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Product Place Price Promotion Marketing Mix

Course Objectives Explain what is Marketing Mix Explain the 4 Ps and 4 Cs of Marketing Mix Explain what is Viral Marketing Explain Extended Marketing Mix Explain 7Ps & 7Cs of Marketing Mix Describe the Characteristics of Marketing Mix Explain Marketing Planning Process Explain AIDA Explain SWOT Analysis Compare Old-School vs. Predictive Marketing Mix Analysis

Introduction Helium Pvt. Ltd. is a major player in the field of cosmetics. Till now, it has majorly focussed on cosmetics related to skincare of men and women. However, now it intends to venture into the baby healthcare products. Look at the various questions that come into the minds of the marketing people at Helium.

Introduction What should be the products / services to be offered? Which areas should be first ventured into? What kind of pricing strategy should be followed? How should the new products be marketed / promoted to make an impact?

Introduction All of the above questions as well as several other questions pertaining to the marketing of a product or service can be answered through an understanding of the concept of marketing mix. Let us learn about marketing mix and its role in marketing. What should be the products / services to be offered? Which areas should be first ventured into? What kind of pricing strategy should be followed? How should the new products be marketed/promote d to make an impact?

History of Marketing Mix The concept of marketing mix was first introduced by Jerome McCarthy in 1960. Marketing mix is a blend of variables through which a firm carries out its marketing strategy. It provides a recipe for effective marketing. Effective marketing is based on the right balance of marketing elements and processes depending on the nature of the product, service or idea being marketed.

Objective Explain what is Marketing Mix Explain the 4 Ps and 4 Cs of Marketing Mix Explain what is Viral Marketing Explain Extended Marketing Mix Explain 7Ps & 7Cs of Marketing Mix Describe the Characteristics of Marketing Mix Explain Marketing Planning Process Explain AIDA Explain SWOT Analysis Compare Old-School vs. Predictive Marketing Mix Analysis

What is Marketing Mix? Marketing Mix refers to the primary elements that must be taken care of in order to properly market a product or service. Marketing mix is the combination of four elements: Product, Place, Price and Promotion. Hence, it is a term that describes the key elements used by an organization to help meet its marketing objectives. So, by altering the elements within a marketing mix, the offer you make to your customer can be altered. So, for a high profile brand, the focus on promotion is increased and whereas the weightage laid on price is decreased.

Definition of Marketing Mix

Simple Marketing System Communication Industry (collection of sellers) Goods / Services Money Market (collection of buyers) Information

Product Price Place Promotion 4 Ps Marketing mix is the combination of four elements. They are: These are known as the 4 Ps of marketing.

People Process Physical Presence Physical Evidence Additional Ps Some marketers also consider an additional four Ps to the original 4 Ps that you learnt. These are: How your staff, are different from those in a competitor s organization, and how your clients are different from your competitor s clients. How your shop or website looks. How your product is built and delivered, or how your service is sold, delivered and accessed. How your service becomes tangible. e.g. policies & brochures are something the customers can touch and hold.

Product Price Place Promotion 4 Ps and 4 Cs Now-a-days, the Four Ps is being replaced by the Four Cs model, consisting of : The Four Cs model is more consumer-oriented and fits better in the movement from mass marketing to niche marketing.

Elements of 4 Cs Model The elements of the four Cs model are: Product- Customer /Consumer Place- Convenience Price- Cost Promotion- Communication Let s look at each in detail.

Product - Customer/Consumer In the four Cs model, the product part of the Four Ps model is replaced by customer or consumer which shifts the focus to satisfying the consumer. PRODUCT

Place - Convenience In the Four Cs model, the place part of the Four Ps model is replaced by the convenience function. Place is no longer as relevant as before due to the rise of internet and hybrid models of purchasing. Convenience takes into account the ease to buy a product, find a product, find information about a product, and several other considerations.

Price - Cost In the Four Cs model, the price part of the Four Ps model is replaced by cost, reflecting the reality of the total cost of ownership.

