Transcript Marketing Mix - Itworkss.com

Marketing Mix
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Marketing mix
 It is sole vehicle for creating and delivering value.
 Consists of four elements
 Marketing mix enhances positioning and differentiating strategies
 Four elements of marketing mix are
Product
2. Price
3. Promotion
4. Place
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Marketing Mix
Marketing
mix
Product
Product variety
Quality
Design
Features
Brand name
Packaging
Sizes
Services
Warranties
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Target market
Price
List price
Discounts
Allowances
Payment period
Credit terms
Promotion
Sales promotion
Advertising
Sales force
Public relations
Direct marketing
Distribution
Channels
Coverage
Assortments
Locations
Inventory
Transport
Product
 The major component of marketing mix
 Includes decision making on
Product design, features, brand name, models, styles, appearance
Product quality
Package: design type, material, size appearance and labeling
Services: pre-sale and after-sale, service standards, service charges.
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Definition
 Product is anything that can be offered to a market to satisfy a
want or a need.
 These include physical goods, services, experiences, events,
persons, places, properties, organisations, information and ideas.
 Product time to time gain identity and personality of its own.
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Components of Product Personality
 The core or the basic constituent
 The associated features
 the brand name and logo
 The package and label
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Product levels: Customer Value
Hierarchy
Expected product
Basic product
Core
benefits
Augmented
product
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Potential
product
Product classification
 Product classification on the basis of durability and tangibility
Non durable goods- these goods are tangible and normally
consumed in one or few uses.
For e.g. soft drinks
2. Durable goods- these goods are tangible but survive many uses.
For e.g. refrigerators, automobiles
3. Services- intangible, inseparable, variable and perishable
For e.g. haircut, legal advice
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Product classification
 Consumer good classification on the basis of shopping habits
1. Convenience goods- frequently and immediately bought with
minimum effort
For e.g. soap, toothpaste, ketchup etc.
2. Impulse goods- purchased without planning or search effort.
For e.g. ice-cream, soft drinks
3. Emergency goods- purchased when need is urgent
For e.g. umbrella, insecticide spray
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Product classification
 Consumer good classification on the basis of shopping habits
4. Shopping goods- consumer uses the process of selection,
characteristically compares on the suitability, quality, price
and style.
For e.g. furniture, home appliances
5. Specialty goods- have unique characteristics or brand
identification for which a sufficient number of buyers are
willing to make a special purchasing effort.
For e.g. Mercedes Benz, Rolls Royce
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Product Classification
 Consumer good classification on the basis of shopping
habits
6. Unsought goods- those products which either consumer
does not know about or does not normally think of
buying
For e.g. encyclopedias, insurance policies
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Product classification
 Industrial goods classification-
Raw material- further classified into farm products and natural
products
 Farm products- include products like wheat, corm livestock,
fruits, vegetable etc .
These products are supplied by many producers, who turn them
over to marketing intermediaries
For e.g. dairy products like milk, curd, cheese etc.
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Product classification
 Industrial goods-Raw material
 Natural products- these products include iron ore, fish crude
petroleum, etc.
These products are limited in supply, and since the users usually are
dependent upon such products long term contracts happen.
By large the prices are regulated by the government.
For e.g. natural salt
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Product Classification
• Industrial goods-
Manufactured materials and parts- further classified into
component materials and component parts.
 Component materials- these products are once processed from
mostly natural products and are further required for processing
for final goods
Price, quality and reliability of the suppliers are the key factors.
For e.g. iron, yarn, wires etc..
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Product Classification
• Industrial goods- manufactured materials and parts
 Component parts- these products directly enter the finished
products with no further change in form.
These products are usually directly sold to the industry user
without any in intermediaries.
For e.g. motors in vacuum cleaner, nuts and bolts and tyres in
automobile.
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Product Classification
• Industrial goods classification
3. Capital items- these products are long lasting that
facilitate developing or managing the finished product.
