L4 What Market Mix Flashcards
What is a consumer?
- User of the article
- Opposite of ‘producer’
- ‘Consumer goods’ are used directly, domestically, but NOT in manufacturing
- Create ‘consumer markets’ for c=goods and services
What is a customer?
- ‘Purchaser’ of the article
- ‘Industrial goods’ are used by commerce, industrial goods are described as being sold to ‘customers’ not ‘consumers’
- Industrial customers create ‘industrial market’ for goods and services
- Customers who will never use the article can create ‘ consumer markets’
What are the 5Ps of the Marketing Mix?
Product, Price, Packaging, Promotion, Place
What is a Product in the Marketing Mix?
- Physical entity or** service**
- Typically purchase of service does not involve change of ownership
- Should provide some benefit to customer
- If competitors cannot match these benefits, product has a Unique Selling Point (USP)
- Judged on criteria like: Quality, Durability, Brand (e.g. brand loyalty from reputation)
What is a Price in the Marketing Mix?
- Price is usually set by market
- typically at a low level slightly above cost (to sell lots and deter competitors) - exceptions exist.
- ‘Pricing gap’ (cost vs. customer valuation), discounts, offers, trade terms etc.
- Price sensitivity - What market is willing to accept may change
- Ability or willingness of consumer to pay affects price
- Affluent/ poor areas of sale
- Luxury branding
- Strategic costing
- Loss leaders - product sold at a loss to attract customers. E.g. free trial of subscription service
What are the different pricing strategies from the Firm’s Viewpoint?
- Price Maker or Price Taker (Market Pricing)
- Cost Plus Pricing
- Target Pricing and Costing
- Discounts
Describe the ‘Price Maker or Price Taker’ strategy
(Market Pricing)
- Price Maker - set by the market leader. E.g. Tesco determines petrol price for petrol stations geographically nearby.
- Price taker - others in the market not as dominant as the market leader. E.g. Shell etc. have to take the price Tesco sets
Describe the ‘Cost Plus Pricing’ stategy
- Design product and then set price
- Product cost + Profit margin = selling price
Describe the ‘Target Pricing and Costing’ strategy
- Target market price - profit margin = target cost
- Destermine the target cost and design the product accordingly
Describe the ‘Discount’ strategy
- Pass on the cost savings
- Reward loyalty
What is Packaging in the Marketing Mix?
- Catches the customers attention/ conveys an impression of the product.
- Ensures that the product is delivered in good condition
What is promotion in the Marketing Mix?
- Any type of persuasive communication
- Aimed at increasing purchases
- Broader taget than the current customer base
- May be:
- Short term (e.g. linked to sales)
- Long term (e.g. public relations; press conference, press releases, publicity events)
- Internal promotion
- Advertisment
What are some examples of promotion?
- Sales promotion - Discounts/offers to trade/consumers
- Advertising - Narrowcast (advertising to ‘product specialists); Broadcast (advertising to anyone and everyone)
- Publicity - Any media coverage that has not been bought (e.g. generated by press release for new products)
- Sales - Sales Systems (e.g. web pages for customer support); Personal selling (Account managers specific client groups).
- Public relations - Raising the public profile of the company.
What is Place in the Marketing Mix?
- How the product reaches the customer. There are various ‘Distribution Channels’;
- “Selling” outlets - from traditional shops to catalogue showrooms, industrial disrtibutors.
- Home Sales (e.g. Tupperware) to “Direct from the Factory”
- Web-based
- Also important is the ‘customer experience’ - merchandise assortment (what products are sold together)
- Store location
- Store layout, ‘atmosphere’ and ‘ambiance’
What is essential to firms when developing strategies and plans?
- Knowing where they are in the supply chain and the distribution of power within it.
- Firms must decide who they are selling to (Consumers, industry or both) and what they are selling (products, services, both).
What’s it worth noting about marketing mix-es
The marketing mix for a consumer product is likely to be very different to the marketing mix for an industrial product, particularly with respect to place and promotion
As the manufacturer of Pedigree dog food, who are you selling to directly and indirectly?
Case Study
- Directly - Grocery multiples like Tesco, Wholesalers like Booker, Pet supermarkets
- Indirectly - Pet owner, household’s main shopper, children in household
- Indirectly - The dog!
Apply the marketing Mix to Pedigree Dog Food - Product
Case Study
- Best food available for your dog, best quality of life, less guilt
- Recipe & Specification; ingredients, odour, shelf-life, healthier, low fat recipes
- Seen to be buying top brand rather than own label, softer side of design, styling
- Dry and wet food, treats. Easy to store, minimal mess while dog eats, minimal waste, happy/healthy dog that lives longer
Apply the marketing Mix to Pedigree Dog Food - Price
Case Study
Pricing Gap: Cost vs. customer valuation; customers are prepared to pay a premium for ‘Pedigree brand’ but how much?
Trade terms: Applicable to direct customers such as Tesco, but not to dog owner
Discounts: Multi-pack discounts, BOGOF (ByOneGetOneFree) offers.
Apply the marketing Mix to Pedigree Dog Food - Packaging
Case Study
- Bright, recognisable label,
- Happy dog on front
Apply the marketing Mix to Pedigree Dog Food - Promotion
Case Study
- Sales Promotion: Discounts/Offers (trade or consumer), store-based “taster-trials” etc.
- Advertising: Narrowcast - Trade magazine (The Grocer). Broadcast - TV, Billboards, Newspapers/magazines.
- Publicity: Any media coverage that has not been bought. (e.g. generated by press release for new products)
- Sales: Sales systems - e.g. web pages for customer support. Personal selling - Account managers for major wholesale outlets.
- Public relations: Crufts Dog Show, Burghley Horse Trials!
Apply the marketing Mix to Pedigree Dog Food - Place
- Channel Members: Who sells product & how?
- Physical distribution: to retailers & wholesalers
- Direct from Pedigree factory or via Pedigree warehouse?
- Direct to shops or to retailers/wholesalers distribution centres?
- How much inventory & where?
- Nature and Outlets:
- How much shelf space, where?
- What point of sale displays are required
- Should/could Pedigree specify minimum standards for retail shops to meet?
What are Order Qualifying Criteria?
- Features which get the product into the market place, and
- Ensure that it stays there and remains successful
