C2 Marketing mix
• Product development: form and function, packaging, branding.
• Pricing strategies: penetration, skimming, competitor based, cost plus.
• Promotional advertising, public relations (PR). Sponsorship, use of social and other media, guerrilla marketing, personal selling, product placement, digital marketing, corporate image.
• Place, distribution channels: direct to end users (mail/online/auction), retailers, wholesalers.
• Extended marketing mix: people, physical environment, process.
The marketing mix provides an excellent framework for developing marketing plans. The marketing mix for a product is generally accepted as being made up of four parts (the four p's) which are product, place, price and promotion. The marketing mix are factors that a company can control and which wil persuade or influence customers to buy its products or services. The extended Marketing Mix which we need to use has 7 P's with the addition of People, Processes and Physical.
Once the marketing objectives have been agreed, marketing plans must be developed to provide a structure for how the goals will be achieved and the indicators for measuring progress.
A product is anything that can be offered to a market to satisfy a want or need. Products include:
Physical goods
Services
Experiences
Events
Persons
Places
Properties
Organisations
Information and ideas
Therefore a combination of goods and services are offered to the target consumer. For example, you might buy a camera and receive a significant amount of added after sales service to help you get the most from its features. These two aspects together make up the product being offered to the consumer.
Form and Function
These terms derive from architecture where a design results in something being either:
designed for form, for example a beautiful chair which can be admired but which is not comfortable to sit on, and therefore not particularly functional.
or designed for function as opposed to form, for example a pair of ordinary wellington boots designed for walking through wet and muddy fields.
Packaging
Packaging can refer to how a product or service is promoted and is not just the physical wrapper around a product. How a product is packaged or labelled can make or break a sale. Some examples of poor physical packaging which make opening difficult, include:
Childproof medicine bottle caps
Sardine Cans
Cellophane wrapped items
Plain packaging or that which does not represent the product , such as that used for medicines and sandwich packaging, can be a disadvantage because it is confusing to the customer. However the re-design of sandwich packaging used by Pret a Manger was not only creative but also functional - following a revamp, the packaging could be used as a tray as well as a receptacle. Another example of ineffectiveness or inappropriately labelled products is shown in this photo. Some packaging is purely functional as the product says it all, such as net bags for satsumas.
Branding
There are many examples of really effective branding which has become synonymous with the product. Animals are often used to represent products even though seemingly unrelated and with considerable success, such as the:
Andrex Puppy
Duracell bunny
Freeview TV cat and budgie
Compare the Market Meerkats
118 Men
Followers of the meerkats and baby Oleg story generated revenue not only for the website, comparethemarket.com, but also for the products associated with the brand, by capturing the public's imagination and tugging at heart strings.
The use of animals in marketing campaigns is recognised as a successful psychological tactic.
More than ever before, marketing campaigns are seeking global attention and so the branding of products must be carefully considered to prevent offence or misrepresentation. Mistakes do occur, where cultural differences do not readily transfer globally, and there are many examples to be found online.
These instances can cost businesses enormous sums of money to correct the branding without having to alter the product. One such example is when Oil of Olay changed the brand in 1999 to Oil of Olaz supposedly due to some nationalities registering their objections about the name. It contains to be known as Oil of Olaz in parts of Europe while retaining the Oil of Olay name as a global brand.
https://www.bbc.co.uk/news/articles/czxvkxnwpnno
Price is the amount of money consumers are charged to buy a product and can vary considerably. Marketing campaigns may focus on promoting special offers or BOGOFS.
Supermarkets used the BOGOF slogan successfully to encourage shoppers to bulk buy. However they were criticised subsequently for encouraging food waste.
Price is the one element of the marketing mix that produces revenue, the others generate costs.
Penetration
A product is sold into a market at a low initial price in order to generate sales before the price is increased. You may have seen examples advertised as "introductory offer" such as online shops, subscription services and telecommunications contracts. This helps break down any barriers to the market and generates sales volume, but not necessarily profit, so it can be used as a short-term strategy to gain market share.
Skimming
At the launch of a new product there will be less competition in the marketplace. Skimming involves setting a reasonably high initial price in order to get high initial returns from those consumers willing to buy the new product. Examples include latest technology such as TVs, music systems, cameras, mobile phones and other devices.
As other similar products or upgraded models enter the marketplace, the price is lowered to remain competitive. This strategy is often adopted by technology companies that benefit from "early adopters".
