3rd chapter Marketing Mix(Part-I)

3rd chapter –
Part-1 MARKETING MIX

By
Asst Prof. Venkatesh.N
Koshys Institute of Management
Studies.

LEARNING GOALS


1.
2.
3.
4.
5.

Key learning goals:
This topic will continue the discussion of
marketing management issues, especially
marketing mix and product life cycle.
Explain the four elements of marketing mix.
State the difference between place and promotion.
Explain the stages of product life cycle.
Explain how a business can extend its product
life.
State the reasons why a business may analyze its
product life cycle.

02/08/14
Copyright © 2002 by Harcourt, Inc. All rights reserved.

Marketing (2)
-Marketing Mix


•

•

What is marketing mix?
Marketing mix refers to those four elements
(product, price, promotion, and place) of a firm’s
marketing strategy which are designed to meet the
needs of customers. These are regularly known as the
four “Ps”.
Simply, to meet consumers’ needs, businesses must
produce the right product, at the right price, make it
available at the right place, and let consumers know
about it through right promotion.
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Elements of Marketing Mix

•
•
•
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Product
Price
Place
Promotion

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Marketing (2)


1.
2.
3.

-Marketing Mix: Product
Product:
Products must be ensured to meet the needs of
customers in terms of the following aspects:
Appearance
Function
Production Cost

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Marketing (2)
-Marketing Mix: Product
Features of a product to meet the needs of customers

Aspects

Brief explanations or examples

The appearance

 Color, size, shape, etc. must meet the
consumer needs.

The function

 Able to be used
 Convenient for use
 Meeting special needs of customers

The cost

 Production costs must be low enough to earn
some profit.
 High cost, higher price.
 Too high price, customers unlikely to buy.

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Product Mix
•

Product mix, also known as product assortment(Mixture),
refers to the total number of product lines that a company
offers to its customers. For example, a small company
may sell multiple lines of products. Sometimes, these
product lines are fairly similar, such as dish washing liquid
and bar soap, which are used for cleaning and use similar
technologies. The four dimensions to a company's product
mix include width, length, depth and consistency.

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Product Line
•

A good way for a company to try to expand its
business is by adding to its existing product line.
This is because people are more likely to purchase
products from brands with which they are already
familiar. For example, a frozen pizza company
may wanted to increase its market share by adding
frozen breadsticks and frozen pastas to its product
line.

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Product Line

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Marketing (2)
-Marketing Mix: Price

Price:
The pricing policy that a business chooses is
often a reflection of the market at which it
is aiming.
The right price set must take into account of
production costs, competitors’ prices and
consumers’ purchase ability and demand
level.
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Marketing (2)
Influences from the pricing factors
Factors

Influences on the price of a product

 High production
costs

High production costs would mean the high
sale price for the goods supplied by sellers.

 High customer
demand

High customer demand will lead to the
increased price of the goods or services.
Suppliers are more wiling to provide the
goods or services as it is more profitable
for them to supply.

Low prices charged
by
competitors

If the price of the substitute product offered
by competitors decreases, the demand for a
product will be decreased as well.

02/08/14


 Attention: High-price strategy
•

•

In general, from the economic point of view, the higher the
price of a product is, the less quantity demanded by
consumers. Or there are few buyers who would like to highprice products.
However, in practice, a business may charge a high price
because it is aiming to sell to those customers who regard its
products as unique and high quality although the production
costs are not high.
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- Marketing Mix: Place



1.
2.

Definition:
Place refers to the means by which products can
be distributed to the consumers. The product
must get to the right place at the right time.
Decision making may be based on the following:
How the product is distributed physically, such
as air, sea, rail, or road.
How the product is sold, such as through
retailers, wholesalers, or direct mailing, etc.

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- Marketing Mix: Promotion

Definition:
• Promotion refers to a number of promotional
•

methods, such as advertising, sales promotion,
competitions, and personal selling, etc.
A business must choose a method of promotion which
is the most effective in its particular market and for its
own product. For example, TV advertising may be
better for the product with a high sales turnover or a
wide request. But for high-technology machines or
equipment, it is better to choose personal selling
methods.

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New-product development and
product life-cycle strategies


Introduction: New products

•

•

New products are the lifeblood of the
organisation but they are extremely at risk
and the majority never reach
commercialisation.
In competitive markets, the best and
strongest firms sustain growth through the
introduction of new products and services
to meet the changing needs of the
consumers.

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Introduction: New products
•

All products have a fixed life span and this is influenced
by the type of product, its innovativeness, the
management of the product through its life cycle, as
well as the markets in which it is sold.

•

All products will finally decline and need to be replaced
by new ones and companies need to be adept at
adapting marketing strategies to respond to the
dynamics of the environment, so as to manage the
product through its life cycle effectively.
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Innovation and new product
development
•
•
•
•

Unless companies develop new products, their
business will certainly decline and die away.
Innovation is a costly and risky activity.
Some innovations are nothing more than a
modification to an existing product range, while others
are completely new products
Success in developing new products is mainly about
correctly identifying what those needs are, and
translating them efficiently into new products.

