THE MARKETING MIX

1. P P P P The 4 P’s of marketing THE MARKETING MIX When marketing their products and services, firms need to create a successful mix of: • PRODUCT • PRICE • PROMOTION • PLACE

2. The Marketing Mix PRODUCT The Product is the actual item that a consumer purchases, including the packaging, image, guarantee and after-sales service Learn this definition!

3. THE PRODUCT LIFE CYCLE GROWTH MATURITY INTRODUCTION Sales DECLINE INJECTING NEW LIFE Time New product Sales low Sales grow rapidly as product becomes well known Popularity declines and sales fall New marketing strategies are introduced to reverse decline Product fully established Sales even out Competitors enter market

4. Extension Strategies • A business wishing to extend the life of a product which has reached maturity or is in decline can alter one or more of the marketing mix by changing • PRODUCT eg alter the packaging, introduce a new version • PRICE eg reducing the price to interest customers • PROMOTION eg introduce a new advertising campaign • PLACE eg change where it can be bought, eg on-line

5. EXTENSION STRATEGIES • One company launched a new drink 7 times before it was successful. Can you guess what they called it? • Answer: 7 UP • Malteesers • Introduction of new variety, eg white chocolate • New advertising campaign for new variety • Guidance • Changed name to Pastoral Support • PS teachers spend more time on guidance and less on teaching • Marathon • Changed name to snickers • Sponsors of sporting event • Banks • Services now available via internet or telephone

6. Cadburys Flake Extention Strategies • The Cadbury Flake bar was originally launched in 1920 • In 1930 the Flake 99 ice cream accompaniment was introduced • 2001 the Snowflake (a crumbly white chocolate Flake centre covered in milk chocolate) was launched.  • In 2003 the Cadbury Flake Dipped was introduced where consumers can enjoy all the benefits of the Flake withouth the mess - ideal for on the go. • In September 2004 Cadbury Flake Moments were launched, a selection of miniature milk chocolate and white chocolate Flake pieces, which extended the Flake brand into the giving market - creating the ideal gift.

7. FOR YOUR JOTTER QUESTIONS • Compare the product life cycles of (a) a new ipod shuffle and (b) Kellogg’s cornflakes. You may use diagrams to illustrate your comparison. • Chanel No5 is an expensive perfume which has been around for many years. It’s sold exclusively in only certain stores and its target market is women over 35. The company feels it is losing ground to newer perfumes and wants to extend the life of the product. Suggest as to how they might achieve this. • Name 3 other products or services which have altered some element of their marketing mix recently and describe how they have done this.

8. BRANDING • A product with a ‘personality’ • Instantly recognisable by logo, packaging, taste, advertising and other features • Believed to be a guarantee of quality • Some brands have ‘snob value’ • Usually cost more

9. BRAND LOYALTY • Some customers are loyal to a particular brand. They will buy the brand again and again and also other associated products • Fairy washing-up liquid • Fairy washing powder • Fairy dishwasher powder • The product is often sold in places that reinforce the brand image, eg sports drinks in leisure centres

10. What about premium own brands? em OWN LABELS • Retailer’s own brands eg Sainsbury’s Savers, George at ASDA • Not manufactured by retailer • Sold only in retailer’s stores • Less expensive than branded goods • Need little advertising • Seen as inferior quality

11. Which brands do you associate with the following products? • Toilet paper • Fish fingers • Chocolate • Soft drink • Gravy • Toothpaste • Washing up liquid • Brown sauce • Crisps • Cat food • Disposable nappies • Digestive biscuits • Ice cream • Soap powder • Teabags • Coffee • Andrex • Birds Eye • Cadburys • Coca-cola • Bisto • Colgate • Fairy liquid • HP • Walkers • Whiskas • Pampers • McVities • Walls • Persil • PG Tips • Nescafe

12. QUESTIONS FOR YOUR JOTTER • From a marketing point of view, describe the differences between Heinz baked beans and Safeway own label baked beans under the following headings • Product • Price • Place • Promotion • Heinz produce many products other than baked beans. Describe the advantages of producing several products under the same brand name?

13. The Marketing Mix PRICE The amount consumers are prepared to pay for a product or service Learn this definition!

14. What is the best price for a product? • Charging the right price is a very important part of the marketing mix. • How much you charge will depend on • How much it cost you to make your product • How much your competitors are charging • Whether you are trying to introduce a new product • The image you want for your product

15. THE PRICING DECISION • A low price will attract sales. This makes it possible to sell large quantities at a low average cost • An average price will mean you need to compete with your rivals by a means other than price, eg by having a better quality product or better promotion or advertising • A high price can be charge if your product is seen a being better than your rivals

16. For each of the following products, try to explain whether the manufacturer/retailer is going for a low price, an average price or a high price Chanel No 5 Morgan Sweet Love CK One (HIGH – prestige product, expensive packaging) (LOW – lower quality, cheaper packaging) (AVERAGE – in competition with similar brands) (HIGH – prestige product, sporty image) (LOW – smaller car, lower spec) (AVERAGE – in competition with other models) Porsche Boxster Nissan Micra Ford Mondeo (AVERAGE – competitively price alternative) (HIGH – market leader, quality product) (LOW– lower quality, cheaper price to attract customers) Supermarket own brand Heinz beans Safeway savers beans (LOW– lower quality cheaper price to attract customers) (HIGH – market leader, quality product) (AVERAGE – competitively price alternative to branded goods) Jeans from market stall Levi 501 Jeanster jeans

17. PRICING TECHNIQUES • Time-based - suitable for repairing a washing machine where the price is dependent on how long the job takes • Cost plus - calculate how much it costs to make a product then add on profit • Start-up or penetration pricing - a firm bringing out a new product or trying to break into a market might charge a low price at first in order to interest consumers. (penetration) • Off the top or price skimming– a prestige product or a new highly sought after product can often be sold at a high price because consumer want to be associated with the product • Destroyer –selling a product at a very low price in order to destroy a competitor. Once the rival firm has been forced out of business the price of the product will be increased • Market Orientated – Selling a product at a price in line with competitors. This is typical where there are many competitors.

