CONCEPT AND

COMPONENTS OF
MARKETING MIX
TRADITIONAL 4 P’S
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 THE 4 P’S OF MARKETING EXPLAINED
Product Promotion Place Price
1. Is there a 1. Making 1. Distribution is 1. How much are
demand for the customers getting the customers
product or aware of a right product willing to pay?
service? product to the right 2. Is the price
2. How to make 2. Advertising place at the competitive
the product 3. Coupons right time in with other
appeal to 4. Rebates the right products?
consumer 5. Sales amount and in 3. Can the
3. Packaging— 6. Free give the right company make
includes the aways condition a profit?
design, color, 7. Publicity 2. Storage
size, and brand 3. Warehousing
names 4. Transporting
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 ADDITIONAL P’S IN MARKETING MIX
•People – these are people who work at the enterprise,
deliver goods, communicate with customers;
•Process - the actual procedures, mechanisms, and flow
of activities by which the service is delivered – this
service delivery and operating systems.
• Physical evidence – it is an environment, an office, a
trading room. The main role is played by the atmosphere,
objects hanging on the wall, certificates, licenses.
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TODAY’S MARKETING MIX

•7Ps – Price, Product,

Promotion, Place, People,
Process, Physical
Environment
•Traditional 4Ps extended to
cope with today's changing
environment

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WOODGROVE 7
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What is the marketing mix?

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BEYOND THE MIX

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1. PRODUCT (GOODS/SERVICES)

For many a product is simply the tangible,

physical item that we buy or sell. You can
also think of the product as intangible i.e. a
service.

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A PRODUCT CAN BE CLASSIFIED ACCORDING
TO:

DURABILITY TANGIBILITY
USE Consumer
vs. Industrial Durable vs. Tangible vs.
Non-Durable Intangible

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 1. BASED ON USE
Consumer Goods Industrial Goods
Goods meant for Goods intended for
personal consumption by consumption or use as
the households inputs in the manufacture
of other products or the
supply of some service are
called 'industrial goods.

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2. Based on Durability
Durable Goods

Non-durable Goods
3. Based on tangibility,

Intangible
Services are essentially
intangible activities which provide
want or need satisfaction. Medical
treatment, postal, banking and
insurance services etc.
Tangible Goods: “Most
goods, whether these are
consumer goods or
industrial goods and whether
these are durable or non-
durable, fall in this category
as they have a physical form
ADDING DIGITAL VALUES TO PRODUCT

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INDIVIDUAL PRODUCT DECISIONS

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3 LEVELS OF PRODUCT

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DISCUSSION QUESTION

Describe the core

benefit, actual
product, and
augmented product
aspects of an
automobile purchase.

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PRODUCT AND SERVICE CLASSIFICATIONS

1. Consumer products
2. Industrial products

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Consumer products are products and services
bought by final consumers for personal
consumption.
Convenience products
Shopping products
Specialty products
Unsought products

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 CONVENIENCE PRODUCTS
• Frequent purchases bought
with minimal buying effort
and little comparison
shopping
• Low price
• Widespread distribution
• Mass promotion
by producer
Examples are: tooth paste,
bread, newspaper, medicine,
soap, cold drinks, grocery
items, etc.
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SHOPPING PRODUCTS

• Less frequent purchases requiring

more shopping effort and price,
quality, and style comparisons.
• Higher priced than convenience
goods
• Selective distribution in fewer outlets
• Advertising and personal selling by
producer and reseller
Examples are: household furniture,
automobiles, refrigerators, sewing
machines, jewelries, clothing, used cars;
arid major Appliances WOODGROVE
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SPECIALTY PRODUCTS

• Strong brand preference and loyalty,

requires special purchase effort, little
brand comparisons, and low price
sensitivity
• High price
• Exclusive distribution
• Carefully targeted promotion by
producers and resellers
Examples are stereo components,
photographic equipment, men’s suits,
shoes, goggles, mobile phones, cloth
material, etc. WOODGROVE 24
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UNSOUGHT PRODUCTS

These are consumer products that

the consumer does not know about
or knows about but does not
normally think of buying.
Examples are Life insurance,
Funeral services, Blood donations

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PAY NOW… DIE LATER
SELLING CEMETERY PLOTS

