Section 3 - Marketing Mix and Strategy

• Marketing Mix


  The four key components of the marketing strategy: product, promotion, pricing, and place
• Design Mix


  The three components of product design: function, aesthetics, and cost
• Components of the Marketing Mix


  • Product
  • Promotion
  • Pricing
  • Place
• The best marketing strategy for a business will depend on the type of market it operates in
• Functionality


  • The product must be fit for purpose and meet the needs of the consumer
• Aesthetics


  • The design of the product must be aesthetically pleasing
• Cost


  • The design shouldn't be so complicated or use such expensive materials that it's too costly to produce
• Changing social trends


  Can influence the design mix of products
• Changes to product design


  • PG tips tea bags using plant-based materials
  • Starbucks selling reusable coffee cups
• Consumers are increasingly demanding that raw materials should be ethically sourced
• Ethically sourced materials help to preserve the environment and protect local communities
• Consumers may choose one producer over another if its products are recyclable, reusable, or use ethically sourced ingredients
• Promotion


  Designed to inform consumers about a product and persuade them to buy it
• Promotional objectives


  Increasing sales and profits, and increasing awareness of the product
• Promotional media


  • Print
  • Film
  • TV
  • Radio
  • Billboards
• Digital communications


  Online adverts, social media, mobile phone advertising
• Many customers are exposed to a large number of digital ads and may ignore them
• Impact of an ad

  Larger ads have more impact than smaller ones
• Specialist media


  Used to advertise specialist products to niche markets
• Businesses need to follow legal constraints on advertising some products
• Other promotional methods


  • Sales promotions
  • Direct marketing
  • Personal selling
  • Event sponsorship
  • Public relations
• Corporate branding


  How a business presents itself
• Product branding


  Branding of specific individual products
• Own branding


  Brands that are in-house to a supermarket or retailer
• Rebranding


  A marketing strategy that can involve changes to the design, promotion, pricing or distribution of an existing brand
• Benefits of strong branding


  • Adds value to the product
  • Makes the product less price elastic
  • Creates a barrier to new entrants
• Unique Selling Point (USP)


  A feature that helps differentiate a product and convince consumers to buy it
• Emotional branding


  Branding that matches the lifestyle, values or aspirations of consumers to trigger an emotional response
• Businesses need to understand the values and purchasing behaviour of consumers to be successful at emotional branding
• Businesses may need to do market research to understand consumer values and behaviour
• Penetration Pricing


  Launching a product at a low price in order to attract customers and gain market share
• The price


  Often set to cover the cost of making the product or buying it from a wholesaler and to make a profit
• The price


  Must be acceptable to customers, depends on how price sensitive the target market is
• A factor that affects pricing decision is price elasticity of demand:

  Influences the pricing of a product, depends on availability of substitutes, type of product, whether it's an expensive purchase, and the strength of the brand
• The stage of the product life cycle

  Will also affect pricing decisions, e.g. if sales are declining then the price may be reduced
• The price


  Has to be in line with the business objectives, e.g. increasing market share, maximum profit, or maintaining brand image
• The level of competition in the market


  Influences pricing decisions, the price is set above competitors without being uncompetitive, but not too far below major players
• A product with a strong USP


  Would be able to command a higher price because it is highly differentiated from any competitor product
• Price Skimming


  1. New and innovative products are sold at high prices when they first reach the market

  2. Prices are then dropped considerably when the product has been on the market for a year or so

  3. Some businesses use price skimming as a long term strategy to keep their brands more exclusive
• Price Skimming


  • Consumers will pay more because the product has scarcity value, and the high price boosts the product's prestige and increases its appeal
  • Potential customers can be put off by the initial high price and customers who bought the product at the initial price may be annoyed and frustrated when it suddenly drops in price after launch