17-the-market-mix.md

17. The Marketing Mix

Learning Outcomes from this chapter

On completion, you should be able to

• Outline the marketing mix for a product of your choice
• Illustrate the benefits of branding for a business and the consumer
• Explain what is meant by ‘own brand’ and give examples
• Discuss the factors that a business considers when designing a product
• Outline the functions of packaging
• Illustrate the product life cycle for a good/service and explain how it can be extended
• Explain the factors a business considers when setting a selling price
• Distinguish between the different pricing strategies a business could use
• Describe the different promotion techniques a business can use to sell a good/service
• Outline the functions of advertising
• Describe the role of public relations and methods used to develop good PR
• Evaluate the different sales promotions techniques a business could use
• Outline the benefits and challenges of using different channels of distribution
• Explain the impact of ICT on promotional techniques
• Explain the impact of changing consumer needs on the marketing mix

The Marketing Mix

Product	Looking at the different elements a good/service has: its branding, packaging, design, functions, form, quality and product life cycle
Price	Pricing strategies a business can use to sell a good/service and the factors that can impact the selling price of the item
Promotion	All actions used to increase sales: advertising, sales promotions, public relations, personal selling
Place	Choosing the channel of distribution for a good/service (right place, right time)

Product

USP (Unique Selling Point)	Sets a product apart, differentiates it
Branding	Product name, design, logo, slogan, shape, form, packaging (to identify it)
Branding (Benefits)	Differentiates; can advertise a brand (rather than a product); can charge higher prices; can target different segments; the brand becomes the product (e.g. Dyson)
Own-brands	Retailers selling products using their own brand name and logo
Reasons a retailer sells own-brand	Higher profit margins; cheaper prices for consumers; can lead to customer loyalty, if people return for that product; more choice for consumers
Design	Costs, production feasibility, target market needs, legal requirements
Packaging	Attract, protect, provide information, competitive advantage, convenience

Product Life Cycle

Introduction	Product launched, sales low, advertising increases product awareness
Growth	Brand awareness increases, sales rise as more customers buy the product
Maturity	Sales reach peak, product is established, business defends its market share
Saturation	Sales level off and start to decline, market has new entrants
Decline	Sales fall, promotions cease, product may be phased out, goods are sold off at low prices

Extending the product life cycle (4 P’s)

Product	Introduce new design, flavours or different packets/containers
Place	Find a new channel of distribution (e.g. online)
Price	Change pricing strategy (e.g. lower prices)
Promotion	Introduce a loyalty card or run a competition

Branding

Branding (From Teacher)

• USP is main focus of branding
• Images, text, logos, phrases, shape, packaging, etc.
• Makes product interesting
• Customer loyalty
• Good brand can charge higher prices
• Easier to go global
• USP is main focus of branding

Benefits of Branding for a Company

• Helps to differentiate the product from rivals
  • A brand gives a product a clear identity that can make it instantly recognisable. This helps a business, as consumers are more likely to buy a brand if they know and trust it
    • A consumer shopping for a block of butter will probably recognise the Kerrygold brand, so may be more likely to buy it over other competitors like Glenstal butter.
• Opportunity to promote the brand, not just a product
  • A business that has developed a strong brand can choose to just promote the brand itself and not advertise each of its products. This marketing tool will help reduce costs. Advertising one of its products with the brand name might remind consumers of other products that the business sells too
    • McDonald’s launched an advert showing groups of people on the way to a wedding all stopping at its restaurants en route. This promoted all of the options the company sells, not just one restaurant or one meal
• Consumer Loyalty
  • A consumer might stay loyal to a brand over a long period of time. A business could release new products in its range aimed at different age groups to target this
    • A consumer who grew up eating Kellogg’s Rice Krispies might choose Kellogg’s All Bran or Corn Flakes. Kellogg’s also offers Special K, giving consumers who might have eaten other Kellogg’s products a lower-calorie option

Benefits of Branding for a Consumer

• Gives confidence and peace of mind
  • When a consumer chooses a recognised brand, they might pay more for it, but feel more confidence in the brand. The consumer might think it is safer to choose a well-known brand when buying an expensive item or a new type of good they have not used before
    • A consumer might be happier to pay more for an Apple iPhone than a Sony mobile phone, as they know Apple is a popular brand in that market, so they would not worry as much about their decision to spend a lot of money
• Helps to judge a product
  • Brands help consumers to judge the expected quality or performance of different options. They can use branding to judge how long a product might last or if it is value for money. The country in which a brand is produced could also influence the consumer
    • Parma ham from Italy might be seen as superior to other hams, or French perfume superior to that of other countries
• Makes it easier to choose
  • A consumer is faced with so many decisions in a grocery or retail store. Easily recognisable logos and packaging can make decisions more straightforward, as certain brands are associated with a positive value, characteristic or position
    • If a consumer sees an Adidas logo on a pair of leggings, they know they are good quality