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INDUSTRIAL PRODUCTS

are those products purchased for

further processing or for use in
conducting a business.
1. Materials and parts
2. Capital items
3. Supplies and services
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Materials and parts include
raw materials and
manufactured materials and
parts.
Capital items are industrial
products that aid in the buyer’s
production or operations.
Supplies and services include
operating supplies, repair and
maintenance items, and
business services. WOODGROVE
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The categories are as follows:
1. Installations – refers to industrial product with long
life, they form part of major capital equipment of an
industrial firms. Examples: elevator, computers, air
condition unit etc.
2. Accessory equipment – goods that are used as an aid in
productions. Mostly shorter usable life. Examples: tools in
trucks, car pillow, etc.
3. Raw materials - goods that are unprocessed and become
part of another product. Examples: fish, lumber, diamond,
sliver etc.
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4.Components parts and materials – processed
industrial goods that will be used and become part of
other finished product. Examples are: string in a guitar,
know on radio and etc.
5.Supplies – items that are considered as an aid in
operating process but not totally part of the finished
product. Examples are: Ball pen, Pencil, crayons, paper
clips etc.
6.Services – are company expense in the operations of
the business. Examples: General services, HR services
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 Price

COST MARKETING
OBJECTIVES

DEMAND

GOVERNMENT
COMPETITION REGULATION

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PRICE
Price is the amount the consumer must exchange to receive the
offering .
The price of a product will depend on:
• The cost to make it
• The amount of profit desired
• Other objectives of the business
• The price competitors charge
• The price customers are willing to pay
–Is there a high demand?
–Is demand sensitive to changes in price?
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 • SALES
KEY-CONCEPTS • FIXED-COSTS
RELATED TO • PROFIT MARGIN
PRICING
• VARIABLE-COSTS
• BREAK-EVEN POINT

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 KEY-CONCEPTS RELEVANT TO PRICING
• SALES- total amount that a company gets based on quantity sold multiplied with selling
price
• FIXED COSTS- costs incurred due to the operations of the business; do not fluctuate with
volume of sales
• PROFIT MARGIN: level of income that is desired by the company. This is usually come
out in percentage form as the amount of mark-up placed on top of the fixed and variable cost
of a product.
• VARIABLE COSTS- costs that vary based on volume or quantity. Bigger quantities of the
same order will cost less than smaller quantities of the same specifications. This concept is
known as economies of scale.
• BREAK-EVEN POINT- the point wherein total cost is equal to total revenue. A company
incurs a loss if cost exceeds revenue, and generates income when revenue exceeds costs. It is
important to know the break-even point especially for a new product.
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 KEY-
CONCEPTS
RELATED TO
PRICING
we sold 1,000 game consoles for $350 per piece.
Sales revenue = 1,000 x 350 = $350,000

SALES
REVENUE
Sales revenue is generated by
multiplying the number of a product
sold by the sales amount using
the formula:
Sales Revenue = Units Sold
x Sales Price. WOODGROVE
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 KEY-
CONCEPTS
RELATED TO
PRICING

NET PROFIT
Since net profit equals
total revenue after
expenses, to calculate net
profit, you just take your
total revenue for a period of
time and subtract your total
expenses from that same
time period.
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 PROFIT MARGIN
• Profit margin is the ratio of profit remaining from
sales after all expenses have been paid. You can
calculate profit margin ratio by subtracting total
expenses from total revenue, and then dividing this
number by total expenses. The formula is: ( Total
Revenue - Total Expenses ) / Total Revenue.
• For example, if a PIZZA company earns
Php300,000 in revenue and the cost to
achieve this is Php100,000, the gross profit
would be Php200,000. The gross profit
margin would be 66.6%, or (Php300,000 in
revenue – Php100,000 in costs) / Php300,000
in revenue.

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Another way to visualize it:

Net Profit Margin =

(Total Revenue – Total
Expenses) / Revenue x 100

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 MARK-UP
• Markup is the retail price for a product minus its cost, but the
margin percentage is calculated differently.

