The marketing mix consists of Product, Price, Place and Promotion strategies that a firm uses to help them reach their objectives.
The marketing mix principles are controllable variables which have to be carefully managed and must meet the needs of the defined target group. All elements of the mix are linked and must support each other.
When an organization introduces a product into a market they must ask themselves a number of questions.
• Who is the product aimed at?
• What benefit will they expect?
• How do they plan to position the product within the market? • What differential advantage will the product offer over their competitors?
Three levels of a product
Level 1: Core Product. What is the core benefit your product offers? Customers who purchase a camera are buying more than just a camera they are purchasing memories.
Level 2: Actual Product. All cameras capture memories. The aim is to ensure that your potential customers purchase your one. The strategy at this level involves organizations branding, assessed features and benefits to ensure that their product offers a differential advantage from their competitors.
Level 3: Augmented Product. What additional non-tangible benefits can you offer? Competition at this level is based around after sales service, warranties, delivery. A retail departmental store that offers a free five year guarantee on purchases of their TV sets, gives their customers the additional benefits of “peace of mind” over the five years should their purchase develop a fault.
Total Product Concept
When placing a product within a market many factors and decisions have to be taken into consideration. These include:
Product Design: Will the design be the selling point for the organization as we have seen with the iphone, blackberry
Product Quality: Quality has to be consistent with other elements of the marketing mix. A high quality product maybe reflected in the price.
Branding: A brand is defined as “a name, term, sign, symbol or a combination of these, that identifies the maker or seller of the product” A brand must stand out and be recognizable, and should help the firm differentiate itself from its competitors.
Product Features: Additional features should increase the benefit offered to your target market. The firm may decide to charge more for these additional features.
Is one of the most important elements of the marketing mix. It is the only mix which generates a turnover for the organization. The remaining 3p’s are the variable cost for the organization. It costs to produce and design a product, it costs to distribute a product and costs to promote it.
Pricing is difficult and must reflect the supply and demand relationship. Pricing a product too high or too low could mean a loss of sales for the organization.
Pricing should take into account the following factors:
• Fixed and variable costs
• Company objectives
• Proposed positioning strategies
• Target group and willingness to pay
An organization can adopt a number of pricing strategies. The pricing strategies are based on what objectives the company has set itself to achieve.
Where the organization sets a low price to increase sales and market share.
The organization sets an initial high price and then slowly lowers the price to make the product available to a wider market. The objective is to skim profits of the market layer by layer, this strategy is popular within the games console industry.
Setting a price in comparison with competitors. A firm has three options, price lower, price the same, or price higher.
Product Line Pricing...