The marketing mix
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This document provides an introduction to key marketing concepts including the 4Ps of marketing (Product, Price, Place, Promotion), the marketing mix, and the importance of understanding customer needs. It explains that marketing involves researching customer needs, designing products to meet those needs, setting prices, promoting products, and making products available where customers can access them. The goal of marketing is to satisfy customer needs and wants in a profitable way for the business.
The marketing mix
- 1. Problem Solving Introduction to Marketing concepts 1 Andrew Triganza Scott MBA (Maas), M.Ed (Melit), B.Psy (Hons) PGCE
- 2. Marketing What you’ll learn... What is marketing? What is the marketing mix? What does it involve? 2
- 4. Marketing in the 21 century WHY 4
- 5. What is marketing? • Marketing… – is not ADVERTISING – is not SELLING – is not PROMOTION • “The aim of marketing is to make selling unnecessary.” Peter Drucker (1973) 5
- 6. What is marketing? • Businesses need to sell products if they are to achieve their objectives. • Marketing is about ensuring that businesses can sell as many products as possible in order to make profits. 6
- 7. What does it involve? • Marketing is a very complex concept. • It involves: • Research • Product design • Setting prices • Making sure the customer knows about products • Choosing how and where to sell 7
- 8. Why is it needed? • Each year millions of new products are launched: Without careful marketing these products would fail 8
- 9. “Marketing is the science and art of exploring, creating and delivering value to satisfy the needs and wants of a target market maintaining loyalty at a profit.” Professor Philip Kotler 9
- 10. Needs Eat, Dress, Move Wants Cheeseburger, Tuxedo, Car Marketer 10
- 11. This Is Demand “Demand” Wants Buying Power 11
- 12. First Task: Detect Needs 12
- 13. Organization’s marketing focus Discover consumer needs Information about needs Potential consumers: The market Marketing’s first task: Discovering Consumer Needs 13
- 14. What is a Market? Potential consumers make up a market, which is: 1. People 2. with the Desire and 3. with the Ability to Buy a specific product. 14
- 15. Organization’s marketing focus Concepts for products Discover consumer needs Information about needs Potential consumers: The market Satisfy consumer needs Find the right combination of: • Product • Price • Promotion • Place Goods, services, ideas Marketing’s Second Task: Satisfying Consumer Needs 15
- 16. The Target Market Because the organization obviously can’t satisfy all consumer needs, it must concentrate its efforts on certain needs of a specific group of potential consumers This is the target market -- one or more specific groups of potential consumers toward which an organization directs its marketing programme 16
- 18. Marketing Vs Sales Is there a difference? 18
- 19. The Marketing Concept • Organizations must concentrate on the customer and not the product or the company • Organizations should revolve round the customer and not the other way around • The purpose of a business is to create and keep a customer 19
- 20. The Selling Concept • Focuses on matching your product or service features and benefits in a way that suits the prospect sales • process is any thing that you do to close the sale and get signed agreement or contract • It is any thing that engages you with the prospect or customer on a personal level rather than at a distance 20
- 21. The Major Role of Marketing and Selling People DO NOT buy products people buy 21
- 24. Relationship Marketing Relationship marketing is linking the organization to its individual customers, employees, suppliers, and other partners for their mutual long-term benefits. Mutual long-term benefits between the organization and its customers require links to other vital stakeholders-- including suppliers, employees, and “partners” such as wholesalers or retailers in a manufacturer’s channel of distribution. 24
- 25. How Marketing became so important? 25
- 26. Production era Sales era Marketing concept era SocietalMarketing era 1860 1880 190019201940 1960 1980 2000 Four different orientations in the history of business 26
- 27. The Marketing Mix The marketing mix is the combination of variables that a business uses to carry out its marketing strategy and meet customer needs. The marketing mix is often called the 4Ps: • Product • Price • Place • Promotion 27
- 28. The Marketing Mix • The tools available to a business to gain the reaction it is seeking from its target market in relation to its marketing objectives • 7Ps – Price, Product, Promotion, Place, People, Process, Physical Environment • Traditional 4Ps extended to cope with today's changing environment 28
- 30. Product 30
