4.5 – The Four P’s

1. 4.5 – The Four P’s IB Business

2. Product Life Cycle • Research and Development • Generating Ideas; Screening Ideas; Creating a Prototype; Test Marketing; Commercialization • Launch (Introduction) • Growth • Maturity • Saturation • Decline

3. Product life Cycle

4. Extension StrategiesDone at the maturity or saturation stages • New Markets • New uses for a product • Repackaging/Redesigning • Target different market segments • Promotion • These strategies are essential to long-term business success

5. Product Life cycle & marketing mix

6. Relationship between product lifecycle, investments, profit & cash flow

7. Product Portfolio Analysis – BCG matrix

8. BCG Matrix strategies • Holding strategy – • focus here is on products with a high market share, to ensure they maintain current position • Building strategy – • turning problem children into stars • Harvesting strategy – • milking the benefits of products with a positive cash flow • Divesting strategy – • poor-performing dogs are phased out or sold off.

9. Limitations of Boston matrix • Focuses on current market position • May be a time consuming and complex exercises for businesses • High market share doesn’t necessarily equate to high profits.

10. Branding • Branding A name, symbol, sign or design that differentiates a firm’s product from its competitors • Can add value to a product, and can have a strong influence on how consumers view a product. • Brand Awares

11. Aspects of Branding • Brand Awareness • Ability of consumers to recognize a firm’s goods or services • Major step; very important when promoting a product. • Brand Development • Any plan to strengthen or improve the product image • Brand Loyalty • When consumers are committed to a firm’s brand; willing to make repeat purchases • A result of brand preference • Brand Ambassadors – consumers who are positive about a particular brand • Brand Value • How much a brand is worth – reputation, potential income, market value

12. Importance of branding • One of the most important tasks of marketers • Branding gives customers a clear image with which they can associate the business • A well-known brand can command a higher price • Customers make judgments about certain product and services based on the way they are presented • A firm’s brand can provide legal protection • Effective branding results in a sense of personal identification & emotional connection among consumers

13. Importance of packaging • Provides physical protection • Offers convenience • Provides information • Can help reduce security risks • Aids promotion • Should be eye-catching and appeal to the customer • Color and shape is key to reinforce and project a brand image

14. price • Plays a significant role in the marketing mix – only “P” that generates revenue for a business; businesses need to set an appropriate pricing strategy • Cost-plus pricing (Mark-up pricing) • Adding a mark-up to the average cost of producing a product – p. 303 • Penetration pricing • Setting a low initial price to attract a large number of customers quickly – p. 303-304 • Price Skimming • Setting a high price when introducing a new product – usually for a limited period – p. 304 • Psychological Pricing • When firms consider how pricing affects consumers’ perception of their product’s value – p. 305 • Consumers may associate a higher price with high quality • Also reducing prices to make us believe we’re getting a deal – 9.95 instead of 10.00

15. Price - continued • Loss Leader • Charging a low price for a product, below average cost • Aim is to attract customers; usually associated with supermarkets p. 305 • Price Discrimination • Charging different prices to different groups of consumers • Business has to have price-setting ability • Elastic v. inelastic demand • Example – concert tickets – different price points – p. 305-306 • Competitive Pricing • Takes into account what competitors are charging • Predatory pricing; Destroyer pricing – driving competitors out of the market – p. 306

16. Promotion • Communicating about your product to consumers • Objectives of Promotion • Informing consumers of a new or improved product • Persuading consumers to purchase a product • Reminding consumers that your product exists • Enhancing the brand image of the product as well as the image of the business • Promotion categorized into two forms: above-the-line and below-the-line

17. Above the line • Paid form of communication – uses independent mass media to promote a product or business • Advertising – central global role – categories of advertising • Informative Advertising – providing information on features, price or other specifications • Persuasive Adverting – convincing customers to buy one product over another • Reassuring Advertising – Focus on existing customers; remind them they made the right decisio • Television Radio Cinema Newspaper Magazines Outdoor Advertising

18. Below the Line promotion • Focuses on promotional activities aimed at consumers or people interested in product • Direct Marketing – examples – direct mail sent to consumers • Has limitations – many consider it “junk mail” • Personal Selling – sale of a product through personal contact • Face to face or over the telephone – car sales as an example; personalized attention; salesperson = commission • Public Relations – promotional activities aimed to enhance the product image • Sales Promotions • Money off coupons • Point of sale displays • Free offers or free gifts • Competitions • BOGOF – Buy one get one free

19. Promotional mix • Involves a good balance of both above-the-line and below-the-line methods • Certain factors must be considered when putting together an appropriate mix: • Cost – does the marketing budget support the method you want to use? • Legal framework – must take into account any applicable laws • Target Market – what specific segment of the market is the produce aimed at? • Stage in the Product Life Cycle • Type of Product

20. Impact of new technology on promotional strategies • Over the last decade technology has changed rapidly, forcing marketers to incorporate the new technology into their marketing strategy. • Social Media Marketing – the way technology is used to build relationships, drive repeat business, and attract new customers through the sharing of information. • Promotion through word of mouth powered by technology • Viral Marketing – individuals pass on promotional messages within social networks • Use of banners, pop-ups, social media, YouTube videos. • Main goal to increase brand awareness through replicating a viral-like process

21. Benefits/limitations of technology

22. Guerrilla marketing • Marketing form using “untraditional” activities to help companies stay successful • Phrase coined from military and warfare-related terminology • Principles of Guerilla Marketing – remember with acronym of APENS • A = Activity • P = Presence • E = Energy • N = Networks • S = Smart

23. Methods used in guerrilla marketing • Peer Marketing; Product Give-aways; text- & video-messaging; “Roach Baiting” and Buzz Marketing; Intrigue; Liver commercials; Bill Stickers • Benefits: • Low Cost Flexibility Simplicity Identified target market • Communication Tool Interaction opportunity Accessibility • Negative Effects of Guerilla Marketing • Denting the brand image high negative attitudes • Negative impact on social life Ethical issues

24. Place – how does product get to consumer? • Refers to the location of the business and the customers • Helps businesses develop the best way to distribute their produce • Using intermediaries and wholesalers helps businesses store and market products • Growing use of internet makes reaching a wide range of customers possible

25. Channels of distribution • Path taken by a product from producer to consumer • Zero Intermediary – directly sold from producer to consumer • Example – vegetables at a Farmer’s Market • One Intermediary – • One person between producer & consumer • Two Intermediaries • Producer, Wholesaler, Retailer, Consumer • Look at illustrations and table, page 316

26. Revision checklist • Have information understood • Read!!!!