4.1THE MARKETING MIXPRODUCT, PRICE, PLACE AND PROMOTION

Introduction

To effectively market a product or service there are four things you need to get right: Product, Price, Place and Promotion. These four elements are known as the marketing mix or the 4Ps. The four elements should be viewed as one unit and structured to support each other; Otherwise a firm's marketing strategy will be confusing and uncoordinated. This article provides you with a quick introduction to each element and links if you would like more information. 

Product

As the product is the item being sold to the customer, the thing that will bring in money, its features and design need careful consideration. Whether the firm is manufacturing the product or purchasing the product for resale, they need to determine what product features will appeal to their target market. When an organization is considering introducing a product into a market, they should ask themselves the following questions:

1. Who is the product aimed at2. What benefit will customers expect from it3. What will be its advantage over competitor products? Or its unique

selling point?4. How does the firm plan to Position the product within the market?

The answers to these questions will help a firm design, package and add value to its products. To learn more about product strategies within the marketing mix click on the following link: Marketing Mix and Product strategies

Price

There are lots of different pricing strategies but every strategy must cover at least your costs unless the price is being used to attract customers to the business (loss leader pricing). A product is only worth as much as people are prepared to pay for it. The amout your target market are prepared to pay for your products/services depends on product features and the target market's budget. You will also need to consider competitor pricing and factors within your marketing environment. Effective pricing involves balancing several factors, to find out more about pricing including example pricing strategies click here.

Place

The Place element of the marketing place is about where the product is made, where is it stored and how is it transported to the customer. The place for each of these things should ensure that the product gets to the right place at the right time without damage or loss. The ideal place will be

Convenient for the customer and the businessAccessible for the customer if it is the place where the product is soldLow cost or free for the customer if it is the place where the product is soldReasonable cost to the business

The following link provides further information on place: Marketing Mix and Place Strategies

Promotion

A successful product or service means nothing unless the benefit of such a service can be communicated clearly to the target market. Promotion is any activity to raise awareness of a product or to encourage customers to purchase a product. Advertising is a form of promotion but not all promotions are advertisements.

Promotional activities for consumer sales will be different to promotional activities for business to business sales. The following things will influence how a firm chooses to promote its product:

Promotional campaign purposeThe budget for the promotional campaignLegal rules about what you can promote and howThe target market for the product The marketing environment in which the firm operates

The following link provides further information on place: Marketing Mix and Promotion Strategies

Other Marketing Mix Links

Service Marketing Mix: The ideal marketing strategy for a firm selling services, includes the traditional marketing mix and three additional elements: people, process and physical evidence. Click on the attached link to learn more about the 7Ps:  Service Marketing Mix

E-Marketing Mix: A massive increase in internet sales has changed the way the marketing mix is implemented by firms. The following link will take you to an article explaining how the marketing mix can be used for online marketing Marketing Mix and The Internet

Environmental Marketing Mix. An increased focus on environmental issues, has contributed to a rise in the demand for environmentally friendly products and services. The spotlight on sustaining the environment has created new terminology such as “carbon footprint” and “offsetting”. Many organisations have adapted their marketing strategies to capitalise on the consumer appetite for Environmentally Friendly Products. Click on this link   to read more about how the marketing mix can be used to market environmentally friendly products and services

4.2 Introduction

Some businesses sell products, others sell services and the remainder sell products and services. This article examines the characteristics of a service and looks at how the marketing mix can be adapted to market a service.

Characteristics of a Service

There are five characteristics to a service:

Lack of ownership Intangibility Inseparability Perishability Heterogeneity

Each of these need to be taken into account when marketing a service.

Lack of Ownership

You can not own a service and you can not store a service like you can store a product. Services are used or hired for a period of time. For example when you buy an aeroplane ticket to fly to the USA, you are buying a service which will start at the beginning of the flight and finish at the end of the flight. You can not take the aeroplane flight home with you.

Intangibility

You cannot hold or touch a service unlike a product. This is because a service is something customers experience and experiences are not physical products.

Inseparability

Services cannot be separated from service providers. A product can be taken away from the producer but a service can not be taken away as it involves the service provider or its representatives doing something for the customer. For example a company selling ironing services needs the company to iron the clothes for you.

