3rd chapter

Part-1 MARKETING MIX

By
Asst Prof. Venkatesh.N
Koshys Institute of Management
Studies.

LEARNING GOALS

1.
2.
3.
4.
5.
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Key learning goals:

This topic will continue the discussion of
marketing management issues, especially
marketing mix and product life cycle.
Explain the four elements of marketing mix.
State the difference between place and promotion.
Explain the stages of product life cycle.
Explain how a business can extend its product
life.
State the reasons why a business may analyze its
product life cycle.

Marketing (2)
-Marketing Mix

What is marketing mix?

Marketing mix refers to those four elements
(product, price, promotion, and place) of a firms
marketing strategy which are designed to meet the
needs of customers. These are regularly known as the
four Ps.
Simply, to meet consumers needs, businesses must
produce the right product, at the right price, make it
available at the right place, and let consumers know
about it through right promotion.
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Elements of Marketing Mix

Product
Price
Place
Promotion

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Marketing (2)

1.
2.
3.

-Marketing Mix: Product

Product:
Products must be ensured to meet the needs of
customers in terms of the following aspects:
Appearance
Function
Production Cost

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Marketing (2)
-Marketing Mix: Product
Features of a product to meet the needs of customers

Aspects

Brief explanations or examples

The appearance

Color, size, shape, etc. must meet the

consumer needs.

The function

Able to be used
Convenient for use
Meeting special needs of customers

The cost

Production costs must be low enough to

earn some profit.
High cost, higher price.
Too high price, customers unlikely to buy.

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Product Mix

Product mix, also known as product assortment(Mixture),

refers to the total number of product lines that a company
offers to its customers. For example, a small company
may sell multiple lines of products. Sometimes, these
product lines are fairly similar, such as dish washing liquid
and bar soap, which are used for cleaning and use similar
technologies. The four dimensions to a company's product
mix include width, length, depth and consistency.

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Product Line

A good way for a company to try to expand its

business is by adding to its existing product line.
This is because people are more likely to purchase
products from brands with which they are already
familiar. For example, a frozen pizza company
may wanted to increase its market share by adding
frozen breadsticks and frozen pastas to its product
line.

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Product Line

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Marketing (2)
-Marketing Mix: Price

Price:
The pricing policy that a business chooses is
often a reflection of the market at which it
is aiming.
The right price set must take into account of
production costs, competitors prices and
consumers purchase ability and demand
level.
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Marketing (2)
-Marketing Mix: Price
Influences from the pricing factors
Factors

Influences on the price of a product

High production
costs

High production costs would mean the high

sale price for the goods supplied by sellers.

High customer
demand

High customer demand will lead to the

increased price of the goods or services.
Suppliers are more wiling to provide the
goods or services as it is more profitable
for them to supply.

Low prices charged

by
competitors

If the price of the substitute product offered

by competitors decreases, the demand for a
product will be decreased as well.

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-Marketing Mix: Price

Attention: High-price strategy

In general, from the economic point of view, the higher the

price of a product is, the less quantity demanded by consumers.

Or there are few buyers who would like to high-price products.
However, in practice, a business may charge a high price
because it is aiming to sell to those customers who regard its
products as unique and high quality although the production
costs are not high.
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- Marketing Mix: Place

1.
2.

Definition:
Place refers to the means by which products can
be distributed to the consumers. The product
must get to the right place at the right time.
Decision making may be based on the following:
How the product is distributed physically, such
as air, sea, rail, or road.
How the product is sold, such as through
retailers, wholesalers, or direct mailing, etc.

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- Marketing Mix: Promotion

Definition:
Promotion refers to a number of promotional

methods, such as advertising, sales promotion,

competitions, and personal selling, etc.
A business must choose a method of promotion which
is the most effective in its particular market and for its
own product. For example, TV advertising may be
better for the product with a high sales turnover or a
wide request. But for high-technology machines or
equipment, it is better to choose personal selling
methods.

