Marketing


Mix

4Ps
 What is a
Product?

A product is anything that

can be offered to a market for
attention, acquisition, use, or
consumption that might
satisfy a want or need.
Products

Tangible Intangible

GOODS SERVICES

Consists of activities, benefits, or

satisfactions offered for sale
• Intangible
• No ownership.
 What Is a Product?
Additional
services or
benefits of the
actual product

The design, brand name,

and packaging that
delivers the core benefit
to the customer

Represent what
the buyer is really
buying
8-4
Levels of Products
 Types of
Product?

Consumer
products Industrial
products
 What Is a Product?
Consumer Products

Convenience Shopping Specialty Unsought

product products products products
• Buy frequent & • Consider on: • Unique • Do not know
immediate • Suitability characteristics about it
• Little buying • Quality • Brand • Do not think of
effort • Price identification buying
• Style • A group of • Life insurance,
buyer is willing funeral service,
to make extra blood donation
buying effort
 Industrial Products

Industrial products are those purchased for further processing or for use in
conducting a business.
Including:
- Materials and parts (natural products)
- Capital items (parts that aid in production)
- Supplies and services (maintenance & repair)
Product and Service Decisions
Factors support buying decisions

Product
Branding
attributes

Product
Packaging
support
& Labeling
services

8-8
Product attributes
Level &
Quality consistency

Used to
Features differentiate with
competitor
Design
 Branding
A brand is a name, term, sign, symbol, or design, or a combination of these, that
identifies the maker or seller of a product or service.
• Differentiate with competitors
• Legal protections
• Segment the market
 Packaging

- The covering or container for a products

- It makes it easy for consumers to handle and store the product.
- Communicating brand personality
Labeling
Labels identify the product or brand,
describe attributes
→ Provide promotion.
Support services
BRANDING
 
 Brand
strategy
Consumer’s perceptions
about a product & its
performance.

Company’s promise to deliver

a specific set of

• Attribute
• Benefits
• Belief & value
(experiences)
 Branding Strategy:
Building Strong Brands
 Brand equity:
o Differentiation: among competitors
o Relevance: relating to firm’s products
o Esteem: appreciation toward its performance
 Brand valuation: is the process of estimating the
total financial value of the brand.

76.5 75.5 69.7 57.8

million USD million USD million USD million USD
8-16
Good Name
SUGGEST
BENEFITS
Greenhouse

EASY TO SAY
/SPELL/ READ
JetBlue

DISTINCTIVE
Lexus

EXTENDABLE
[Link]

WORKS
WORLDWIDE

CAN BE LEGALLY
PROTECTED
 PRICE STRATEGY
Developing an effective price strategy is an important part of a
marketing plan.

It enables you to set prices consistent with your objectives and

appropriate for your target market.
Factors Affecting Price

costs and supply and

expenses demand

technological
trends
$ consumer
perceptions

government
competition
regulations
 Costs and Expenses

Fixed costs and expenses, such as rent, utilities, and

insurance premiums, affect price. Fixed costs and
expenses that are not subject to change
depending on the number of units sold

Variable costs and expenses, such as the cost of

goods or services, sales commissions, delivery
charges, and advertising, also affect price.
Variable costs and expenses that are subject to
change depending on the number of units sold
 Costs and Expenses

If you are selling goods, their costs are affected by the

pricing structure in the channel of distribution.
Each channel member has to make a profit to make
handling the goods worthwhile. Their cost and profit
together is your cost.
The law of supply and demand also affects price.
When the demand for a product is high and supply is
low, you can command a high price.
When the demand for a product is low and supply is
high, you must set lower prices.
 Consumer Perception
The price of your products helps create your
image in the minds of customers.

If your prices are too low, customers may consider

your products inferior.

If your prices are too high, you may turn some

customers away.
 Competition

Competition can affect pricing when the target

market is price conscious because competitors’
pricing may determine your pricing.

Businesses can charge higher prices than

competitors if they offer added value, such as
personal attention, credit, and warranties.
 Technological Trends
The Internet and technological trends affect price
strategy.