• Markup formula - Selling price of a product (SP) - Cost price of

a product (CP)

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 PRICING APPROACHES

1. COST-BASED APPROACH
2. BUYER-BASED APPROACH
3. COMPETITION-BASED APPROACH
4. SKIMMING APPROACH
5. PENETRATION APPROACH

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1. COST-BASED APPROACH

Is an approach that aims to cover

costs and make a profit. When
using cost-based pricing, the
fixed and variable costs are
computed, and a mark-up is
added. This kind of pricing
strategy, however, does not look
into the price sensitivity of its
consumers nor the pricing
scheme of its competitors.
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A. COST-PLUS PRICING

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 2. BUYER-BASED APPROACH
• a pricing approach deals with the perceptions of the buyers or base on the
behavior of the customers.
• a. Perceived value Pricing – established pricing based on the perceptions of the
buyers. Cost has slight to do with retailing price.
• b. Price Quality Relationship Pricing – a pricing practice hinges on the
observations of the customers that high price with high quality , low price low
quality.
• c. Odd Numbered Pricing – a psychological pricing below a peso amount. For
instance , 99.75 rather than a flat 100.
• d. Loss Leader Pricing – pricing practice where the company reduce the price
of some items which will generally result to low yield of return.
• e. Pricing Lining– a practice of selling merchandise at a limited number of pre
– determined price level WOODGROVE
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 A. PERCEIVED
VALUE
PRICING

• Perceived value
Pricing – established
pricing based on the
perceptions of the
buyers. Cost has
slight to do with
retailing price.
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 B. PRICE
QUALITY
RELATIONSHIP
PRICING
• Price Quality
Relationship Pricing –
a pricing practice
hinges on the
observations of the
customers that high
price with high quality ,
low price low quality.

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C. ODD-
NUMBERED
PRICING
• Odd Numbered
Pricing – a
psychological
pricing below a
peso amount. For
instance , Php
99.75 rather than
a flat Php 100.
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3. COMPETITION-BASED
APPROACH
• pricing set by the company based on
the price charge by the competitors.
There are two kinds of competition-
based pricing (Medina 2008).
• a. Going rate – pricing strategy based
on the competitors’ price. Price maybe
a little higher or a bit lower.
• b. Sealed rate- the company set a
price a little bit lower than that of
competitors.

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 4. LOSS LEADER
PRICING

• Loss leader pricing is a marketing

strategy that involves selecting one
or more retail products to be sold
below cost – at a loss to the retailer
– in order to get customers in the
door. The loss leaders are the
products being sold at such
low prices as an enticement to
buyers to step foot in the store. WOODGROVE
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5. SKIMMING PRICING STRATEGY
• Price skimming—setting a high price and lowering it
as the market evolves

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6. PENETRATION PRICING STRATEGY
• Penetration pricing—setting a low price to enter a
competitive market and raising it later

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CHANNEL MANAGEMENT / DISTRIBUTION

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FACTORS AFFECTING THE CHOICE OF DISTRIBUTION CHANNEL

MIDDLEMEN
CONSIDERATION
NATURE OF
COMPANY
NATURE OF
PRODUCT
NATURE OF
MARKET

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 A channel of distribution comprises
a set of institutions which perform
all of the activities utilized to move
a product and its title from
production to consumption

Bucklin - Theory of Distribution Channel Structure

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 PHYSICAL DISTRIBUTION IS…

• Organizing and moving products through the

channels

• aka: Logistics = ordering, transporting,

storing, handling and inventory control

• The 3rd largest expense for

most businesses
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EXPLAIN HOW CHANNEL MEMBERS ADD
VALUE
Right PLACE
Right TIME

• Place UTILITY
• Location – having the product where customers can buy it

• Time UTILITY
• Having the product available when the customer wants/needs it

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 CHANNEL MEMBERS ADD VALUE TO A
PRODUCT BY PERFORMING CERTAIN
CHANNEL ACTIVITIES EXPERTLY

• Marketing
• Packaging
• Financing
• Storage
• Delivery
• Merchandising
• Personal selling
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HOW MARKETING CHANNELS REDUCE THE
NUMBER OF REQUIRED TRANSACTIONS

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CHANNEL INTERMEDIARIES AND
THEIR FUNCTIONS

Define the types of

channel intermediaries
and describe their
functions and activities

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 CHANNEL INTERMEDIARIES
A channel intermediary that
Retailer
sells mainly to customers.

An institution that buys goods

Merchant from manufacturers, takes title
Wholesaler to goods, stores them,
and resells and ships them.

