3rd chapter marketing mix(part-i)

3rd chapter – 3rd chapter –

Part-1 MARKETING MIX Part-1 MARKETING MIX

ByByAsst Prof. Venkatesh.NAsst Prof. Venkatesh.NKoshys Institute of Management Koshys Institute of Management StudiesStudies..

Copyright © 2002 by Harcourt, Inc. All rights reserved.

Key learning goals: This topic will continue the discussion of

marketing management issues, especially marketing mix and product life cycle.

1. Explain the four elements of marketing mix.2. State the difference between place and promotion.3. Explain the stages of product life cycle.4. Explain how a business can extend its product

life.5. State the reasons why a business may analyze its

product life cycle.

LEARNING GOALSLEARNING GOALSLEARNING GOALSLEARNING GOALS

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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.

Marketing (2)Marketing (2)-Marketing Mix-Marketing Mix

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Elements of Marketing Mix Elements of Marketing Mix Elements of Marketing Mix Elements of Marketing Mix

• Product• Price • Place • Promotion

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Product: Products must be ensured to meet the needs of

customers in terms of the following aspects:1. Appearance 2. Function 3. Production Cost

Marketing (2)Marketing (2)-Marketing Mix: Product-Marketing Mix: Product

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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.

Marketing (2)Marketing (2)-Marketing Mix: Product -Marketing Mix: Product

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Product Mix Product Mix Product Mix 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 Product Line Product Line 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 Product Line Product Line Product Line

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Marketing (2)Marketing (2)-Marketing Mix: Price-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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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.


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-Marketing Mix: Price-Marketing Mix: Price-Marketing Mix: Price-Marketing Mix: Price

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 high-price 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 - Marketing Mix: Place - Marketing Mix: Place - Marketing Mix: Place

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:1. How the product is distributed physicallydistributed physically, such , such

as air, sea, rail, or road.as air, sea, rail, or road.2. How the product is sold, such as through

retailers, wholesalers, or direct mailing, etc.

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- Marketing Mix: Promotion- Marketing Mix: Promotion- Marketing Mix: Promotion- 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 New-product development and product life-cycle strategiesproduct life-cycle strategiesNew-product development and New-product development and product life-cycle strategiesproduct life-cycle strategies


Introduction: New productsIntroduction: New productsIntroduction: New productsIntroduction: 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 productsIntroduction: New productsIntroduction: New productsIntroduction: 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 Innovation and new product developmentdevelopmentInnovation and new product Innovation and new product developmentdevelopment

• 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 strategyInnovation and new product development strategy Innovation and new product development strategyInnovation 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 Product innovations are not to be confused with inventionswith inventions Product innovations are not to be confused Product innovations are not to be confused with inventionswith 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 Product innovations are not to be confused with inventionswith inventions Product innovations are not to be confused Product innovations are not to be confused with inventionswith 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?Why do new products fail?Why do new products fail?Why do new products fail?

• 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 What influences new product success?success?What influences new product What influences new product success?success?

• Development of a unique superior product• Better quality, new features and greater value

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

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9 Steps of new product 9 Steps of new product developmentdevelopment9 Steps of new product 9 Steps of new product developmentdevelopment

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1. 1. Idea generationIdea generation1. 1. Idea generationIdea 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 new-product ideas.

• Distributors, suppliers and others

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2. Idea screening(Viewing )2. Idea screening(Viewing )2. Idea screening(Viewing )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 testing3. Concept development and testing3. Concept development and testing3. 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 development4. Marketing strategy development4. Marketing strategy development4. Marketing strategy development

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

business unit hopes to achieve its marketing objectives

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5. Business analysis5. Business analysis5. Business analysis5. 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 development6. Product development6. Product development6. 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.

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7. Test Marketing7. Test Marketing7. Test Marketing7. 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• Distributor and dealer display rooms04/11/23


8. Commercialisation 8. Commercialisation 8. Commercialisation 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 9. Organising for new-product development development 9. Organising for new-product 9. Organising for new-product development 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.

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Product life-cycle strategiesProduct life-cycle strategiesProduct life-cycle strategiesProduct 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.

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The product life-cycleThe product life-cycleThe product life-cycleThe product life-cycle

• 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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Figure 14.2 Sales and profits over the product’s life from inception to demise

The product life cycle

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The PLC as an effective marketing toolThe PLC as an effective marketing toolThe PLC as an effective marketing toolThe 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:

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Figure 14.3 Marketers need to understand and predict style, fashion and fad

The PLC as an illustrator

Ex:KostymEx: nordisk (ljust trä)

Ex:Platåskor

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Product / concept development stageProduct / concept development stageProduct / concept development stageProduct / 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 stageIntroduction stageIntroduction stageIntroduction 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.

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Introduction stage strategiesIntroduction stage strategiesIntroduction stage strategiesIntroduction 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 stageGrowth stageGrowth stageGrowth 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 stageMaturity stageMaturity stageMaturity 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 stageDecline stageDecline stageDecline 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 PackagingBranding and PackagingBranding and PackagingBranding 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 BrandingReasons for BrandingReasons for BrandingReasons for Branding

• 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 Various terms relating to brandingbrandingVarious terms relating to Various terms relating to brandingbranding

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..Contd..Contd..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: Brand classification: 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 Factors affecting the selection of good brandof good brandFactors affecting the selection Factors affecting the selection of good brandof good brandSimple 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 :Advantages of branding :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

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Contd..Contd..Contd..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:Disadvantages of branding: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

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Conclusion: Conclusion: Conclusion: 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..

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What is packaging?: What is packaging?: What is packaging?: 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 packagingObjective of packaging::Objective of packagingObjective of packaging::

• Protection Identification Convenience Promotion Attraction Economy Reputation

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Advantages of packagingAdvantages of packaging::Advantages of packagingAdvantages 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 consumersAdvantages to consumers: : Advantages to consumersAdvantages 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: Essential of good packaging: Essential of good packaging: 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:-: Example of packaging:-: Example of packaging:-: 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 Packaging policies and strategies: strategies: Packaging policies and Packaging policies and strategies: strategies:

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

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Packaging decisionsPackaging decisionsPackaging decisionsPackaging 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

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

image Large scale production Increase in variety

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