Lesson: 4 Developing the Marketing Mix

Performance Standard:

The learner must be able to….

The essence of the new product development, pricing, placing and promoting a product or service.

Learning Competencies:

The learners:

1. Design new product/services

2. Decide types of pricing approach

3. Choose distribution methods

4. Promotion tools that respond to market trends

Marketing Mix

The marketing mix refers to the set of actions, or tactics, that accompany uses to promote its brand or
product in the market.

The 4Ps make up a typical marketing mix-

1. Price

2. Product

3. Promotion and place

4. However

Nowadays, the marketing mix increasingly includes several other Ps like Packaging Positioning, People
and even Politics as vital mix elements. All the elements of the marketing mix influence each other. They
make up the business plan for a company and handled right, can give it great success. But handled
wrong and the business could take years to recover. The marketing mix needs a lot of understanding.
Market research and consultation with several people from users to trade to manufacturing and several
others.

1. Price: refers to the value that is put for a product It depends on costs of production, segment
targeted, ability of the market to pay, supply- demand and a host of other direct and indirect factors.
There can be several types of pricing strategies, each tied in with an overall business plan. Pricing can
also be used a demarcation, to differentiate and enhance the image of a product.
2. Product: refers to the item to actually being sold. The product must deliver a minimum level of
performance; otherwise even the best work on the other elements of the marketing mix won’t do any
good

3. Place: refers to the point of sale. In every industry, catching the eye of the consumer and making it
easy for her to buy it is the main aim of a good distribution or ‘place’ strategy .Retailers pay a premium
for the right location. In fact, the mantra of a successful retail business is ‘location’.

4. Promotion: this refers to all the activities undertaken to make the product or service known to the
user and trade. This can include advertising, word of mouth, press reports, incentives commissions and
awards to the trade. It can also include consumer schemes, direct marketing, contests and prizes.

The blending of the four strategic elements to fit the needs and preference of the specific target market.
The marketing mix and the 4Ps of marketing are often used as synonyms for each other .In fact, they are
not necessarily the same thing. ‘Marketing mix’ is a general phrase used to describe the different kinds
of choices organizations have to make in the whole process of bringing a product or service to market.
The 4Ps is one way –probably the best-known way- of defining the marketing mix, and was first
expressed in 1960 by E J McCarthy.

Product

A product is anything that can be offered to a market that might satisfy a want or need. In retailing
products are called merchandise, In manufacturing, products are bought as raw materials and sold as
finished goods.

Services

These are intangible, perishable, variable, interactive activities offered for sale to satisfy needs in
consumer and organizational markets.

Price

Is the amount of money needed in order to acquire the product/services from the marketer or the
seller. Is determines the value of the goods /service. It is the amount /sum of the values that consumer
exchange for the benefit of having or using the product. Price may involve other than money.

Pricing is often one of the most difficult things to get right in business. There are several factors a
business needs to consider in setting a price;

 Competitors – a huge impact on pricing decisions. The relative market shares (or market
strength) of competitors influences whether a business can set prices independently, or
whether it has to follow the lead shown by competitors
 Costs – a business cannot ignore the cost of production or buying a product when it comes to
setting a selling price. In the long-term, a business will fall if it sells for less than cost, or if its
gross profit margin is too low to cover the fixed costs of the business
  The state of the market for the product – if there is a high demand for the product but a
shortage of supply, then the business can put prices up.
 The stale of the economy – some products are more sensitive to changes unemployment and
worker wages than other. Makers of luxury products will need to drop prices especially when
the economy is in a downturn.
 The bargaining power of customers in the target market- An individual consumer has little
bargaining power over a supermarket. However, an industrial customer that buys substantial
quantities of a product from a business may be able to negotiate lower or special prices.
 Other element of the marketing mix – it is important to understand that prices cannot be set
without reference to other parts of the marketing mix. The distribution

 Chemical used will effect price – different prices might be charged for the same product sold
direct to consumers or via intermediaries. The price of the product in the decline stage of its
product life-cycle will need to be lower than when it was first launched.

There are other factors that are within the internal control of the organization when setting
price decision. It is function of the marketing manager to determine the internal organizational
factors that will be set the pricing objectives competitive in the market and at the same time
maintain its profit objective.