These are further classified into installations and
equipment.
 Installations are major purchases and require long
negotiation period before decision making.
For e.g. factories, offices, generators, elevators
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Product Classification
 Industrial goods classification
 Equipment comprises portable factory equipment and tools as
well as office equipment.
These goods just facilitate or help in production of finished products.
For e.g. desk, PCs, coffee machine etc.
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Product- the first P of marketing mix
 The differentiation strategy starts with product. The
differentiation can be done in various ways.
 Form- most of the products are differentiated in form.
Form relates to the size, shape or physical structure.
For e.g. parachute name is synonymous with coconut oil. But
the brand differentiates itself by the unique shape and
different sizes of product and unique locking system of the
bottle.
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Product
 Features- products can be offered in varying features that
supplements its basic function.
Usually the features should be such that the competitors will
not be able to imitate or match with it.
For e.g. LG offers unique feature of Golden eye in its television
for better visibility.
 Performance quality-it is the level at which the product’s
primary characteristics operate.
The organization should design a performance level which is
appropriate to the target audience and competitors’
performance level.
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Product
 Conformance quality- degree to which all the produced unit are
identical and meet the promised specifications.
Buyers expect the product to have high conformance quality.
For e.g. Honda Activa, it is designed has conformance quality to
accelerate to 40 kmph within 6 sec.
 Durability-a measure of the product’s expected operating life under
natural or stressful conditions.
Buyers generally pay more for products which have reputation for
being long lasting.
For e.g. NOKIA cell phones.
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Product
 Reliability – it is the measure of the probability that a product will
not malfunction or fail within a specified time period.
Reliability is the major factor which helps in building a positive
brand image.
For e.g. NOKIA, CEAT
Reparability- it is the measure of the ease of fixing a product when it
malfunctions or fails.
Ideal reparability would be when user could fix the product
themselves.
For e.g CISCO who maintains a big list of FAQs for its consumers so
that they can repair the hardware by themselves. Every day a new
query comes then it is added as FAQ in the website which helps co
save $240 million on services.
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Product
 Style- it describes the product looks and feel to the buyer.
Aesthetics play a key role in building a brand image as well as
differentiating the product from the market.
Style has the advantage of creating distinctiveness that is
difficult to copy.
For e.g. Harley Davidson, Apple Computers
 DESIGN- design is the totality of features that effect how a
product looks and functions in terms of customer
requiremments.
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Product- service differentiation
 When physical product cannot be easily differentiated then
the key to competitive success may lie in adding value
services and improving service quality.
 The main service differentiators are:
 Ordering ease- refers to how easy it is for the customers to
place an order with the company.
The ease of ordering helps organization in identifying lateral
needs of the customers.
For e.g. Wockhardt has made tie up with Apollo pharmacy
shops for stocking and delivering the sugar testing stripes for
the diabetic patients, now customers just need to call the
pharmacy and order the stripes which are delivered at home
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Product- service differentiation
 Delivery – refers to how well the product or service is delivered
to the customer.
It also includes speed, accuracy and care attending the delivery
process.
For e.g. Domino pizza promises to deliver the pizza in 30 minutes
other wise the pizza is free for the customer.
 Installation – refers to work done to make a product operational
its planned location.
Differentiating at this point in the consumption chain is particularly
important for the companies with complex products.
For e.g. Tata sky installation are done by the trained staff within a day
of purchase of the services
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Product- service differentiation
 Customer training- refers to training the customers to use
the equipment properly and efficiently.
This particular aspect especially is for industrial goods but it is
more or less applicable to customer goods also.
For e.g. demo of how to use microwave,
Training certain employees in an organization on how to use
the elevators.
 Customer consulting- refers to data, information system and
advice services that the sellers offers to buyers.
for e.g. Share khan provides online services as well as send sms
to the customers who register themselves for stock market
advice
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Packaging
 All the activities of designing and producing a container for a
product.