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New-product development and

product life-cycle strategies

Introduction: New products

New products are the lifeblood of the

organisation but they are extremely at risk

and the majority never reach
commercialisation.
In competitive markets, the best and
strongest firms sustain growth through the
introduction of new products and services to
meet the changing needs of the consumers.

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Introduction: New products

All products have a fixed life span and this is influenced

by the type of product, its innovativeness, the
management of the product through its life cycle, as
well as the markets in which it is sold.

All products will finally decline and need to be replaced

by new ones and companies need to be adept at
adapting marketing strategies to respond to the
dynamics of the environment, so as to manage the
product through its life cycle effectively.
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Innovation and new product

development

Unless companies develop new products, their

business will certainly decline and die away.
Innovation is a costly and risky activity.
Some innovations are nothing more than a
modification to an existing product range, while others
are completely new products
Success in developing new products is mainly about
correctly identifying what those needs are, and
translating them efficiently into new products.
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Innovation and new product development strategy

Product innovation covers a range of product

development activities, including product
improvement, development of new products
and extensions to product lines.
Classifications:
New to company, new to market.
New to company, significant innovation to market.
New to company, minor innovation to market.

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Product innovations are not to be confused

with inventions

Innovations

Ideas, services, technologies and products that

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have been developed and marketed to

customers who perceive them as novel or new.
It is a process of creating and delivering new
product or service values that did not
previously exist in the marketplace.

Product innovations are not to be confused

with inventions

New product development

The development of new brands, original products,

product improvements or modifications, through the

efforts of the firms R&D.

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Why do new products fail?

New product development is too expensive

Unexpected delays and time to market too long
Insufficient demand for the product or service
Not as well designed as it should have been
Incorrectly positioned
Incorrectly priced
Competitors fight back more aggressively than expected.

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What influences new product

success?

Development of a unique superior product

Clearly defined market and product concept

Meeting market needs
Senior management commitment
New product planning
Systematic new product development
process

Better quality, new features and greater value

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9 Steps of new product

development

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1. Idea generation

Systematic search for new-product ideas.

In pharmaceutical companies it can take 6000-8000 ideas

to produce one commercial success.

Generally only 1 out of 100 new-product ideas will reach
their objectives.

Customers
Competitors

Observing the competition is an excellent source of newproduct ideas.

Distributors, suppliers and others

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2. Idea screening(Viewing )

Process of screening the new-product ideas

in order to spot good ideas and drop poor
ones as soon as possible.
exact evaluation is necessary.

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3. Concept development and testing

Product idea converted into a product

concept
Converted into meaningful consumer terms of a
product image
How the consumers will perceive the product.

Concept testing is essential to judge the

strength of the new-product concept and

ascertain if it will have commercial appeal.
Consumers may like the idea but would they be
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prepared to pay for it?

4. Marketing strategy development

Develop the suitable marketing strategy

based on the marketing logic by which the

business unit hopes to achieve its marketing

objectives

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5. Business analysis

Review of the sales, costs and profit projections.

Establish the viability of the project and whether
it will satisfy the companys objectives.
Explore strategic fit with entire business.

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6. Product development

Logical developing the product concept into

a physical product in order to ensure that
the product idea can be turned into a
workable product.

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7. Test Marketing

Test marketing is a technique used during product

development to determine how people respond to a
product.
It can be used at many different phases of development
to see whether or not the public will buy the product,
how the product may need to be adjusted to make it
appealing to the public, and how members of the
public interact with the product.
Using information from test marketing, product
developers can refine products to make them more
commercially viable before embarking on a
widespread project launch.
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8. Commercialisation

Commercialization is the process or cycle of

introducing a new product or production method into
the market. The actual launch of a new product is the
final stage of new product development and the one
where the most money will have to be spent
for advertising, sales promotion, and
other marketing efforts.the company needs to decide
the following:
When?
Where?
To Whom?
How?

