Chapter 04

MARKETING MANAGEMENT. CHAPTER 04. MARKETING MIX. MARKETING MIX.

MEANING OF MARKETING MIX. The marketing mix, or 4Ps, is a strategic framework that includes Product, Price, Place, and Promotion.It helps businesses plan and implement effective marketing strategies Product focuses on the offering, Price on setting the right cost, Place on distribution channels, and Promotion on communication to the target audience..

ELEMENTS OF MARKETING MIX. Here are the four elements of the marketing mix: Product: This refers to the tangible goods or intangible services that a company offers to its target market. It includes decisions about product design, features, quality, branding, packaging, and any additional services or support. The goal is to create a product that meets the needs and wants of the target customers. Price: This involves determining the appropriate pricing strategy for the product or service. Pricing decisions consider factors such as the cost of production, competitor pricing, perceived value by customers, and overall market conditions. The pricing strategy should be aligned with the perceived value of the product in the eyes of the target market. Place (Distribution): This pertains to the methods and channels through which a company delivers its products or services to its customers. Distribution decisions involve choices about distribution channels, logistics, inventory management, and the physical locations where the product is made available. The goal is to ensure that the product is accessible and available when and where customers want to purchase it. Promotion: This encompasses all the activities a company undertakes to communicate the value of its product or service to its target audience. Promotion includes advertising, public relations, sales promotions, personal selling, and other promotional activities. The aim is to create awareness, generate interest, and persuade customers to choose the company's product or service over competitors..

PRODUCT MIX. The term "product mix" refers to the complete set of products and/or services that a company offers to its customers. It encompasses all the various product lines and individual products that a business manufactures, markets, and sells. The product mix is an essential element of a company's overall marketing strategy and plays a crucial role in defining its market presence.

Product Lines: A product line is a group of related products that are marketed and sold under a single brand or family name. For example, a company that manufactures smartphones may have a product line that includes various models with different features and specifications. Product Width: This refers to the number of different product lines a company offers. A company with a broad product width has a diverse range of product lines, while a company with a narrow product width focuses on a specific product category or market segment. Product Length: Product length refers to the total number of products within a company's product lines. It represents the depth of each product line. For instance, if a company offers smartphones, tablets, and accessories within its electronics product line, the product length is the sum of these individual products. Product Depth: Product depth refers to the variety of options or versions available within a specific product category. For example, within a smartphone product line, product depth may include different models with varying specifications, colors, and storage capacities. Consistency: The consistency of the product mix reflects how closely related the various product lines are to each other in terms of usage, production processes, or distribution channels. Consistency is essential for maintaining a clear and coherent brand image..

PRODUCT LINE. A product line is a group of related products or services that are marketed and sold under a single brand or family name by a business. Product lines are a way for companies to organize and categorize their offerings, making it easier for consumers to identify and choose products that suit their needs..

Advantages of Product Line: Economies of Scale: Producing and marketing a range of products within a product line can lead to economies of scale. The shared production processes, distribution channels, and marketing efforts for similar products can result in cost efficiencies, reducing the overall production cost per unit. Brand Loyalty and Recognition:A well-established product line with a common brand identity can contribute to brand loyalty and recognition. Consumers who have a positive experience with one product in the line may be more inclined to try other products within the same line, fostering brand loyalty. Marketing Synergy: Product lines provide an opportunity for marketing synergy. Companies can leverage the marketing efforts for one product to promote other related products in the same line. Cross-selling and bundling strategies become more effective, leading to increased sales..

Disadvantages of Product Line: Overdependence on a Niche: Having a product line focused on a specific niche can lead to overdependence on that niche. If market conditions or consumer preferences change, the company may be vulnerable to shifts in demand, making it challenging to adapt quickly. Cannibalization: Product lines can experience cannibalization, where newer products within the line may compete with existing products for the same customer base. This competition within the product line can lead to a decrease in sales for individual products or an overall reduction in profit margins. Risk of Brand Dilution: Introducing too many products within a single product line can risk diluting the brand image. If products within the line vary too widely or if quality is inconsistent, it may confuse consumers and erode the overall brand equity, impacting consumer trust and loyalty..

The product life cycle is a conceptual framework that illustrates the stages a product goes through from its introduction to the market until its decline and eventual discontinuation. Understanding the product life cycle is crucial for businesses to make informed decisions regarding marketing, pricing, and product development..

4 STAGES OF PRODUCT LIFE CYCLE. Introduction Stage: New product is introduced to the market.Sales are slow as consumer awareness builds.High marketing and promotion costs.Negative profits due to initial investments.Focus on creating product awareness. Growth Stage: Rapid sales growth and increased consumer acceptance.Market expansion with heightened competition.Profits start to rise as sales volume increases.Product becomes well-known among the target audience.Strategies include distribution expansion and product improvements..

