Marketing Mix

Notes
Successful marketing depends on addressing
a number of things:
• What the company will produce
• How much it will charge
• How it will deliver its products/ services
• How it will tell its customers about the
products/ services
• Who will deliver
• What they will do to get there
• Standard?
 The Marketing Mix
When marketing their products firms need to create a successful mix of:
• the right product
• sold at the right price
• in the right place
• using the most suitable promotion.
• Supported by the right
• People
= Integrated Marketing. The marketers devise marketing activities and
assemble fully integrated marketing programs to create, communicate
and deliver value for consumers. Marketing activities come in all forms,
McCarthy described these activities as marketing mix tools of 4 broad
kinds which are called the 4 Ps’ of marketing.
 Creating the right marketing mix:
• The product has to have the right features - for example, it must look good and work well.
• The price must be right. Consumer will need to buy in large numbers to produce a healthy
profit.
• The goods must be in the right place at the right time. Making sure that the
goods arrive when and where they are wanted is an important operation.
• The target group needs to be made aware of the existence and availability of the product
through promotion. Successful promotion helps a firm to spread costs over a larger
output.
• Plus People

• For services – Process

• Physical evidence
 Kellogg’s Breakfast Cereals
• Kellogg's is constantly developing new breakfast cereals - the product element is the new
product itself
• Getting the price right involves examining customer perceptions and rival products as well
as costs of manufacture,
• Promotion involves engaging in a range of promotional activities e.g. competitions,
product tasting etc, and

• Place involves using the best possible channels of distribution such as leading supermarket
chains. The product is the central point on which marketing energy must focus.
Notes: (Finding out how to make the product, setting up the production line, providing the
finance and manufacturing the product are not the responsibility of the marketing function.
However, it is concerned with what the product means to the customer. Marketing therefore
plays a key role in determining such aspects as: the appearance of the product - in line with the
requirements of the market
the function of the product - products must address the needs of customers as identified
through market research.
 Product
• The product range and how it is used is a function of
the marketing mix.
• The range may be broadened or a brand may be
extended for tactical reasons, such as matching
competition or catering for seasonal fluctuations.
• Alternatively, a product may be repositioned to
make it more acceptable for a new group of
consumers as part of a long-term plan
 Price
• Price creates sales revenue - all the others are costs.
• The price of an item is clearly an important determinant of the value
of sales made.
• Although figures vary widely from product to product, roughly a fifth
of the cost of a product goes on getting it to the customer. ‘
• In theory, price is really determined by the discovery of what
customers perceive is the value of the item on sale.
• Researching consumers' opinions about pricing is important as it
indicates how they value what they are looking for as well as what
they want to pay. An organisation's pricing policy will vary according
to time and circumstances. Crudely speaking, the value of water in the
Lake District will be considerably different from the value of water in
the desert.
 Place
• Place' is concerned with various methods of
transporting and storing goods, and then making
them available for the customer.
• Getting the right product to the right place at the right
time involves the distribution system.
• The choice of distribution method will depend on a
variety of circumstances. It will be more convenient
for some manufacturers to sell to wholesalers who
then sell to retailers, while others will prefer to sell
directly to retailers or customers.
 Promotion
• Promotion is the business of communicating with customers.
• Information that will assist them in making a decision to purchase a product
or service.
• The nature, pace and creativity of some promotional activities are almost
alien to normal business activities.
• The cost associated with promotion or advertising goods and services often
represents a sizeable proportion of the overall cost of producing an item.
• Successful promotion increases sales so that advertising and other costs are
spread over a larger output.
• Increased promotional activity is often a sign of a response to a problem such
as competitive activity, it enables an organisation to develop and build up a
succession of messages and can be extremely cost-effective.
 What are the key elements of the
Manchester United Marketing Mix ?
• Product: includes providing an excellent football team that plays
and wins in an exciting way.
• Other product elements:
- Merchandising such as the sale of shirts, and a range of
memorabilia.
- Television rights, & Manchester United's own TV channel.
• Place:
- Old Trafford where home games are played,
- Manchester United also plays at a range of other venues.
- Products are sold across the globe, through the club's website and
a range of other sales media.
 Place
• Old Trafford where home games are played,
• Manchester United also plays at a range of
other venues.
• Products are sold across the globe, through the
club's website and a range of other sales
media.
 Promotion
• Manchester United markets itself as a global
brand.
• Joint promotional activities, e.g. Vodafone.
• Manchester United books, shirts,
programmes, key rings and many other items
are sold and promoted through its website.
 Price
• The club has positioned itself at the upmarket
premier end of the market
• Premium prices as evidenced by the high cost
of a season ticket to watch home league
games.
Positioning or repositioning a product - refers
to locating that product within a market for
example presenting it is an upmarket or
downmarket product
 Marketing mix Exercise
• Identify a brand you would like to work with
• Review its Marketing Mix...
• Product
• Price
• Promotion
• Place
 8 P’s of Product & Services Marketing

