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The Marketing Mix
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The Marketing Mix
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Product
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CHARACTERISTICS
Primary characteristics (Standard)
Corebenefits: in common with its competitors
Auxiliary characteristics (Optional)
features and benefits: unique to the product.
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LEVELS OF PRODUCT
The core product benefits;
The actual product benefits;
The augmented product benefits.
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PRODU T LIFE Y LE
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Introduction phase:
- The products sales grow slowly- The profit is small or negative
The growth stage:- Sales increases rapidly
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Profits begin to grow, but- Competition enters the market
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The maturity phase:
- The promotional spend eases off- Production economies of scale become
established
- Competitors have entered the market
The decline phase:
- The product is losing market share and
profitability rapidly.
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Question Marks
High growth, low shareBuild into Stars or phase outRequire cash to hold
market share
Stars
High growth & shareProfit potentialMay need heavy
investment to grow
Cash Cows
Low growth, high shareEstablished, successfulSBUs
Produce cash
Dogs
Low growth & shareLow profit potential
Relative Market ShareHigh Low
Market
GrowthRa
te
Low
High
Analyzing Current SBUs:
Boston Consulting Group Approach
?
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Product
Methods used toimprove/differentiatethe product and increasesales or target sales moreeffectively to gain
a competitive advantage e.g. Extension strategies
Specialised versions
New editions
Improvementsreal or
otherwise! Changed packaging
Technology, etc. Image copyright: www.freeimages.co.uk
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Price
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Setting Initial Product Prices
Market Skimming Market Penetration
> Setting a High Price for
a New Product to SkimMaximum Revenuesfrom the Target Market.
> Results in Fewer, MoreProfitable Sales.
> Intels $1,000 Chip
> Setting a Low Price for
a New Product in Orderto Attract a LargeNumber of Buyers.
> Results in a LargerMarket Share.
> Wal-mart
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MinimizesPriceCompetition
What is Cost-Plus Pricing and Why
is it Popular?
PerceivedFairness to
Both Buyersand Sellers
Sellers Are MoreCertain AboutCosts Than
Demand
Adding a Standard Markup to the Cost of the Product.
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Types of Cost Factors that
Affect Pricing Decisions
Total CostsSum of the Fixed and Variable Costs for a Given
Level of Production
Variable Costs
Costs that do varydirectly with the
level of production.
Raw materials
Fixed Costs(Overhead)Costs that dont
vary with sales orproduction levels.
Executive SalariesRent
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Product Line PricingSetting Price Steps
Between Product Line Itemsi.e. Lawnmowers at $299 & $399
Optional-Product PricingPricing Optional or Accessory Products
Sold With The Main Producti.e. Car Options such as a CD player
Captive-Product PricingPricing Products That Must Be
Used Along With The Main Producti.e. Razor Blades, Film, Software
By-Product PricingPricing Low-Value By-Products To
Get Rid of Themi.e. From Chemicals, Lumber Mills, Zoos
Product-Bundle PricingBundles Of Products Sold
Together at a Reduced Pricei.e. Season Tickets, Computer Makers
Product Mix Pricing Strategies
Product
MixPricing
Strategies
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Price-Adjustment Strategies
Adjusting Prices forPsychological Effect.
Price Used as a QualityIndicator.
Reference Prices i.e.Clothing.
Temporarily Reducing Pricesto Increase Short-Run Sales.
i.e. Loss Leaders, forSpecial-Events, Cash Rebates
Psychological Pricing
Promotional Pricing
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Price
Pricing Strategy
Importance of:
knowing the market
elasticity keeping an eye
on rivals
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Price Elasticity of Demand
Price
Quantity Demanded per Period
A. Inelastic Demand -Demand Hardly Changes Witha Small Change in Price.
P2
P1
Q1Q2
P
rice
Quantity Demanded per Period
P2
P1
Q1
Q2
B. Elastic Demand -Demand Changes Greatly Witha Small Change in Price.
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Promotion
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The Promotion Mix
The promotion mix is the specific blend of advertising,sales promotion, public relations, personal selling, anddirect-marketing tools that the company uses topersuasively communicate customer value and buildcustomer relationships.
Major Promotion Tools
Advertising
Sales promotion
Public relations
Personal selling
Direct marketing
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The Promotion Mix
Major Promotion Tools: Advertising
Advertising is any paid form of non-personalpresentation and promotion of ideas, goods, or services
by an identified sponsor.
Broadcast
Print
Internet
Outdoor
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The Promotion Mix
Major Promotion Tools: Sales promotion
Sales promotion is the short-term incentives toencourage the purchase or sale of a product or service.
Discounts
Coupons Displays
Demonstrations
Samples
Cash refund
Price packs
Premium
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The Promotion Mix
Major Promotion Tools: Public relations Public relations involves building good relations with
the companys various publics by obtaining favorable
publicity, building up a good corporate image, and
handling or heading off unfavorable rumors, stories, andevents.
Publicity - Press releases
Sponsorships
Special events Web pages
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The Promotion Mix
Major Promotion Tools: Personal selling Personal selling is the personal presentation by the
firms sales force for the purpose of making sales and
building customer relationships.
Sales presentationsTrade shows
Incentive programs
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The Promotion Mix
Major Promotion Tools: Direct marketing Direct marketing involves making direct connections
with carefully targeted individual consumers to both
obtain an immediate response and cultivate lasting
customer relationshipsby using direct mail,telephone, direct-response television, e-mail, and the
Internet to communicate directly with specific
consumers.
Catalog
Telemarketing
Kiosks
Direct mail
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Promotion
Strategies
to make the consumer
aware of the
existence of a productor service
NOT just advertising
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Promotion Mix Strategies
Push strategyinvolves pushing the productto the consumers by inducing channel
members to carry the product and promote it
to final consumers.
Used by B2B companies
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Promotion Mix Strategies
Pull strategyis when the producer directs itsmarketing activities toward the final
consumers to induce them to buy the product
and create demand from channel members.
Used by B2C companies
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Place
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Place
The means by which products and services
get from producer
to consumer and where they can be
accessed by the consumer The more places to buy the product and the
easier it is made to buy it, the better for the
business (and the consumer?)
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Wholesaler Jobber Retailer Consumer
Consumer
Retailer Consumer
Producer
0-level ch annel Direct
Wholesaler Retailer ConsumerProducer
2-level ch annel
Producer
3-level ch annel
1-level ch annel
Producer
Number of Channel LevelsChannel Level - Each Layer of Marketing Intermediaries that Perform
Some Work in Bringing the Product and its Ownership Closer to the Final
Buyer.
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SWOT is an acronym for strengths,
weaknesses, opportunities, and threats
A SWOT analysis is a method of
studying organizational resources andcapabilities to assess the firms
strengths and weaknesses and
scanning its environment to identify
opportunities and threats
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SWOT
A l i