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THE MARKETING MIX

PRODUCT PRICE PROMOTION PLACE

When marketing their products and services, firms need to create a successful mix of:

P P

PP

The 4 P’s of marketing

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PRODUCTThe Product is the actual item that a consumer purchases, including the packaging, image, guarantee

and after-sales serviceLearn this definition!

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Sales

Time

THE PRODUCT LIFE CYCLE

INTRODUCTION

GROWTH

MATURITY

DECLINE

INJECTING NEW LIFE

New product

Sales low

Sales grow

rapidly as product becomes

well known

Product fully established

Sales even outCompetitors enter

market

Popularity declines and sales

fall

New marketing strategies are

introduced to reverse decline

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Extension Strategies

A business wishing to extend the life of a product which has reached maturity or is in decline can alter one or more of the marketing mix by changing PRODUCT eg alter the packaging,

introduce a new version PRICE eg reducing the price to

interest customers PROMOTION eg introduce a new

advertising campaign PLACE eg change where it can be

bought, eg on-line

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Malteesers Introduction of new variety, eg white chocolate New advertising campaign for new variety

Guidance Changed name to Pastoral Support PS teachers spend more time on guidance and less

on teaching Marathon

Changed name to snickers Sponsors of sporting event

Banks Services now available via internet or telephone

EXTENSION STRATEGIES One company launched a new

drink 7 times before it was successful. Can you guess what they called it?

•Answer: 7 UP

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Cadburys Flake

Extention Strategies

•The Cadbury Flake bar was originally launched in 1920

•In 1930 the Flake 99 ice cream accompaniment was introduced

•2001 the Snowflake (a crumbly white chocolate Flake centre covered in milk chocolate) was launched. 

•In 2003 the Cadbury Flake Dipped was introduced where consumers can enjoy all the benefits of the Flake withouth the mess - ideal for on the go.

•In September 2004 Cadbury Flake Moments were launched, a selection of miniature milk chocolate and white chocolate Flake pieces, which extended the Flake brand into the giving market - creating the ideal gift.

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QUESTIONS1. Compare the product life cycles of (a) a new ipod shuffle

and (b) Kellogg’s cornflakes. You may use diagrams to illustrate your comparison.

2. Chanel No5 is an expensive perfume which has been around for many years. It’s sold exclusively in only certain stores and its target market is women over 35. The company feels it is losing ground to newer perfumes and wants to extend the life of the product. Suggest as to how they might achieve this.

3. Name 3 other products or services which have altered some element of their marketing mix recently and describe how they have done this.

FOR YOUR JOTTER

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BRANDING A product with a ‘personality’ Instantly recognisable by logo,

packaging, taste, advertising and other features

Believed to be a guarantee of quality Some brands have ‘snob value’ Usually cost more

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BRAND LOYALTY Some customers are loyal to a

particular brand. They will buy the brand again and again and also other associated products Fairy washing-up liquid Fairy washing powder Fairy dishwasher powder

The product is often sold in places that reinforce the brand image, eg sports drinks in leisure centres

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OWN LABELS

Retailer’s own brands eg Sainsbury’s Savers, George at ASDA

Not manufactured by retailer Sold only in retailer’s stores Less expensive than branded goods Need little advertising Seen as inferior quality

What about premium own brands? em

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Which brands do you associate with the following products?

Toilet paper Fish fingers Chocolate Soft drink Gravy Toothpaste Washing up liquid Brown sauce Crisps Cat food Disposable nappies Digestive biscuits Ice cream Soap powder Teabags Coffee

Andrex Birds Eye Cadburys Coca-cola Bisto Colgate Fairy liquid HP Walkers Whiskas Pampers McVities Walls Persil PG Tips Nescafe

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QUESTIONS

1. From a marketing point of view, describe the differences between Heinz baked beans and Safeway own label baked beans under the following headings Product Price Place Promotion

2. Heinz produce many products other than baked beans. Describe the advantages of producing several products under the same brand name?

FOR YOUR JOTTER

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PRICEThe amount consumers are

prepared to pay for a product or serviceLearn this definition!

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What is the best price for a product?

Charging the right price is a very important part of the marketing mix.

How much you charge will depend on How much it cost you to make your

product How much your competitors are

charging Whether you are trying to introduce a

new product The image you want for your product

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THE PRICING DECISION A low price will attract sales. This

makes it possible to sell large quantities at a low average cost

An average price will mean you need to compete with your rivals by a means other than price, eg by having a better quality product or better promotion or advertising

A high price can be charge if your product is seen a being better than your rivals

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Chanel No 5Morgan Sweet

Love CK One

For each of the following products, try to explain whether the manufacturer/retailer is going for a low price, an average price or a high price

Porsche Boxster Nissan Micra Ford Mondeo

Supermarket own brandHeinz beans Safeway savers beans

Jeans from market stall Levi 501 Jeanster jeans

(HIGH – prestige product, expensive packaging)(LOW – lower quality, cheaper packaging) (AVERAGE – in competition with similar brands)(HIGH – prestige product, sporty image)

(LOW – smaller car, lower spec)(AVERAGE – in competition with other models)

(AVERAGE – competitively price alternative)(HIGH – market leader, quality product)(LOW– lower quality, cheaper price to attract customers)