Maturity Stage: Sales growth slows as market saturation occurs.Increased competition with similar productsPrices may stabilize or decrease due to competition.Focus on maintaining market share and maximizing profits.Implementation of cost control and product differentiation. Decline Stage: Sales decline due to market saturation or shifting preferences.Increased competition from newer products.Prices may drop as demand decreasesProfit decline as sales and market share decrease.Consideration of discontinuation or phasing out the product..

NEW PRODUCT DEVELOPMENT. New product development (NPD) is the process by which a company creates and brings a new product or service to the market. This process involves various stages, from idea generation to market launch.

FACTORS INFLUENCING NEW PRODUCT DEVELOPMENT. Idea Generation: Identify innovative ideas from internal and external sources, including customers, employees, and market trends. Idea Screening: Evaluate ideas based on feasibility and alignment with strategic goals to prioritize the most promising concepts. Concept Development and Testing: Develop detailed product concepts and gather consumer feedback to refine and enhance the idea. Business Analysis: Conduct thorough market research and financial analysis to assess market potential, demand, competition, and profitability. Product Development: Create prototypes and refine product design, ensuring functionality, quality, and performance meet expectations. Market Testing: Introduce the product in a limited market to assess real-world consumer response and gather feedback..

Commercialization: If successful, proceed with a full-scale launch, implementing marketing and distribution strategies. Post-Launch Evaluation: Continuously monitor sales, customer feedback, and market trends, making adjustments as needed. Product Maturity and Extension: Manage the product throughout its life cycle, considering extensions, improvements, or innovations. Iterative Process: Recognize that new product development is an iterative process, requiring adaptability and responsiveness to changing circumstances and consumer.

REASONS FOR FAILURE OF NEW PRODUCT. The failure of new products can be attributed to various factors, and the reasons can vary across different industries and markets. Here are some common reasons for the failure of new products:.

3. Insufficient Planning: Incomplete or flawed business plans, including inadequate financial projections, marketing strategies, or overall project planning. 4. Competitive Issues: Strong competition or the introduction of similar products by competitors, leading to market saturation. 5.Ineffective Marketing: Poorly executed marketing campaigns, including ineffective messaging, targeting the wrong audience, or inadequate promotional efforts. 6.Quality Issues: Products that fail to meet quality standards or consumer expectations, leading to dissatisfaction and negative reviews. 7.Timing and Launch Issues: Launching a product at the wrong time or with poor timing in relation to market trends, seasons, or economic conditions. 8.Inadequate Resources: Insufficient financial or human resources allocated to the development, marketing, or distribution of the new product.9..9. 9.Technology Challenges: Technological complexities or issues that hinder product development or result in a product that is not user-friendly. 10.Regulatory and Compliance Problems: Failure to comply with industry regulations, standards, or legal requirements, leading to delays, recalls, or other complications..

BRAND ELEMENTS, PACKAGING, LABELING, AND PRICING ARE ESSENTIAL COMPONENTS OF A COMPANY'S MARKETING STRATEGY..

packaging: Definition: Packaging refers to the physical container or wrapper that houses and protects a product. It includes the design, materials, and functionality of the package. Purpose: Protection: Protects the product from damage, contamination, and spoilage. Information: Communicates product details, usage instructions, and nutritional information. Attraction: Attracts attention on the shelf and influences purchasing decisions..

Labeling: Definition: Labeling involves the information, symbols, or graphics attached to the product or its package. It provides details such as ingredients, usage instructions, and legal information. Purpose: Regulatory Compliance: Ensures compliance with legal and regulatory requirements. Information: Communicates essential details to consumers. Branding: Can reinforce brand elements and visual identity..

Pricing: Definition: Pricing refers to the process of setting a monetary value or price for a product or service. It involves considering factors such as production costs, competition, and perceived value. Purpose: Profit Maximization: Aims to maximize profits for the company. Market Positioning: Influences how consumers perceive the product in terms of value. Competitive Edge: Pricing strategies can create a competitive advantage..

OBJECTIVES OF PRICING. profit Maximization: Set prices to maximize overall profits or achieve a target level of profit. Market Share Leadership: Gain a significant share of the market by offering competitive prices. Revenue Growth: Increase total revenue by implementing pricing strategies that encourage higher sales volume. Market Skimming: Maximize profits by initially setting higher prices to target the premium market segment. Market Penetration: Gain rapid market acceptance by setting lower prices to attract a large customer base..

FACTOR INFLUENCING PRICING POLICY. Costs:The cost of production, distribution, and marketing is a fundamental consideration. Businesses need to cover costs while ensuring a reasonable profit margin. Market Demand:Pricing is influenced by the level of demand for a product or service. High demand may allow for higher prices, while lower demand may require competitive pricing to stimulate sales. Competitor Pricing:The prices set by competitors impact a company's pricing decisions. Businesses may choose to price their products similarly, differentiate based on perceived value, or undercut competitors. Perceived Value:The perceived value of a product in the eyes of the customer is a critical factor. Pricing should align with the perceived benefits and quality of the product. Elasticity of Demand:The responsiveness of demand to changes in price influences pricing decisions. Inelastic demand allows for higher prices, while elastic demand may require lower prices to boost sales..

