Chapter 7 marketing mix

Chapter 7: Marketing Mix Ms DANG THI MAI HUONG (SARAH) Faculty of Economics and Management International School of Thai Nguyen University Email: sarahhuong11@gmail.com 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 often 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  Product: Products must be ensured to meet the needs of customers in terms of the following aspects: Appearance Function Cost Features of a product to meet the needs of customers  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 • Influences from the pricing factors 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: 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 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 appeal But for high-technology machines or equipment, it is better to choose personal selling methods Factors for making choices of marketing mix: The type of product sold, e.g for high tech.equipment, the business needs to emphasize the product and its quality rather than promotion The market sold to, e.g for consumer markets, promotion may be emphasized 3 The degree of competition, e.g if the competition is high, price is needed to be emphasized in order to gain some advantages in the market The position of the business in the industry, e.g if the business is large or the market leader, it has more freedom to choose the market mix The stage of product life cycle in which a product is, e.g if the product is in the stage of introduction, of course, promotion must be emphasized Product Life Cycle  Definition: Product pass through several stages of development in its life from introduction to decline: Stages of product life cycle usually include: Introduction Growth Maturity Decline • Introduction Stage – This stage of the cycle could be the most expensive for a company launching a new product The size of the market for the product is small, which means sales are low, although they will be increasing On the other hand, the cost of things like research and development, consumer testing, and the marketing needed to launch the product can be very high, especially if it’s a competitive sector • Growth Stage – The growth stage is typically characterized by a strong growth in sales and profits, and because the company can start to benefit from economies of scale in production, the profit margins, as well as the overall amount of profit, will increase This makes it possible for businesses to invest more money in the promotional activity to maximize the potential of this growth stage • Maturity Stage – During the maturity stage, the product is established and the aim for the manufacturer is now to maintain the market share they have built up This is probably the most competitive time for most products and businesses need to invest wisely in any marketing they undertake They also need to consider any product modifications or improvements to the production process which might give them a competitive advantage • Decline Stage – Eventually, the market for a product will start to shrink, and this is what’s known as the decline stage This shrinkage could be due to the market becoming saturated (i.e all the customers who will buy the product have already purchased it), or because the consumers are switching to a different type of product While this decline may be inevitable, it may still be possible for companies to make some profit by switching to less-expensive production methods and cheaper markets Uses of product life cycle: The reasons why the business needs to analyze the product life cycle are as follows: It can help a business find out which stage its product is in; It can help to find out when to launch a new product or stop the production of a product; It can help to identify when to introduce an extension strategy; It can help to identify the revenue trends or profitability of a product at each stage; It can help to plan different marketing strategies for a product in different life cycles… [...]... size of the market for the product is small, which means sales are low, although they will be increasing On the other hand, the cost of things like research and development, consumer testing, and the marketing needed to launch the product can be very high, especially if it’s a competitive sector • Growth Stage – The growth stage is typically characterized by a strong growth in sales and profits, and... established and the aim for the manufacturer is now to maintain the market share they have built up This is probably the most competitive time for most products and businesses need to invest wisely in any marketing they undertake They also need to consider any product modifications or improvements to the production process which might give them a competitive advantage • Decline Stage – Eventually, the... a product; 3 It can help to identify when to introduce an extension strategy; 4 It can help to identify the revenue trends or profitability of a product at each stage; 5 It can help to plan different marketing strategies for a product in different life cycles…