4.3 The Marketing Mix

4.3.1 Product

Development of a new product/service

Developing a new product or service is the process of creating and bringing a new product/service into a market. This process includes generating ideas, conducting market research, developing a prototype, testing and launching the product.

The difference between goods and services

Goods are tangible items that can be touched, seen, and stored

Services are intangible, meaning they cannot be physically touched.

Packaging and its importance

Packaging is important for several reasons such as protecting the product, providing information about the product, being appealing to attract customers and making the product more convenient and easier to store. Packaging can help a brand stand out against competitors and can be a significant factor in a consumer’s decision to purchase the product.

Product life cycle – main phases and extension strategies

Definition: The product life cycle is a model that identifies the stages a product goes through from its launch to its decline.

Main phases

  1. Introduction - This is when the product is first introduced to the market. Here, sales are usually low, and marketing costs are high to create awareness.

  2. Growth - During the growth phase, sales increase as customers become more aware of the product.

  3. Maturity - Maturity is when sales reach their peak, however, growth slows as the product faces more competition.

  4. Decline - In the decline phase, sales and profits decrease due to changing consumer preferences or competition.

Extension Strategies

Definition: Extension strategies are methods used by businesses to extend the life of a product or service when the product is close to the decline stage of the product life cycle.

Some extension strategies include:

  • Price reduction

  • Product differentiation

  • Entering new markets

  • Changing packaging or design

  • Offering promotions

  • Improving customer service

  • Changing marketing strategies

Managing and reviewing the product portfolio (Boston matrix)

Definition: The Boston Matrix is a model which helps businesses analyze their range of products or services, based on market share and market growth.

Boston matrix categories:

  1. Stars - A product with high market growth and high market share.

  2. Cash cows - A product with low market growth and high market share.

  3. Question marks - A product with high market growth and low market share.

  4. Dogs - A product with low market growth and low market share.

4.3.2 Price

The main pricing strategies and when they might be applied:

  • Cost plus - When a fixed percentage (mark-up) is added to the cost of producing a product to determine its selling price.

    • This may be used to ensure all costs are covered and the sale of a product is profitable.

  • Penetration - When a business initially sets a low price to attract customers against competitors.

    • Businesses may use this when launching a new product in a competitive market as the product will be differentiated from the competition.

  • Competition - When pricing decisions are made based on the prices charged by competitors.

    • This may be used in markets with little product differentiation in order to help businesses stay competitive.

  • Skimming - Initially setting a high price which is eventually lowered.

    • This is usually used with new or innovative products. It may help brands with good customer loyalty or limited competition maximise profits.

  • Promotional - Prices which are temporarily reduced to attract customers or clear out stock.

  • Businesses may do this to boost sales in the short term or at seasonal events such as sales.

4.3.3 Place – distribution channels

Methods of distribution:

  • Retailers - Businesses that buy goods in bulk from producers or wholesalers and sell them directly to consumers in smaller quantities.

  • E-tailers (e-commerce) - Businesses that sell goods online through websites or apps.

4.3.4 Promotion

Promotion strategies for different market segments:

  • Advertising - Promotion involving a business paying to have their product or service promoted in a public space.

  • Sponsorship - An agreement where a business provides financial or other support to an event, team, or organisation in exchange for marketing exposure.

  • Product trials - A temporary offer made by a business to encourage consumers to test a new product.

  • Special offers - Temporary benefits, such as discounts, made by a business to boost short term sales.

  • Branding - The process of creating a unique and identifiable name, design, symbol, or other feature that differentiates a product or company from its competitors.

Above the line and below the line promotion techniques:

Above the line

Definition: Above the line promotion refers to advertising which is aimed at a wide audience through traditional mass media channels to create awareness about a product, service, or brand.

Examples:

  • Television Advertising

  • Radio Advertising

  • Print Media (Newspapers and Magazines)

  • Online Advertising (Display Ads, Social Media Ads)

  • Billboard Advertising

  • Cinema Advertising

  • Sponsorship

Below the line

Definition: Below-the-line promotion includes marketing specifically aimed at targeted individuals, without the use of mass media.

Examples:

  • Public Relations

  • Direct Marketing (Email, Mail, Telemarketing)

  • Sales Promotions (Discounts, Coupons, Loyalty Programs)

  • Sponsorship

  • Sampling and Free Trials

Public relations

Definition: Public relations (PR) involves a business building relationships with the public, promoting a positive image for the business or brand as a whole and managing its reputation in the media.

Role of Public Relations:

  • Improve company/brand image

  • Increase awareness

  • Engage target market

  • Build trust and credibility

The use of Technology in Promotion

  • Targeted advertising online - Online ads are customized and shown to specific groups based on demographics, interests, location, or online behaviour. This helps businesses target the relevant audience.

  • Viral advertising via social media - Creating content that spreads quickly across social media platforms. This is low-cost and can help businesses reach large amounts of people.

  • E-newsletters - Emails are regularly sent to subscribers to inform them about products, services, offers, or updates. This can help keep customers consistently engaged.

The Importance of a Brand

Definition: Branding is the process of creating a unique and identifiable name, design, symbol, or other feature that differentiates a product or company from its competitors.

Importance:

  • Add value - A strong brand can add value to a product by creating a perception of quality, reliability and reputation.

  • Ability to charge premium prices - Customers may be willing to pay more for products associated with a well-established brand as they perceive products with strong branding to be of higher quality and therefore worth the extra cost.

  • Establish recognition and identity - Having a strong brand can help a business form a unique identity within a competitive market, allowing it to stand out and stay relevant.

  • Differentiation - Branding can help emphasise features which make a product or service unique, allowing businesses to stand out in a competitive market.