Market Conditions:Economic conditions, inflation, and overall market trends affect pricing strategies. In challenging economic times, businesses may adopt more competitive pricing to maintain sales. Product Life Cycle:The stage of the product life cycle (introduction, growth, maturity, decline) influences pricing. Different strategies may be appropriate at each stage. Regulatory and Legal Constraints:Regulatory requirements and legal constraints, including antitrust laws and price-fixing regulations, impact pricing decisions. Distribution Channels:The method and complexity of distribution channels can affect pricing. Direct sales to consumers may have different pricing considerations than sales through intermediaries..

Brand Image and Positioning:The brand image a company wants to convey and its market positioning influence pricing. Premium brands may command higher prices based on brand equity. Target Customer: The characteristics and preferences of the target customer influence pricing decisions. Businesses may adopt different pricing strategies for various customer segments. Technology and Innovation: Pricing can be influenced by the level of technology and innovation in a product. Cutting-edge technology may command premium prices. Global Considerations: In a global market, factors such as currency exchange rates, tariffs, and regional economic conditions impact international pricing strategies..

PHYSICAL DISTRIBUTION. Physical distribution, also known as logistics or supply chain management, refers to the set of activities involved in the efficient and effective movement of products from the manufacturer to the end consumer. It encompasses various processes such as transportation, warehousing, inventory management, order fulfillment, and distribution network design to ensure that products reach their destination in a timely and cost-effective manner..

FACTORS AFFECTING CHANNEL SELECTION:. Product Characteristics:The nature of the product, including size, weight, perishability, and fragility, influences the choice of distribution channels. Market Characteristics:Factors such as the size and geographical dispersion of the target market, consumer preferences, and buying behavior impact channel selection. Company Resources: The financial resources, infrastructure, and capabilities of the company determine its ability to manage and support various distribution channels. Competitive Environment:The actions and strategies of competitors in the market influence the selection of distribution channels to gain a competitive advantage. Product Life Cycle:The stage of the product life cycle can influence the choice of channels. For example, in the introduction stage, direct channels may be preferred for better control. Customer Expectations: Understanding customer preferences, expectations, and service requirements is crucial in selecting channels that align with customer needs. Channel Costs:The cost associated with each distribution channel, including transportation, warehousing, and intermediary margins, affects the overall cost-effectiveness of the distribution strategy..

TYPES OF MARKETING CHANNELS:. Direct Distribution:Involves selling products directly from the manufacturer to the end consumer without intermediaries. Examples include company-owned stores, online sales, and direct sales teams. Indirect Distribution:Involves the use of intermediaries or middlemen to distribute products. This can include wholesalers, retailers, agents, and brokers. Single-level Channel:A distribution channel with one intermediary, such as a retailer or wholesaler, between the manufacturer and the consumer. Two-level Channel:Involves two intermediaries, like a manufacturer selling to a wholesaler, who then sells to a retailer. Multichannel Distribution:The use of multiple distribution channels simultaneously, such as selling through both brick-and-mortar stores and an online platform. Intensive Distribution:Distributing a product through as many outlets as possible to maximize market coverage, commonly used for convenience products. Selective Distribution:Choosing specific outlets to distribute a product, often based on criteria such as brand image or product complexity..

PROMOTION. Promotion, in the context of marketing, refers to the set of activities and strategies aimed at creating awareness, generating interest, and influencing the purchase decisions of potential customers..

Encouraging Action:Promotion is designed to influence consumer behavior, encouraging them to take specific actions such as making a purchase, requesting more information, or trying a new product. Differentiation:In a competitive market, effective promotion helps differentiate a product from others in the market. It emphasizes what makes the product unique or superior to alternatives. Increasing Sales:The primary goal of promotion is often to drive sales. By creating awareness, building interest, and influencing purchasing decisions, promotion contributes directly to revenue generation. Building Brand Image: Promotion plays a crucial role in shaping the brand image. Consistent and positive messaging contributes to the development of a strong and favorable brand perception. Educating Consumers: Promotion provides a platform to educate consumers about the features, uses, and benefits of a product. It helps address questions and concerns potential customers may have. Supporting New Product Launches: When introducing a new product or service, promotion is essential to communicate its value proposition, create anticipation, and facilitate a successful launch. Fostering Customer Loyalty: Ongoing promotion helps maintain a connection with existing customers. Loyalty programs, special offers, and communication reinforce the relationship between the brand and its customer base..

PERSONAL SELLING AND ADVERTISING MEANING. Personal selling is a form of promotional communication where a sales representative interacts directly with potential buyers to influence their purchasing decisions. This communication is typically face-to-face or involves direct communication through digital platforms. Advertising is a form of mass communication that uses various media channels to convey promotional messages to a wide audience. It is a non-personal method of promotion aimed at creating awareness, generating interest, and influencing the purchasing behavior of a target market..