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9. Organising for new-product

development

Sequential(ordered) product development slow

and many companies encourage the concept of
simultaneous product development:

departments work together, overlapping the steps in

the product development process so as to save time
and increase effectiveness.

Successful new-product development is based

upon an fixed culture of innovation within the
company that is supported from senior
management downwards.
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Product life-cycle strategies

Following the launch of the new product, the

challenge to management is ensuring that the
product achieves its potential over its projected
life span.

This involves understanding the product life-cycle

and developing appropriate marketing strategies and

interventions(act of involving).

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The product life-cycle

The product life-cycle (PLC) is the course of a

products sales and profits over its lifetime. It
involves five stages:
Product development
Introduction
Growth
Maturity
Decline
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The product life cycle

Frklarar ven varfr mnga fretag vljer att kopiera.

Figure 14.2 Sales and prots over the products life from inception to demise
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The PLC as an effective marketing tool

The PLC can be applied to product classes

as well as styles, fashions and fads.
The PLC will reflect these aspects in the
length and type of PLC as illustrated:

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Product / concept development stage

Product concept converted into meaningful

consumer terms of a product image.
Concept tested to establish commercial
appeal.

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Introduction stage

The phase where the new product is

distributed and made available for purchase.

The market initiate has much responsibility
when devising the appropriate strategy as it
sets the stage for the products introduction
to the consumer.
Characterised by high promotional costs.
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Introduction stage strategies

Strategies are based upon the product and

the dynamics of the market

Skim the market slowly using high price and

relatively low promotional activity.
Skim rapidly by using a high price and high
promotion strategy if the market is price
insensitive.

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Growth stage

The product sales begin to increase rapidly.

Profit is generated as a result of effective

promotional activity and the spread of costs

over larger volume of sales.

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Maturity stage

The phase where sales growth slows or

levels off.
Marketers then seek to resuscitate or extend
the life of the brand by the following
methods;

New market development

New usage and application

Product development and modification

Marketing innovation
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Decline stage

Sales decline.
Marketers need to determine the value of
retaining the product versus the cost of
divesting from the product.
This is weighed up against the market
dynamics.

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Branding and Packaging

What is Branding?:
What is Branding? Branding is the process
of stamping product with some identifying
name or mark or combination of both

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Reasons for Branding

Identify the particular product or service

Easy advertising and publicity Standard
quality and satisfaction to buyers Increases
the sales Sale promotion in competitive
market Reduces personal believable selling
efforts

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Various terms relating to

branding
A brand is a name, term, sign, symbol or design used to
identify the products of one firm and to differentiate them
from the products of the competitors. Bata, LG, Samsung,
levis are some examples of common brand Brand name: It
consists of words, letters or numbers which may be
vocalized or pronounced. for example: LG, BPL, Onida,
SONY, 501 Soaps etc.
Brand mark: It is that part of the brand which can be
recognised but not utter able, such as symbol, design or
distinctive coloring or lettering.

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Contd..

Trade mark: when a brand is registered and

legalized it becomes a trade mark. Trade mark
v/s brand Registration Scope Legal protection
Nature

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Brand classification:
Brand classification
On the basis of ownership: Manufactures brand
Middlemens brand
On the basis of market area: Local brand Regional
brand National brand International brand
On the basis of number of products: Family brand
Individual brand Product line brand
On the basis of use: Fighting brand Multiple brand

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Factors affecting the selection

of good brand

Simple and short Easy pronunciation

Recognizable Suggestive Economical
Legally protectable Helpful in advertising

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Advantages of branding :
Advantages of branding to the manufactures :
Builds up reputation and image Helpful in
advertising Easy to identify Personal contact
with customers Creation of separate market

Advantages of branding to the middlemen:

Helps in understanding the consumer

behaviour No need of extra advertising and
sales promotion Increase in goodwill Quick
moving products Reduces distribution cost

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Contd..

