IBDP Design Technology - 9.3 Marketing Mix

Innovation and Markets / 9.3 /
Marketing Mix

The marketing mix is often crucial when determining a product or brand’s offering. Empathy for and understanding of the target audience is developed through thorough analysis of the market chosen. This informs several factors: the standards that end users demand; how and where to distribute and sell the product; how much they are willing to pay for a certain product and its quality; and how to communicate the launch of a product. Correct analysis of these factors could determine the success or failure of a product, despite its quality.

9.3.0 | Marketing Mix

The “marketing mix” involves 4 Ps: Product, place, price and promotion. These factors provide designers with an accurate brief of market requirements.

9.3.1 | Product

Product is what you are producing and placing in the marketplace. A careful analysis of competing products is vital to understanding the point in the market your product or service will sit, this will help establish your correct price point. Some questions to consider:

What is the Unique Selling Point - USP?
What different features do competing products have?
Which competing products are most successful? Why?
Which competing products are least successful? Why?

9.3.2 | Price

Price refers to the amount of money paid by a customer to purchase a product or service. An important (and difficult) aspect of marketing a product is setting the correct price that will attract consumers to make a purchase while generating profit. Without getting the balance right, a company can quickly find that they are losing money through a lack of sales or through lack of profit generation. The following strategies for price setting can be used (see also topic 10.5):

Penetration/Loss Leader Pricing: Setting a low price to increase sales and capture market share.
Competitor-Based Pricing: Setting a price based on the price of similar products.
Psychological Pricing: Setting a price based on the psychological effect of the price within the market. E.g, charging $199 instead of $200.
Demand Pricing / Value-based pricing: Setting a price based on demand for a product (prestigious branding, rarity, scarcity).
Product Line Pricing: Setting a range of prices by offering ‘add-ons’ to improve or vary the product.
Cost Plus Pricing: Setting a price by adding a percentage to the total costs incurred for a product (production, design, distribution etc.)
Plus-Minus Strategy: The opposite of a cost-plus pricing strategy. Marketing research determines the price at which consumers are willing and able to pay for a product. The desired profit margin is subtracted from that price. This gives the producer a target cost for the product.

9.3.3 | Place

Place refers to the distribution of products, i.e how products get from the producer to the consumer. For instance, products could be available at large warehouses, retail outlets (shops), through agents or via the internet.

Distribution channels determine how the product gets to the consumer. Traditional intermediaries are wholesalers who purchase large amounts from the manufacturer, then the products are distributed to retailers who sell them to the customers. But the advent of the internet has changed this traditional route. Many manufacturers can now sell directly to customers via the internet.

Each product has different styles and consumer habits that surround it, therefore it is important to analyse other factors within the marketing mix to find the most suitable platform for distribution.

9.3.4 | Promotion

Promotion is informing current, potential, and future customers of the availability of a product or service. The cost of promotion should be offset by the profit generated from increased sales.

Promotion activities can have a different reach. They can be targeted or non-targeted. They can focus on building a brand or on promoting sales (conversion).

Examples of promotion activities are:

Advertisements on TV, radio, outdoors and in printed media. These are relatively untargeted but with a larger reach. They are suitable for brand building.
Social Media Marketing, Cold calling, Search Engine Optimization (SEO) and Search Engine Advertising (SEA), Public Relations (e.g. sponsorship), point of sale displays, point of sale personal selling or promotion, experiential marketing and product packaging. These are relatively targeted and with a smaller reach. They are more suitable for conversion.

Marketers want to be able to measure the impact of promotion strategies in order to make cost-benefit analyses. They want to be able to track and monitor promotion activities in order to determine steps to improve Return of Investment (ROI). Some promotion activities provide more opportunities for control over ROI than others.

9.3.5 | Product Standardization

Standardization is the process of setting uniform characteristics for a particular good or service. Product standardisation among products produced by different businesses operating is useful for consumers as it permits competition between the various suppliers.

Types of standardisation:

Government / Trading area standardisation: Different countries have different standards for products. Designers and manufacturers need to be aware of these requirements.
Component standardisation (market battle): Historically companies with different technologies have competed for format standardisation, because they know if they can get ‘their’ format set as the industry standard, the market is going to be huge. For example Betamax v VHS, USD v Mini USB, Blu Ray v HD DVD. However, if a product does not allow interchangeability or interaction with other standardised components, this can lead to consumer discontent - Apple for example.
Industry-wide standards: Many industries voluntarily adopt standards that enable them to work collaboratively and compete effectively in the market. E.g fire resistance - on clothes, furniture, other household items.
Efficiency and Performance: Increasingly, governments are concerned with energy conservation and legislate to prevent products with high energy consumption from being sold.

9.3.6 | Trigger products vs incremental products

Trigger products attract customers on their own merit for their function and performance. The KitchenAid classic blender comes with a mixing bowl and various mixing/blending attachments. This setup suits most consumers, and they are happy to pay the initial cost for this product.

Incremental products are available to engage customers to purchase ‘add-ons’. For example, for the KitchenAid you can purchase a range of add-ons that enable a wider range of functions and performance from the basic machine.

These high margin add-ons purchases are rarely considered by customers when making the initial purchase decision. Independently, the incremental products have little or no intrinsic value as they can only be used by the same trigger product and not transferred to other products.

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