• Product
• Price
• Promotion
• Place
• People
• Process
• Physical evidence
• Productivity and Quality
 Product
• What goods/ services to offer the selected target market?
• New product development is key
• Technology & tastes change over time
• Competition

 E.g. the Sony Walkman was the market leader in portable

music players.
 The Apple iPod soon out sold the Walkman & had added
benefits of downloading music and hold thousands of
songs
 Walkman

The first Walkman went on sale in 1979

Played cassettes
Considered small, light and cool.
iPod Shuffle (Capacity 4GB)
The first music player that talks
to you:
- Smallest music player
- Voice over to tell song title &
artists name + names of
playlists
iPod Nano Capacity 8-16GB – the
world’s most popular music
player:
- Curved all aluminum design
- Colour range wide
- Load it with songs, movies, TV
shows photos
iPod classic
Entire entertainment library
Capacity120GB
CAPACITY, CAPACITY, CAPACITY!!!
Holds up to 30 000 songs
100s’ of hours of video
iPod Touch
The funnest iPod ever
Capacity 8/16/32GB
Music, movies, games.
Display screen/ touch technology
 Product Decisions
• Brand names
• Guarantees
• Packaging
• Services
• Product variety/range
• Quality
• Design
• Features
• Sizes
• Returns
 Price
• Represents the income to the business
• All other elements represent costs
- Expenditure on product design, advertising,
promotions, distribution.
- Pricing objectives?
Discounting, payment periods, credit terms, competition,
etc. Some businesses position themselves as offering
better value/lower prices versus competition
e.g. ASDA supermarket in S. Africa, Aldi in Germany,
Shoprite S. Africa.
 Promotion
• Advertising
• Personal Selling
• Sales Promotion
• Public Relations
• Direct marketing
• On line promotions
 Each element has its own advantages and disadvantages
 Social media marketing opportunities – Facebook /
twitter = direct dialogue with customers, up to date
feedback
 Place
• Distribution channels
• Channel management
• Location of outlets
• Methods of transportation
• Stock/ inventory levels to be held
• Obj = to stock to meet demand, at the right time and place
 Channels include: Retailers, wholesalers, local/ export,
internet.
 Change e.g. internet sales for music, dell direct selling to
customers
 Dell Case Study
• “Wedon’t think about the channel as a second thought – it’s integrated into everything we are doing.
Every new offering and capability has partners in mind.”

- Michael Dell in September 2011.

• “Our channel business continues to grow, continues to prosper, and we continue to attract new
partners and grow our install base, and become a bigger and bigger part of the Dell portfolio.”

- Davis, Dell’s global channel chief in 2011.

• Introduction
• In January 2007, Dell had lost its No. 1 position in worldwide PC shipments to Hewlett-Packard
Company (HP). In 2011, Dell reported the largest revenue increase in the company’s history when it
reported its results for financial year 2011. Within three years, Dell had successfully transformed itself
from its direct-sales-only mantra to building a successful reseller network.
• Dell has probably witnessed more changes in its business model than many other companies have. Dell
is now engaging more with channel strategy and is on a channel-hiring blitz seeking ways to improve
working with channel partners. Dell is making bigger investments in the channel with new innovative
channel sales initiatives. The Dell channel business now amounts to about 33 percent of the company’s
$62 billion in annual sales in 2011.
 Effective Marketing Mix