Adapting to technological changes can give an

entrepreneur a competitive edge; not adapting can
cause some businesses to become obsolete.
 Technological Trends
Before setting prices, consider the following
objectives:

obtaining a target return on investment

obtaining market share
social and ethical concerns
meeting the competition’s prices and
establishing an image
survival
sometimes maintaining the status quo
 Pricing Strategy Decisions
Consider your target market as you make
these pricing strategy decisions:

Set a price based

Select a basic
Determine your on the stage of
approach to
pricing policy. the product life
pricing.
cycle.
 Setting a Basic Price
There are three basic approaches to pricing

cost-based demand-based competition-

pricing pricing based pricing
 Pricing Policies
 Establishing a pricing policy frees you from making
the same pricing decisions over and over again and
lets employees and customers know what to
expect.

 A flexible-price policy is one in which customers

pay different prices for the same type or amount of
merchandise.

 A one-price policy is one in which all customers are

charged the same price for all the goods and
services offered for sale.
 Product Life Cycle Pricing
All products move through the four-stage life cycle:

1 Introduction

2 Growth

3 Maturity

4 Decline
 Product Life Cycle Pricing
Price skimming is commonly used when
introducing a product.
price skimming the practice of charging a high price
on a new product or service in order to recover costs and
maximize profits as quickly as possible; the price is then
dropped when the product or service is no longer unique

Penetration pricing is also commonly used when

introducing a product.

penetration pricing a method used to build sales by

charging a low initial price to keep unit costs to
customers as low as possible
 Pricing Technique
psychological pricing
Once you have introduced a pricing technique, most
your new product through often used by retail
penetration pricing or price businesses, that is based
on the belief that
skimming, you need to adjust
customers’ perceptions of
your prices so they are more a product are strongly
attractive to customers by influenced by price; it
using psychological pricing. includes prestige pricing,
odd/even pricing, price
lining, promotional pricing,
multiple-unit pricing, and
bundle pricing
Psychological Pricing Techniques
A business may use
prestige pricing to
prestige odd/even foster a high-end
pricing pricing image.
prestige pricing a
pricing technique in
bundle Psychological which higher-than-
price
pricing Pricing
Techniques
lining average prices are
used to suggest
status and prestige to
multiple-unit promotional the customer
pricing pricing
 Pricing Technique
When a business uses odd/even pricing, customers may
think they are getting a bargain.
odd/even pricing a pricing technique in which odd-
numbered prices are used to suggest bargains, such as
$19.99

A store that sells all its jeans at $20, $40, and $60 is using
price lining.
price lining a pricing technique in which items in a certain
quality category are priced the same
 Pricing Technique
A new restaurant that offers “1950s prices for three
days only” is using promotional pricing, a temporary
pricing technique.
promotional pricing a pricing technique in which lower
prices are offered for a limited period of time to
stimulate sales

When a store sells three pairs of socks for $10, it is

using multiple-unit pricing.
multiple-unit pricing a pricing technique in which
items are priced in multiples, such as 3 items for 99
cents
 Pricing Technique
Businesses that sell computer hardware often use bundle
pricing to sell software that may not have sold otherwise.
bundle pricing a pricing technique in which several
complementary products are sold at a single price, which is
lower than the price would be if each item was purchased
separately

Discount pricing is used by all types of businesses to

encourage customers to buy.
discount pricing a pricing technique that offers customers
reductions from the regular price; some reductions are basic
percentage-off discounts and others are specialized
discounts
 PRICE STRATEGY
 Carry out a break-even analysis.
 Apply formulas used in calculating markup and markup
percentages.
 Employ formulas used to compute discounts.
 List considerations for updating the price strategy.
 Break-Even-Analysis
 To calculate the break-even point, you divide
fixed costs by the selling price minus your
variable costs.
 break-even point the point at which the gain
from an economic activity equals the costs
involved in pursuing it
 Break-even analysis does not tell you what price
you should charge for a product, but it gives you
an idea of the number of units you must sell at
various prices to make a profit.
 MARK UP vs. MARKDOWN
 Businesses that purchase or manufacture goods for
resale use markup pricing based on the cost of the item.
markup the amount added to the cost of an item to cover
expenses and ensure a profit

