based

  • Discount, premium, going rate

  ✩Other types

  • Target, value based, psychological, bundeled
• Price skimming: When a company charges the highest initial price that customers will pay and then lowers it over time
• Pros and Cons of Price skimming:

  Pros

  • Firms can increase profit and enable more research
  • Consumers who wait can benefit from lower prices
  • High price can help recoup investment costs of new product

  Cons

  • Consumers who pay high price may feel ripped off
  • Firm could lose market share if prices too high
  • It requires a degree of monopoly power
• Penetration Pricing: Offering a lower price initially to attract customers to a new product or service
• Pros and Cons of Penetration pricing:

  Pros

  • Setting low prices can be a marketing tool raising brand awareness
  • A quick way to gain market share and enter a competitive industry
  • It enables a firm to benefit from economies of scale
  • Overtime, prices can increase and the firm become more profitable

  Cons

  • It might involve selling at a loss for first few months
  • It is risky - if consumers have brand loyalty then may not switch- despite low prices
  • A firm needs to gear up with high output straight from the start
  • It might start a price war with existing firms cutting prices to discourage entry
• Competitive pricing: Pricing your product relative to a competitor's product on the market
• Pros and Cons of Competition based pricing:

  Pros

  • Selling at market rates
  • Customers will deem price fair
  • Minimal upfront risks

  Cons

  • Beware of " Race of the Bottom"
  • Might end up with less margin
  • Might diminish perceived value
• Promotional pricing:

  • Bundle pricing
  • Buy one Get one
  • Cashback
  • Discount
  • Advance payment discount