Transcript marketing mix - AIS-IB

Thought for the day:
“The aim of marketing is
to know and understand
the customer so well the
product or service fits him
and sells itself.”
Druker
Marketing Plan
4.2
Target
Learning Objective

Apply the elements of the marketing mix to given situations.
Discuss the effectiveness of a selected marketing mixin achieving
marketing objectives.
Construct an appropriate marketing mix for a particular product or firm.
Explain the value of a marketing audit as a business tool.
Identify possible target markets.

HL: Apply Porter’s five forces model to classify and analyse competitive
pressures in the marketplace.
Examine how appropriate the marketing objectives are in achieving the
goals of an organization.
Analyse the role of market research.
Analyse the usefulness of market segmentation and consumer profiles
Apply an appropriate marketing mix to the target market(s).
Construct a position map from given information.
Discuss how organizations can differentiate themselves and their products
from competitors.
HL: Develop and evaluate strategies designed to change customer
perceptions.
Analyse sales trends and forecasts from given data, and evaluate the
significance for marketing and resource planning.

Discuss the ethical issues of what is marketed and how it is marketed:
nationally, internationally and across cultures.
HL: Discuss the effectiveness of a selected marketing mix in achieving
strategic objectives.
Evaluate different methods of market research.
HL: Evaluate different methods of sampling, for example, quota, random,
stratified, cluster and snowballing.
Design or evaluate marketing strategies for given situations. Applyan
appropriate marketing mix to the strategy.
Who?
ALL
D
(AO1)
MOST
C-B
(AO2 & 3)
SOME
A
(A04)
Keywords
Starter:
What is a marketing Plan?
Play
Marketing objectives
• L/O: Examine how appropriate the marketing
objectives are in achieving the goals of an
organization.
Marketing objectives
•
•
•
•
Target of the marketing department.
- sense of purpose
- allow progress (monitored)
- Help with planning and developing
• E.g: market leadership, product positioning,
customer satisfaction, diversification, market
development, new product development,
product innovation, high market standing.
Marketing objectives
• L/O: Examine how appropriate the marketing objectives are in achieving
the goals of an organization.
Firms Goals:
• Growth
• Image/reputation
• Market standing
E.g: market leadership, product positioning, customer satisfaction,
diversification, market development, new product development, product
innovation, high market standing.
Target of the marketing department.
• - sense of purpose
• - allow progress (monitored)
• - Help with planning and developing
Marketing mix·
• The marketing mix is
probably the most
famous marketing term.
Its elements are the
basic, tactical
components of a
marketing plan.
Play
Marketing mix·
• product (including range of
pack sizes and/or flavours
or colours)
• price (long-term pricing
strategy and pricing
method)
• promotion (branding,
advertising, packaging and
sales promotions)
• place (choosing distribution
channels and seeking shop
distribution
Marketing mix·
•
•
•
•
•
•
•
•
Product·
Place·
Price·
Promotion·
People·
Process·
Physical evidence·
Packaging
Play
• L/O:
• Apply the elements of the marketing mix to given
situations.
• Discuss the effectiveness of a selected marketing mix
in achieving marketing objectives.
• Construct an appropriate marketing mix for a
particular product or firm.
• HL: Discuss the effectiveness of a selected
marketing mix in achieving strategic objectives.
Higher
Level
ACTIVITY
•
Pretend you are creating your own chocolate
Bar
1. Company name
2. Write your: Business Objectives
3. Write your: Marketing Objectives
Product
• Typically, a product is divided into three basic levels. The first
level is often called the core product, what the consumer
actually buys in terms of benefits.
• Next is the second level, or actual product, it consists of the
brand name, features, packaging, parts, and styling.
• The final, or third, level of the product includes additional
services and benefits that surround the first two levels of the
product.
Examples are technical assistance in operating the product and
service agreements.
• The Product Life Cycle (PLC)
• The Boston Matrix
• Ansoff’s Matrix
The Product Life-Cycle
• After a period of development it is introduced or launched into the
market; it gains more and more customers as it grows; eventually the
market stabilises and the product becomes mature; then after a period of
time the product is overtaken by development and the introduction of
superior competitors, it goes into decline and is eventually withdrawn.