(LOW– lower quality cheaper price to attract customers)(HIGH – market leader, quality product)(AVERAGE – competitively price alternative to branded goods)

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PRICING TECHNIQUES Time-based - suitable for repairing a washing

machine where the price is dependent on how long the job takes

Cost plus - calculate how much it costs to make a product then add on profit

Start-up or penetration pricing - a firm bringing out a new product or trying to break into a market might charge a low price at first in order to interest consumers. (penetration)

Off the top or price skimming– a prestige product or a new highly sought after product can often be sold at a high price because consumer want to be associated with the product

Destroyer – selling a product at a very low price in order to destroy a competitor. Once the rival firm has been forced out of business the price of the product will be increased

Market Orientated – Selling a product at a price in line with competitors. This is typical where there are many competitors.

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Describe a suitable pricing technique for each of the following situations? Justify your answers.

A new state-of-the-art video mobile phone just on the market

A self-employed gardener wanting to quote customers for general gardening jobs

A newspaper in fierce competition with a rival paper

Cadbury’s introducing a new chocolate bar A business makes and sells fresh sandwiches

to office workers

QUESTIONS FOR YOUR JOTTER

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PLACE

This is the route that products take to reach the consumer

from the manufacturerLearn this definition!

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The Market PlaceNo matter how good the product is – it has to be in the right place at the right time. buyers and sellers come together in the following ways

Shop Cash and Carry Market stall TV – shopping channel Internet Newspaper and Magazines Mail order Direct mail Factory shop

These are referred to as Direct Marketing

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CHANNELS OF DISTRIBUTION

MANUFACTURER MANUFACTURER MANUFACTURER

CONSUMER CONSUMER

RETAILER

CONSUMER

RETAILER

WHOLESALER

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The channel of distribution chosen will depend on:

The product being sold The finance available The reliability of companies in the chain The desired image of the product Legal restrictions The products life cycle The manufacturer’s distribution capability

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1. Wheels Ltd manufacture bicycles. They sell to customers via wholesalers and retailers. They are considering opening a factory shop to sell directly to customers. Outline the advantages of this plan to Wheels Ltd and to their customers? (4)

2. Advances in technology have opened up new channels of distribution. Describe one of these new channels and illustrate your answer with an appropriate example.

1. There are legal restrictions on the way in which some products are distributed to consumers. Give examples of such products and describe why these restrictions are enforced.

FOR YOUR JOTTERQUESTIONS

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Extension

Log on to http://puzzlemaker.discoveryeducation.com/

Create a word search on marketing using terms we have covered so far.

Include at least 12 terms Swap with someone and complete

their word search.

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PROMOTION

Promotion is the way in which a consumer is made aware of a

product or service and is persuaded to purchase it

Learn this definition!

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PROMOTION The aims of promotion are to

PERSUADE consumer to buy the product

INFORM consumers about the product REMIND consumer that the product

still exists

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ADVERTISING MEDIA Television Newspapers – National, Sunday, local Magazines Radio Cinema Outdoor media – billboards, sports

hoardings, bus shelters Internet Direct mail

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Above the Line Promotion

This targets everyone – even those not interested in the product.

TV Radio Newspapers magazines

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Below the Line Promotion

The business has direct control. Direct mail (post or e-mail) Personal selling Trade fairs

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Quick Task…….

State whether each of the media below is Above or Below the Line.

Suggest advantages and disadvantages for each of the following Advertising Media.: Television Daily Newspapers Radio Cinema Billboards Internet pop ups Direct Mail

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Quick Task 2………

Suggest a suitable advertising media for Nike’s new trainers.

Justify your answer.

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PRODUCT ENDORSEMENT Famous sport or showbiz

personalities are paid to wear and use a particular product, eg Adidas, Gillette and David Beckham

• PRODUCT PLACEMENT–Paying for product to be used in films and TV programmes, eg James Bond driving a BMW in Goldeneye

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Quick Task 3………….

Explain possible advantages and disadvantaged of celebrity endorsement for an organisation.

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The choice of advertising media depends on: The product The audience to be targeted The type of coverage, eg national

or local The amount you want to spend The advertising used by

competitors

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SALES PROMOTIONS

Short term inducements used to encourage sales

There are 2 groups of sales promotion: Into the pipeline Out of the pipeline

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INTO THE PIPELINE These are offered by manufacturer to

retailers (dealers) to encourage them to stock their products: Point of sale displays Sale or return Dealer competitions Staff training Credit facilities

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These are offered by the retailer to the consumer to encourage purchases to be made: Free samples Credit facilities Demonstrations Competitions BOGOFs Promotional prices Free offers Coupons/vouchers

OUT OF THE PIPELINE

Buy One Get One Free

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QUESTIONS

1.Describe the difference between product endorsement and product placement. Give examples to illustrate your answer.

2.Compare the following advertising media – television, newspapers and direct mail. Your answer should refer to cost, coverage, market segment, legal restrictions, and competition.

3.Describe 2 forms of each of the following types of sales promotion Into the pipeline Out of the pipeline

FOR YOUR JOTTER

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Activity…….

Design a poster explaining all you know about the Marketing including the Marketing Mix (The 4p’s)