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Innovation and new product development strategy

•

•

Product innovation covers a range of product
development activities, including product
improvement, development of new products
and extensions to product lines.
Classifications:
• New to company, new to market.
• New to company, significant innovation to market.
• New to company, minor innovation to market.

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Product innovations are not to be confused
with inventions

•

Innovations

• Ideas, services, technologies and products that
•

have been developed and marketed to
customers who perceive them as novel or new.
It is a process of creating and delivering new
product or service values that did not
previously exist in the marketplace.

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Product innovations are not to be confused
with inventions

•

New product development

• The development of new brands, original products,

product improvements or modifications, through the
efforts of the firm’s R&D.

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Why do new products fail?
•
•
•
•
•
•
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New product development is too expensive
Unexpected delays and time to market too long
Insufficient demand for the product or service
Not as well designed as it should have been
Incorrectly positioned
Incorrectly priced
Competitors fight back more aggressively than expected.

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What influences new product
success?

•

Development of a unique superior product

•
•
•
•
•

Clearly defined market and product concept
Meeting market needs
Senior management commitment
New product planning
Systematic new product development
process

• Better quality, new features and greater value

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9 Steps of new product
development

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1. Idea generation
•

Systematic search for new-product ideas.

• In pharmaceutical companies it can take 6000-8000 ideas
•

•
•
•

to produce one commercial success.
Generally only 1 out of 100 new-product ideas will reach
their objectives.

Internal sources
Customers
Competitors

• Observing the competition is an excellent source of newproduct ideas.

•

Distributors, suppliers and others
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2. Idea screening(Viewing )

•
•

Process of screening the new-product ideas
in order to spot good ideas and drop poor
ones as soon as possible.
exact evaluation is necessary.

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3. Concept development and testing

• Product idea converted into a product

concept
• Converted into meaningful consumer terms of a
product image
• How the consumers will perceive the product.

• Concept testing is essential to judge the

strength of the new-product concept and
ascertain if it will have commercial appeal.
• Consumers may like the idea but would they be
prepared to pay for it?

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4. Marketing strategy development

• Develop the suitable marketing strategy
• based on the marketing logic by which the

business unit hopes to achieve its marketing
objectives

02/08/14

5. Business analysis

•
•
•

Review of the sales, costs and profit projections.
Establish the viability of the project and whether
it will satisfy the company’s objectives.
Explore strategic fit with entire business.

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6. Product development

•

Logical developing the product concept into
a physical product in order to ensure that
the product idea can be turned into a
workable product.

02/08/14

7. Test Marketing
•

New product tested in realistic market settings:
• Standard test markets
• Small number of representative test cities / markets, Pilot study
• Competitors are able to monitor the project
• Controlled test markets
• Conducted in conjunction with research firm, Controlled parameters
• Competitors are able to monitor the project
• Simulated test markets
• Simulated environment
• Provides measure of trial and commercial effectiveness against
competitors

•

Test marketing new industrial products
• Product-use tests, Trade shows
• Standard or controlled test market
02/08/14• Distributor and dealer display rooms

8. Commercialisation

•

If having met the validity of the prior
analysis, the product is then brought to
commercialisation, the company needs to
decide the following:

• When?
• Where?
• To Whom?
• How?
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9. Organising for new-product
development

•

Sequential product development slow and many
companies encourage the concept of
simultaneous product development:

• departments work together, overlapping the steps in
the product development process so as to save time
and increase effectiveness.

•

Successful new-product development is based
upon an fixed culture of innovation within the
company that is supported from senior
management downwards.
02/08/14

Product life-cycle strategies

•

Following the launch of the new product, the
challenge to management is ensuring that the
product achieves its potential over its projected
life span.

• This involves understanding the product life-cycle

and developing appropriate marketing strategies and
interventions.

02/08/14

The product life-cycle

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•
•
•
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•

The product life-cycle (PLC) is the course of a
product’s sales and profits over its lifetime. It
involves five stages:
Product development
Introduction
Growth
Maturity
Decline
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The product life cycle

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Figure 14.2 Sales and proﬁts over the product’s life from inception to demise
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The PLC as an effective marketing tool

•
•

The PLC can be applied to product classes
as well as styles, fashions and fads.
The PLC will reflect these aspects in the
length and type of PLC as illustrated:

02/08/14

The PLC as an illustrator

Ex: nordisk (ljust
trä)

Ex:Kostym

Ex:Platåskor

Figure 14.3 Marketers need to understand and predict style, fashion and fad
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Product / concept development stage

•
•

Product concept converted into meaningful
consumer terms of a product image.
Concept tested to ascertain commercial
appeal.

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Introduction stage
• The phase where the new product is distributed
•

•

and made available for purchase.
The market pioneer has much responsibility
when devising the appropriate strategy as it sets
the stage for the product’s introduction to the
consumer.
Characterised by high promotional costs.

02/08/14

Introduction stage strategies
• Strategies are based upon the product and the
dynamics of the market

• Skim the market slowly using high price and
•

relatively low promotional activity.
Skim rapidly by using a high price and high
promotion strategy if the market is price insensitive.