Promotion - Communication Finally, in the Four Cs model, the promotion part of the Four Ps model is replaced by communication. Communications represents a broader focus than simply promotions. Communications includes any form of communication between the firm and the consumer such as advertising, public relations, personal selling, viral advertising etc.

Product PRODUCT

Components of a Product Variety Quality Design Features Brand Name Packaging

Components of a Product - Variety Variety There are different variants of a single product available due to a large range of combinations of product features possible

Components of a Product - Quality Quality A quality product is a product or process that is reliable, and that performs its intended function Quality usually refers to the non-inferiority or superiority of something. Hence, quality is a perceptual, conditional and somewhat subjective attribute and may be understood differently by different people Consumers may focus on the specification quality of a product/service, or how it compares to competitors in the marketplace

Components of a Product - Design Design Product design can be defined as the idea generation, concept development, testing and manufacturing or implementation of a physical object or service

Components of a Product - Features Features Features of a product are the characteristics or attributes that help differentiate one product from the other. It also points to the functional and physical characteristics of a product

Components of a Product - Brand Name Brand Name The brand name is often used interchangeably within "brand". However, brand name is more correctly used to specifically denote written or spoken linguistic elements of any product In this context a "brand name" constitutes a type of trademark, if the brand name exclusively identifies the brand owner as the commercial source of products or services

Components of a Product - Packaging Packaging Packaging refers to the overall presentation of the product. It helps in the safe delivery of products across the world. There are various types of packaging available for different types of products

Place Place represents the location where a product can be purchased Hence, place is often referred to as the distribution channel Visit https://grandemareopenseatoknowledge.wordpress.com/ It can include any physical store as well as virtual stores on the Internet

Place - Physical Distribution Physical distribution are the activities involved in transporting products from the producer to the consumer Hence, the different components of distribution are: Mode of transport Warehousing & Storage Order processing Inventory control Coverage Locations Transportation Logistics

Place - Channels of Distribution Channels of distribution are the routes through which the ownership of goods flow on its way from the producer to the customer The various channels of distribution are: Distributor Super-stockist Wholesalers Retailers

Price The price is the amount a customer pays for the product. Price is dependent on a number of factors. Some of the factors are: Market share Competition Material costs Product identity Customer's perceived value of the product

Different Kinds of Pricing of Product The different kinds of pricing of a product include:

Different Kinds of Pricing of Product The different kinds of pricing of a product include: In retail, list price is regularly quoted to customers before applying discounts. List prices are usually the prices printed on dealer lists, invoices, price tags, catalogs, or dealer purchase orders

Different Kinds of Pricing of Product The different kinds of pricing of a product include: Discounts and allowances are reductions to a basic price of goods or services

Different Kinds of Pricing of Product The different kinds of pricing of a product include: The payment period is the stipulation by a business as to when it should be paid for goods or services supplied, such as, cash on order, payment on delivery, or within a particular number of days of the invoice date

Different Kinds of Pricing of Product The different kinds of pricing of a product include: A Credit term is a financial mechanism in which an arrangement for deferred payment for goods and services is made available. This arrangement is made available in exchange for a charge or fee

Setting a Price The following factors should be taken into consideration by marketers for setting the price of a product: Target Segment Cost Competition Society & Law Variant Prices Discount Policy Let s look at each in detail.

Setting a Price Target Segment Cost Competition Society & Law Variant Prices Target Segment: How much the target segment is willing to pay at different price levels which is also known as the price elasticity of demand Discount Policy

Setting a Price Target Segment Cost Competition Society & Law Variant Prices Cost: What is the cost borne by the firm in manufacturing and marketing the product Discount Policy

Setting a Price Target Segment Cost Competition Society & Law Competition: Prices of competitors Variant Prices Discount Policy

Setting a Price Target Segment Cost Competition Society & Law Variant Prices Society & Law: Price should be set within societal norms and legal framework defined by state and national laws Discount Policy

Setting a Price Target Segment Cost Competition Society & Law Variant Prices Variant Prices: Prices across models and geographic regions have to be established Discount Policy

Setting a Price Target Segment Cost Competition Society & Law Variant Prices Discount Policy: The price should be set after taking into account and also framing the policies on discounts Discount Policy Discount Policy

Price Discounts and Rebates Some of the different kinds of discounts or rebates that are offered to consumers to lure them to buy the product and help increase sales volumes are: Innovative Discounts Discount sales in shopping malls Off season sales Closing down sales Credit points Exchange offers mobiles, cookers, cars Festive Sales: Christmas & Diwali Sales End of season sale Special Sales

Methods of Fixing Price There may be two methods of pricefixation: Let s look at each in detail.