 There are three levels of packaging
 Primary package- the container containing the product
 Secondary package- the cardboard or the paper cover
 Shipping package- usually used for transportation of goods
from one place to another.
Packaging depends on the kind of product and the durability of
the product.
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Packaging as a marketing tool
 Packaging helps differentiate the product.
 the various reason behind using packaging as a differentiating
tools are:
 Self service- earlier Indian consumers depended on small
retailers who bought the product from the wholesalers in
bulk and them further use to give customer a loose pack as
the retailer used to get a single bulk packing.
With shift in consumer preferences and behavior towards
owning a personal but sealed pack has made the difference.
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Packaging as a marketing tool
 Consumer affluence- consumer are willing to pay a little
more for the convenience, appearance, dependability and
prestige of better packages.
 Company and brand images- package contributes to instant
recognition of the company or the brand.
 Innovation opportunity-
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Packaging as a marketing tool
 Effective packaging must achieve a number of objectives like:
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3.
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Identify the brand
Convey descriptive and persuasive information.
Facilitate product transportation and protection.
Assist at-home storage
Aid product consumption
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Labeling, warranties and guarantees
 Label identifies, grades, describes and promote the product.
 Warranties are formal statements of expected product
performance by producer.
 Products under warranty can be returned to the
manufacturer or designated repair center for repair,
replacement or refund.
 Guarantees reduce the customers’ perceived risk. Guarantees
suggests that the products are of high quality and that the
company and its service performance are dependable.
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Product life cycle
 A company’s positioning and differntiation strategy must
change as the product, market, market demand and
competitors change.
 These changes occur because product also has a life cycle
which asserts following points:
1. Products have limited life.
2. Product sales pass through distinct stages, each posing
different challenges, opportunities and problems to the
sellers.
3. Profits rise and fall at different stages of life cycle.
4. Products require different strategies in each life cycle stage.
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Product life cycle
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GROWTH
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MATURITY
TIME
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Product life cycle-introduction stage
 Introduction – the stage where the product is introduced into
the market.
 In this stage the organization uses heavy promotions to
position the product in the minds of target market.
 The sales growth is slow and profits are non existent because
of the heavy expenses of product introduction.
 Sales growth is also slow because it takes time to roll out the
product, workout the technical problems, complete the
supply chain and gain consumer acceptance.
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Product life cycle-introduction stage
 Promotional expenditure are at their highest ratio to sales
because of the need to
1. Inform potential customers
2. Induce product trial
3. Secure distribution in retail outlets
 Companies must plan when to enter the market.
 Usually it is feasible to enter early and be the first to enter
the market as early pioneers like coca cola and
amazon.com have got the advantage of positive and strong
positioning in the target consumer’s mind.
 Prices are initially high to encounter the cost
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Product life cycle-introduction stage
 Early pioneers have risk as well as more expenses to deal
with.
 Another strategy is to enter late into the market only when,
when the organization can bring superior technology, quality
and brand strength.
 The product should be introduced in one segment rather
than targeting all the segments at once.
 This reduces the risk of “not meeting to the customer
expectation”
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Product life cycle- growth stage
 Growth - this stage is of rapid growth in terms of sales of the
product and profit.
 Early adopters like the product and additional potential
customer start buying the product.
 New competition enters the market looking into the market
growth of the existing company.
 Prices either remain same all they fall slightly.
 Promotional expenditures are high but now the target is to
counter the competition.
 As the sales rise so the sales- promotion ratio reduces
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Product life cycle- maturity stage
 Maturity stage- it is the stage where the sales growth slow
down.
 The product moves to the stage of relative maturity.
 The maturity stage is divided in to three stages:
1. Growth- the sales start to decline. There are no new
distribution channel to fill
2. Stable- sales flatten on per capita basis because of market
saturation.
3. Decaying maturity- the absolute level of sales start to
decline and customers begin to switch to another product.
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Product life cycle- decline stage
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