~One clothes manufacturer may use better materials than its rivals. Another may have better workmanship.
~One computer manufacturer may install a 24-hour, unlimited-use hotline for its customers. Another may have its hotline functioning for only eight hours a day.
~ One computer manufacturer may give a one-year guarantee; another may give a two-year guarantee.
At one time there were many goods, such as milk, which were not differentiated. Now there are skimmed, semi-skimmed, extended life, long-life and other kinds of milk to appeal to various subgroups in the market segment.
The Price
Prices are one of the most powerful weapons in modern marketing. In the past, most prices were based on the cost-plus pricing method. This was calculated by the following formula: ~ Unit cost+overheads+mark-up=Selling price.
Other factors in pricing:
~ Supply and demand. This has a big influence on prices in the primary sector of production.
~ State of the economy. If the economy is booming, with little unemployment and rising wages and salaries, prices will rise, vice versa.
~ Price Plateau. For each kind of good there is a price plateau, or range of price, that careful shoppers think they would have to pay.
Promotion
The business world is now so competitive that the third P – promotion – has become increasingly important. Promotion is the way in which a business draws attention to itself and its products. There are three main methods:
~ Advertising
~ Public relations
~Merchandising
Methods of promoting sales are:
~ Free gifts, special offers, discount vouchers, bonus packs, charity promotions, competitions, and loyalty cards.
Place
The last of the four P’s – place- deals with how a business distributes its products. There are four main channels of distribution, which link the producer, or seller, with the consumer, or buyer.
The traditional way of distributing goods is shown as Channel A.
Channel A: Wholesaler-Retailer-Customer.
The wholesaler buys goods in bulk, or large quantities, from manufacturers. They are then split up into smaller quantities and delivered to the retailer. This process is known as breaking bulk.
Packaging: The fifth P
Packaging plays such a powerful part in the marketing mix that it has become known as the “fifth P”. There are three main aspects of packaging:
~ The materials from which it is made, such as paper, cardboard, plastic, glass, etc;
~ The size, shape, and weight of the container;
~ The label.
Each of them can be used in different ways to support and assist the other four P’s.
Product: For many goods the package is an essential part of the product e.g. leak proof containers for domestos, or ring-pull cans ( designed for ease of use ). The packaging can also be used to extend the products life cycle.
Price:
Elaborate packaging helps to persuade customers to buy products. It is often a significant part of the total price. Some retailers use plain packaging instead. This reduces costs, but it has not been a great commercial success so far.
Place
Packaging plays an essential part in the distribution of goods. It should be strong and secure, and easy to handle and transport. This can reduce the cost of replacing broken or damaged goods, and help to prevent losses through tampering or theft. The packaging should also be of a suitable shape and size for easy and attractive display in shops and stores.
Promotion
Packaging is also used to promote the brand name, which is usually prominently displayed. It can also be used to advertise details of other promotions such as price cuts, competitions, special offers, etc.
Other uses of Packaging
~ The bar code on the package plays an essential part in the automatic re-ordering of stock in supermarkets
~ Packaging also provides information required by law, such as the ingredients of tinned food
~ Secure packaging prevents criminals and terrorists from interfering with the contents.