General Pricing Approaches:

1. Value-based pricing

- Uses buyer’s perception of value rather than seller’s cost to set price.
- Measuring perceived value can be difficult because of the costume’s attitude toward price
and quality that have shifted during the last decade.
- Value pricing at the retail level.

Competition –based Pricing

- Also called the going-rate pricing

- Its product and services may price at the same level above or below competitor.

Distribution channel

A distribution channel is a set of people and business organization involved in the transfer of
the title of a product from the producer to the ultimate consumer or to other business users. It may
includes both the producer of the goods and final consumer in its present form. It include the middle as
distributer, wholesaler, and retailers.

Major function of distribution channel

It’s not enough to produce or make goods or services because it isn’t a given that they will get
to the end user. Product and services don’t usually get to the user directly. Especially when the end user
is a consumer. Distribution channels are usually the vehicle that transfers goods from producers to
consumers.

1. Brea king Bulk

In the pursuit of efficiency, manufacturers often produce large quantities at a time, but
consumers usually buy only a few or even one product. Distribution channels, such as retail
Store chains, can sell smaller quantities, even though the producer made thousands. Something
similar occurs higher up the distribution chain. Relative to the amount produced, retailers can
only buy small amounts of the various products they sell. So wholesalers act as agents between
manufacturers and retailers.
2. Consolidation and Distribution
Consumers often prefer to buy a wide variety of consumer goods at one time and place. Retail
stores enable consumers to do just that because they stock and display a great number of
different products. Up the distribution channel chain. Wholesalers can accumulate large
amounts of many different products from different manufacturers and efficiently deliver many
products to many retailers. This lowers carrying and transportation costs.
3. Facilitating Functions

Distribution channels offer a variety of services that ease and enhance selling and buying goods.
They offer credit to customers and accept returned merchandise. They also advertise and
promote products through special displays, sales prices and inclusion in ads and filers.
Depending on the product, distribution channels service the products they sell. This includes
maintenance and repair services, and they often are trained and supported by the
manufacturer. Distribution channels may even add value to products before distributing the
customers.

4. Customer Relationships
Consumers often trust distribution channels more than they do manufacturers. They expect
these channels to provide objective information about products and originating companies.
Distribution channels communicate with customers and perform transaction function. They also
provide marketing and sales support assistance. Because they are closer to customers end users,
they can provide manufacturers with a wealth of information on customer preferences. This can
include consumer likes and price sensibility

Promotion

It is systematic decision making relating to the whole organization micro/macro environment that
sustain information flow to the customer. Promotion is one of the best tool a product/services is all
about, its unique feature, quality and capability of the product. With promotion it could easily influence
the customer to buy the product or avail the services, it also entices the customer to try or buy the
product.

Promotional tools
 Promotional tools are tactics or activities you plan and execute to persuade consumers to buy
your product or services. As a consumers, you likely partake of these activity yourself without realizing
it; as a businessperson on the selling side, finding effective tools is challenging.

1. Advertising
Advertising is defined as any form to paid communication or promotion on product, services and
idea. Advertisement is not only use by companies but is many cases by museum, government and
charitable organization. However, the treatment meted out to advertisement defers from an
organization to an organization.

Advertising development involves as decision across five Ms Mission, Money, Message, Media, and
Measurement.
2. Sales Promotion
Promotion is an incentive tool used to drive up short term sales. Promotion can be launched
directed at consumer or trade. The focus of advertising to create reason for purchase the focus of
promotion is to create an incentive to buy. Consumer incentives could be Samples, coupons, free
trial and demonstration. Trade incentive could be price off, free goods and allowances. Sales force
incentive could be convention, trade shows, competition among sales people.
3. Public relations
Companies cannot survive on isolation they need to have a constant interaction with customers,
employees and different stakeholders. This servicing of relation is done by the public relation
office. The major function of the pubic relation office is to handle press, releases, support product
publicity, create and maintain the corporate image, handle matters with lawmakers, guide
management with respect to public issues.
4. Direct Marketing

The communication establishes through a direct channel without using any intermediaries is
referred to as direct marketing Direct Marketing can be used to deliver message or service Direct
marketing has shown tremendous growth in recent years. The internet has played major part in
this growth story. Direct marketing saves time, makes an experience personal and pleasant. Direct
marketing reduces cost for companies. Face to face selling, direct mail, catalog marketing,
telemarketing, TV and kiosks are media for direct marketing.