Perishability

Services last a specific time and cannot be stored like a product for later use. For example an interior designer will design a property once. If you would like to redesign the house you will need to purchase the service again.

Heterogeneity

Firms have systems and procedures to ensure that they provide a consistent service but it is very difficult to make each service experience identical. For example two identical plane journeys may feel different to the passengers due to circumstances beyond the airline's control such as weather conditions or other passengers on the plane.

SERVICE MARKETING MIX (Extended Marketing Mix)

In the previous article we discussed the characteristics of a service. In this article we look at how the marketing mix for marketing a service is different to the marketing mix for products. Just like the marketing mix of a product the service marketing mix

comprises of Product, Price, Place and Promotion. How ever as a service is not tangible the marketing mix for a service has three additional elements: People, Process and Physical Evidence. 

People

People are an essential ingredient in service provision; recruiting and training the right staff is required to create a competitive advantage. Customers make judgments about service provision and delivery based on the people representing your organisation. This is because people are one of the few elements of the service that customers can see and interact with. The praise received by the volunteers (games makers) for the London 2012 Olympics and Paralympics demonstrates the powerful effect people can create during service delivery.

Staff require appropriate interpersonal skills, aptititude, and service knowledge in order to deliver a quality service. In the UK many organisations apply for the "Investors in People" Accreditation to demonstrate that they train their staff to prescribed standards and best practices.

Process

This element of the marketing mix looks at the systems used to deliver the service. Imagine you walk into Burger King and order a Whopper Meal and you get it delivered within 2 minutes. What was the process that allowed you to obtain an efficient service delivery? Banks that send out Credit Cards automatically when their customers old one has expired again require an efficient process to identify expiry dates and renewal. An efficient service that replaces old credit cards will foster

consumer loyalty and confidence in the company. All services need to be underpinned by clearly defined and efficient processes. This will avoid confusion and promote a consistent service. In other words processes mean that everybody knows what to do and how to do it.

Physical Evidence (Physical Environment)

Physical evidence is about where the service is being delivered from. It is particularly relevant to retailers operating out of shops. This element of the marketing mix will distinguish a company from its competitors. Physical evidence can be used to charge a premium price for a service and establish a positive experience. For example all hotels provide a bed to sleep on but one of the things affecting the price charged, is the condition of the room (physical evidence) holding the bed. Customers will make judgments about the organisation based on the physical evidence. For example if you walk into a restaurant you expect a clean and friendly environment, if the restaurant is smelly or dirty, customers are likely to walk out. This is before they have even received the service.

Summary

The Service Marketing Mix involves Product, Price, Place, Promotion, People, Process and Physical Evidence. Firms marketing a service need to get each of these elements correct. The marketing mix for a service has additional elements because the characteristics of a service are different to the characteristics of a product. The Characteristics of a service are:

(1) Lack of ownership (2) Intangibility (3) Inseparability(4) Perishability (5) Heterogeneity.

To certain extent managing services are more complicated then managing products, products can be standardised, to standardise a service is more difficult as there it can be affected by factors outside the service providers control.

 

4.3 INTERNATIONAL MARKETINGIntroduction

International Marketing is any marketing activity which supports business activity, in a country other than the one that the business is located in. If we refer back to learnmarketing's definition of marketing   :

"Marketing is not about providing products or services it is essentially about providing changing benefits to the changing needs and demands of the customer "

International marketing enables businesses to provide benefits (in the form of products and services) to consumers around the world. International marketing activity may be tailored specifically for each country; this is because 'needs and demands' of customers in one country may be different from 'needs and demands' of customers in another country.

So Why Go Global?

There are a number or reasons why businesses decide to trade internationally including:

Competition within the national market is becoming too intense Sales and profit are declining in national markets. International expansion

(market development) is suggested as an option to plug falling sales under Ansoff's Matrix .

International markets offer the opportunity to increase the product life cycle for products with a life cycle coming to an end in national markets.

Overseas markets contain similar market segments as national markets. Easy international travel and technology are turning national brands into

international brands and facilitating the move into international markets. Consumers and buyers in other countries may already have become familiar with the brand during trips abroad and through the internet

The business is doing well in national markets and the firm have decided to become a global player

INTERNATIONAL MARKETING ENVIRONMENTIntroduction

There are a number of steps that need to be taken before you decide to enter international markets. The first step involves an analysis of the international marketing environment through a PEST/STEP analysis. Let's briefly look at some factors that make up a PEST analysis:

Political Factors

Consider:

The political stability of the nation. Is it a democracy, communist, or dictatorial regime?

