Marketing mix

1. Marketing mix THE TIMES 100

2. Marketing mix The marketing mix is the combination of variables that a business uses to carry out its marketing strategy and meet customer needs. The marketing mix is often called the 4Ps: • Price • Product • Place • Promotion

3. Product • ‘Product’ refers to the functions and features of a good or service • Should satisfy the needs of the customer • May have a Unique Selling Proposition (USP) • ‘Product’ also includes a range of factors such as packaging, quality, warranties, after-sales service and branding

4. Product lifecycle The product lifecycle looks at the sales of a product over time

5. Stages of product lifecycle Development – high costs but no sales Launch – high expenditure on promotion and product development, low sales Growth – sales increase and product should break-even Maturity – sales stabilise, less expenditure on promotion needed, revenue & profit should be high Decline – sales decline, extension strategies canbe adopted or the product withdrawn

6. Extension strategies Extension strategies should maintain or increase sales. They include: • Modifying the product • Reducing the price • Adding a feature • Promoting to a different market sector

7. Price The price of a product will depend on: • The cost to make it • The amount of profit desired • Other objectives of the business • The price competitors charge • The price customers are willing to pay • Is there a high demand? • Is demand sensitive to changes in price?

8. Price leaders and takers Price leader – businesses that dominate the market can often dictate the price charged for a product. Other businesses follow this lead. Price taker – businesses have to charge the market price. This is often the case where there are many small firms competing against each other.

9. Pricing strategies & tactics

10. Place • Products should be conveniently available for customers to buy • ‘Places’ include: • Stores • Mail order • Telephone sales • Internet The use of e-commerce (promoting and selling on the internet) has grown massively over the last few years

11. Channels of distribution Manufacturers Wholesaler Retailer Consumer

12. Promotion The aims of promotion are to: • Raise awareness • Encourage sales • Create or change a brand image • Maintain market share

13. Promotion Above-the-line promotion This uses advertising media over which a firm has no direct control e.g. television, radio and newspapers Below-the-line promotion This uses promotional media which the firm can control e.g. direct mail, sales promotions and sponsorship

14. Promotional activities • Advertising e.g. TV, billboards and internet. • Sales promotions e.g. Loyalty cards, BOGOF, discounts & free gifts • Sponsorship – a business pays to be associated with another firm, event or cause • Direct mailing – promotional material is sent to potential customers by post/email • Public relations – building the relationship between the firm and the public by enhancing its reputation

15. Promotional mix Most businesses use a combination of different promotional activities. The chosen promotional mix will depend on: • Cost • Target market • Product • Competitors

16. How the marketing mix evolves over time The marketing mix will evolve over time. For example: • The product portfolio may grow as a business becomes more established • More expensive promotional activities may be adopted as a firm’s revenue increases • More outlets may be opened, or products sold via the internet • Price may increase as demand grows

17. Marketing mix in Example “McCain Foods”

18. Pricing at McCain Foods McCain uses a range of pricing strategies associated with adding value for money. One of the factors it must consider is how much the consumer will be prepared to pay. Why do you think consumers will pay more for Oven Chips than it would cost them to buy the potatoes and oil to prepare chips themselves?

19. Product range at McCain McCain Food’s product range includes frozen vegetables, ready meals and desserts; McCain is also the world’s leading manufacturer of frozen potato products such as Oven Chips. What factors have driven changes in the product range? Use the McCain Food’s case study to help you

20. Promotion of McCain products Are the following promotional methods used by McCain above-the-line or below-the-line? • TV advertisements • Discount vouchers • Advertisements on supermarket trolleys • E-mail newsletter • Leaflet drops

21. McCain distribution channels “place” McCain sells its products to both wholesalers and retailers. Draw these distribution channels. How does McCain reduce the environmental impact of transporting its products? Use the case study to help

22. Apply what you have learned! • Take the next 10-15 minutes. List 5 Businesses and define their product mix. • -Price • -Product • -promotion • -Place

23. Useful resources • Marketing mix lesson suggestions and activities (The Times 100) • McCain case study (The Times 100) • McCain website