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Growth stage
• The product sales begin to increase rapidly.
• Profit is generated as a result of effective

promotional activity and the spread of costs
over larger volume of sales.

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Maturity stage
• The phase where sales growth slows or levels
•

off.
Marketers then seek to resuscitate or extend the
life of the brand by the following methods;

• New market development
•
•

• New usage and application
Product development and modification
Marketing innovation

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Decline stage
• Sales decline.
• Marketers need to determine the value of
•

retaining the product versus the cost of
divesting from the product.
This is weighed up against the market
dynamics.

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Branding and Packaging

•
•

What is Branding?:
What is Branding? Branding is the process
of stamping product with some identifying
name or mark or combination of both

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Reasons for Branding
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Identify the particular product or service
Easy advertising and publicity Standard
quality and satisfaction to buyers Increases
the sales Sale promotion in competitive
market Reduces personal persuasive selling
efforts

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Various terms relating to
branding
A brand is a name, term, sign, symbol or design used to
identify the products of one firm and to differentiate
them from the products of the competitors. Bata, LG,
Samsung, levis are some examples of common brand
Brand name: It consists of words, letters or numbers
which may be vocalized or pronounced. for example:
LG, BPL, Onida, SONY, 501 Soaps etc. Brand mark:
It is that part of the brand which can be recognised but
not utterable, such as symbol, design or distinctive
coloring or lettering.

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Contd..
•

Trade mark: when a brand is registered and
legalized it becomes a trade mark. Trade
mark v/s brand Registration Scope Legal
protection Nature

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Brand classification:
• Brand classification On the basis of

ownership: Manufacture’s brand
Middlemen’s brand On the basis of market
area: Local brand Regional brand National
brand International brand On the basis of
number of products: Family brand
Individual brand Product line brand On the
basis of use: Fighting brand Multiple brand

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Factors affecting the selection
of good brand
Simple and short Easy pronunciation
Recognizable Suggestive Economical
Legally protectable Helpful in advertising
• Reasons for not using brand:
• Nature of products Below quality products
Lack of quality maintenance Difficulty in
differentiating
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Advantages of branding :
Advantages of branding to the manufactures :
Builds up reputation and image Helpful in
advertising Easy to identify Personal contact
with customers Creation of separate market
Advantages of branding to the middlemen:
Helps in understanding the consumer
behaviour No need of extra advertising and
sales promotion Increase in goodwill Quick
moving products Reduces distribution cost

02/08/14


Contd..
Advantages of branding to the consumers:
Easy identification Quality products Easy
shopping Easy to lodge complaint and make
claims

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Disadvantages of branding:
Disadvantages of branding to the
manufactures: Increases cost Expensive
Opposed by middlemen 2. Disadvantages of
branding to the consumers: Greater
confusion Discourages from trying other
products Commands premium Increase in
price

02/08/14

Conclusion:
•

If we compare its advantages and
disadvantages, we may confirm that its
advantages are much powerful. So I
conclude that the use of brand is necessity
in modern era..

02/08/14

What is packaging?:
•

A package is a wrapper or container in
which a product is enclosed, encased or
sealed. For example: a wrapper, box,
cartoon, can, crate, bottle, jar, tube, barrel,
drum etc. for convenient distribution…

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Objective of packaging:
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Protection Identification Convenience
Promotion Attraction Economy Reputation

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Advantages of packaging:
•

•

1.Advantages of packaging to the
manufacturers: Keep the product safe Facilitate
storage Enhances goodwill Promotes product
Prevents adulteration Helpful in advertising and
sales promotion Increase profit
2. Advantages to the middlemen Facilitates
storage Self advertising Easy display Help in
transit
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Advantages to consumers:
•

Minimum possibility of adulteration.
Convenient handling and storage. Provide
necessary information about the products.
Helps memory and recognition. Protects the
contents. Payment of appropriate price.

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Essential of good packaging:
•
•
•

It should be protective It should be attractive It
should be informative It should be pollution
free Durability Suitability Cost material
Classification of packaging:
Consumer packaging Transit packaging
Family packaging Product-line packaging
Multiple packaging Re-use packaging
Disposable packaging Industrial packaging

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Example of packaging:-:
•
•

Function of packaging:
Function of packaging Protection
Convenience Identification Promotion
Attractive Differentiation Dependability
Profit Communication

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Packaging policies and
strategies:
•

Changing the packaging strategies Product line packaging strategies Re - use
packaging strategy Multiple packaging
strategy Promotional packaging strategy
Example of promotional strategy-: Moneyoff pack: Coupon pack: Pack in premium
Premium package Old size packaging

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Packaging decisions
•

Package design Package size Package cost
Package test Further four kind of test are
made for package test Engineering test
Appealing test Consumer test Middlemen’s
test

02/08/14

Reason for growth of
packaging:
• Self-service Consumer need Company

image Large scale production Increase in
variety

02/08/14

3rd chapter Marketing Mix(Part-I)

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