Competitor Based
Businesses need to remain aware of their competitors' pricing strategies otherwise they are likely to lose their market share by appearing to overcharge for similar products. You will be aware of price wars between supermarkets and it is difficult for consumers to make direct comparisons between products based on price alone.
While brand names stipulate the RRP, some manufacturers restrict businesses to reduced prices so the product is offered at a consistent price across stiores. Such examples include items in pre-priced packaging such as some Cadbury chocolate bars, cereals and promotional merchandise. it is illegal to make claims about substantial savings based on the RRP.
Cost Plus
This is a pricing strategy which is used to determine the retail or wholesale price of products or services. Businesses apply a simple formula as a guideline for determining a sale price which still enables the business to make a reasonable profit.
Sales price LESS unit cost= gross profit
Unit profit is determined by the amount of mark-up the business adds to each unit. The mark-up is determined by looking at competitor pricing in order to remain competitive in the market place. Competitor pricing can vary depending on the geographic location of the business. For example, the cost of fuel can vary considerably ingarages, even when situated opposite each other. This might be related to the cost from the suplier of the fuel, such as Shell, Texaco, or Esso, which is reflected in the mark-up. By contrast retail outlets selling identical goods will wish to remain competitive and might find themselves engaged in price wars such as the major supermarkets.
Promotion is made up of various ways of communicating products or services of the business. The purpose of promotion is to raise awareness of a business and generate sales.
Promotion should inform , persuade and influence consumers to purchase a product or service and promote the reason the purchase should be made form their business as opposed to another. For example, although the product differs , KFC, Burger King and McDonald's compete to persuade customers to purchase food rather than go to one of their competitors.
A marketing model known as AIDA, defines promotion as a four-step process.
Awareness
Interest
Desire
Action
You might question why some businesses continues to advertise even though they appear to be extremely successful and are household names. One such business is Coca Cola, a global brand dominating the market. It is claimed to be the world's third biggest brand valued at around 80 billion. Around 94% of the world's population recognises the brand and it is the world's favourite soft drink. However, they need to remain an active market presence to ensure that competitors do not gain advantage.
Public Relations
Public relations relates to business communications and relationships with the public. This includes customers, suppliers, stockholders, employees, the government, the general public and the society in which the organisation operates. Public relations programmes can be wither formal or, such as professional advertising or informal, for example promoting the business by word of mouth.
Sponsorship
In order for businesses to be more creative with their finances, particularly in relation to their marketing budget, they may seek sponsorship (input of money) from other businesses such as manufacturers and suppliers of celebrities. Sponsorship has become more popular during times of austerity and can be highly successful. Examples include:
Santander: Olympic medalists, golfer Rory McIlroy
Formula 1 Racing Teams: Oil companies, banks, airlines, luxury watch brands
Football Clubs: Manchester United has several sponsors including Adidas, Apollo Tyres, DHL and Chevrolet.
Some businesses which rely on sponsorship are also sponsors themselves- Santander is an example. Formula 1 driver Jenson Button appears in Santander advertisements ( so he helps generate money for them, while his team McLaren-Honda is sponsored by them.
Media/Social Media
The media has opened up opportunities to promote businesses ,enabling rapid promotion. However unless it is though about carefully it may generate negative publicity.
Social media enables small business with very limited budgets to promote their businesses and gives them ready access to learn from others. This might also be the case with businesses favouring more traditional marketing methods such as a routine advert in the local press. Some of the most popular methods of online media used for promotional advertising include:
Youtube
Using Social Media enables businesses to expand their promotional range and therefore could lead to them being unable to fulfill the demand generated.
Guerilla Marketing
This approach refers to low cost , creative and unconventional methods used to maximise return. It can include using tactics such as flash mobs or graffiti, or as in the case of a Unicef campaign around clean water, creative placement next to vending machines. The aim of this marketing is to keep the budget low but maximise the impact particularly if the campaign goes viral through Social Media.
Personal Selling
This is a skilled task which may require training a sales team. It is considered to be one of the more expensive aspects of the promotional mix. A seller presents a product direct to a customer, often face-to-face but it can also be over the phone or through video conferencing and instant messaging.
Personal selling may reach a relatively small number of people (compared with TV advertising, for example) but it is generally more effective as potential customers can ask questions relating to their own personal circumstances which may result in a sale, even an unlikely one.