Advantages of branding to the consumers:

Easy identification Quality products Easy
shopping Easy to fix complaint and make
claims

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Disadvantages of branding:

Disadvantages of branding to the

manufactures: Increases cost Expensive
Opposed by middlemen

2. Disadvantages of branding to the

consumers: Greater confusion Discourages
from trying other products Commands
premium Increase in price

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Conclusion:

If we compare its advantages and

disadvantages, we may confirm that its
advantages are much powerful. So I
conclude that the use of brand is necessity
in modern era..

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What is packaging?:

A package is a wrapper or container in

which a product is enclosed, encased or
sealed.
For example: a wrapper, box, cartoon, can,
crate, bottle, jar, tube, barrel, drum etc. for
convenient distribution

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Objective of packaging:

Protection Identification Convenience

Promotion Attraction Economy Reputation

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Advantages of packaging:

1.Advantages of packaging to the

manufacturers: Keep the product safe Facilitate
storage Enhances goodwill Promotes product
Prevents adulteration Helpful in advertising and
sales promotion Increase profit
2. Advantages to the middlemen Facilitates
storage Self advertising Easy display Help in
transit
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Advantages to consumers:

Minimum possibility of adulteration.(being

mixed with extraneous material)
Convenient handling and storage. Provide
necessary information about the products.
Helps memory and recognition. Protects the
contents. Payment of appropriate price.

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Essential of good packaging:

It should be protective It should be attractive It

should be informative It should be pollution
free Durability Suitability Cost material

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Example of packaging:-:

Function of packaging:
Protection, Convenience, Identification
Promotion, Attractive, Differentiation
Dependability, Profit ,Communication

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Packaging decisions

Package design Package size Package cost

Package test.
Further four kind of test are made for
package test Engineering test Appealing
test Consumer test Middlemens test

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Reason for growth of

packaging:
Self-service Consumer need Company

image Large scale production Increase in

variety

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PRICING

Price is only one element in the marketing

mix that creates sales revenue the other
elements as costs.

PRICE DETERMINATION PROCESS

Pricing is the process of determining what a

company will receive in exchange for its
products.
Pricing factors are manufacture cost, market
place , competition , market condition, and
quality of product.
pricing is a fundamental aspect of financial
modeling and is one of the 4ps of the
marketing mix.

PRICING POLICY

Policies are guidelines for achieving the

objective.
Different pricing policies may be adopted to
meet the different long term objectives.
When decisions are made to fit the changing
competition situations met by the specific
product are called pricing policies.

Contd.

Considering the competitive situation various

price strategies may be followed. In the absence
of the competition the prices may be fixed very
high and high profit may be earned.

On the other hand, if the market is highly

competitive, the very low price, probably near
the cost policy may be adopted to throw out the
competitors if the price may have a suitable
appeal to the consumer

FACTORS INFLUENCING PRICING POLICY

Cost
Objective
Demand
Competition
Distribution channel
Government
Economic condition
Ethical Consideration
Types of buyers
Product differentiation

METHODS/TYPES OF PRICING POLICY

DISCOUNT AND ALLOWANCES

Discounts and allowances are reductions to a basic

price of goods or services. they can occur anywhere
in the distribution channel, modifying either the
manufacturers list price, the retail price.
They are many purpose for discounting, including to
increase short-term sales, to move out-of-date stock,
to reward valuable customer, to encourage
distribution channel members to perform a function.
Discounting is common in many industries-in some
it is so common as to give normal price lists
practically meaningless.

Contd..

This is not to say that there is anything

particularly wrong with price discounting
provided that you are getting something specific
that you want in return.
Common form of discounts
Trade discount
Cash discount
Quantity discount
Seasonal discount

Contd..

Allowances:- the manufacturer may offer

promotional allowances like advertising
allowances, window display allowances,
free sample, free display material, free
training in sales demonstration etc..

Pricing approaches and strategies

There are three main approaches a business takes to

setting price:
Cost-based pricing: price is determined by adding a
profit element on top of the cost of making the product.

