Marketing Planning Content Marketing Mix Product Price Place

Marketing Planning

Content • Marketing Mix: – Product – Price – Place – Promotion • Elasticity of demand • Marketing budget • Sales Forecasting

Marketing Mix • The marketing mix or the 4 Ps are the key elements of a businesses marketing plan • The marketing mix refers to: – Product – Price – Place – Promotion

Product • Product refers to what the business sells • This could be a good – tangible or a service – intangible • Products are composed of different features which help consumers identify them e. g. their size, their colour • Products need to be developed to meet customer needs and wants

Price • Price refers to how much consumers are charged for a product • There are different strategies for different types of products: – Price skimming (new products) Price is initially high due to type of product (usually electrical, luxury, innovative) – Price penetration (new products) Price starts at a lower price to gain market share

Price • Pricing strategies for existing products: – Price leader – dominant firms in the market are able to set the price for the rest of the market – Price taker – these firms accept the price that the price leaders set – Predator – predatory pricing is where businesses undercut competitors to drive them out of the market and gain market share

Pricing methods • Cost based – businesses work out how much products will cost to make, they then add a profit margin on to this to calculate price • Contribution – Prices are calculated by looking at how much they contribute to variable costs • Discriminatory – Where businesses can charge different prices to different consumers for the same product e. g. peak and off peak travel

Pricing Tactics • Loss leader – Businesses have products priced at a low level where they will make a profit, this encourages customers into the business where they will buy additional products • Psychological – Where businesses use prices such as £ 9. 99 as they seem to be cheaper

Place • Place refers to physical location and channels of distribution • Channels of distribution – how a product gets from the producer to the consumer • There are four main channels of distribution: – 1. Producer – consumer – this is generally used for small businesses e. g. farm shop

Channels of Distribution cont. . • 2. Producer – Wholesaler – Consumer – Here the wholesaler acts as an intermediary for the producer and is able to carry a number of different producers products e. g. furniture • 3. Producer – Wholesaler – Retailer – Consumer- This is common for clothes • 4. Producer – Retailer – Consumer – this is often used for electrical products

Channels of Distribution • Each link in the chain of distribution adds costs onto the final product and makes it more expensive for the end consumer • Wholesalers and retailers can provide important functions for producers especially as they grow larger • By using wholesalers and retailers businesses can loose control over the promotion of their products

Location • Businesses need to consider a number of factors when considering their location including: – Historical factors – Cost of premises – Space and land – Transport links – Proximity to suppliers / customers

Promotion • Promotion is the way of communicating what the product is to the consumers • It aims to persuade customers to buy the product • Above the line promotion – Advertising that uses independent media • Below the line promotion – Sponsorship, Public Relations, Direct Mail, Special offers

Advertising • Advertising can be done using a variety of media including: – TV – local, national, sky, digital – Radio – local, national – Press – newspapers, magazines, local, national, specialist press • Type of advertising media is dependent on: – Cost – Target Audience

Sponsorship • Individuals, events or teams are sponsored by organisations to increase company recognition and sales • Businesses often choose individuals / teams / events that have a similar target audience and similar ethos to themselves • E. g. David Beckham and police sunglasses, 3 day eventing and land rover

Sales promotions • These are ways to boost sales e. g. BOGOF – buy one get one free, 20% extra free • These are used to boost short term sales

Public relations • Where businesses have contact with the media to send out specific messages about the firm / its product • This is free advertising • Sometimes public relations can backfire for a business

Personal Selling • This is where a product is being promoted in a face-to-face situation • The product is promoted by a salesperson whose aim is to increase sales of the product • This often happens in the financial services industry

Direct mail • This is where mailshots are sent directly to customers • These can be sent via mail, text or email • As customer profiling techniques become more sophisticated mail shots are increasingly targeted • E. g. Tesco club card send vouchers to their customers based on their purchasing patterns and segmentation analysis

Elasticity • Elasticity measures how responsive demand is to a change in price / income • PED = % change in quantity demanded / % change in price • YED = % change in quantity demanded / % change in income • Inelastic – less responsive to a change in price / income • Elastic – more responsive to a change in price / income

Elasticity • If YED / PED is greater than 1 it is elastic • If YED / PED is less than 1 it is inelastic • If YED / PED is 1 it is neither elastic or inelastic • To increase revenue for elastic goods you decrease price • To increase revenue for inelastic goods you increase price

Elasticity • Elastic goods tend to be: – Luxuries – Many substitutes – Take up a large % of income • Inelastic goods tend to be: – – Necessities Few substitutes Take up a small % of income Goods with strong brands

Marketing Budget • A marketing budget sets out the costs and revenues that are allocated to the marketing department • The marketing budget will influence the promotional tools that a business is able to utilise

Sales forecasting • Sales forecasting – looks at what they expect their sales to be • Can use market research to forecast expected sales • Past sales figures are a good prediction of new figures

Summary • Marketing Mix looks at the 4 Ps • Product – refers to the good / service the business sells, it is made up of a number of features • Price – how much you charge for the product, can use different strategies depending on type and age of product and company size • Place – location of business and channels of distribution – how the product gets to the consumer • Promotion – how customers find out about the product – there are two types above and below the line • Elasticity – measures responsiveness of demand to a change in price / income • Market budget – sets financial targets for the marketing department • Sales forecasting – aims to predict sales and therefore revenues for a new product