The Boston Matrix
• The Boston Matrix:
– A means of analysing the product portfolio and informing
decision making about possible marketing strategies
– Developed by the Boston Consulting Group – a business
strategy and marketing consultancy in 1968
– Links growth rate, market share and cash flow
The Boston Matrix
•
•
•
•
•
•
•
•
Dogs.
These are products with a low share of a low growth market. These are the
canine version of 'real turkeys!'. They do not generate cash for the company,
they tend to absorb it. Get rid of these products.
Cash Cows.
These are products with a high share of a slow growth market. Cash Cows
generate much more than is invested in them. So keep them in your portfolio
of products for the time being.
Problem Children/Question Mark
These are products with a low share of a high growth market. They consume
resources and generate little in return. They absorb most money as you
attempt to increase market share.
Stars.
These are products that are in high growth markets with a relatively high
share of that market. Stars tend to generate high amounts of income. Keep
and build your stars.
Ansoff’s Matrix
ACTIVITY TASK
• Describe the packaging of your
bar
• Describe your chocolate bar and
the product life cycle
• Describe your chocolate bar and
the Boston Matrix
• Describe your chocolate bar and
the Ansoff’s Matrix
• Advantage of developing/having
a brand (brand
awreness/development/loyalty)
•L/O Apply the elements of
the marketing mix to given
situations.
PRICE
Price
• The choice of pricing strategies will depend to some
extent on the long-term objectives of the business
for example;
– Making a profit
– Pricing to keep the competitors out of the market
– Pricing which positions the company at the luxury end of
the market
– Pricing to maximise sales and make the business a market
leader
• The following are short-term pricing strategies which
can be used
Research the following price strategies, state
when they would be appropriate to use.
•
•
•
•
Cost-plus
Price leadership
Penetration
Skimming
Some different pricing strategies
Premium Pricing.
• Use a high price where there is a uniqueness about the product or service. This
approach is used where a a substantial competitive advantage exists. Such high
prices are charge for luxuries such as Cunard Cruises, Savoy Hotel rooms, and
Concorde flights.
Penetration Pricing.
• The price charged for products and services is set artificially low in order to gain
market share. Once this is achieved, the price is increased.
Economy Pricing.
• This is a no frills low price. The cost of marketing and manufacture are kept at a
minimum. Supermarkets often have economy brands for soups, spaghetti.
Price Skimming.
• Charge a high price because you have a substantial competitive advantage.
However, the advantage is not sustainable. The high price tends to attract new
competitors into the market, and the price inevitably falls due to increased supply.
Manufacturers of digital watches used a skimming approach in the 1970s. Once
other manufacturers were tempted into the market and the watches were
produced at a lower unit cost, other marketing strategies and pricing approaches
are implemented.
ACTIVITY TASK
• decide on the pricing strategies for your
chocolate bar
• Justify your decisions by mentioning your aims
and objectives, your research and target
audience
Promotion
Promotion
• This element of the 4 Ps of marketing focuses
on communicating with your customer.
• It consists of a blend of advertising, personal
selling, sales promotion and public relations
tools.
1) Advertising
•Any paid form of non-personal communication of ideas or products in the "prime media":
i.e. television, newspapers, magazines, billboard posters, radio, cinema etc. Advertising is
intended to persuade and to inform. The two basic aspects of advertising are the message
(what you want your communication to say) and the medium (how you get your message
across)
(2) Personal Selling
•Oral communication with potential buyers of a product with the intention of making a sale.
The personal selling may focus initially on developing a relationship with the potential
buyer, but will always ultimately end with an attempt to "close the sale".
(3) Sales Promotion
•Providing incentives to customers or to the distribution channel to stimulate demand for a
product.
(4) Publicity
•The communication of a product, brand or business by placing information about it in the
media without paying for the time or media space directly. otherwise known as "public
relations" or PR.