Customer-based pricing: where prices are

Competitor-based pricing: where competitor prices

determined by what a firm believes customers will be

prepared to pay.

are the main influence on the price set

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KINDS OF PRICING

Odd pricing
Psychological pricing
Customary prices
Prestige pricing
Price lining
Geographic pricing
Dual pricing
Administered pricing

Even-Odd Pricing

Why do marketers use the following prices?

Customary Pricing

A method of determining the price for a good

or service based on the
perceived expectations of customers. Customary pricing
is generally used for products with a
relatively long market history of being sold for a
particular amount, and is driven by intuitive notions
of value on the part of buyers.

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Product Line Pricing

Where there is a range of products or services
the pricing reflects the benefits of parts of
the range.
e.g.- car washes; a basic wash could be $2, a
wash and wax $4 and the whole package for
$6

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Prestige Pricing

Marketing strategy where prices are set

higher than normal because lower prices
will hurt instead of helping sales, such as
for high-end perfumes, jewellery, clothing,
cars, etc. Also called image pricing.

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Geographical Pricing:-

Geographical pricing sees variations in

price in different parts of the world.
e.g. rarity value, or where shipping costs
increase price. More tax on certain types of
product which makes them more or less
expensive.

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Product Bundle Pricing:-

Sellers combine several products in the

same package. This also serves to move old
stock. Blu-ray and videogames are often
sold using the bundle approach once they
reach the end of their product life cycle.

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Dual Pricing

The practice of setting prices at different levels

depending on the currency used to make the
purchase.
Dual pricing may be used to accomplish a variety
of goals, such as to gain entry into a foreign
market by offering unusually low prices to buyers
using the foreign currency, or as a method of price
discrimination.

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Product Bundle Pricing

Definition:

Multiple products sold together for one price

Creates of savings
Eases decision-making and ordering for consumers
Examples:
Computer package: PC, monitor, software, and printer.
McDonalds Value Meal: Burger, Fries and Drink
Vacation package: Flight, hotel and meals

Optional Product Pricing:-

Companies will attempt to increase the

amount customers spend once they start to
buy. Optional extras increase the overall
price of the product or service. e.g.- airlines
will charge for optional extras.

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Administered Price

Price set by the management of a firm, and not

arrived at through negotiations between a buyer and

a seller.
Most retail
and industrial prices are administered prices, which
are then adjusted in response to the competitors'
prices.

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Contd..

PSYCHOLOGICAL PRICINGA pricing strategy that

specializes in inflicting psychological effects on
consumers. It is a marketing strategy based on utilizing
particular pricing techniques to form a psychological
impact on consumers.
Popular techniques that raise sales :
Odd Pricing
Prestige Pricing
The opposite of odd pricing
, e.g. pricing at $10 rather than $9.99. BOGOF
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CHANNEL OF DISTRUBUTION

The channel of distribution is the pathway taken

by goods and services as they flow from the
point of production of the point of consumption
and include a sequence of marketing agencies.
After production the next problem faced by a
producer is that of selling and distributing.
Because production is made to satisfy the needs
of the consumers so it must reach to the
consumer for whom it is made

DEFINITIONS

According to Philip Kotler, every

producer seeks to link together the set of
marketing intermediaries is called the
marketing channel OR channel distribution.

NEED OF CHANNEL OF DISTRIBUTION

VARIOUS CHANNEL DISTRIBUTION

Manufacturer-consumer-channel
Manufacturer-retailer- ultimate consumer
Manufacturer-wholesaler-retailer-consumer
Manufacturer-agent-wholesaler-retailerconsumer
Manufacturer-wholesaler-consumer/user

WHOLESALER

Wholesaler including all activities involved

in selling goods and services to those
buying for resale or business use.
Types of wholesalers
Merchant wholesaler
Broker and agents

FUNCTIONS OF WHOLESALERS

Selling and promoting

Buying and assortment building
Bulk breaking
Warehousing
Transportation
Financing
Risk bearing
Market information
Management service and advice

PROMOTION

Promotion is one of the four variables in the

marketing mix. Basically it is communicating
information b\w producer\seller and buyer or
prospective buyer to change attitude and behaviour
of consumer .
When a company develops a new product, makes
change in the old one or simply wants to increase
sale of its existing product without making any
change, it must transmit selling message to potential
customer, it is promotion.

