Marketing Mix
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MARKETING MIX
The Marketing Mix
The marketing mix is the balance of marketing techniques required for selling the product. Its components are often known as the four Ps:
Price – the price of the product – particularly the price compared to your competitors – is a vital part of marketing. There are several possible pricing techniques, which I will explain about further on.
Product – targeting the market and making the product appropriate to the market segment you are trying to sell into
Promotion – this may take the form of point of sale promotion, advertising, sponsorship or other promotions.
Place – this part of the marketing mix is all about how the product is distributed. Current trends are towards shortening the chain of distribution.
In the past many firms have been what could have been described as product-oriented. They produced a product and spent their energies marketing this product. There was little flexibility for individual customers or segments of the market. Firms now tend to be market-oriented. This means that they are flexible and adaptable to the demands of the market. They aim to change the product as necessary to satisfy their customers. I think with my coca-cola hooded sweatshirt I am going to be a bit product-oriented and a bit market-oriented, to try to get the best out of it.
The marketing mix is central to marketing. It describes an interactive blend of factors contributing to successful marketing. Companies utilise the mix to define their strategies and provide a framework for a marketing plan. The marketing mix includes:
Product
Price
Place
Promotion
PRODUCT
The products exist for customers. If they do not suit customer needs, they are not successful. A product should:
Function well
Attract customers
Offer benefits to customers
Develop with trends
When Im deciding on what to do with the product I think it is essential for me to understand about product features and benefits. A feature is what a product has or is, e.g. colour, size, shape and attachments. A benefit is what those features do for the customer, e.g. save time or money, offer comfort or prestige.
PRODUCT
FEATURE
BENEFIT
Leather Seats
Comfort, Prestige
Washing Powder
Larger Package
Economy
I also needs to investigate why a product is not selling to non-customers in the market. Sometimes there is a simple way of getting them to buy the product. For example a different product colour, change of packaging.
PRICE
The companies with successful products know what customers will pay so they do not need to have a lower price. Most product prices should not be based simply on calculating costs and adding a mark-up or should be set too low. It is more attractive to customers to reduce prices later.
Pricing a product can be defined as juggling strategy, cost and cash flow. A final price can be based on:
Comparing equivalent competitive products
Market research
Covering costs
Generating profit
Value of the benefits to the customer
A golden rule is to maintain prices and improve productivity, or: High Price + Low Costs = Maximum Profit.
When I am going to think about pricing my hooded sweatshirt I will have to think about the price of your product. I will have to consider the following when deciding:
What is your product/service worth to your customers?
What will your product cost to produce?
What is the competition charging?
Cost structure
Before I price my hooded sweatshirt I will have to split my costs up into variable and fixed costs as it will make my pricing more accurate and more profitable.
Variable costs – these are the costs that change with sales – extra labour requirements, more raw materials, etc
Fixed costs – the costs that stay the same – rent and salaries
Competitors
Before I decide the price it could be worth me trying to find the price that the competition is charging so I could use it as a area to price my hooded sweatshirt.
Mark-up – cost plus pricing
This is commonly used as a technique, businesses think about how much they need to add to the cost figure to make a profit, and use information about what mark-up their competitors use. However there are dangers with this method:
Cost plus pricing ignores the image you are trying to achieve, and the demand for your product or service
Hidden costs could mean the margin is not as large as you expect
Cost plus pricing relies on you hitting sales targets
Beware of starting a price war with the competition
Pricing by demand
The focus on pricing by demand is based on what your customers are willing to pay. The price you charge for your product or service will vary according to demand.
Differential pricing
This is where a business uses different margins for different products or services, e.g. higher margins on products, which take up a lot of space or are slow to turn over. In some cases customers may be willing to pay a premium, e.g. plumber emergency callouts.
Vanishing opportunity
Some products are valuable today and worth nothing tomorrow, e.g. perishable goods – pricing should reflect this. It is important to consider:
Does the product/service have a sell-by date?
Some products/services gradually become obsolete,