Key questions for Promotion
• What are our objectives from advertising (increase
sales, branding, improve image)?
• Who is the target market / audience?
• What image do we want to portray?
• Which Method of promotion will best reach our
target audience?
• Will to additional cost of advertising actually
generate enough sales to pay for itself?
Pg 296
Above the Line
(paying for communication with
consumers)
•Advertising
•-informative
•-Persuasive
•The bigger the firm the bigger the
budget
•Choose the right media – cost, target
audience. Type of product and message,
other of the 4 Ps, Law & constraints).
Below the line
(not directly paid for, short term
incentives)
•Sales promotions – special offers, deals.
•Leads to short term increase in sales.
•Price deals, loyaty cards, coupons, point
of sale dsplays, BOGOF, games and
promotions, PR, sponsorship.
The Promotion mix
• The combination of promotion techniques
that a firm uses to communicate the benfits of
its products to its customers.
• The wider market mix.
• Blanace ads, sales promotion, direct
marketing and personal selling in a planned
and structured way.
• 8 steps (pg 297)
ACTIVITY TASK
• Decide the Promotion Mix for your chocolate
bar.
• Make sure you justify your promotional
decisions.
How the promotional mix may vary
over the life cycle of a product
• Pg 300
PLACE
Objective: discuss different
distribution channels and assess their
appropriateness in different
circumstances.
Place
• Place is also known as channel, distribution,
or intermediary. It is the mechanism through
which goods and/or services are moved from
the manufacturer/ service provider to the user
or consumer
Definition of Place
• The place element of the marketing mix involves decisions
about the location in which goods & services can be
purchased
• The distribution channels through which they pass from
producer to final user, and the physical distribution methods
used
Why the choice of distribution channel is
important (pg 300)
Intermediaries
•
•
•
•
•
These are groups that operate between producers &
consumers on a number of different channel levels. They
include:
Agents
Wholesalers
Distributors
Dealers
Retailers
Typical marketing channels for consumer
product
• Channel strategy (pg 300)
• Factors influencing choice (pg 300)
• Appropriate channels (pg 301 – 302)
ACTIVITY TASK
• Explain which distribution channel is suitable
for your chocolate bar, and why
•L/O Apply the elements of
the marketing mix to given
situations.
Target
Learning Objective

Apply the elements of the marketing mix to given situations.
Discuss the effectiveness of a selected marketing mixin achieving
marketing objectives.
Construct an appropriate marketing mix for a particular product or firm.
Explain the value of a marketing audit as a business tool.
Identify possible target markets.

HL: Apply Porter’s five forces model to classify and analyse competitive
pressures in the marketplace.
Examine how appropriate the marketing objectives are in achieving the
goals of an organization.
Analyse the role of market research.
Analyse the usefulness of market segmentation and consumer profiles
Apply an appropriate marketing mix to the target market(s).
Construct a position map from given information.
Discuss how organizations can differentiate themselves and their products
from competitors.
HL: Develop and evaluate strategies designed to change customer
perceptions.
Analyse sales trends and forecasts from given data, and evaluate the
significance for marketing and resource planning.

Discuss the ethical issues of what is marketed and how it is marketed:
nationally, internationally and across cultures.
HL: Discuss the effectiveness of a selected marketing mix in achieving
strategic objectives.
Evaluate different methods of market research.
HL: Evaluate different methods of sampling, for example, quota, random,
stratified, cluster and snowballing.
Design or evaluate marketing strategies for given situations. Applyan
appropriate marketing mix to the strategy.
Who?
ALL
D
(AO1)
MOST
C-B
(AO2 & 3)
SOME
A
(A04)
Keywords
Your Market Mix
• You have now Constructed an appropriate marketing mix for a
particular product or firm.
• Plan your presentation.
L/O:
.
Construct an appropriate
marketing mix for a particular
product or firm.
Your Market Mix
• Discuss the effectiveness of the selected marketing mix in
achieving the stated marketing objectives.
L/O:
Discuss the effectiveness of a
selected marketing mix in
achieving marketing objectives.