Matches customer need

Effective
Creates a Marketing Well blended
competitive advantage mix

Matches Corporate resources

 Matching Customer needs
CUSTOMER NEEDS
Economic Key customer
Performance requirements
Availability
Reliability
Durability
Productivity
Psychological Marketing mix
Self image Product
Quiet life Competitive Price
Pleasure Advantage Promotion
Convenience Place
Risk reduction

Competitive advantage is superior performance through differentiation to provide superior

Customer value or by managing to achieve lowest delivered cost. E.g. iPod delivering customer
Benefits in excess of the competition, iPod = small size, downloading and storing music vv
The Sony Walkman
 Spare the gas with Cobra beer
• Before Cobra beer British curry eaters faced a problem.
- What drink to order with their curry?
- Often Asian cuisine overpowered the taste of wine and standard beers and were too
gassy.
 Cobra beer had the competitive advantage of being less gassy and an Indian heritage.
 Positioned as an Indian lager cobra has seen massive growth since launch in 1989 and
is seen as a natural accompaniment to Asia meals.
 Its available in a selection of ranges including: the double fermented King Cobra, Cobra
light, Cobra 0% and the Cobra Bite range of fruit flavored premium beers.
 The company has also signed new deals to offer the drink in bottles, cans and on
draught.
• Its now available in bars, pubs and restaurants in almost 50 countries in the world. Its
success is based on marketing fundamentals: meeting customer needs = a less gassy,
suitable accompaniment for Asian food, better than the competition i.e. wines,
standard beers and lagers.
 The Marketing Mix creates competitive
advantage
• Decisions taken on the four P’s – iPod
• Aldi the German supermarket controls costs
• Cobra delivers the preferred product
• Advertising for perfumes e.g. Chanel, Givenchy
• Sales force size and quality can be a competitive
advantage
• Radisson SAS hotel at Manchester Airport = customer
convenience 5 minutes walk under covered walkways
to the terminals. Versus using taxis/transit busses at
other hotels
 Marketing mix = well blended
• Consistent execution of 4 Ps
• E.g. high quality products like Armani, Calvin
Klein, Christian Dior will be distributed in
exclusive/ selected outlets
• Successful products are generally
characterized by consistent execution of the
marketing mix…. E.g. Econet
The Marketing mix should match Corporate
resources
Choice of marketing mix strategy can be guided/ constrained by
Business financial resources
• Laker Airlines used price as a competitive advantage to attack
British Airways and TWA in transatlantic flights.
• When the competition retaliated Laker Airlines had insufficient
resources to win the price war.
• Market impact using certain media depends on the investment –in
the UK the guide for TV advertising campaigns is at least 5million
pounds to make an impact – otherwise better to use other options
like posters/ sales promotions.
Company skills base may constraint marketing mix execution. E.g.
personal selling may be limited.
Horse Meat Scandal
 Efficiency/ Effectiveness Matrix

• Efficiency
- Efficient businesses produce goods/ services economically
- It does things right
- The benefit is that the cost per unit of output is low
- Therefore the business can offer low prices or medium to
high prices and achieve high profit margins
The company needs to be effective as well to be successful

Efficiency = use of inputs and the outputs

 Effective = doing the right things
• Operating in attractive markets
• Making products that consumers want to buy
• Companies operating in unattractive markets
and not producing what consumers want to
buy will go out of business.
• Efficiency is cost focused
• Effectiveness is customer focused.
 Efficiency/ Effectiveness Matrix

Ineffective Effective
Inefficient Goes out of
business quickly
Survives
Efficient Dies slowly Does well/
Thrives

