Marketing Mix

The marketing mix or the 4P's are the key elements of a businesses marketing plan

The marketing mix refers to:

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

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

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

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

This is 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
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

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:

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:

Type of advertising media is dependent on:

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

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

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