Exam Question
Individually
Level 4
Peer Assess
Teacher Assess
Nov
Level 2
2006
Explain: ‘Describe with
reason.’
-”The reason for this is…”
SL paper
Q2
(a)
(c)
(d)
Level 4
Discussion: ‘Investigate by
reasoned argument.’
-”After considering both
sides, in my opinion it would
be…”
Level 4
Evaluate: ‘Make a reasoned
decision.’
-”After considering both
sides, in my opinion it would
be…”
Ethics of marketing
• L/O: Discuss the ethical issues of what is
marketed and how it is marketed: nationally,
internationally and across cultures.
Ethics of marketing
• Ethics are a collection of principles that underpin
decision making.
• Ethics refers to the study of moral principles, or
“right and wrong”,
• therefore marketing ethics is all about marketers
doing the “right thing”.
• Exactly what the right thing is, is not always
completely clear-cut since what is “right” may vary
depending on whether you are looking at it from the
perspective of the company, its customers or the
society in which they both exist.
Ethics of marketing
There are however several basic principles involved in ethical
marketing :
• Taking responsibility : marketers need to take responsibility
for their products and their decisions. In the past marketers
have often responded to social concern about particular
products by defending them on the basis of “It was what the
customer wanted”;
• Dealing fairly : marketers need to be honest and fair in their
dealings with all stakeholders. This means that products must
be fit for use and accurately described, and contracts (both
formal and implicit) should be drawn up in good faith and
honoured;
• Respecting consumer rights : including the right of redress,
the right to information and the right to privacy;
Ethics of marketing: Marketing can fall foul of
accusations of unethical behaviour in a number of ways…
•
•
•
•
Misleading,
false claims.
Price
comparisons.
Failing to
mention
conditions of
sale.
Advertise a
short term
price (and not
mention when
it ends).
‘Door stepping’ –
turning up at
someone's home
and trying to get
them to switch
companies (e.g
gas).
Commissionbased sales may
make staff ‘bully’
home owners.
Cheap suppliers
Selling the product based on something other
than the product itself e.g. Sex appeal or fear.
Ethics of marketing
• In marketing ethics particular emphasis is
given to safeguarding the interests of
vulnerable consumers, such as children and
the elderly.
Ethics of marketing
• In practice many companies and organisations
have attempted to deal with issues of
marketing ethics by developing codes of
conducts. A good example of a clear code of
marketing conduct is the Canadian Marketing
Association’s code on information-based
marketing.
Ethics of marketing
• Business must also consider the international
aspects of marketing ethics.
• Business wish to save money by running the
same ads globally.
• Need to consider the ads may be perceived
differently in different countries.
Activity
Discuss
Choose an industry you
are interested in.
-Which of the elements of
the marketing mix are
most important to
businesses in this
industry? Why?
What limits the
organisations to market
directly to children?
TOK
• Is it unethical for an organisation to market
directly to children.
Ethics of marketing
• Children are a vulnerable group (not being
able to tell the difference between a TV
program and advertising).
• Sweden has banned advertising for children
under the age of 12.
• Sweet shops must place sweets out of the
reach of little children to avoid ‘pester power’.
Marketing audit
• L/O: Explain the value of a marketing audit as
a business tool.
Marketing audit
• Businesses will want to assess the balance of
their marketing mix continually.
• A Marketing audit looks at the cost
effectiveness of a marketing activity on a
periodic basis.
• It will consider the internal and external
environment in order to identify the firms
strengths and weaknesses, Opportunities and
threats facing the business.
• RECAP:
• SWOT
analysis.
• Play
Marketing audit
• Business must consider their SWOT factors
and try to find ways of using their marketing
activity to maximise their strengths and
minimise the damage caused by threats.
• By matching strengths and opportunities,
firms can get a clear direction for the future
success of the business.
Higher Level
•
Porter’s five forces
L/O: Apply Porter’s five forces model to classify and analyse competitive
pressures in the marketplace.
• Play
Market research·
• Role of market research·
• Primary and secondary
research
L/O:
• Analyse the role of
market research.