Agents and Wholesaling intermediaries who facilitate the sale of a

Brokers product by representing channel members.

the oldest and widely used channel of distribution. A

Jobbers jobber assembles products from a variety of producers,
stores them and sells them to retailers and customers.
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CHANNEL INTERMEDIARIES

Retailers Take Title to Goods

Merchant
Wholesalers Take Title to Goods

Agents
and Do NOT Take Title to Goods
Brokers

Jobbers
Take Title to Goods
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 CHANNEL INTERMEDIARIES AND
FUNCTIONS

CHANNEL CHANNEL
INTERMEDIARIES FUNCTIONS

Perform
Retailers
Transactional
Wholesalers
Logistical
Agents and Brokers
Facilitating
Jobbers

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MARKETING CHANNELS FOR CONSUMER
PRODUCTS

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TYPES OF DISTRIBUTION CHANNELS
1. Direct Channel or Zero Level Channels - When the producer
or the manufacturer directly sells the goods to the customers
without involving any middlemen, it is known as direct channel or
zero level channel. It is the simplest and the shortest mode of
distribution.
Methods of Direct Channel are:
(a) Door to door selling
(b) Internet selling
(c) Mail order selling
(d) Company owned retail outlets
(e) Telemarketing
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TYPES OF DISTRIBUTION CHANNELS
2. Indirect Channels - When a manufacturer or a producer
employs one or more middlemen to distribute goods, it is known as
indirect channel.
Following are the main forms of indirect channels:
(a) Manufacturer-Retailer-Consumer (One Level Channel):
• This channel involves the use of one middleman i.e. retailer who
in turn sells them to the ultimate customers. It is usually adopted
for specialty goods. For example Tata sells its cars through
company approved retailers.
• Manufacturer→ Retailer→ Consumer

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TYPES OF DISTRIBUTION CHANNELS
(b) Manufacturer-Wholesaler-Retailer-Customer (Two level channels):
• Under this channel, wholesaler and retailer act as a link between the
manufacturer and the customer. This is the most commonly used channel for
distributing goods like soap, rice, wheat, clothes etc.
• Manufacturer→ Wholesaler→ Retailer→ Customer
• (c) Manufacturer-Agent-Wholesaler-Retailer-Consumer (Three level
channels):
• This level comprises of three middlemen i.e. agent, wholesaler and the retailer.
The manufacturers supply the goods to their agents who in turn supply them to
wholesalers and retailers. This level is usually used when a manufacturer deal in
limited products and yet wants to cover a wide market.
• Manufacturer → Agent → Wholesaler → Retailer → Consumer
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CHANNELS FOR CONSUMER
PRODUCTS

Direct A distribution
Channel channel in which
producers sell
directly to
consumers.

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4. PROMOTION

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ADVERTISING: PAY TO PLAY

Advertising is any paid form of nonpersonal presentation

and promotion of ideas, goods, or services by an identified
sponsor.
• Broadcast
• Print
• Online
• Mobile
• Outdoor

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Sales promotion is a short-term incentive to
encourage the purchase or sale of a product
or service.
• Discounts
• Coupons
• Displays
• Demonstrations
• Free taste
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Personal selling is the personal interaction
by the firm’s sales force for the purpose of
engaging customers, making sales, and
building customer relationships.
Personal selling includes:

Sales presentations
Trade shows
Incentive programs

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Public relations involves building good
relations with the company’s various publics
by obtaining favorable publicity, building up
a good corporate image, and handling or
heading off unfavorable rumors, stories, and
events.

Examples of public relations include press releases,

sponsorships, events, and webpages.

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Direct and digital marketing involves
engaging directly with carefully targeted
individual consumers and customer
communities to both obtain an immediate
response and build lasting customer
relationships.
Direct and digital marketing includes:
Direct mail
Catalogs
Online and social media
Mobile marketing
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PURPOSE OF ADVERTISING

1. Informative Advertising creates awareness of brands,

products, services, and ideas. It announces new products and
programs and can educate people about the attributes and benefits
of new or established products.
2. Persuasive Advertising tries to convince customers that a
company’s services or products are the best, and it works to alter
perceptions and enhance the image of a company or product. Its
goal is to influence consumers to take action and switch brands, try
a new product, or remain loyal to a current brand.
3. Reminder Advertising reminds people about the need for a
product or service, or the features and benefits it will provide when
they purchase promptly.
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Informative Advertising Persuasive Advertising WOODGROVE 77
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EXAMPLE OF REMINDER ADVERTISING