Methods of Fixing Price - Cost-based Approach Cost-based approach is the simplest method of pricing. In this method, the companies add a certain percentage of profit, to the total cost of the product. The total cost of the product is calculated after taking all types of costs into consideration. While following this approach, no other factors e.g. prices of substitute goods, nature of demand, etc. are considered.

Methods of Fixing Price - Competition-based Approach In a competitive market, cost-based approach is not always practicable. Companies may follow any one of the following three approaches: o Price-in-line o Market-plus o Market-minus Price-in-line means prices fixed nearly equal to the prices of close alternatives. When companies charge or fix up a price which is more than the price of existing substitutes, it is called market plus pricing. Sometimes business enterprises may supply products at a price lower than the market price. This method may be be adopted to grab a larger market share or to make a newly introduced product more popular. This approach is called market-minus approach

Promotion Promotion activities are meant to communicate and persuade the target market to buy the company s products Hence, promotion represents all of the communications that a marketer may use in the marketplace

Elements of Promotion There are five distinct elements of Promotion. A certain amount of crossover occurs when promotion uses the five principal elements together. The elements of promotion are: Advertising Personal Selling Public Relations Word of Mouth Let s look at each in detail. Point of Sale

Elements of Promotion - Advertising Advertising: Advertising covers any communication that is paid for, from and cinema commercials, radio and Internet adverts through print media and billboards. Hence, it is mass communication efforts through media

Elements of Promotion - Personal Selling Personal Selling: Personal selling includes face to face personal communication or tele-marketing

Elements of Promotion - Public Relations Public Relations: This includes any type of publicity such as communicating with an audience by personal or non-personal media that are not paid for delivering the message. These include print media news, broadcast media news-uti,pti, Reuters, annual reports, speeches by employees etc.

Elements of Promotion - Word of Mouth Word of Mouth: This is the promotion of a product by the spread of information from one individual to another. Hence, this includes viral marketing

Elements of Promotion - Point of Sale Point of Sale: The promotion of the product at the point of sale itself. This includes product brochures, banners, demos etc.

Factors Governing Promotion-mix Nature of product: Different types of products require different promotion mix. In case of consumer goods, advertisement is considered to be the most important because the goods are non-technical and produced on a large scale Type of the market: If the number of customers is quite large and they are spread over a vast area, advertisement is more helpful because it can reach people everywhere Stage of the product life cycle: The promotional mix depends upon the stage of the product in product life cycle. During introduction, heavy expenditure is incurred on advertisement followed by personal selling and sales promotion. At the maturity stage, competition is more intense Budget: Funds available for promotion also decide promotion mix. Personal selling involves continuous spending. Thus, budget is a deciding factor for promotion-mix Push vs. Pull Strategy: When the firm pushes the product to the middlemen they push it to consumers, known as push strategy. Pull strategy refers to a policy to strive to build consumer demand without middlemen

What is Viral Marketing? Viral marketing and viral advertising refer to marketing techniques that use pre-existing social networks to produce increases in brand awareness or to achieve other marketing through self-replicating viral processes, just like the spread of pathological and computer viruses It can be word-of-mouth delivered or enhanced by the network effects of the Internet Various means can be used for viral promotions such as: video clips, interactive Flash games, advert games, ebooks, brandable software, images, or even text messages Hence, you can see that viral marketing depends on a high pass-along rate from person to person. If a large percentage of recipients forward something to a large number of friends, the overall growth snowballs very quickly. If the passalong numbers get too low, the overall growth quickly fizzles

Extended Marketing Mix Price Physical Environment Process Extended Marketing Mix Product Place People Promotion There have been attempts to better accommodate specific aspects of marketing by developing an 'extended marketing mix'. For example, in the 1970s, Nickels and Jolson suggested the inclusion of packaging. In the 1980s, Kotler proposed public opinion and political power. With the same intention, for an extended marketing mix, Booms and Bithner included three additional 'Ps' to accommodate trends towards a service or knowledge based economy.