• Evaluate different
methods of market
research.
Activity
In pairs
Discuss
What are the advantages and
disadvantages of
•Primary
•Secondary
Research.
• Quantitative market
research
• Qualitative market
research
Pg 192
Clarke
Higher
Level
Higher Level
Sampling Methods of sampling
Limitations of sampling, Sampling
errors
• L/O: Evaluate
different methods
of sampling, for
example, quota,
random, stratified,
cluster and
snowballing.
Activity
In pairs
Discuss
Research – advantages and
disadvantages of each types of
research
Exam Question
Individually
Level 4
Peer Assess
Teacher Assess
Nov
2006
SL paper
Q1
Level 1
Describe: ‘Give an
account.’
-”Tell a simple story…”
Level 2
Explain: ‘Describe with
reason.’
-”The reason for this is…”
(d)
Level 3
Analyse: ‘Divide and
break down.’
-”The reason for the
situation are many and can
be explained by…”
Market segmentation and consumer
profile
• L/O: Analyse the usefulness of market
segmentation and consumer profiles.
Market segmentation
Define: A market segment is a sub-set of a market made up of people or
organizations with one or more characteristics that cause them to demand
similar product and/or services based on qualities of those products such as
price or function.
Pg 194
Clarke
Consumer profiles
Define:
Pg 195
Clarke
NICHE VERSUS MASS
MARKETING
Definition
• Mass Marketing means devising products with
mass appeal and promoting them to all types
of customers.
• This limits the sales potential but makes the
product more attractive to those in the target
group.
Mass Marketing
• Mass marketing is the attempt to create products or
services that have universal appeal.
• Rather than targeting a specific type of customer,
mass marketing aims the product at the whole
market.
• The intention is that everyone should be a consumer
of the product.
Mass Marketing
• Coca Cola is a good example of a firm that
uses mass marketing techniques.
• The company aims its product at young and
old alike. Its goal has always been to be the
market leader, and it still is today.
• The ultimate goal of mass marketing is to
achieve market domination.
• The ultimate prize of mass marketing is the
creation of generic brands.
Generic Brands
• These are brands that are so
closely associated with the
product that customers treat
the brand name as if it were a
product category.
• Examples include Hoover
(vacuum cleaner) and Bacardi
(white rum).
The Origins of Mass Marketing
• Mass marketing started alongside mass production
at the turn of the twentieth century.
• The architect was Henry Ford and the product was
the Model T.
• Ford decided that he wanted to see every American
family owning a Ford car.
• To do this profitably Ford had to revolutionise the
way that cars were produced.
The Origins of Mass Marketing
• By producing a standardised product from
standardised parts Ford was able to reduce his costs
and cut its prices.
• As prices were cut, sales rose and more American
families bought the Ford car.
• Ford’s mass marketing and mass production
strategies had given the company over 50% of the
US car market.
The Origins of Mass Marketing
• If mass marketing is carried out successfully it can be
highly profitable.
• Even today many firms still set out to be high
volume, low margin operators and achieve
handsome profits.
• It is important to note that mass marketing does not
have to go hand in hand with low prices.
The Origins of Mass Marketing
• For example, Calvin Klein, producer of CK
One, took the decision to target its latest
fragrance at the mass market.
• First, by taking the unusual step of aiming its
latest fragrance at both men and women the
target market was doubled at a stroke.
The Origins of Mass Marketing
• The decision to attract the mass market was also
evident in terms of distribution policy.
• Calvin Klein decided to sell the fragrance through
record shops as well as the more traditional
distribution outlets of boutiques and department
stores.
• The company’s mass marketing strategy was
vindicated by phenomenal sales and profitability.
The Origins of Mass Marketing
A highly effective advertising campaign featuring the
supermodel Kate Moss provided the necessary
Product Differentiation to sell high sales volumes
without the need to cut prices.
Ford’s Virtuous Reinforcing Circle
Low Costs
Increased Sales
Which
created
Which in turn
created
Low Prices
Niche Marketing
• A market niche is a small segment of a larger market.
