THE MARKETING MIX HIGHER BUSINESS MANAGEMENT This is
THE MARKETING MIX HIGHER BUSINESS MANAGEMENT
• This is often referred to as the 4 Ps! 1. 2. 3. 4. Product Price Place Promotion • Each of these factors will influence the customer buying a product.
PRODUCT • This is the good or service that the customer will buy. • It must meet the needs of the customer, both actual and potential. • A PRODUCT MUST BENEFIT THE CUSTOMER.
CORE PRODUCT • The basic benefit of the product. PRODUCT Shampoo Trainers Video Recorder BASIC FUNCTION To clean hair To protect feet To record TV programmes
ACTUAL PRODUCT • Most products are not bought to meet just a single need. • There a number of factors which make up a product concept. • Will have characteristics such as brand name, design and packaging.
AUGMENTED PRODUCT • Producers often add an element of attraction to their product to gain a competitive edge. • Additional features include: – – – High after sales service 0% credit terms Style Colour Quality Brand name
PRODUCT LIFE CYCLE • Markets are constantly changing due to – – Technology Fashion Politics Economics • Because of this products become obsolete eventually.
• Every product will go through a number of stages over a period of time. • From the birth of the product until the end of it’s life. • Some products will have a short life cycle e. g. Pop Record • Others will have a very long life e. g. Mars Bars, Coca Cola.
Sales DECLINE SATURATION MATURITY GROWTH INTRODUCTION R&D Time
RESEARCH AND DEVELOPMENT • At this stage of it’s life the product is not yet on the market. • There are no sales and the product is probably making a loss for the firm.
INTRODUCTION • This is when the product is first put onto the market. • Sales are low because there is limited customer awareness and brand loyalty for other products. • Cost are also high at this stage due to heavy advertising and holding stocks.
GROWTH • Sales at this stage are increasing quickly. • There is heightened awareness of the product. • At this stage the product is making it’s highest amount of profits due to little competition.
MATURITY • More and more competition is coming on to the market. • Sales begin to slow down. Price is likely to be cut to attract customers.
SATURATION • Here there is lots of competition that the market is flooded with similar products. • Sales will begin to dip. • Supply will outstrip demand.
DECLINE • At this stage the product is not fashionable, becoming obsolete. • Everyone has one and there are new and better products on the market. • Sales fall away as does profits.
PRODUCTS AT DIFFERENT STAGES R&D Introduction Growth Maturity Saturation Decline PS 3 Games PS 3, Iphones, Blue Ray DVDs Video Mobiles, Recordable DVDs MP 3 Players, IPODS DVD Players Video Recorders
EXTENDING THE LIFE CYCLE • Not all products will go into decline. • Some companies will alter elements of the marketing mix in order to inject new life into a old product.
STRATEGIES • Changing the product – shape, size, colour e. g. diet drinks • New variants – fun size • Altering the package to appeal to a different segment of the market. E. g. Pepsi cans to blue • Altering where the product is sold, e. g. selling online
• Changing the price • Altering the advertising or promotions e. g. special offers, free gifts. • Changing the use of the product e. g. Luzocade • Change the name of the product.
Extension Strategies Sales Time
PRODUCT MIX/PRODUCT PORTFOLIO • This is a range of products that a firm may have. • E. g. – Cadbury – chocolate sweet range – Virgin – records, banking, insurance, flights.
• By having a range of products you can spread the risk. • If they had only one product and that failed, the firm would be in trouble. • Wide range means that you can target different market segments, which can also increase profits.
• A firm may introduce a new product just as an older product is going into decline. • This way they will always have products at the various stages of the Product Life Cycle.
Sales Product 3 Product 2 Product 1 Time
BOSTON MATRIX • This is used by some firms to look at their product mix. • It places products into one of four categories.
• These categories are based on: • The market share each product has – ie the percentage of the market they hold. • and • Market Growth – the potential for the product to experience growth in it’s market.
MARKET SHARE MARKET GROWTH HIGH LOW HIGH STAR PROBLEM CHILD LOW CASH COW DOG
• Firms want to have a few problem children. These are products that have a low market share but there is potential for growth. • Firms want a lot of stars, products with both high market share and high market growth.
• They want a few cash cows, where the market share is high but there is not a lot of potential for growth. MILK THE CASH COW. • And no or very few dogs, these products do not make a lot of money. PUT DOWN DOGS.
PRODUCT INNOVATION • Coming up with new products is extremely important for businesses, to replace those going into decline.
STAGES • • • Generation of the idea Analyse the idea (will customer buy? ) Produce a prototype and test it Test market Adapt and review Launch
• There is a high failure rate with product innovation. • Only 1 in 50 are successful! • A lot of time and money is spent on producing new products.
BENEFITS TO R&D • New products developed give a competitive edge. • Can develop new production techniques • Improve efficiency and productivity which reduces costs • May gain a patent which gives you a competitive advantage • Staff are highly motivated as they are allowed to be creative.
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