Efficiency = use of inputs and the outputs

 Efficiency/ Effectiveness Matrix
Ineffective Effective
Inefficient Goes out of
business quickly Survives
- Operating in
- GM high attractive markets
healthcare costs, and marketing
undesirable/ products people
unreliable cars want to
buy..Mercedes was
in this category
focus on over
engineering
increasing costs and
reducing efficiency
- E.g. Porsche
premium pricing
1955 Chevvy E Rod
• With the loss of the EV-1 Electric Car, and with an aging platform in the form of the “S”
Sedan, Coupe and Wagon, GM started tinkering with the Saturn Division by offering
additional models, without really understanding the Saturn Customer.
• The Saturn "L" Series Sedan
• Introduction of new products to the Saturn Brand have been met with mixed results.
• The ill-fated Saturn L-Series (for Large Car) really wasn’t designed as a Saturn from the
onset, but was itself a redesigned Opel Vectra, available in Europe for a number of
years, only redesigned for US consumption. One of the first things GM did in the
redesign was to add the famous dent-resistant plastic panels onto an existing body,
and this was met with mixed results.
• The second miscalculation was the fact that the L-series was manufactured in another
GM plant other than the Saturn Spring Hill, Tennessee plant. Within a year, the LS
designation was changed to L100, L200, or L300 depending upon trim level. This was
done because of a conflict between Ford (who produced the Lincoln LS at the time),
and Toyota (which produced the Lexus LS). The “L” series was a moderate sales success,
with production totaling over 400 000 cars in 6 years.
 Efficiency/ Effectiveness Matrix
Ineffective Effective
Efficient Dies slowly Does well/
e.g. Thrives
- Kodak - Zara Spanish
consumers have clothing business,
own highly
moved digital automated
- Efficient manufacturing and
producer of distribution, 350
photographic independently
film owned workshops in
Spain/Portugal, low
advertising spend. =
high efficiency.
Marketing Characteristics & business
performance
Hooley & Rich report on high performing companies
• More committed to Market research
• More likely to be found in new, emerging or growth
markets
• More proactive in marketing planning
• More inclined to use strategic planning tools
• Product performance and design focus for
competitive advantage( rather than price)
• Close relationship with Finance dept.
• Focus on market share for market performance
evaluation
 Coca- Cola & Pepsi Business case
review
1. Compare Coca-Cola’s response to the
changing marketing environment before the
arrival of Neville Isdell to that of PepsiCo.
2. Assess both companies in terms of their
Marketing orientation.
3. What future challenges is Coca -Cola likely
to face?
Coca - Cola
Product
Focus on Carbonated Soft Drinks (CSD)
Responded after losing market share –
responding due to a problem
Pepsi
Product
Continued with CSD, but grew focus on
options of Non CSD in response to
customer needs
Developed Market penetration strategy
moved into new products.
Coca - Cola Pepsi

Promotion Product

Disastrous product launches

Disinvestment in Marketing

Place Place

Process / no due diligence when they Universities, Schools, Supermarkets,

bought Dasani which was found to have Pubs, Bars
bromate.
People

Culture – boardroom squabbles after

Roberto Goizueta. Overdependence on
people =Goizueta.
Coca-Cola ( product orientation focus on
product and volumes)
Product
Focus on CSD
Response was only after losing market
share
Product focus - Low cost and high profit
margin - original business focus. Not
considering market developments
Pepsi ( serious market orientation –
business decisions guided by market)
Product
Looked at Non CSD business in response
to customer needs. Introducing specific
products for selected segments
Moved into new Products and Markets =
consumer orientation = focusing on
Health drinks, based on customer needs.
They were researching on market needs
More market focused than Coke –
considering customer needs. New
markets with new products = Product
development ( new product acquisitions)
and diversification into new markets –
new products with the cereals
Labeling products for customer
convenience
Coca - Cola Pepsi

Arrogant –ignoring competition Customer focus

Goizueta death affected the business, Entrepreneurship

trading on past success

Not listening to customers

Dafina…. Distilled water… contaminated

Dependent on Cola only –not looking for

opportunities

No marketing investment/Reduced
market research
 Coca - Cola challenges
• Brand terrorism risk - .
• Mecca Cola, Zam Zam Cola – Threat of more growing Competition
• Continued competition from healthy products - lobbying for healthy products
by different organizations
• Customer focus on healthy products – Health/ Obesity concerns
• Product perceptions / Bottled water.
• Threat of new entrants with innovation….leading brand now following
• Packaging challenges - Customers will resist buying environmentally unfriendly
packaging
• Product Life Cycle management - so that they don’t go into decline
• Risk of being identified as American and the American policies/ politics
affecting them with people preferring own home made product
• Lacking investment in Marketing and Research - important that they review so
that they manage their sales growth.