• Niche marketing is the process by which firms
attempt to, first, find and then exploit new or underserved market sectors.
• It involves aiming at a relatively small target market
with a specialised product designed to meet the
specific needs of that niche.
Niche Marketing
• Firms using niche marketing need high prices
to compensate.
• Therefore, the product must be highly
differentiated and highly valued by the niche it
is aimed at.
Niche
Marketing
Niche Marketing
•
There are many reasons why firms in the motor
industry have chosen to adopt niche marketing
strategies.
a) Niche markets can act as safe havens for small
firms.
b) In the mass market the small firms will always
struggle against the economies of scale of larger
firms.
Niche Marketing
• To survive, small firms often operate in niches that
are too small for large firms to be interested.
• Large firms may switch to a niche marketing
approach when a market has stopped growing.
• In a mature market the only to gain further sales is to
take market share from competitors.
Niche Marketing
• Niche marketing can also be used to help improve
the sales of mass market products sold by the same
manufacturer.
• Jaguar launched the high performance XJ220 partly
to provide additional glamour to the family brand
name.
• Niche market products can be highly profitable in
their own right.
Niche Marketing
• The effect on the overall company profits can
be even more substantial.
• The XJ220 created a ‘halo effect’ that added
value and sales volume to the more
established Jaguar models.
How do firms go about identifying new
market niches?
• The approach used to identify niche markets
varies from company to company.
• If possible be closed to your own market.
• Small firms may have an advantage over larger
firms in terms of identifying market niches.
Niche Marketing
• Many ideas for niche market products come
from direct customer feedback at the point of
sale.
• Small specialist firms are often run by
enthusiasts.
Niche Marketing
• Utilise modern secondary market research
information.
• Both manufacturers and retailers have always been
keen to exchange sales figures in order to gain
valuable market intelligence information.
• The fact that many shoppers use retail loyalty cards
has added even more value to this data.
• Databases can now be merged and cross-referenced
so that retailers and manufacturers know not only
what has been sold but also the identity of the buyer.
• Knowing the identity of the potential buyer is vital
for targeting promotions.
Evaluation
• Which is better, Mass or Niche Marketing?
• It depends really!!!
• In the bulk ice-cream market, large packs of icecream have become so cheap that little profit can be
made.
• Therefore, it is better to be in the Niche market, e.g.
Haagen Dazs, Tom & Jerry, etc.
Your Market Mix
• Would your product of been Niche or Mass?
• Conventional businesses such as Heinz,
Kellogg’s and even Chanel show that mass
marketing does not have to mean devaluing a
brand name.
Activity
In pairs
Discuss
Think of an organisation you are
familiar with:
What are the advantages and
disadvantages of using primary
and secondary research
Positioning
• If a business wishes to target
a niche, it will find it useful to
analyse the current state of
the market. Market or
position maps allow the
business to see where
existing brands are aimed
and identify potential
profitable niches in the
market.
• Pg 195 Clarke.
Activity
In pairs
Discuss
Draw a position map for
the chocolate bar
industry
Is this useful?
Positioning
Unique selling propositions (USP)
• USPs are key in protecting a niche once a
business has identified it.
• If a product doesn’t have something special or
different about it, customers may be easily
tempted away by rival products.
• Companies spend a lot of time and money
ensuring that their product is clearly
differiated both in the design and branding.
Targeting
• L/O:
• Identify possible target markets.
• Apply an appropriate marketing mix to the
target market(s).
Positioning·
• Corporate image· Position/perception maps·
Unique selling point/ proposition (USP)
• L/O: Construct a position map from given
information.
• Discuss how organizations can differentiate
themselves and their products from
competitors.
• HL: Develop and evaluate strategies
designed to change customer perceptions.
Sales forecasting and Trends ·
Seasonal, cyclical and random
Higher
variation
Level
• L/O: Analyse sales trends and forecasts from
given data, and evaluate the significance for
marketing and resource planning.
Development of marketing strategies
and tactics
• L/O: Design or evaluate marketing strategies
for given situations. Apply an appropriate
marketing mix to the strategy.