The Marketing Mix Unit 1 3 Business Management

The Marketing Mix Unit 1. 3 Business Management

Definition • The marketing mix is a marketing tool. It is a checklist. It focuses attention on the various elements of marketing needed to carry out the marketing strategy. • It consists of four factors (product, price, promotion and place) cemented together by effective market research.

How is the marketing mix used? • Marketing managers look at each of the ingredients and decide what actions need to be taken under each of the headings. • The ingredients need to work with each other eg a good product poorly priced may fail. If the product is not available following an advertising campaign the expenditure is wasted. • A successful mix will produce customer satisfaction. It will achieve the marketing objectives. • For each marketing situation there will be a different mix. • The mix will ensure that the marketing effort is correctly targeted. There are different markets. Industrial markets are different from consumer markets.

Industrial markets • One business is supplying another • Businesses purchase raw materials, part-finished goods, machinery, vehicles, office equipment, insurance etc in order to produce their own products for the market • In industrial markets the products may have exact specifications agreed with the customer.

Consumer markets • This market supplies the final consumer. It is a much larger and more complex market. • In order to understand the market businesses look at the Buying habits and The type of consumer.

The ingredients are not equally important! • In most cases the product is the vital ingredient. No amount of marketing effort will make a poor product succeed. However a good product without good support may also fail. • The balance will vary. In a price-sensitive market, pricing will be important. This is seen in the petrol market. If one company reduces its price the other follow rapidly. • In traditional markets reliability and quality may be the overriding considerations.

Why is Product so important? • Without product there is no need for price, promotion and certainly no need for a place to sell from! • The product can be either a good or a service such as banking, the product is the customer’s account and the different accounts and schemes on offer.

The Product – Four Golden Rules 1. Be Market-Driven – not Product. Driven! 2. Get the detail of the product right 3. Know your product’s Life Cycle 4. Make your product different from the competition.

Market driven – not product driven! • Market-driven firms will use market research to find out what people want, then make it. This usually means the product is useful – like a portable CD player with a built-in anti-shock device. • Product-driven firms will design or invent a new product and then try to sell it. This often means they make something nobody really wants – like a portable CD player with a builtin toaster. • With very few exceptions market-driven firms do best.

Get the detail of the product right • The design must be fit for its purpose – it’s no good making a car that doesn’t start! • The product name must be catchy. Call your car the Thunderball, not the X 3 MS 5. • There must be a suitably broad product range to give options to all your potential customers. So make your car in saloon and hatchback, manual and automatic.

Know your product’s Life Cycle • All products go through the same life cycle – they are launched, sales grow and reach maturity. • Saturation is when there is no more room to expand – sales are at their peak. After that, sales start to decline and finally the product becomes obsolete.

Product Life Cycle Sales Saturation This shows how sales change over time. Maturity Decline Growth Launch Obsolescence Time

Product Life Cycle • The sales life of some products is longer than others. The sales life of most cars is about 10 years, but the sales life of a computer game is only a few months. It is possible to update and relaunch the product when sales decline. This is called an extension strategy.

Product Failure • Some products do not live up to the company’s expectations and may suffer an aborted life cycle, being withdrawn from the market at short notice. The Sinclair C 5 was a one-person electrical vehicle developed for town travel in the 1980 s. The product was not popular as people felt vulnerable init due to being near to the ground and production was quickly halted. The life cycle would look something like this:

Make your product different from the competition • Product Differentiation – it’s what all firms want. A firm has achieved product differentiation if it knows the answer to this question: “What is different about our product compared to the competition that makes people want to buy it? ” • It might be that your product has a unique design feature, or a reputation for reliability, or a cool brand image. • if you don’t have product differentiation, people think your product is identical to others and they will only buy it if it’s cheaper – which means less profit for you.

Points to Remember! • The product is probably the most important part of the marketing mix • Products are aimed at particular market segments • The product life cycle is the natural growth and decline of a product • Branding is how a firm gives a product a distinctive name or image • Packaging is vital in reinforcing that image

Task • Choose a well-known brand of a product (smarties, for example or Heinz beans or Walkers crisps) and redesign the packaging so that the product would appeal to a totally different market. • Explain what market you have aimed the product at. • What other changes do you think you would have to make in the marketing mix to make this product a success.