Transcript Price
The term 'marketing mix' was first used in 1953 when Neil Borden, in his American Marketing Association presidential address, took the recipe idea one step further and coined the term "marketingmix". A prominent marketer, E. Jerome McCarthy, proposed a 4 P’s classification in 1960, which has seen wide use. Marketing Mix is a combination of marketing tools that a company uses to satisfy their target customers, and achieving organizational goals. McCarthy classified all these marketing tools under four broad categories: Product Price Place Promotion These four elements are the basic components of a marketing plan and are collectively called 4 P’s of marketing. All marketing decision-making can be classified into four strategy elements, sometimes referred to as the marketing mix or the four P’s. Product: What are the benefits of this product and service to its customers? Price: Should this product and service be free or funded by a grant? Should a price be charged to cover costs only? Should the price allow for a profit? Place: What can be done to make this product and service more accessible and available? Promotion: What can be done to increase the visibility of this product and service? What can be done to increase its usage or exposure? Value perceived in the mind of the consumer Marketing communications Cover location, distribution, channels and logistics Collection of features and benefits that provide customer satisfaction Product is the actually offering by the company to its targeted customers which also includes value added stuff. Product may be tangible (goods) or intangible (services). For many a product is simply the tangible, physical entity that they may be buying or selling. While formulating the marketing strategy, product decisions include: What to offer? Brand name Packaging Quality Appearance Functionality Accessories Installation After sale services Warranty The CORE product is NOT the tangible, physical product. You can't touch it. That's because the core product is the BENEFIT of the product that makes it valuable to you. So with the car example, the benefit is convenience i.e. the ease way at which you can go where you like, when you want to. Another core benefit is speed since you can travel around relatively quickly. The ACTUAL product is the tangible, physical product. You can get some use out of it. Again with the car example, it is the vehicle that you test drive, buy and then collect. The Product Life Cycle (PLC) is based upon the biological life cycle. For example, a seed is planted (introduction); it begins to sprout (growth); it shoots out leaves and puts down roots as it becomes an adult (maturity); after a long period as an adult the plant begins to shrink and die out (decline). Price includes the pricing strategy of the company for its products. How much customer should pay for a product? Pricing strategy is not only related to the profit margins but also helps in finding target customers. Pricing decision also influence the choice of marketing channels. Price decisions include: Pricing Strategy (Penetration, Skim, etc) List Price Payment period Discounts Financing Credit terms Using price as a weapon for rivals is as old as mankind, but it’s risky too. Consumers are often sensitive for price, discounts and additional offers. Another aspect of pricing is that expensive products are considered of good quality. Price is one of the most complex marketing decisions. It plays a number of roles in most marketing strategies: it can be a key component in product image (quality); a powerful sales promotion tool; or a versatile element in competition. Determining pricing strategy is a delicate task. It requires that you assess customer demand and analyze cost in order to choose a price that will create customer satisfaction and yield a satisfactory level of profit. Pricing is related to the goals and objectives of your organization. What are the objectives for your library? Are you a profit making institution or is cost recovery your goal? One thing is clear, nothing is free anymore, especially information. When thinking about pricing, you must consider all costs associated with any given product. The final price is a marketing decision. It not only includes the place where the product is placed, all those activities performed by the company to ensure the availability of the product tot he targeted customers. Availability of the product at the right place, at the right time and in the right quantity is crucial in placement decisions. Placement decisions include: Placement Distribution channels Logistics Inventory Order processing Market coverage selection of channel members There are many types of intermediaries such as wholesalers, agents, retailers, the Internet, overseas distributors, direct marketing (from manufacturer to user without an intermediary), and many others. Promotion includes all communication and selling activities to pursuade future prospects to buy the product. Promotion decisions include: Advertising Media Types Message Budgets Sales promotion Personal selling Public relations/publicity Direct marketing Sponsorship The elements of the promotions mix are integrated to form a coherent campaign. As with all forms of communication. As these costs are huge as compared to product price, So it’s good to perform a break-even analysis before allocating the budget. It helps in determining whether the new customers are worth of promotion cost or not. Marketing mix (4 P’s) was more useful in early 19’s when production concept was in and physical products were in larger proportion. Today, with latest marketing concepts, marketing environment has become more integrated. So, in order to extend the usefulness of marketing mix, some authors introduced a fifth P’s and then seven P’s (People, Packaging, Process). But the foundation of Marketing Mix still stands on the basic 4P’s.