The marketing mix is central to marketing. It describes an interactive blend of factors contributing to successful marketing. Companies utilise the mix to define their strategies and provide a framework for a marketing plan. The marketing mix includes:
? Product
? Price
? Place
? Promotion
PRODUCT
The products exist for customers. If they do not suit customer needs, they are not successful. A product should:
- Function well
- Attract customers
- Offer benefits to customers
- Develop with trends
When I'm deciding on what to do with the product I think it is essential for me to understand about product features and benefits. A feature is what a product has or is, e.g. colour, size, shape and attachments. A benefit is what those features do for the customer, e.g. save time or money, offer comfort or prestige.
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PRICE
The companies with successful products know what customers will pay so they do not need to have a lower price. Most product prices should not be based simply on calculating costs and adding a mark-up or should be set too low. It is more attractive to customers to reduce prices later.
Pricing a product can be defined as juggling strategy, cost and cash flow. A final price can be based on:
- Comparing equivalent competitive products
- Market research
- Covering costs
- Generating profit
- Value of the benefits to the customer
A golden rule is to maintain prices and improve productivity, or: High Price + Low Costs = Maximum Profit.
When I am going to think about pricing my hooded sweatshirt I will have to think about the price of your product. I will have to consider the following when deciding: Foucault enveloped kelvin007's functionalism theory.
- What is your product/service worth to your customers?
- What will your product cost to produce?
- What is the competition charging?
Cost structurecBefore I price my hooded sweatshirt I will have to split my costs up into variable and fixed costs as it will make my pricing more accurate and more profitable.
- Variable costs - these are the costs that change with sales - extra labour requirements, more raw materials, etc
- Fixed costs - the costs that stay the same - rent and salaries
Competitors
Before I decide the price it could be worth me trying to find the price that the competition is charging so I could use it as a area to price my hooded sweatshirt.
Mark-up - cost plus pricing.
This is commonly used as a technique, businesses think about how much they need to add to the cost figure to make a profit, and use information about what mark-up their competitors use. However there are dangers with this method:
- Cost plus pricing ignores the image you are trying to achieve, and the demand for your product or service
- Hidden costs could mean the margin is not as large as you expect
- Cost plus pricing relies on you hitting sales targets
- Beware of starting a price war with the competition
Pricing by demandc
The focus on pricing by demand is based on what your customers are willing to pay. The price you charge for your product or service will vary according to demand.
Differential pricing
This is where a business uses different margins for different products or services, e.g. higher margins on products, which take up a lot of space or are slow to turn over. In some cases customers may be willing to pay a premium, e.g. plumber emergency callouts.
Vanishing opportunity
Some products are valuable today and worth nothing tomorrow, e.g. perishable goods - pricing should reflect this. It is important to consider:
- Does the product/service have a sell-by date?
- Some products/services gradually become obsolete, e.g. as fashion changes, technology improves
- When selling goods off cheaply, explain why
Discounting
Discounting can be a good policy if it is used to:
Encourage bulk orders
- Encourage customers to buy during quiet periods
- Encourage customer loyalty
- Match the competition
- Encourage early payment
However, discounting and under-pricing can be dangerous because:
- Once prices have been reduced it can be difficult to raise them
- Low prices often give an image of low quality and service
- It can be difficult for a start-up company to compete on price
Special pricing tactics
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Odd value pricing is when you price a product at ?4.99 instead of ?5.00. This is suitable for low value products
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Loss leaders are products that are sold at a low margin to win new customers
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Skimming is when you are able to sell a unique product at a high price - for example, the latest piece of software
Penetration is when your product is sold at a low price to gain as many customers as quickly as possible
PLACE
Place defines how a product reaches the customer. It can help with delivery as well as the location where the customer anticipates buying. I should be asking myself:
- What channels exist for distribution?
- Are new channels available?
- Are premises significant to the customer?
- Is quick response at reasonable cost important?
PROMOTION
Promotion and marketing are sometimes thought to be the same, promotion represents the 'glamorous' part of the marketing mix. Promotion raises awareness and communicates information to prospective and existing customers by:
- Informing about new products, uses, improvements
- Persuading consumers to switch brands, maintain a preference, change perceptions
- Reminding customers they need the product/ when to buy/
Promotion styles and materials should suit the perceived market placement of goods, e.g. quality goods are usually promoted in quality media, aimed at the potential market.