- 31. Product • Product’ refers to the functions and features of a good or service • Should satisfy the needs of the customer • May have a Unique Selling Proposition (USP) • ‘Product’ also includes a range of factors such as packaging, quality, warranties, after-sales service and branding 31
- 32. Product • The firm must come up with a product or service that people will want to buy. • It must fulfil some need or want. • It must be (or at least seem) unique. 32
- 33. Product • Methods used to improve/differentiate the product and increase sales or target sales more effectively to gain a competitive advantage e.g. – Extension strategies – Specialised versions – New editions – Improvements – real or otherwise! – Changed packaging – Technology, etc. Image copyright: www.freeimages.co.uk 33
- 34. The Product Life Cycle • The product lifecycle looks at the sales of a product over time 34
- 35. Stages in the Product Lifecycle Development – high costs but no sales Launch – high expenditure on promotion and product development, low sales Growth – sales increase and product should break-even Maturity – sales stabilise, less expenditure on promotion needed, revenue & profit should be high Decline – sales decline, extension strategies can be adopted or the product withdrawn 35
- 36. Extension Strategies Extension strategies should maintain or increase sales. They include: • Modifying the product • Reducing the price • Adding a feature • Promoting to a different market sector 36
- 37. Product or service or brand Core Product Actual Product Augmented Product BMW Freedom to travel A motor car Hilton Rooms Room service Air Malta Flight An airline journey Sliema Wanderers Excitement and leisure T-shirts – photos with players MAPFRE Insurance policy Finance Daikin Cooling Warranty 37
- 38. Price 38
- 39. Price The price of a product will depend on: • The cost to make it • The amount of profit desired • Other objectives of the business • The price competitors charge • The price customers are willing to pay – Is there a high demand? – Is demand sensitive to changes in price? 39
- 40. Price • Pricing Strategy - International – Comparative – Cost plus • The price must be one that the customer thinks is good value for money. • This is not the same as being cheap! • Prices have a great psychological effect on customers. 40
- 41. Price Leader/Taker Price leader – businesses that dominate the market can often dictate the price charged for a product. Other businesses follow this lead Price taker – businesses have to charge the market price. This is often the case where there are many small firms competing against each other 41
- 42. Pricing Strategies & Tactics • Skimming • Launching with a high price when there is little competition, then reducing the price later. Often used with technology. • Penetration • Low price charged initially to penetrate the market and build brand loyalty; prrice is then increased e.g. introductory offers on magazines. 42
- 43. Pricing Strategies & Tactics • Competitive • A similar price is charged to that of competitors’ products. • Loss leader • Products may be sold at a price lower than the cost to produce it. Often used by supermarkets to encourage people into the store where it is hoped they will buy other products. 43
- 44. Pricing Strategies & Tactics • Psychological • A price is set which customers perceive as lower than it is e.g. €39.99 instead of €40 44
- 45. Price • Pricing Strategy • Importance of: – knowing the market – elasticity – keeping an eye on rivals Image copyright: www.freeimages.co.uk 45
- 46. Promotion 46
- 47. Promotion • Strategies to make the consumer aware of the existence of a product or service • NOT just advertising 47
- 48. Promotion The aims of promotion are to: • Raise awareness • Encourage sales • Create or change a brand image • Maintain market share • Increase market share 48
- 49. 49
- 50. Promotion Above-the-line promotion This uses advertising media over which a firm has no direct control e.g. television, radio and newspapers Below-the-line promotion This uses promotional media which the firm can control e.g. direct mail, sales promotions and sponsorship 50
- 51. The promotional message should Grab Attention Stimulate Interest Create Desire Promote Action 51
- 52. Promotional Activities • Advertising e.g. TV, billboards and internet. • Sales promotions e.g. Loyalty cards, BOGOF, discounts & free gifts • Sponsorship – a business pays to be associated with another firm, event or cause 52
- 53. Promotional Activities • Direct mailing – promotional material is sent to potential customers by post/email • Public relations – building the relationship between the firm and the public by enhancing its reputation 53
- 54. Promotional Mix Most businesses use a combination of different promotional activities. The chosen promotional mix will depend on: • Cost • Target market • Product • Competitors 54