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Public Service Announcement (PSA) - is a message spread in the
interest of the public

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Effective wordless advertisement

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 COMMON ADVERTISING TECHNIQUES

1. Traditional Advertising — This

term refers to ad placement in
traditional print and broadcast media.
Common examples of traditional
advertising include newspaper ads, TV
commercials and radio infomercials.
2. Retail Advertising — This terms
refers to ad and placement within retail
stores to maximize sales. Common
examples of retail advertising include
product placement within stores, ads on
shopping carts and featured product
displays. WOODGROVE 81
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 COMMON ADVERTISING TECHNIQUES

3. Online Advertising — This term

refers to ad placement on the internet in
media and other websites. Common
examples of online advertising include
contextual ads in search engines, banners
on websites, promotional videos and
sponsored content.

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 COMMON ADVERTISING TECHNIQUES

4. Mobile Advertising — This term

refers to ad placement on mobile phones
and smartphones. Common examples of
mobile advertising include automated
dialers, banners to download apps and
click-to-call ads.

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COMMON ADVERTISING TECHNIQUES

5. Outdoor Advertising — This term refers to

ad placement on outside structures, generally in
heavily trafficked areas to attract the most
attention. Common examples of outdoor
advertising include billboards, banners on the
outside of buildings and branded vehicles.

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COMMON ADVERTISING TECHNIQUES

6. Pay Per Click (PPC) Advertising — This

term refers to online ad placement designed to
drive traffic to a company’s website. Companies
derive extensive customer data from these ads,
only paying when users click on the link.

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ADDITIONAL P’S IN THE MARKETING MIX

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 People

People Who Make the Products People Who Talk to the

Customers

People Who Bring the

Products to the Customers
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5. PEOPLE

Happy Staff = Happy Customers = Happy Shareholders

90% of your website should be designed to service customers

• Auto-responders • Ask and answer services
• Email/text alert • Co-browsing
• Call-back facility • Virtual assistants
• Real-time live chat • Customer reviewers and assistants
• FAQ • Tailored customer landing pages

Challenges
• People vs Automation
• Keeping content fresh
• Training and resourcing
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6. PHYSICAL EVIDENCE
As services online are intangible, customers look for reassurance on quality

Reasons why people come back to a site

• High-quality content • Quick download
• Ease of use • Frequently updated content
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6. PHYSICAL EVIDENCE

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7. PROCESS

Refers to the internal and sometimes external processes, transactions

and internal communications that are required to run a business

Digital Marketing
Simultaneity
Services in production
and
consumption
Optimizing internal and external
processes is essential

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AN EXTRA ‘P’ - PARTNERSHIPS

Partnerships need to be identified,

recruited and nurtured for success

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HANDOG NG SAFEGUARD: MEDTECHS NG KINABUKASAN SCHOLARSHIP
PROGRAM
P&G and PAMET executives with the 30 Handog ng Safeguard: MedTechs ng Kinabukasan scholars
during the awarding ceremony in Manila Peninsula Hotel.

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SM CARES, SAFEGUARD PROMOTE PROPER HAND WASHING FOR
#SAFEHANDSATSM

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WOODGROVE 96
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WOODGROVE 97
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LET'S SAFEGUARD OUR FRONTLINERS!

Safeguard partners with

SHOPPEE for a SAFE
Philippines by bringing
safer delivery
transactions

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COLGATE THE LEADER OF ORAL CARE PARTNER
WITH PDA

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Jollibee partners with Globe Business to
expand its express delivery service via
#8-7000

Taste the Joy: Jollibee and Coca-Cola:

Can of Joy
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MCDONALDS and COCA-COLA: Better
Together!

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SUMMARY OF THE MARKETING MIX

Re-examine marketing mix for the digital world.

Relationship building and service quality are vital
The mix is much more dynamic today

Product– can be extended online through new information-based services

and interaction with the brand.
Price – reduction in market prices and changes in purchase, distribution
and usage of products affect price
Promotion – online options
People – service quality is a key differentiator online and offline.
Place – availability of the multi-channels for distribution
Physical evidence – a well-designed site.
Process – front- and back-office systems
Partnerships – can be potent but need experienced management. WOODGROVE 102
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 WOODGROVE
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THANK YOU!!!