3.3 THE MARKETING MIX

• Marketing mix


  The 4 key decisions that must be taken in the effective marketing of a product
• The 4Ps of the marketing mix

  • Product
  • Price
  • Promotion
  • Place (distribution channels)
• Product


  Anything that can be offered in a market for attention, acquisition, use, or consumption that might satisfy a need or want
• Product


  • Includes more than just "tangible goods", e.g. service, events, persons, places, organizations, ideas or mixes of these
  • Tangible attributes – measurable features that can be easily compared with other products
  • Intangible attributes – subjective opinions of customers about a product that cannot be compared or measured easily
• Consumer decisions are not always easy to weigh up or explain – which makes market research less accurate
• Marketing managers should recognise the product as a bundle of tangible and intangible attributes
• Meeting intangible expectations is commonly achieved by effective branding
• New product development


  1. Creating new ideas

  2. Idea screening

  3. Concept development & testing

  4. Product development

  5. Business analysis

  6. Product testing

  7. Test Marketing

  8. Commercialisation (National launch)
• New product development


  • For a new product to succeed it must: Have desirable features that consumers are prepared to pay for
  • Be sufficiently different from other products to make it stand out – having a "unique selling point"
  • Be marketed effectively to consumers – they need to be informed about it
• Idea generation


  1. From company's own R & D department

  2. Adaptation of competitors' ideas

  3. Market research – focus groups

  4. Brain storming by employees

  5. Complaints from customers

  6. Sales people

  
• Idea screening


  • Use check list to eliminate ideas that do not have a chance to be commercially successful: Customer need, Competing products, Technology, Marketable?, Cost of manufacturing, Price Vs competition, Performance Vs competition

  
• Concept Development & Testing

  1. Determine what features the product should have

  2. Concept testing refers to testing new-product concepts with groups of target consumers

  3. The concepts may be presented to consumers symbolically or physically
• Business Analysis


  1. Estimating costs

  2. Predict sales

  3. Manpower

  4. Will it fit in with the existing product mix?
• Product Development


  1. Concerned with the technical performance of the product and if it is likely to meet consumers' expectation

  2. Have a prototype of the product and test it

  3. Use focus groups to gather opinions about the product

  4. Adapt or change it after the information from the focus groups
• Test Marketing


  1. The launch of the product on a small-scale market to test consumers' reactions to it

  2. Actual consumer behaviour can be observed and measured

  3. Response from consumer will enable to calculate investing capital of manufacturing

  4. Greatly reduce new product failure
• Test Marketing


  • The idea is to duplicate 'everything' - promotion and distribution as well as `product' - on a smaller scale
  • The technique replicates, typically in one area (residential neighborhood), before launching it nation width
  • The results are very carefully monitored to help decide if the new product is worth Introducing in a full-scale basis

  
• Test marketing can be expensive
• Competitors are able to observe a firm's intentions & react – coming out with a copy before you!
• Keys to a successful new product

  • Number-one factor: UNIQUE, superior, differentiated product
  • Market-driven and customer-focused new product process
  • More predevelopment work before development gets under way
  • Sharp and early product definition
  • Execution of quality, consistency and completeness
  • Speed is everything
  • It is important to meet the new needs or wants of consumers
• Commercialization


  1. Full-scale launch of the product

  2. Promotion

  3. Distribution

  4. Correct pricing
• Adding Value


  Marketing is the added value on most products, the customers will pay for something the perceive is of better quality
• How Companies Add Value

  • Retail environment improvements creating an exclusive and luxurious environment
  • Packaging creates a Point of Difference (POD)
  • Promotion must have brand
  • Create a USP – differentiates your product from competitors
• Product differentiation


  Making a product distinctive so that it stand out from competitors' products in consumers' perception
• Unique selling point (USP)


  The special feature of a product that differentiates it from competitors' products
• Product Life Cycle (PLC)


  The pattern of sales recorded by a product from launch to withdrawal from the market
• Stages of the Product Life Cycle


  • Introduction
  • Growth
  • Maturity
  • Decline
• Introduction Stage


  • Firm seeks to build product awareness & develop a market for the product
  • Impact on 4Ps: Product - establish branding & quality level, patents, trademarks; Pricing - low penetration pricing or skim pricing; Place - selective; Promotion - aimed at innovators & early adopters
• Growth Stage


  • Firm seeks to build brand preference & increase market share
  • Impact on 4Ps: Product - quality is maintained & additional features & support services may be added; Pricing - is maintained as the firm enjoys increasing demand with little competition; Place - Channels are added as demand increases; Promotion - is aimed at a broader audience
• Maturity Stage


  • Strong growth in sales diminishes, competitors come out with similar products
  • Impact on 4Ps: Product - enhance differentiation from competitors; Pricing - may be lower due to new competition; Place - more intensive, incentive offer to middle men; Promotion - emphasizes product differentiation
• Decline Stage


  • Possible options: maintain the product, rejuvenate by adding new features or finding new uses; Harvest the product – reduce costs & continue to offer it; Discontinue the product – liquidating remaining inventory or selling it to another firm
• Extension Strategies


  Strategies that aim to lengthen the life of an existing product before the market demands a completely new product
• Maturity Stage


  • The strong growth in sales diminishes. Competitors come out with similar products. Objective at this stage is to defend market share while maximizing profit.
• Impact on 4 Ps in Maturity Stage

  1. Product - enhance differentiation from competitors

  2. Pricing - may be lower due to new competition

  3. Place - more intensive, incentive offer to middle men to encourage them to stick with your firm

  4. Promotion - emphasizes product differentiation
• Possible options in Decline Stage


  • Maintain the product
  • Rejuvenate by adding new features or finding new uses
  • Harvest the product - reduce costs & continue to offer it
  • Discontinue the product - liquidating remaining inventory or selling it to another firm
• Extension Strategies


  • Selling in new markets
  • Repackaging and relaunching the product
  • Finding new uses for the product
• Uses of product life cycle


  1. Assisting with planning marketing-mix decisions , such as a new product launches and price or promotion changes
  2. PLC helps to identifying how cash flow might depend on the cycle, also at which stage is profit earned
  3. Recognising the need for a balanced product portfolio
• Product portfolio


  The mix of products produced by a single firm
• New products involve heavy investment and mature products might only have a short life left to them
• Balanced product portfolio


  A variety of products at different stages in the life cycle
• Every product will eventually decline, therefore, it is very important to develop a new product to replace the aging ones