Transcript Market Planning

Market Planning
Unit 4.2 The Marketing Mix
Marketing Mix (8 P’s!)
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Product
Price
Place
Promotion
People
Process
Physical evidence
Packaging
Product
• Can be a physical good (e.g. a car) or
intangible service (e.g. a hair cut)
• Products fulfil the needs of the consumer
• What differentiates one product from
another are the collective and relative
customer benefits of purchasing that
product.
– E.g. the brand image, packaging, functions
and after sales care
Categories of products
• Producer products – these are products sold to other
business as supplies to further the production process
e.g. raw materials such as steel
• Consumer products – these are products sold to the
end user
– Convenience products – fast moving consumer goods
such as food
– Consumer durables – Long lasting goods such as
furniture
– Speciality products – Expensive products such as
diamonds
Product Line and Product Mix
• Product Line – collection of related
products e.g. different types of cars from
the same company
• Product Mix – the variety of products sold
by a company. This is when a company
sells more than one type of product such
as Apple (laptops, desktops, ipods, ipads,
iphones etc.
Price
• If a product is over priced then demand would
be less as consumers will feel they are being
‘ripped off’
• If the price is too low then the product may be
seen as inferior quality
• Economists define the ‘correct’ price as the
equilibrium price where buyers and sellers
agree on an appropriate price
• Buyers want value for money and sellers want a
price that exceeds their costs of production to
earn sufficient profit
Pricing decision depends on:
• Demand
– The higher the demand the higher the price tends to be
• Supply
– the lower the supply the higher the price, e.g. oil and also diamonds
• Business Objectives
– Non profit making businesses will see price in a different way to profit
making businesses
• Competition
– The more competition the more sensitive consumers are to price as
there are many substitutes to choose from
• Costs of production
– The higher the cost of production the higher the price tends to be
• Corporate Image
– Prestigious businesses can charge a higher price due to their image
Place
• This is how the product is distributed to the
consumer
• Channels of distribution which are the
intermediaries used to get a firm’s
products to consumers
• More detail on this in the next unit
Promotion
• Refers to the strategies used to attract
customers
• Above the line – promotional activities that
use mass media e.g. television and radio
• Below the line – Promotional tactics such
as packaging and direct mail
• More detail on this in the next unit
People (customer relations
management – CRM)
• The attitudes and aptitudes of employees will determine
the experience and quality of service
• Happy customers are more likely to stay loyal to the
business and use word-of-mouth promotion
• Good after sales service can gain customer a
competitive advantage
• Customer relations manager (CRM) involves setting
standards for good customer service
• CRM promotes customer lifetime value – the profitability
that can be gained during the lifetime of a positive
relationship with customers rather than the profits made
from a single transaction with the customer
• It can be argued that it is cheaper to keep existing
customers than to find new ones!
Process
• Process refers to the methods and
procedures used to give clients the best
possible customer experience
• Process can help to build customer loyalty
• Customers are constantly in search of
improved convenience
• It is inconvenient for customers to wait a
long time for items to be delivered to them!
Physical evidence
• This is the image portrayed by a business
(or perceived by customers)
• Businesses that offer services have to give
more attention to this than those who sell
products only
Packaging
• This refers to the way in which a product is
presented to the customer
• It’s a form of product differentiation
• Packaging is important when a product’s
design, functions or features cannot be
easily differentiated from others on the
market
Packaging is important in the
marketing mix because:
• Can have a profound impact on the customer
perceptions of the product or brand
• Acts as a form of differentiation
• Protects the product against damage during
transportation
• Labelling can be used to provide information
• Can make the distribution of products easier
• Encourage impulse buying
• Can be used for advertising the product
Limitations of packaging
• Cost
• Environmentalists will argue that marketing
creates excess packaging, at the cost to the
environment – e.g. plastic bags!
• Some argue that packaging is part of promotion
and should not be a separate part of the
marketing mix
• Packaging does affect costs, prices, customer
perceptions and consumer demand
Limitations of the marketing mix
• Cost – Does the business have the resources to
carry out its plans effectively? E.g. small
business may not be able to run a TV advert
• Competition – If one firm starts a advertising
campaign it can force others to do the same to
maintain market share
• New Technology – e.g. the use of social
networking sites allowing businesses to use
‘viral’ campaigns