Product Placement
Product placement is when TV programmes and movies display recognisable brands. Examples include:
Apple Computers- Mission Impossible and Independence Day
Pepsi- Back to the future
Nokia- Hollyoaks
Nationwide- Coronation Street
Digital Marketing
This is the promotion of products or services using multi media. The place where you study probably uses digital marketing, as do many businesses, via means such as :websites, Facebook, Linkedin, Texting.
Government departments and agencies also use digital marketing to promote their services, eg online services for vehicle road tax and to file tax returns. Some NHS services are promoted by text messaging such as clinics, flu jabs etc. The government's digital marketing strategy is available publicly.
Corporate Image
Part of the marketing mix is the way in which the business promotes its corporate image to the world. For example, some technology companies promote a creative, friendly and almost family image such as those portrayed by Google and Microsoft. Apple's corporate image is often perceived by consumers as displaying success and bucking the trend, just by owning one fo their products. Similarly, corporate image is reflected in the clothing people wear.
If a business wants to project a corporate image as the place to buy hiking gear then they would be unlikely to want a corporate image represented by Day-Glo
The marketing mix includes developing a strategy for promoting the product in accordance with where it can be purchased and how it is distributed. For example, most consumers of confectionery will buy products from a shop. However, in order to sell confectionery at these stores, a manufacturer needs to sell and distribute the products to wholesalers who will then sell to the retailers, or sell direct to the public as long as certain conditions are met.
Business therefore need to adapt their
marketing mix depending on the end customer- that is whether they are a
consumer or a reseller. Each end customer will seek different benefits from the
same product.
Direct to end users(mail/online/auction)
Direct distribution is where the business sells and distributes direct to the customer. For example, Apple sells products to consumers via their e-commerce website and delivers direct to the consumer. In contrast, purchases made from Amazon and Ebay may also be distributed indirectly when ordered through their websites on behalf of the retailer.
Many businesses continue to promote their products via a brochure such as Screwfix, Lidl and Wicks. Customers can place their order over the phone or by completing a form. Businesses might also sell via auction houses or websites. Examples include property and land agents or websites such as eBay.
Retailers
Marketing strategies also vary depending on whether consumers purchase from retailers or wholesalers. Retailers usually operate on a greater profit margin and can exploit savings to market their business and what they offer.
Wholesalers
As wholesalers rely on a quick turnaround of their products at prices which already have a low profit margin, they are likely to focus their campaigns on bulk buying, purchasers' convenience and out of town locations. They might include in their marketing mix the reasons why they can sell at lower margins and possibly advertise the benefits to the environment of their use of less packaging o
This model extends the standard four P model to 7 P's by including people, physical environment and processes.
Successful businesses recognise the need to constantly improve the service they offer alongside their products to benefit from repeat business. Even for low-price repeat purchase items, it is now standard for companies to offer a level of customer care after the initial purchase. For example, snacks and sweets will have their dedicated customer service to resolve any product queries or complaints. Successful business also invest in training for their workforce to ensure employees have the right skills to represent the culture of the business
Businesses can reinforce their image and culture by means of the environment used by customers. For example, high-end vehicle manufacturers such as Porsche and Merceds-Benz have plush, contemporary showrooms which accomodate both new and returning customers. When customers visit such showrooms for servicing or vehicle maintenance they can enjoy facilities such as Wi-fi enabled quiet working areas, leisure areas with TVs, quality refreshments and child friendly play areas.
Customers of bargain shops are likely to experience fairly cramped conditions, This is because the retailer needs to maximise every inch of square space to return maximum profit where the goods generate small profit margins.
Any business should recognise the importance of creating and maintaining a positive image because the purchasing process for a particular product or service can be a key part of the promotional mix. Many companies use technology to improve the service they offer customers. They might help customers to create accounts quickly (to avoid providing the same information each time they buy something) and track orders so customers can see when their purchase will be delivered.
Virgin Atlantic portray a friendly and relaxed yet professional identify through their marketing. The process of booking a flight, holiday or any one of their brands models that image. Customer's checking in online for a forthcoming flight are able to recognise the Virgin brand in the same way as customers purchasing a rail ticket. They can identify with their ethos by the way the website is structured, its language and usage. When on board a Virgin flight that image continues with a cartoon safety video which attracts attention, unlike the more generic version used by many airlnes. Customers' safety is paramount to airlines and passengers are more likely to pay attention when they engage with the corportate identify.