“Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements efficiently and profitably.”

The Chartered Institute of Marketing (CIM)

“The marketing mix refers to the set of actions, or tactics, that a company uses to promote its brand or product in the market.”

Economic Times

The marketing mix is made up the four P’s:-

•Product

•Price

•Place

•Promotion

There is also version which consist of 7ps, but we are only concerned with the 4P version.

The main difference in products can be classified under the following headings. 

•Appearance

•Features

•Function

•Cost

•Packaging

•Unique Selling Point(USP) 

Different businesses will create different products for different markets. The product developed will have an effect on the price. Some products are developed to target budget minded shoppers, some to target shoppers with no budget concerns. When a produc is released it goes through the product lifecycle which plots the number of sales of a product against time. 

“The product life cycle (PLC) is the cycle through which every product goes through from introduction to withdrawal or eventual demise.”

Economic Times

The stages of the Product Lifecycle:

Research and Development

This is the stage when the product is researched and designed. At this stage the product makes a loss as it costs money to design and make it and it is not currently for sale.

Introduction

This is the stage when the product is launched into the market

•At this stage, there is heavy marketing and product promotion

•Sales are slow as customers are made aware of the product

•Expenditure high

•Profits low 

Growth

This is third stage of the PLC

•Sales increase rapidly as customers are now aware of the product

•Customer loyalty

•Competition can be high

•Profits should begin to increase

Maturity

This fourth stage of the PLC

•Sales are maintained as the product is established in the market

•Competition becomes very intense

•Difficult to increase the volume of the product sales any further

•Business start to think of ways of extending the PLC

Saturation

The fifth stage of the PLC. 

•Sales begin to level off

•Extension strategies are often used here to increase sales 

Decline

This is the final stage of the PLC

•Sales have fallen and product becomes unprofitable

•Price wars continue

•Profits are lower

•Further advertising or price reductions will not be successful

•Product will be withdrawn from the market

When the sales for a product start to stagnate or level off, business will try to extend the life of the product and increase sales  in several ways including:

•Modify the product

•Change the packaging

•Increase promotion

•Reduce the price

•Find new market

•Encourage increased use of product

Cost Based Pricing

A method of pricing in which a mark-up is added to the total product/service cost.

This involves:-

•Working out the total fixed and variable costs of the product

•Deciding the percentage profit you want.

•Adding the two together to get the selling price the advantage of this pricing policy is that the business is guaranteed a profit.  Disadvantage is if competitors sell at a lower price they don't get sales to make the profit.

Competitor Based Pricing

A method of pricing which involves the setting of prices based on what your competitors are charging. If there is strong competition in the market, customers are faced with a wide choice leading to better value for money.

Penetration

A method of pricing when a business sets a low price at the beginning in order to gain entry into an existing market. This is used for new business trying to enter an existing

market which is well established.  They need to offer low prices to attract customers.  The idea that they gain the customers and then they can increase the price when they gain regular customers.  Risk is that the prices can be set very low which makes profit minimal.

Skimming

Skimming is when a business set a high price initially to ‘skim’ the market and gain as high a profit as possible. This policy is used for new products which have little competition at the start eg smart phone.  People are willing to pay high prices to be the first to have the new/unique product. Later on other businesses come into the market and the prices have to fall to maintain sales, this policy can be mean high profits can be short lived.

Factors that affect price

•Cost of production

•Need to make a profit

•Competition in the market

•Price which the market can bear

•Season

•Quantity of stock in hand

Methods

Advertising is a means of communication with potential customers of  a business' products or services. Advertisements are messages paid for by a business and are intended to inform or persuade potential customers who receive them to purchase products/services from a business Advertising can take the form of leaflets, social media, online marketing. 

Examples include:-

•Radio

•Newspapers

•Television

•Mail shots

•Poster

•Billboards

•Vehicles

•Internet

Sales promotion is the process of persuading a potential customer to buy a businesses products/services. Sales promotion is designed to be used as a short-term tactic to increase a businesses sales. Examples include money-off coupons, competitions, discount vouchers, free gifts and buy one get one free.

Examples include:-

• Coupons

• Loyalty cards

• Competitions

• Product endorsements

• Free offers

• Merchandising

• Point of sale displays

Place is about getting the product to the customer by having the product in the right place so that it sells most successfully.

This means that manufacturers must be very careful where they sell their product so that their image is maintained.  They also plan the most effective way for transport and delivery.

To achieve this businesses must:-

• Identify the most appropriate retail store for their product

• Get the best possible channel of distribution for their product

• Identify the most appropriate transport method for their product

Factors affecting Choice of Distribution Channel

•Type of goods

•Value of goods

•If the product is perishable (Goes out of date)

•Costs involved

Key trends

•Growth of digital technology

•Growth of call centres

•Growth of retail parks

•Diversification of products and services offered by   retailers

Manufacturer is the producer of a physical good, the buy the raw materials and process them to produce a product on a large scale.

Wholesaler buys products from the manufacturers and then sales them on to retailers.

Retailer is the final seller of the goods to the consumer. The retailer makes the goods available for the consumer at a convenient place and also further buys bulk of the products so that the consumer is able to buy small amounts. 

Consumer The consumer is the final user of a product/service. The consumer would buy small usable amounts of  the product or make use of a service. 

•Businesses can no longer rely solely on traditional marketing materials like newspaper, posters, flyers etc

•They need to attract the attention of their customers by embracing digital technology in their marketing strategy.

“Digital marketing is an umbrella term for the marketing of products or services using digital technologies, mainly on the Internet, but also including mobile phones, display advertising, and any other digital medium”

Examples

•Search Engine Optimization (SEO)

•Search Engine Marketing (SEM)

•Social Media Marketing (SMM) – eg Facebook  / Twitter  / Snapchat / Instagram

•Electronic Billboards

•Text reminders etc

•Email Marketing

•Blogs

Benefits

• Faster communication

• Cost efficient

• Professional

• Larger target audience

• Customers more informed

• Corporate Image

Drawbacks

• Communication too fast

• Capital may need to be invested

• Training/retraining may be required

• Can be 24/7

• Over communication

• Technology breakdown

• Digital divide