Booms & Bithner Booms and Bithner included three additional 'Ps' to accommodate trends towards a service or knowledge based economy. These were: People Process Physical Evidence Let s look at each in detail.

People They suggested that all people who directly or indirectly influence the perceived value of the product or service, including knowledge workers, employees, management and consumers should be taken into consideration while designing a marketing mix.

Process The process includes the procedures, mechanisms and flow of activities which lead to an exchange of value.

Physical Evidence The physical evidence includes the direct sensory experience of a product or service that allows a customer to measure whether he or she has received value. An example may be a cover letter from a bank for collection of dues. Hence, you can see that physical evidence is the material part of a service. A few other examples of physical evidence are as follows: Packaging Internet/web pages Paperwork (such as invoices, tickets and despatch notes) Brochures Business cards The infrastructure itself (such as prestigious or scenic offices)

7Ps & 7Cs The 7Ps are Organisation Facing & the 7Cs are Customer Facing. Let s look at the 7Ps & 7Cs of Marketing Mix. 1 2 3 4 5 6 7

7Ps & 7Cs PRODUCT 1 2 3 4 5 6 7

7Ps & 7Cs 1 2 3 4 5 6 7

Fundamental Actions of Marketing Mix They are not trade-offs but are fundamental marketing issues that always need to be addressed. It is important to keep in mind that, in a marketing mix, the 4P elements do not represent options. Hence, they are the fundamental actions that marketing requires whether determined explicitly or by default.

Above the Line (ATL) Above the line (ATL) is an advertising technique to promote brands using mass media. Major above-the-line techniques include TV & radio advertising, print advertising and internet banner ads. This type of communication is conventional in nature and is considered impersonal to customers. The ATL strategy makes use of current traditional media: television, newspapers, magazines, radio, outdoor, and internet.

Below the Line (BTL) Below the line advertising typically focuses on direct means of communication, most commonly through direct mail and e-mail, often using highly targeted lists of names to maximize response rates. Those consumer items where the customer will rely on immediate information than previously researched items. The terms Below the Line (BTL) promotion or communications, refers to forms of non-media communication including non-media advertising. BTL is a common technique used for touch and feel products. BTL techniques ensures recall of the brand while at the same time highlighting the features of the product.

ATL versus BTL The major difference between Above the line (ATL) and Below the line (BTL) is: ATL uses the usual ATL common uses the channels usual of common advertising channels to promote of advertising products, to services. promote products, services. BTL uses the unconventional methods such as direct mail, public relations and sales promotion for which a fee is agreed upon and charged up front. ATL ATL BTL

Integrated Communication Approach The term Below the Line is rapidly going out of fashion in advertising circles. Agencies and clients switch to an 'Integrated Communication Approach. The 'Integrated Communication Approach' is a management concept that is designed to make all aspects of marketing communication such as advertising, sales promotion, public relations, and direct marketing work together as a unified force, rather than permitting each to work in isolation.

Through the Line (TTL) The Through the Line refers to an advertising strategy which involves both above and below the line communications. An example would be a TV commercial that says 'come visit our nearest showroom to sample XYZ product'. It is a form of advertising strategy in which one form of advertising points the target to another form of advertising thereby crossing the line. In this example, the TV commercial is a form of above the line advertising and once in the showroom, the target customer is presented with below the line promotional material such as showroom banners, competition entry forms, etc.

