Introduction to Marketing

Learning Goal: Develop skills in utilizing the marketing mix and promotional mix.

Marketing can be defined accurately in many ways. I prefer to refer to marketing as any contact an organization (via products/services, employees, building design, advertising, etc.) has with potential customers. This definition assumes that everything a company does impacts its image. The likability of a company directly impacts the probability that a potential customer will buy the product/service from them.

Marketing Mix

The marketing mix is is a general phrase used to describe the different kinds of choices organizations have to make in the whole process of bringing a product or service to market. The 4 Ps is one way – probably the best-known way – of defining the marketing mix, and was first expressed in 1960 by E J McCarthy.

The 4Ps are:

    • Product (or Service)
    • Place
    • Price
    • Promotion

A good way to understand the 4 Ps is by the questions that you need to ask to define you marketing mix. Here are some questions that will help you understand and define each of the four elements:

Product/Service

A good, idea, method, information, object or service created as a result of a process and serves a need or satisfies a want. It has a combination of tangible and intangible attributes (benefits, features, functions, uses) that a seller offers a buyer for purchase.

Things to consider for products include, but are not limited to:

    • What does the customer want from the product/service? What needs does it satisfy?
    • What features does it have to meet these needs?
    • Are there any features you've missed out?
    • Are you including costly features that the customer won't actually use?
    • How and where will the customer use it?
    • What does it look like? How will customers experience it?
    • What size(s), color(s), and so on, should it be?
    • What is it to be called?
    • How is it branded?
    • How is it differentiated versus your competitors?
    • What is the most it can cost to provide, and still be sold sufficiently profitably? (See also Price, below).

Example: Tesla was founded in 2003 by a group of engineers who wanted to prove that people didn’t need to compromise to drive electric – that electric vehicles can be better, quicker and more fun to drive than gasoline cars. Today, Tesla builds not only all-electric vehicles but also infinitely scalable clean energy generation and storage products. Tesla believes the faster the world stops relying on fossil fuels and moves towards a zero-emission future, the better.

Place (Distribution Channels)

  • Location of the market and means of distribution used in reaching it.
  • Where do buyers look for your product or service?
  • If they look in a store, what kind? A specialist boutique or in a supermarket, or both? Or online? Or direct, via a catalogue?
  • How can you access the right distribution channels?
  • Do you need to use a sales force? Or attend trade fairs? Or make online submissions? Or send samples to catalogue companies?
  • What do you competitors do, and how can you learn from that and/or differentiate?

Example: Traditional independent dealerships are usually built on large plots of land in out-of-the-way locations, noted Maron. In contrast, Tesla stores are better off in areas that have a lot of foot traffic, he said. Some are in places like malls and city centers. The stores also benefit from being much smaller and more intimate.

Traditional car dealers focus on inventory. Once they get a car onto a lot, they move it out as quickly as possible. Tesla shipped about 50,000 last year, customers usually have to wait months to get their cars.

Potential Tesla customers go into Tesla stores to learn about the technology. Tesla reps often spend hours with customers to teach them where they can charge Tesla cars, the size of government electric car incentives, and how much they can expect to pay in electricity versus gas. Car sales staff at traditional independent dealers would likely be unwilling to spend the time to educate the customer about Tesla cars.

Price

A value that will purchase a finite quantity, weight, or other measure of a good or service.

As the consideration given in exchange for transfer of ownership, price forms the essential basis of commercial transactions. It may be fixed by a contract, left to be determined by an agreed upon formula at a future date, or discovered or negotiated during the course of dealings between the parties involved.

In commerce, price is determined by what (1) a buyer is willing to pay, (2) a seller is willing to accept, and (3) the competition is allowing to be charged. With product, promotion, and place of marketing mix, it is one of the business variables over which organizations can exercise some degree of control.

It is a criminal offense to manipulate prices in collusion with other suppliers, and to give a misleading indication of price such as charging for items that are reasonably expected to be included in the advertised, list, or quoted price.

  • What is the value of the product or service to the buyer?
  • Are there established price points for products or services in this area?
  • Is the customer price sensitive? Will a small decrease in price gain you extra market share? Or will a small increase be indiscernible, and so gain you extra profit margin?
  • What discounts should be offered to trade customers, or to other specific segments of your market?How will your price compare with your competitors?