Advertisement, Promotional activity, Public relation and direct marketing play an essential role in
helping companies reaches their marketing goals.

Sales Promotion

Sales promotions are the set of marketing activities undertaken to boost sales of the product or
service. Definition: Sales promotions are the set of marketing activities undertaken to boost sales
of the product or service. Description: There are two basic types of sales promotions: trade and
consumer sales promotions.

Personal Selling
It is oral presentation of the sales person. It is face interaction between the seller and buyer with
the prospect of making a sale.

Steps in Personal selling:

1. Prospecting:
Searching for prospects is prospecting, Here, prospect is a person or an institution who is likely
to be benefited by the product the salesman wants to sell and can afford to buy it.

Prospecting is the work of collecting the names and addresses or persons who are likely to buy
the firm’s products and services, Provide encompasses even the discovery of special needs and
multiplying the sales with existing clientele.
2. Pre-approach:
Pre-approach is to get more detailed facts about a specific individual to have effective sales
appeals on him or her. It is a record round effort to get details regarding the prospect such as
his ability, need, authority, accessibility to buy ; it is a closer look of prospects, likes and
dislikes, tastes, habits, financial status, social esteem, material status, family background and
the like.

The objectives of pre-approach are to providing additional qualifying information to design an

effective approach strategy; to better the planning information; to avoid serious and to build-
up confidence.
3. Approach:
Approach means the meeting of the prospect in person by the salesman when he makes face
to face contact with prospects to understand them better. Approach is such a delicate and
critical stage of the sales process that the sales are either won or lost.

Approach is stepping stone for sales presentation. It is because of this delicacy that sales are
likened to a chain where break of one link will break it into useless lump of hooks.
4. Presentation and demonstration:
Presentation implies an array and decoration of articles in the shop. It is the heart of selling
process. Effective presentation has the capacity to convince the customer of his sales
proposition. It creates and holds the interest of customers toward the products. It would be
wrong to assume that all those who enter the shop do buy the products.

Normally, most of the prospects visit the shop to see prior to their decision to buy. The casual
visit can be a commitment visit provided products are displayed, presented and demonstrated
by the salesmen in an appealing manner. Demonstration is a part of presentation because,
more description is not enough
5. Overcoming objections:
For a creative and persuasive salesman, the process of selling really starts when the prospect
Raise objections. It absence of sales resistance the salesman is merely an order booking clerk.
For every action of salesman there is prospect’s pro-action or reaction that is, approval or
disapproval
 An objection is the expression of disapproval of an action taken by salesman; it is an adverse
reason or an argument indicating clearly that the prospect not yet ready to buy.
6. Closing
All the earlier stages of sales talk namely, prospecting, pre-approach; approach, presentation
and handling the objection have been designed to induce the prospect to make decision to buy
so that a sale can be concluded.

The success in earlier stages will lead to the last stage of closing the sale and clinch the deal.
Here, “close” means the act of actually getting the prospect’s a sent to the sales proposal or he
gets an order.

Public Relations
Public relations is a strategic communication process that builds mutually beneficial
relationships between organization and their publics. “Public relations can also be defined as
the practice of managing communication between an organization and its publics”.

Direct Marketing
Direct marketing is a type of advertising campaign that seeks to elicit an action (such as an
order, a visit to a store or Web site, or a request for further information) from a selected group
of consumers in response to a communication from the marketer.

Factors Affecting Consumer Behavior

Consumer behavior refers to the selection, purchase and consumption of goods and services
for the satisfaction of their wants. There are different processes involved in the consumer
behavior . Initially the consumer tries to find what commodities he would like to consume,
than he selects only those commodities that promise greater. After selecting the commodities,
the consumer makes an estimate of the available money which he can spend. Lastly the
consumer analyses the prevailing prices of commodities and taken the decision about the
commodities he should consume. Meanwhile, there are various other factors influencing the
purchase of consumer such as social, cultural, personal and psychological. The explanation of
these factors is gives below.

