4.5 Marketing Mix - how to make marketing decisions

1. product
2. price
3. promotion
4. place
5. people
6. processes
7. physical evidence
8. appropriateness of marketing mix

marketing mix

• set of decisions that need to be made by managers
• Goods: 4 Ps product price promotion place
• Services 7 Ps - + processes, physical evidence, people

product

FMCG - fast moving consumer goods (toothbrush, no expiration but is used up quickly). durables - last a long time. speciality goods - unique and limited distribution channels (i.e. designer clothes)

product lifecycle

• stages a product goes through from launch to decline product portfolio
• menu of organization
• product portfolio analysis ⇒ use BCG matrix

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stages R&D (only cash outflows) launch(star or question mark) growth maturity decline

Product extension strategies

• plan to avoid decline/prolong maturity
• Market development (ansoff matrix) (new markets to sell too)
• redesigning product (“limited edition”)
• targeting new segmetns (new people to sell the same product, different customer groups)
• price reductions
• repackaging
• differentiation ( USP )
• SLAP (effect on stakeholders, long term effect, advantages, disadvantages)

Branding - combination brand: how a company wants to be recognized aspects of a company’s brand - be recognizable, improve awareness, get customer dedication, premium that the customers are willing to pay for the product brand development - strengthen the brand (improve awareness). generic brand (xerox, kleenex) brand loyalty - buying the same product over and over again

• positive WoM (word of mouth), celebrities brand value - how much customers are willing to pay above the value of the product (acts as an entry barrier)

importance of branding

• copyright (legal protection)
• differention strategy
• adds values
• increases profit margins
• customer loyalty

price

pricing strategies

1. cost plus average cost + markup
2. penetration charge really low prices to attract customers increase sales and awareness low profitability and brand value (cheap, low quality products)
3. loss leader sell certain products as a loss

• attract potential customers, works well for FMCG, causes brand switching
• works only if customers purchase other products too, otherwise you’re in loss (disadvantage)

1. predatory DANGEROUS PRICE WARS AHHHHHHHHHHHHHHHHH work short term

• increased market share, and high entry barrier
• can result in a MONOPOLYYYYYYY bads
• not sustainable long term, unethical/illegal
• profitability is at a risk

1. premium

• setting a high price for premium high quality products advantages - high margins, good brand value
• low sales value, does not apply to every product (con)

1. dynamic

• price changes based on circumstance
• adv: flexibilyt, chance to maximze profits (i.e. gas prices)
• dis: not applicalble to many products (can cause customer dissatisfaction (i.e. high price for umbrella when it rains))

1. competitive

• lower/increase price product based on compitors
• ensures sales encourgase brand loyalty
• reliance on competitive (i.e. companies may use predatory pricing, bad for you, ) not sustainable long term

1. contribution price - AVC

• profitability is ensured, your price is higher than AVC
• disregards competitors price (disadvantage) not offer a competitive price PED
• you change the price, demand chance
• Inelastic (0 - 1), price change does not change demand much
• Unit elastic 1: % change in price equals % change in demand cange
• elastic > 1 (small change in price greatly affects demands) Promotion
• communicate messages about product/brand to the customers promotional mix: advertising, personal selling, public relations, sales promotions

aspects of promotion above the line — mass media below the line - directed, not mass media TTL Through the line : ATL + BTL

ATL

• mass media
• targeting
• increases awareness
• reaches a wide audience
• expensive BTL
• non mass media
• targeted
• secures sales
• reaches a small audience
• relatively cheap

promotional mix - advertising, pr, personal selling sales promotion advertising: informative (understand benefits of a product, appeals to logic) + persuasive - comparative advertising, numerical factor (informative factor, throwing stats at you) - persuasive advertisement: appeals to emotion (celebrity endorsement, feel good factor, bargain appeals, slogans)

• personal selling (i.e. car dealership, person-to-person sales/purchasing experience)
• PR - promotional activities aimed at increasing brand value, reposition a brand/product “there is no such thing as negative publicity”
• sales promotion: encourage sales of a product (buy one get one free, free gifts)
• APPS - advertising PR personal selling sales promotion

ATL media - tv radio newspaper magazine outdoor advertising BTL - POS, direct mail, publicity through brand ambassadors, WoM, events TTL: digital marketing (SMM - social media marketing) SMM - clear KPIs and metrics (direct response, cost efficiency, improved brand awareness), complementary to traditional marketing

Places (better name is distribution)

• about distribution channels
• how product gets to consumer
• getting the right product to the right people at the right time at the right place
• intermediaries link in distribution
  • retailers
  • distributors
  • agents
  • wholesalers (retailer that buys/sells in bulk)
  • car dealerships
  • vending machines
• zero level
  • sold directly to consumers
  • got to deal with logistics
  • smaller lowerhead cost
• one level
  • retailers, distributors, agents, car dealerships
    • retailers in charge of distribution storage and sales
  • you got to be reliant on someone, and they take a slice out of your product
• two level
  • works well when you are far away from your customers
  • wide coverage of locations, sales revenues in large quantities in a short time
  • lower profit margins and even higher profits

(next three apply to services only) people

• the people selling your services
• essential to decision for services
• not all services involve humans (i.e. AI), cashierless supermarkets
• culture - employee - consumer relations
• cultural gap (think globally, act locally) monoculture environment : easy to sell, no diversity
• multicultural gap (having to adapt, diversity) processes
• concerned with the purchasing experience
• how the sale is made
• delivery, customer service, payment methods, waiting/queueing times

physical evidence

• tangible aspects of a service
• allows customers to evaluate and predict the quality of provided services
• i.e. rating systems (private school furniture, class sizes, equipment)
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