Monetary regulations. Will the seller be paid in a currency that they value or will payments only be accepted in the host nation currency?

Economical Factors

Consider:

Consumer wealth and expenditure within the country. National interests and inflation rate. Are quotas imposed on your product. Are there import tariffs imposed. Does the government offer subsidies to national players that make it difficult

for you to compete?

Social Factors

Consider

Language. Will language be a barrier to communication for you? Does your host nation speak your national language? What is the meaning of your brand name in your host country’s language?

Customs: what customs do you have to be aware of within the country? This is important. You need to make sure you do not offend while communicating your message.

Social factors: What are the role of women and family within society? Religion: How does religion affect behaviour? Values: what are the values and attitudes of individuals within the market?

Technological

Consider:

The technological infrastructure of the market. Do all homes have access to energy (electricity) Is there an Internet infrastructure. Does this infrastructure support broadband or

dial up? Will your systems easily integrate with your host country's?

MARKET ENTRY CONSIDERATIONS

  Paliwood (International Marketing 1993) suggests that before a business makes the final decision to start trading in an overseas country it should consider six factors:

SpeedHow quickly does the business wish to enter the selected market (country). Due to country specific laws, rules and regulations it will take longer to (obtain the necessary permits and permissions and) set up in some countries compared to others. 

CostsThe business should carry out a full assessment of the likely costs of entering the selected market. Otherwise the business could end up losing money and affecting its current business set up. 

FlexibilityHow easy is it to enter/leave the chosen market. As discussed above some countries may have rules and regulations that make it difficult to enter that market. Conversly if the decision to trade in an overseas country is unsuccessful the business need to be able to leave quickly and limit business losses.

Risk FactorsWhat are the political risks of entering the overseas market? Political relations between the country that the business is based in and the one the business would like to enter, may affect what the business can do in the selected market. For example the country you wish to enter may have international trading sanctions against it. 

What are the competitive risks of entering the market? How competitive is the market? If the market is already very competitive this will make it difficult to obtain a profitable market share. 

Payback PeriodWhat deadline has the business set for securing a profitable return from entering the market? If there are pressures to breakeven and return a profit within a certain period the business needs to carefully consider their decision to trade globally, as international trade is unpredictable. 

Long Term ObjectivesWhat does the organisation wish to achieve in the long term by operating in the foreign market? Does the long term plan involve establishing a presence in one market and then moving onto others? A long term plan will help the business establish its strategy and ensure that it grows at a sustainable pace. 

There are a number ways businesses can sell their products in international markets. The most appropriate method will depend on the business, its products, the outcome of its Marketing Environment analysis and its Marketing Plan. This article talks you through market entry options.

Direct Export The organisation produces their product in their home market and then sells

them to customers overseas.

Indirect Export The organisations sells their product to a third party who then sells it on within

the foreign market. Licensing Another less risky market entry method is licensing. Here the Licensor will

grant an organisation in the foreign market a license to produce the product, use the brand name etc in return that they will receive a royalty payment.

Franchising Franchising is another form of licensing. Here the organisation puts together a

package of the ‘successful’ ingredients that made them a success in their home market and then franchise this package to oversea investors. The Franchise holder may help out by providing training and marketing the services or product. McDonalds is a popular example of a Franchising option for expanding in international markets.

Contracting Another of form on market entry in an overseas market which involves the

exchange of ideas is contracting. The manufacturer of the product will contract out the production of the product to another organisation to produce the product on their behalf. Clearly contracting out saves the organisation exporting to the foreign market.

Manufacturing Abroad The ultimate decision to sell abroad is the decision to establish a manufacturing

plant in the host country. The government of the host country may give the organisation some form of tax advantage because they wish to attract inward investment to help create employment for their economy.

Joint Venture To share the risk of market entry into a foreign market, two organisations may

come together to form a company to operate in the host country. The two companies may share knowledge and expertise to assist them in the development of company, of course profits will have to be shared between the two firms.