External – outside of the business there are also many constraints. These include
- Consumers (they will not be interested in the business if it is not consumer-focused)
- Competitors (if a competitor in the same market already has an advantage then it is very difficult for a new business to market a product.)
- Economy (If there is a period of economic recession when customers have falling incomes marketing a luxury product will be difficult)
- Law (There are many laws that restrict the way a product can be marketed by a business.)
Functional areas
Businesses need to be broken down into different functional areas. The functional areas in a business all support the marketing department. They are:
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Finance – The marketing department have to work within a budget that will support their TV advertisements, direct mail, PR, and other promotional activities. It is the finance department’s job to allocate budgets to support promotional activities costs.
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Customer service – Customers are important to a Business as a whole as loyalty of customers is important. From the customers services a business can develop products to fit their customer’s needs as well this they relay customer views on the way the products are being marketing to the marketing department.
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Production – This department works on producing products that will satisfy the customer’s needs. Production will work with the marketing department to produce a high level of output to match the marketing departments target for a high level of sales.
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Research and development – The research and development department uses the market research and uses the results to design new products that can be introduced to new customers by the marketing department.
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Quality assurance department – Tries to ensure that the expectations (that the marketing department have made) of the customers are met. This department is very important because it can influence the market position
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Human resources – It is the job of the human resource department to employ the correct candidates in all of the functional areas including the marketing department. This means that the marketing department will have the best employee’s possible working in their area.
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Administration and IT – This area is important to the whole business as it is essential in communication. Information can be passed on to the marketing department such as research done by the research and development to improve how they choose to market their products etc. Also this department enables marketing to be stored on a system that is easily accessible and all their finance etc can be sorted out with no hassle.
It is important that the functional areas within a business work together because they need to stay focussed on the business aims and objectives as well as helping each department with the specific skills they use and others may require.
The marketing mix
The marketing mix is a useful way of looking at the marketing of products. It is the tools available to a business to gain the reaction it is seeking from its target market in relation to its marketing objectives.
The marketing mix is made up of “the 7p’s” these are regarded as vital when a new product is released. Originally there were only 4p’s but as businesses grew larger 4p’s no longer covered the entire market. The 7p’s are:
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Product – This can be a good or a service. It is considered to be the most important element in the marketing mix. There are many different ways of presenting the product to the customer, it can be done through:
- Branding, this helps the customer differentiate between products and can be a name symbol or a design, as well as manufacturers brand, own label brand and generic brands. Businesses seek to create portfolio of individual products which support the image of the brand.
- Features, the features of a product are what are sold to the customer not just the product itself.
- Packaging, this is the way the product is presented to the customer.
- Item, specific model or size of the product.
- Line, similar to item, with similar characteristics and applications
- Mix, mix of all the business’s product line.
The product goes through various stages these are, introduction (launching a new product through big marketing campaigns, many products fail in this opening stage), growth (sales are increasing at their fastest rate but may bring competitors hoping to get the same positive reaction to a similar product), maturity (sales have reached their highest peak and therefore the product should be making the biggest profits) decline (the final stage of the cycle where sales are falling, this could lead to the product being withdrawn if its making a loss) The product can then be extended through product extension (this can be done by advertising to try and gain a new audience or remind the current one, reducing the price to make the product more appealing, adding new features to a product, exploring new markets or re-packaging.
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Price – The only “P” that generates income. The importance of price in the marketing mix varies depending on the product. There are many different pricing strategies, these are:
- Skimming, this involves setting a reasonably high price for a new product in order to yield a high return from customers willing to purchase the new product. Once the first layer of customers has been satisfied the business can lower the price in order to attract new customers, this continues until a large section of customers has been catered for. The skimming strategy reduces the risk of under pricing the product.
- Penetration, this is where a new product is launched in a competitive market and needs to attract custom, this is done by introducing the product at low prices and with special offers. As the product penetrates the market sales and profitability increase so the business increases the prices of the product.
- Loss leader, this involves selling product that at a price that will generate little or no profit so that they can attract customers that might buy other products being sold at higher prices to make up for the loss.
- Cost plus, this is where the cost of the items a business produces is totalled up and then the margin is added on to get the total price e.g. margin of 20% means the total price will be 20% more than the cost of production.
- Psychological, this is where prices are expressed as a little less than a round figure so the customer is encouraged to ignore the last significant digits rather than properly round it, which suggests to the customer the product, is being priced at the lowest possible price.
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Promotion – All of the techniques that a business uses to communicate with their customers, with other individuals and businesses. The businesses send information to the customers through oral, visual or written messages. Promotion of a product can be done in many different ways, these are:
- Advertisement, this is a method of communicating with groups in the market in order to achieve some of the objectives. Adverts are messages sent through the media which aims to persuade the targeted market to buy the businesses products.
- Printed media, for example newspapers, magazines etc. this means that the business can send a message to millions of potential customers.
- Broadcast media, this includes TV and radio, and reaches millions of households and therefore millions of commitments.
- Direct mail, this is often regarded as junk mail but it still gets the attention of potential customers
- Special offers and coupons etc, these draw customers into the business and persuades them to buy the product and maybe other products. Often used in sales promotion.
- P.R, involves a transfer process which helps convert the negative feelings of a business’s many publics into positive ones. PR activities include donations to charity, sponsorship and lobbying.
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Place – this provides a basic structure for customers needs to be satisfied. The place a product is sold enables the product to be sold to the customer at a time right to them.
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People – represent the business, the image they give to the customer is important as the business’s reputation may be referred to the people they present to the customers.
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Process – the process of the marketing the product is especially relevant to the service industries, and shows how the product is consumed by the customer, the way they have to get the product, and how available the product is to the customer.
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Physical environment - The ambience, mood or physical presentation of the environment. It is important that the customer view of the business is positive, they look to see if the business is:
- Smart/shabby?
- Trendy/Retro/Modern/Old Fashioned?
- Light/dark/bright/subdued?
- Romantic/chic/loud?
- Clean/dirty/unkempt/neat?
- Music?
- Smell?
Blending the marketing mix
The blend of the marketing mix depends on the following things:
- Marketing objectives
- Type of product
- Target market
- Market structure
- Rivals’ behaviour
- Global issues – culture/religion, etc.
- Marketing position
- Product portfolio
It is important for a business to consider the blend of the marketing mix so that the customers are satisfied with all of the ways the product is being presented to them, a good blend of the marketing mix will persuade a customer to buy the product and stay loyal to the business. It is also important that the business has a specific blend just for them because of their aims and objectives as a business, for example a supermarket needs to keep a different blend to a fast food chain as their targeted customers have different needs.
Overall the marketing in a business plays a very important role in how successful a product and therefore a business will be, as a good marketing strategy will attract more customers and gain more profit for the business. The marketing department mainly relies on help from other departments and the marketing mix (it is important to have the right blend). If the business uses the right strategies to fit the product/service they provide then they will be successful in achieving their aims and objectives.