Example: Tesla uses a premium pricing strategy that integrates the majority of the costs into the original purchase price of the vehicle. Due to the electric engine overall maintenance costs are minimal. Charging stations are free to drivers and tax savings are included through government grants.

Promotion

  • The advancement of a product, idea, or point of view through publicity and/or advertising.
  • Where and when can you get across your marketing messages to your target market?
  • Will you reach your audience by advertising in the press, or on TV, or radio, or on billboards? By using direct marketing mailshot? Through PR? On the Internet?
  • When is the best time to promote? Is there seasonality in the market? Are there any wider environmental issues that suggest or dictate the timing of your market launch, or the timing of subsequent promotions?
  • How do your competitors do their promotions? And how does that influence your choice of promotional activity?

Example: Tesla CEO Elon Musk stressed this week that the electric car maker is not spending much to market its Model 3, a sedan that company is counting on to enter the mainstream. "We're not promoting the car," he said on an earnings call Wednesday.

Tesla relies heavily on unpaid media channels to build up interest in their cars. From social media to written articles on Fast Company, Tesla pushes people to talk about the uniquenesses of the brand. They also ran a #loveday video contest on Youtube.

Promotional Mix

As you can see in the previously written section, promotion is broken down into many segments which are often referred to as the promotional mix.

Promotion is one of the market mix elements, and a term used frequently in marketing. The specification of five promotional mix or promotional plan. These elements are personal selling, advertising, sales promotion, direct marketing, and publicity. A promotional mix specifies how much attention to pay to each of the five subcategories, and how much money to budget for each.

A promotional plan can have a wide range of objectives, including: sales increases, new product acceptance, creation of brand equity, positioning, competitive retaliations, or creation of a corporate image.

Fundamentally, however there are three basic objectives of promotion. These are:

  • To present information to consumers as well as others.
  • To increase demand.
  • To differentiate a product.

There are different ways to promote a product in different areas of media. Promoters use internet advertisement, special events, endorsements, and newspapers to advertise their product. Many times with the purchase of a product there is an incentive like discounts, free items, or a contest. This is to increase the sales of a given product.

Advertising

Is persuasive communication about a product to a customer (i.e., iPod Touch in this case)

Forms of Advertising: TV, Radio, Billboard, Newspaper, & Internet

Questions to Answer

  • What is your advertising going to look like?
  • What will your message be?
  • Who needs to see it?

Public Relations

Is developing/protecting positive image towards customers, employees & community.

Questions to Answer

  • How does this product/service help people in an area they care about?
    • Environment
    • Jobs
    • Social Issues

Sales Promotion

Is a short-term incentive to encourage customers to take action (buy).

Forms of Direct Marketing: Travel Deals, Coupons, Giveaways, Buy One Get One Free, Trade Examples/Consumer

Promotions

Questions to Answer

  • How will you incentivize people to buy your product?
  • What auxiliary products/services can you provide as an incentive?

Personal Selling

Is maintaining face-to-face contact with customers.

Forms of Personal Selling: A sales representative from the Apple Store helping you select and purchase an iPod that best meets your needs based upon size (shape), memory, color and function.

Questions to Answer

  • How will you differentiate your personal selling?
  • What can you wear or say?

Direct Marketing

Is a promotional message sent to a specific group of customers in an effort to generate sales and awareness (direct mail or email).

Forms of Selling Promotion: Apple sending an email advertisement associated with Valentines Day to male customers in an effort to persuade them to purchase iPods for their significant other.

Questions to Answer

  • How can target select customers with a message the spurs them to sell?
  • How do individuals within your target audience vary and how could you direct your message to specific people?

Lesson Information

Presentation

Introduction to Marketing

Vocabulary:

Additional Reading

Student Activity

Develop a marketing mix and promotional mix for your product.

Download and print the IntrotoMarketing-Template.pdf. Complete the form for the business we are currently working on. You may work with one partner but not with more than one person. You will present your work to the class and we will vote on the best marketing plan and promotional mix.

Template

IntrotoMarketing-template
IntrotoMarketing-branding