Entrepreneurs may use markdown pricing to tempt

shoppers to buy in order to reduce inventory.
markdown the amount of money taken off an original price
 DISCOUNTS
A discount is a reduction in price to the customer.
 multiply the item price by the discount percentage
 then subtract the discount dollars from the price
POSSIBLE CHANGES TO
PRICING STRATEGY

Adjusting prices to maximize profit

Reacting to market prices

Revising terms of sale

Place - Distribution
& Destination

 Supply Chain Partners

Suppliers
Upstream
Experts Value
Delivery
Company’s products / services Network

Distribution Channels
Downstream
Marketing Channels

12-
 The Nature and Importance of
Marketing Channels
 A distribution channel: set of independent organizations that help make
a product or service available for use or consumption by the consumer
or business users → Intermediaries
How channel members Add Value

PRODUCER CUSTOMER

PRODUCER CUSTOMER

PRODUCER 9 CUSTOMER
How channel members Add Value

PRODUCER CUSTOMER

DISTRIBUTOR
PRODUCER CUSTOMER

6
PRODUCER CUSTOMER

Intermediaries
 Channel functions
 
1. Complete the transactions
2. Help to fulfill the completed transactions
Channel Functions

Gather and distribute information

Engage in promotion
Contact prospective/ potential buyers
Match offer to buyer’s needs
Negotiate transaction
Channel Functions

Physical distribution of goods

Finance transactions along channel
Risk sharing
 Channel Levels
is each layer of marketing intermediaries

PRODUCER PRODUCER PRODUCER

WHOLESALER

RETAILER RETAILER

CONSUMER CONSUMER CONSUMER

Direct marketing Indirect marketing channel

channel
DISTRIBUTION STRATEGIES
 Intensive distribution
Apply for convenience products and common raw
materials in which they stock their products in as
many outlets as possible.
Selective distribution
Producer uses more than one but fewer than all of the
intermediaries willing to carry the producer’s products.
o Televisions
o Electrical appliances

Best Denki store at Ngee Ann City, Singapore.

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go HITACHI Asia Home

[Link]
Exclusive distribution

Producer gives only a limited number of dealers the

exclusive right to distribute products.

[Link]

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Logistics
Marketing logistics (physical distribution) involves planning,
implementing, and controlling the physical flow of goods, services,
and related information from points of origin to points of
consumption to meet consumer requirements at a profit.
Logistics

• Outbound distribution—moving products from the factory to

resellers and consumers.

• Inbound distribution—moving products and materials from

suppliers to the factory.

• Reverse distribution—moving broken, unwanted, or excess

products returned by consumers or resellers.
 Warehousing

Inventory Management

Transportation

Information Management

Logistics functions
Warehousing – storage
 Promotion Mix
Promotion:
Consists of 4 elements known as the Promotional Mix:
--Advertising (print, TV, radio, internet)
--Public Relations (press releases)
--Sales Promotion (contests, rebates)
--Personal Selling (face-to-face, sales rep.)
 What Is The “Promotional Mix”?

Advertising PR Sales Personal

Promotion Selling
Communicator Indirect, Indirect, Indirect, Direct, face-to-
Control nonpersonal nonpersonal Nonpersonal Face
[Link] Little Little Little to moder. A lot
Speed of Delayed Delayed Varies Immediate
Feedback
Message flow One-way One-way One-way Two-way
Content Yes No Yes Yes
control
Speed Fast Usually fast Fast Slow
Message Same No control Same Tailored to
flexibility message over message message buyer
 What Should My Total Promotion Budget Be?

Factors to consider:
 What your objectives are in terms of sales the first 3-5 years
(i.e. sales should be derived from response from marketing
vehicles chosen such as direct mail, personal selling, trade
shows).
 What industry competitors are spending.