1. Cultural Factors
Consumer behavior is deeply influenced by cultural factors such as buyer culture, subculture,
and social class.

Culture
Basically, culture is the part of every society and is the important of person wants and
behavior. The influence of culture on buying behavior varies from country to country therefore
marketers have to be very careful in analysing the culture of different group, regions or even
countries.
Subculture
Each culture contains different subcultures such as religions, nationalities, geographic
Regions, racial groups etc. Marketers can use these groups by segmenting the market into
various small portions. For example marketers can design products according to the needs of a
particular geographic group.

Social class
Every society possesses some form of social class which is important to the marketers because
the buying behavior of people in a gives social is similar. In this way marketing activities could
be tailored according to different social classes. Here we should note that social class is not
only determined by income but there are various other factors as well such as wealth,
education, occupation etc.

2. Social Factors
Social factors also impact the buying behavior of consumers. The important social factors are
reference groups, family, role and status

Reference groups

Reference group have potential in forming a person attitude or behavior. The impact of
reference groups varies across products and brands. For example if the product is visible such
as dress, shoes, car etc then the influence of reference groups will be high. Reference groups
also include opinion leader (a person who influence other because of his special skill,
knowledge or other characteristic).

Family

Buyer behavior is strongly influence by the member of the family. Therefore marketers are
trying to find the roles and influence of the husband wife and children. If the buying decision
of a particular product is influence by wife then the marketer will try to target the women in
their advertisement. Here we should note that buying roles change with change consumer
lifestyle.

Roles and status

Each person possesses different roles and status in the society depending upon the groups,
clubs, family, organization etc. to which he belongs. For example the women is working in an
organization as finance manager. Now she is playing two rules, one of finance manager and
other of mother. Therefore he buying decisions will be influence by her role or status.

3. Personal factors
Personal factors can also effect the consumer behavior. Some of the important personal
factors that influence the buying behavior are: lifestyle economic situation, occupational, age,
personality and life concept.

Age

Age and life circle have potential impact on the consumer buying behavior. It is obvious that
the consumers change the purchase of goods and service with the passage of time. Family life-
cycle consists of different stage such young single, unmarried couples etc which help
marketers to develop appropriate product of each stage

Occupation

The occupation of a person has significant impact of his buying behavior. For example a
marketing manager of an organization will try to purchase business suits, where as a low level
worker in the same organization will purchase rugged work clothes.

Economic situation

Consumer economic situation has great influence on his buying behavior. If the income and
savings of a customer is high then he will purchase more expensive products. On the other
hand, person with low income and savings will purchase inexpensive product.

Lifestyle

Lifestyle of customers is another import factor affecting the consumers buying behavior.
Lifestyle refers to the way a person lives in a society and is expressed by the things his/her
surroundings. It is determined by customer interests, opinions, activities etc and shapes his
whole pattern of acting and interacting in the world.

Personality

Personality changes from person to person, time to time and place to place. Therefore it can
greatly influence the buying behavior of customers. Actually, Personality is not what one
wears; rather it is totality of behavior of a man in different circumstances. It has different
characteristics such as: dominance, self-confidence etc which can be useful to determine the
consumer behavior for particular product of service.

4. Psychological factors

There are four important psychological factors affecting the consumers buying behavior. These
are: perception, motivation, learning, belief and attitudes.
Motivation

The level of motivation also affects the buying behavior of customers. Every person has
different need such as physiological needs, social needs etc. the nature of the needs is that,
some of them are most pressing whole others are least pressing. Therefore a need becomes a
motive when it is more pressing to direct the person to seek satisfaction.

Perception
Selecting, organizing and interpreting information in a way to products a meaningful
experience of the world is called perception. There are three different perceptual processes
which are selective attention, selective distortion and selective retention. In case of selective
attention, marketers try to attract the customer attention. Whereas, in case of selective
distortion, customers try to interpret the information in a way that will support what the
customers already believe, Similarly, In case of selective retention, marketers try to retain
information that supports their beliefs.