NATURE OF PROMOTION

Promotion activities are performed by the

manufacturer. It is the responsibility of the
producer to get information about the consumer
and prospective consumer so that the necessary
product may be served to meet their demands.

Promotion includes, advertising, personal selling

and other sales promotion.

IMPORTANCE OF PROMOTION IN MARKETING

The activity of promotion has become important

because of the widening of the market .
In modern times, there is a cut throat competition
in every field.
There are number of channel of distribution. (the
producer should not only inform the consumer but
also he should the middlemen)
Promotion expenses are the highest of all the
marketing expenses.

PROCESS OF COMMUNICATION IN MARKETING

Marketing communication involves sharing of

meaning, information and concepts by the source and
the receiver about the products and services and also
about the firm selling through the device of promotion
via, advertising, salesmanship and sales promotion.
Selling process
Sales planning
Sales territory:-sales territory is a basic unit of sales
planning and sales control.

SALES PROMOTION

Sales promotion is a parts of promotional

mix, sales promotion refers to the activities
which supplement and co-ordinate personal
selling and advertising to attract customer to
buy a product.
Sales promotion methods include display,
demonstration, expositions, exhibitions and
other .

CHARACTERISTICS OF SALES PROMOTION

Sales promotion does not include advertisement,

personal selling and publicity.
Sales promotion activities are not regular activities.
These are purely temporary and are performed at
certain times such as display, free samples,
exhibitions, demonstration etc.
Sales promotion encourages dealers, distributors and
consumer.

TYPES OF SALES PROMOTIONS

The different kinds of sales promotions are as

fallows.
Sales promotional letters
Catalogues
POP(point of purchase)
Demonstrations
Trade fair and exhibitions(trade fairs and exhibitions
provide companies with the opportunity of
introducing and displaying their products) it is one
of the oldest practice in sales promotion

ADVERTISING,DIRECT SELLING,SALES
MANSHIP ETC.

Advertisement:- it is a paid form of non- personal

presentation of ideas, plans good and services which is

identified by the particular sponsor.
Different Medias Of Advertisement :Answer please
Commercial Advertising:
Non commercial advertising
Who are the main key players of advertising: Answer

please

What is a Marketing Channel?

A
A set
set of
of interdependent
interdependent organizations
organizations
that
that ease(make
ease(make easier)
easier) the
the transfer
transfer of
of
ownership
ownership as
as products
products move
move from
from
producer
producer to
to business
business user
user or
or
consumer.
consumer.

Names for Marketing Intermediaries

Retailer
Retailer

A
A channel
channel intermediary
intermediary that
that
sells
sells mainly
mainly to
to customers.
customers.

Wholesaler
Wholesaler

An
An institution
institution that
that buys
buys goods
goods
from
from manufacturers,
manufacturers, takes
takes title
title
to
to goods,
goods, stores
stores them,
them,
and
and resells
resells and
and ships
ships them.
them.

Agents
Agents and
and
Brokers
Brokers

Wholesaling
Wholesaling intermediaries
intermediaries who
who
facilitate
facilitate the
the sale
sale of
of aa product
product by
by
representing
representing channel
channel member.
member.

CHANNEL INTERMEMDIARIES

Retailers
Retailers

Take
Take Title
Title to
to Goods
Goods

Merchant
Merchant
Wholesalers
Wholesalers

Take
Take Title
Title to
to Goods
Goods

Agents
Agents
and
and
Brokers
Brokers

Do
Do NOT
NOT Take
Take Title
Title to
to Goods
Goods

CHANNELS FOR CONSUMER PRODUCTS

DIRECT
Producer

RESELLER
Producer

WHOLESALER

AGENT

Producer

Producer