18. QUESTIONS FOR YOUR JOTTER Describe a suitable pricing technique for each of the following situations? Justify your answers. • A new state-of-the-art video mobile phone just on the market • A self-employed gardener wanting to quote customers for general gardening jobs • A newspaper in fierce competition with a rival paper • Cadbury’s introducing a new chocolate bar • A business makes and sells fresh sandwiches to office workers

19. The Marketing Mix PLACE This is the route that products take to reach the consumer from the manufacturer Learn this definition!

20. The Market Place No matter how good the product is – it has to be in the right place at the right time. buyers and sellers come together in the following ways • Shop • Cash and Carry • Market stall • TV – shopping channel • Internet • Newspaper and Magazines • Mail order • Direct mail • Factory shop These are referred to as Direct Marketing

21. CHANNELS OF DISTRIBUTION MANUFACTURER MANUFACTURER MANUFACTURER WHOLESALER RETAILER RETAILER CONSUMER CONSUMER CONSUMER

22. The channel of distribution chosen will depend on: • The product being sold • The finance available • The reliability of companies in the chain • The desired image of the product • Legal restrictions • The products life cycle • The manufacturer’s distribution capability

23. Wheels Ltd manufacture bicycles. They sell to customers via wholesalers and retailers. They are considering opening a factory shop to sell directly to customers. Outline the advantages of this plan to Wheels Ltd and to their customers? (4) Advances in technology have opened up new channels of distribution. Describe one of these new channels and illustrate your answer with an appropriate example. There are legal restrictions on the way in which some products are distributed to consumers. Give examples of such products and describe why these restrictions are enforced. QUESTIONS FOR YOUR JOTTER

24. Extension • Log on to http://puzzlemaker.discoveryeducation.com/ • Create a word search on marketing using terms we have covered so far. • Include at least 12 terms • Swap with someone and complete their word search.

25. The Marketing Mix PROMOTION Promotion is the way in which a consumer is madeaware of a product or service and is persuaded to purchase it Learn this definition!

26. PROMOTION • The aims of promotion are to • PERSUADE consumer to buy the product • INFORM consumers about the product • REMIND consumer that the product still exists

27. ADVERTISING MEDIA • Television • Newspapers – National, Sunday, local • Magazines • Radio • Cinema • Outdoor media – billboards, sports hoardings, bus shelters • Internet • Direct mail

28. Above the Line Promotion This targets everyone – even those not interested in the product. • TV • Radio • Newspapers • magazines

29. Below the Line Promotion • The business has direct control. • Direct mail (post or e-mail) • Personal selling • Trade fairs

30. Quick Task……. • State whether each of the media below is Above or Below the Line. • Suggest advantages and disadvantages for each of the following Advertising Media.: • Television • Daily Newspapers • Radio • Cinema • Billboards • Internet pop ups • Direct Mail

31. Quick Task 2……… • Suggest a suitable advertising media for Nike’s new trainers. • Justify your answer.

32. PRODUCT ENDORSEMENT • Famous sport or showbiz personalities are paid to wear and use a particular product, eg Adidas, Gillette and David Beckham • PRODUCT PLACEMENT • Paying for product to be used in films and TV programmes, eg James Bond driving a BMW in Goldeneye

33. Quick Task 3…………. • Explain possible advantages and disadvantaged of celebrity endorsement for an organisation.

34. The choice of advertising media depends on: • The product • The audience to be targeted • The type of coverage, eg national or local • The amount you want to spend • The advertising used by competitors

35. SALES PROMOTIONS • Short term inducements used to encourage sales • There are 2 groups of sales promotion: • Into the pipeline • Out of the pipeline

36. INTO THE PIPELINE • These are offered by manufacturer to retailers (dealers) to encourage them to stock their products: • Point of sale displays • Sale or return • Dealer competitions • Staff training • Credit facilities

37. OUT OF THE PIPELINE • These are offered by the retailer to the consumer to encourage purchases to be made: • Free samples • Credit facilities • Demonstrations • Competitions • BOGOFs • Promotional prices • Free offers • Coupons/vouchers Buy One Get One Free

38. FOR YOUR JOTTER QUESTIONS 1. Describe the difference between product endorsement and product placement. Give examples to illustrate your answer. 2. Compare the following advertising media – television,newspapers and direct mail. Your answer should refer to cost, coverage, market segment, legal restrictions, and competition. 3. Describe 2 forms of each of the following types of sales promotion • Into the pipeline • Out of the pipeline

39. Activity……. • Design a poster explaining all you know about the Marketing including the Marketing Mix (The 4p’s)