Designing the Right Marketing Mix The right blend of the marketing mix achieves the following: Achieves marketing objectives Meets customer needs Is balanced and consistent Creates a competitive advantage Matches corporate resources

Achieving the Right Marketing Mix The right marketing mix can be achieved by: First, choosing the product that meets the identified need of the target segment Second, the right distribution channel is used to make the product available Third, the firm undertakes eye catching promotion Fourth, the price platform is acceptable to the customer & firm

Inter-relationship between Components of Marketing-mix

Characteristics of Marketing Mix The following are the characteristics of a marketing mix: Marketing mix has to be reviewed constantly in order to meet the changing requirements Marketing-mix is the crux of marketing process Changes taking place within the firm too necessitate changes in marketing mix Changes in external environment necessitate alterations in the mix

Marketing Plan Marketing plan is the application of marketing resources to achieve marketing objectives. The various components that need to be considered for a successful market plan are: o Strengths of organization o Weakness of organization o Design for creating value o Market Needs o Wants o Existing competitors o Expected competitors

Marketing Planning Process Step 1: Performing a situation analysis Step 2: Formulating basic assumptions Step 3: Setting objectives for what is being sold and to whom Step 4: Deciding how the objectives are to be achieved Step 5: Scheduling and costing out the actions necessary for implementation

Marketing Strategy vs. Marketing Plan A company s marketing strategy describes how it will position itself and the products it sells or the services it provides in the competitive marketplace. Hence, marketing strategy includes a discussion of target markets, product and pricing policies, and proposed marketing and promotional initiatives. Marketing plan is a written document which details the marketing methods selected such as advertising, price promotions, etc. and specific marketing actions or marketing activities. It also examines the resources needed, both financial and human to achieve specified marketing objectives.

AIDA I D AIDA is an acronym which represents the steps a marketer takes in order to persuade customers to buy a product or service.

AIDA A Attention: Marketing must first attract the customers attention to the product. Customers become aware of a product and know it is available. I Interest: Then, marketing must create an interest in the product. Customers will develop an interest in the product. D Desire: Next, marketing must develop a desire to own or have the product so that customers actively want the product. A Action: Finally, marketing must prompt action to purchase, so that customers take steps to buy the product. For example, by going to the shop or ordering it online.

SWOT Analysis Strengths It is critical to carry out a SWOT Analysis before entering the marketplace. Acronym for SWOT: Strengths, Weaknesses, Opportunities, Threats. Opportunity SWOT Analysis Weakness Hence, a SWOT analysis helps to identify the strengths and weaknesses of a product, service or company, and the opportunities and threats facing it. Threats Strengths and weaknesses refer to the product itself and are considered as internal factors. The external factors, referring to the marketplace, are opportunities and threats.

Old-School vs. Predictive Marketing Mix Analysis Old-School Marketing Mix Analysis Decision Making Technique Frequency / User Secondary data from vendor Sales reports Spreadsheets Biannual MM analysis by marketing managers Ad hoc Static Techniques Econometrics Forecasting Predictive modelling Simulation Statistics Text analysis Predictive Marketing Mix Analysis Frequency / User On-demand reports by multiple analysts supporting marketing and finance Decision Making Predictive Proactive For C-level execution

Case Study 1. What is the kind of analysis that the marketing department at Global Trading needs to do? Global Trading Pvt. Ltd. has been in the business of importing glassware from Italy and selling in the U.S. Now, Global Trading wants to venture into importing and selling of medical equipments in Asian countries. 2. What are the factors that need to be considered for a good marketing mix?

Summary In this module you learnt that: Marketing Mix refers to the primary elements that must be taken care of in order to properly market a product or service. Marketing mix is the combination four elements: Product, Place, Price and Promotion. Hence, it is a term that describes the key elements used by an organization to help meet its marketing objectives. The additional four Ps to the original 4 Ps are, people, physical presence, process and physical evidence. Now-a-days, the Four Ps is being replaced by the Four Cs model, consisting of consumer, cost, convenience, and communication. Below the line (BTL) is an advertising technique that uses less conventional methods than the ATL. ATL uses the usual common channels of advertising to promote products, services.