Strategic Marketing Mix Modification Guide

1. Modifying the Marketing Mix Foundation Degree CWD Karen Roberts

2. Objectives • Recognise the situations when the marketing mix needs modification • To examine the nature of the marketing mix for business-to-business markets • Identify the more complex and extended marketing mix required for services • Recognise that for marketers involved in global marketing, the marketing mix requires consideration of additional issues.

3. Marketing is Marketing? • Analyse, marketing environment, consumer behaviour, customer needs, competition, trends. • Determine marketing strategy, identify segments, prioritise target markets, judge ability to compete and define desired brand positioning. • Develop a marketing programme – MARKETING MIX- to implement the recommended target market strategy. • There are differences in practices of the B2B, services or international markets

4. B2B characteristics of MMix • Product • Important to decide HOW to compete – Product positioning • Greater emphasis on service, both before & after, on-time delivery, parts distribution. Service package. • Technical advice before sale. • Long term customer relationships to repeat business. • Large purchases – credit agreements • Consultancy service • Customer service departments / call centres – complaints. • Mature market – growth from attracting market share from other companies, or new applications for products – e.g. JCB.

5. B2B characteristics of MMix • Place • Direct distribution channels – which products are sold directly from producer to user. • B2B distributor – independent business that takes title to products and carries inventories.

6. B2B characteristics of MMix - Place Producer Producer Producer Producer Agents Agents B2B Distributors B2B Distributors B2B Buyers B2B Buyers B2B Buyers B2B Buyers

7. B2B characteristics of MMix • Promotion • Personal Selling – informing and persuading customers to purchase through personal communication. Especially with high value or technical features, based on repeat business. • Educators – how product fits need. Highly trained, in own company products & competitors. Reduce uncertainty and specifies differentiation of products. • Advertising media – print, trade publications, direct mailing, sponsorship, catalogues, trade shows & public relations.

8. B2B characteristics of MMix • Price • More constraints than consumer, mainly legal & economic factors • Product differentiation important, value for money & quality more important than price. • Value does not equal low prices • Administered pricing – seller determines price for a product and customer pays it – list price, can have discounts. • Bid pricing – determined through sealed or open bids submitted by the seller to the buyer. • Negotiated pricing – determined through negotiation between buyer & seller.

9. B2B characteristics of MMix • People • Personal selling • Develop relationships – regular ongoing contacts between business & their customers. • Effective recruitment, training & motivation of personnel who are in regular contact with your customers.

10. Place Product Price Promotion People Physical Evidence (ambience) Process Services characteristics of MMix • Nature of service industry leads to change of the 5 P’s MMix • Now 7 P’s • Physical Evidence (ambience) • Process

11. Services characteristics of MMix • Product • Services – intangible – lack physical attributes • Tangibles – facilities, employees or communications • Consumer perception or image important • Product associated service provider – person who offers service • Perceived product quality most important factor determining long term profitability • Price, quality and value – consumers choices • Complexity – number of steps to perform service • Variability – amount of diversity allowed in each step, i.e. how standardised is the service process.

12. Services characteristics of MMix • Promotion • Not easy – intangible. Use cues, facilities, quality or nature of service. • Focus on objects or characteristics believe customer wants from service. • Importance of branding in services – imagery, catch lines. • Contact personnel critical to perception of quality of service. • Personal selling – as in B2B important. • Word of mouth, valued highly by customers. • Professional services promotion is limited by law.

13. Services characteristics of MMix • Price • Both an economic & psychological role • Bundled together and sold for a single price. • Complicated to set price of service, no production costs. • Price competition severe in many service areas, especially in hotel & leisure, banking & insurance. • Price can help smooth fluctuations in demand.

14. Services characteristics of MMix • Place • Making services available to consumers. • Distribution services closely relate to product development. • Indirect distribution may be possible by tangible representation or facilitating goods, e.g. credit card. • Limited to direct channels of distribution. • High contact services, providers and consumers cannot be separated. • Low contact services can be separated by intermediaries. • Unique way to distribute services, many used intermediaries for many years, most recently banks work together.

15. Services characteristics of MMix • People • Employee selection, training & motivation central consideration to any service industry. • Operational staff often help to ‘produce’ the service product, sell it and assist in its consumption. • Many service businesses are totally dependent on their personnel.

16. Services characteristics of MMix • Process • Direct involvement of consumer in the production of most services places greater emphasis on the process of the service. • Consumer perception – friendliness of staff, queuing system, ease of payment. • Operational issues that directly affect perception & satisfaction of consumers.

17. Services characteristics of MMix • Physical Evidence (ambience) • Environment where service offered and consumed central to satisfaction of consumer. • ‘Feel’ is very important. • Décor, layout, up-keep, noise, aroma, ease of access and use.

18. International characteristics of MMix • Product & Promotion • 5 possible strategies

19. International characteristics of MMix • Place & Price

20. Place Between countries and within the foreign country. Current retailers & wholesalers Control the distribution process. Political stability Right product or service Pricing Lower foreign prices can exist Dumping – sales of products in non-domestic markets at lower prices Cost plus approach Currency fluctuations Transfer Pricing Parallel imports International characteristics of MMix

21. International characteristics of MMix • People • Cultural & social forces most prominent in international markets. • Local knowledge & skills BUT also the marketing skills to implement the MMix. • MMix may need to be altered to reflect these local issues.

22. Summary • Marketing is Marketing • Personal selling very important B2B • Value not always = low price in B2B • Service Industry – 7P’s • International – options for different strategies. • All areas, vital to have the right person for the right job. • Right product for the target market