Own-brand (From Teacher)

• Offers cheaper alternative
• Bigger profit share for the company e.g. Dunnes
• Lead to repeat customers
• Easily recognisable product
• Speciality goods

Price (different pricing strategies)

		Example
Premium	Higher price to show image of superiority or quality	Rolex
Price skimming	High price to start, drop price later to get more sales after	PS4 Game
Penetration	Lower price to start, to build market share	Aldi/Lidl
Psychological	Price at perceived cheaper amounts €19.99 vs €20	Travel Agent
Bundle	Lower price per item when bought as a package	TV/broadband
Cost plus	Price to cover all costs (ads/production) plus percentage profit	Clothes retailers
Tiered	Selling different levels of quality at different price ranges	Cars (add-ons)
Discrimination	Selling goods at different prices to different groups	Dublin Bus
Predatory	Lower prices to eliminate competitors	Ryanair

Factors that influence price

Input Costs	Depends on economies of scale (size of operation), cost of raw materials, rents/wages (location can be a factor)
Competitors	Pricing will position the product’s image against competitors in the market
Consumers	Expectations of satisfaction and norms for consumers
Legal regulations	Tariffs, import costs, VAT, changes in exchange rates – all impact on price
Demand	If demand increases, companies may increase prices to match (e.g. concerts)

Promotion

1. Advertising	Actions to convince consumers to buy a good/service. Types of advertising: generic, informative, persuasive, competitive. Forms of advertising: social media, billboards, TV, media, Google
2. Public relations	Efforts to build positive public image of the company and defend against criticism; uses press releases, sponsorship, endorsements
3. Sales promotions	Short-term actions to boost sales (e.g. 2 for 1, 33% off), discount codes, loyalty cards, competitions, free gifts, merchandising
4. Personal selling	Salesperson interacts with the consumer (interpersonal skills), informs them (with knowledge/training) and persuades them to buy a good/service

Types of advertising

Generic Advertising	To get the name/brand coverage Represents everyday life/work These adverts are generic and non-descript, it could be for anything
Informative Advertising	Gives Product Details Gives USP Highlights key brand imagery
Persuasive Advertising	Persuades you need the product “Your life will improve by owning it”
Competitive Advertising	Highlights the difference between competing brands Emphasis on product perks over competitors Usually side-by-side comparison

Promotion (impact of ICT)

Advertising	ICT has led to online advertising, which has a much bigger impact on younger market segments. Younger consumers spend more time online (on phones and tablets) so more money is spent advertising there
Public relations	ICT has allowed companies to use social media (Twitter, Instagram, etc.) to interact with consumers. Businesses enhance their image through endorsements from social media users with lots of followers
Sales promotions	ICT has allowed for a much wider range of ‘share and win’ competitions on social media to incentivise sales. Businesses also ask consumers to sign up for newsletters in exchange for discount codes. Businesses use pop-ups on browsers and websites
Personal selling	ICT has allowed salespeople to use smartphones and tablets to illustrate products/services in action. Live Chat is used for direct online interaction

Place

Channels of distribution

Traditional	Manufacturer ➔ Wholesaler ➔ Retailer ➔ Consumer	Soft Drinks
Alternative	Manufacturer ➔ Retailer ➔ Consumer	TVs
Direct	Manufacturer ➔ Consumer	E-commerce sites
Agent	Manufacturer ➔ Agent ➔ Consumer	Insurance brokers

Factors for choosing a channel of distribution

Profit margin	The more stages (e.g. wholesaler, retailer) involved, the less a business profits per item sold
Type of good	Perishable goods are best sold direct. Mass produced goods are best sold through wholesalers who can ‘break bulk’ and sell to retailers
Market size	Low-volume operations may suit a more direct channel (especially for job production), since orders might be custom made
Online presence	A business with lots of followers can sell directly through websites and social media. This is useful if the target market regularly uses devices
Technology	Apps such as Uber Eats and Deliveroo provide platforms where manufacturers can sell (which enables higher sales)