- 55. Place 55
- 56. Place • The means by which products and services get from producer to consumer and where they can be accessed by the consumer • The more places to buy the product and the easier it is made to buy it, the better for the business (and the consumer?) 56
- 57. Place • Products should be conveniently available for customers to buy • ‘Places’ include: • Stores • Mail order • Telesales • Internet - The use of e-commerce (promoting and selling on the internet) has grown massively over recent years 57
- 58. 58
- 59. Jobber • One that buys merchandise from manufacturers and sells it to retailers 59
- 60. People 60
- 61. People • People represent the business • The image they present can be important • First contact often human – what is the lasting image they provide to the customer? • Extent of training and knowledge of the product/service concerned • Do staff represent the desired culture of the business? 61
- 62. People • People represent the business – The image they present can be important – First contact often human – what is the lasting image they provide to the customer? – Extent of training and knowledge of the product/service concerned – Mission statement – how relevant? – Do staff represent the desired culture of the business? 62
- 63. People • People represent the business – The image they present can be important – First contact often human – what is the lasting image they provide to the customer? – Extent of training and knowledge of the product/service concerned – Mission statement – how relevant? – Do staff represent the desired culture of the business? 63
- 64. Process 64
- 65. Process • How do people consume services? • What processes do they have to go through to acquire the services? • Where do they find the availability of the service? – Contact – Reminders – Registration – Subscription – Form filling – Degree of technology 65
- 67. Physical Environment • The ambience, mood or physical presentation of the environment • Packaging. • Internet/web pages. • Paperwork (such as invoices, tickets,…..). • Brochures. • Furnishings. • Uniforms. • Business cards. • The building itself (such as prestigious offices or scenic headquarters). • Mailboxes and many others . . . . . . 67
- 68. 68
- 69. Physical Environment • The ambience, mood or physical presentation of the environment – Smart/shabby? – Trendy/retro/modern/old fashioned? – Light/dark/bright/subdued? – Romantic/chic/loud? – Clean/dirty/unkempt/neat? – Music? – Smell? 69
- 70. Stages in Consumer Decision Process Awareness Interest Decision Satisfaction Action Advertising Channel Product / Service Price Word- of- Mouth 70
- 71. The Marketing Mix • Blend of the mix depends upon: • Marketing objectives • Type of product • Target market • Market structure • Rivals’ behaviour • Global issues – culture/religion, etc. • Marketing position • Product portfolio – Product lifecycle – Boston Matrix 71
- 72. Marketing Model Target Market Aware Understand Believe Want Find Buy Use Prefer Revenue Value Experience Point of Purchase Above the Line Loyal Below the Line Intention to Purchase Behavior 72
- 73. Marketing Management Philosophies Competing Philosophies Production Sales Market Societal Marketing 73
- 74. Marketing Management Philosophies • Philosophy Key Ideas Production Sales Market Societal Focus on efficiency of internal operations Focus on satisfying customer needs and wants Focus on satisfying customer needs and wants while enhancing individual and societal well-being Focus on aggressive techniques for overcoming customer resistance 74
- 75. The Marketing Concept Focus on Customer Wants and Needs Integrate Organization’s Activities to Satisfy Customer Needs and Wants Achieve Organization’s Long Term Goals by Satisfying Customer Wants and Needs 75
- 76. Comparing Sales and Market Orientations Market Orientation Outward Coordinated use of all marketing activities Customer satisfaction Specific groups of people Satisfying wants and needs Organization’s Focus Firm’s Business For Whom? Primary Profit Goal? Tools to Achieve Selling goods and services Everybody Maximum sales volume Primarily promotion Inward Sales Orientation 76
- 78. Evolving Marketing Mix • The marketing mix will evolve over time • The product portfolio may grow as a business becomes more established • More expensive promotional activities may be adopted as a firm’s revenue increases • More outlets may be opened, or products sold via the internet • Price may change as demand changes 78
- 79. Value and Satisfaction Performance 8 10 If performance is lower than expectations, satisfaction is low. If performance is higher than expectations, satisfaction is high. Performance 10 8 79 Expectation Expectation
- 80. Why Do So Many Products Fail? 80