For a product such as a Rolls Royce neither price nor promotion are important. In this case the product is by far the most important element element in the marketing mix. Price in this case is possibly the least important.
It might even be the case that all the elements are equally important.
The successful business, with a successful marketing policy, will know which of the four elements is the most important and which is the least important. If they get the mixture wrong and concentrate upon promotion when the product is the most important element, then their marketing policy will fail. They will not sell as many goods as they want to and ultimately the company will not be successful.
GCSE Business Studies
The Four P’s
Effective marketing should produce the right product, at the right price, at the right time in the right place. In order to achieve this the four P’s, PRODUCT, PRICE, PROMOTION AND PLACE are important.
The product is everything from the design, and including the packaging, through to the after-sales service and guarantee.
The price must take into account the competition and the demand for the good by the consumer. If the consumer is not prepared to pay the price then it is wrong.
Promotion includes everything that is normally thought of as marketing, sales promotions, advertising, free gifts, trials and so on.
The final P, place is equally important. If the good is not available at the right place, shop or city, then it will not sell.
Pricing Strategies
- SKIMMING – Selling a product at a high price sacrificing high sales for high profit.
- COST– Fixing a price by adding a percentage profit to the cost of production of the goods.
- COMPETITIVE – Setting a price based on the prices charged by the competitors for similar products.
- PENETRATION – Setting initially low price for a new product so it is attracting to the costumers prices likely to be raised later.
- DESTROYERS – Were one company forces another company out of the market :- intense competition.
- PRICE WARS – Intense competition not lasting every long competing over market share.
- PSYCHOLOGICAL – Letting the costumers think there getting more or better offers than there competitors.
One example of pricing strategies;
50p to buy
- 10p to make
40p
- 10p for taxes
30p
- 15p for profit
15p
- 10p for wages, manufactures/ retailers
5p for transport costs
The pricing strategy I used for my chocolate bar was PENENTRATION. The reason for this is to attract many customers to my bar and later when I find that my bar is selling well, I will then gradually raise the price by 4 or 5p.
Marketing
As a results, most firms are now MARKET-ORIENTATED. They have to identify the wants and desires of the consumer, both now and in the future, and provide the right goods or services to satisfy the customer and make a profit for the firm. That, in brief, is what marketing is all about.
Marketing is based on the theory that people of the same age, income, education etc. will spend their money on similar products. For example, most pop records are bought by teenagers, most university graduates don’t read the Sun.
Market Segments
Marketing people divide the whole population into different groups and categories, called MARKET SEGMENTS, and examine each one in great detail. Their main aim is to find out what kinds of goods and services consumers buy.
Geographical and regional differences affect the ways in which people spend their money. You would be able to sell more Wellington boots in the country than you would in the centre of London, for example.
There are other factors, which are even more important. Age is one of the most significant. As the proportion of old people in the population increases, there will be a rise in demand for medicine, old people’s homes and hospital services (both state and private).
Business Studies For GCSE (Second Edition)
Marketing And The Marketing Mix
Marketing is not advertising, as many people believe, nor is it market research or selling. Advertising, market research and sell are part of the marketing activity of a company but not the whole processing. Marketing is a whole company philosophy, which affects every part of a business and every person with a business. Simply stated, marketing affects everyone.
A very simple definition of marketing is that it is:
Providing the right good at the right price in the right place at the right time.
However, this is very basic and not very accurate. A better definition is provided be the Chartered Institute of Marketing.
‘Marketing is the management process responsible for identifying, anticipating and satisfying consumer requirement profitably.’
Marketing puts the consumer at the centre of a company’s activities. It is about discovering the needs of the consumer, identifying needs, and satisfying those needs in a way that earns the company as much profit as possible. Part of identifying consumer needs is to realise that these needs change over time. Marketing should therefore anticipate any changes, now and in the future, in order to continue to satisfy the consumer.
Marketing has become even more important to businesses over the last 40 years. Greater competition, the rapid growth in technology, constantly changing fashion and trends, emphasised by television and newspapers, along with an increase in people’s income to have a good marketing policy.
Market Economies
A third way of organising a nation’s resources is the MARKET ECONOMY. With this system everything would be controlled by supply and demand, i.e. by market forces. There would be no government interference of any kind.
There are no examples of a true market economy. The United States comes closest, but even there the government has some say in how the economy is managed. For example, the government spends a greater percentage of its gross national product on defence than any other country in the world.
