1) List and describe the '4Ps' of the marketing mix, and ...



Question 1.

The 4 P’s of the marketing mix are - Product, Price, Place (distribution), and Promotion.

Product: A company or an individual must have product to market and to offer to the people. A product is define as anything that can be offered to a market for attention, use, or consumption, and that might satisfy a want or need (Armstrong and Kotler 278)

Example: Quality: A company may decide to opt for a product which has higher quality over poor quality solutions. In doing so they will have to pay more for the product which will effect the price they need to sell it at in order to make a reasonable profit. This increased price can affect demand for the product, therefore the quality of an item needs to be good enough for the consumer to want to purchase it – but cheap enough for the company to buy or produce so they yield a sufficient profit.

Models: By creating more models of a product the company is expanding its range, therefor share of the market, which can yield them higher profits. But creating a range that is too large for the market can have adverse effects: consumers might be confused by different variations and may opt to purchase a different item, costs involved with developing and marketing a larger range of products are significantly increased. This in turn will ultimately yield the company lower profits than creating a smaller set of models in the range for that particular market.

Price: Price is defined as “The amount of money charged for a product or service or the sum of the values that consumers exchange for the benefits of having or using the product or service” (Armstrong, Gary and Philip Kotler 353). It is essential to remember that the price is right for the target consumer, or the company could face pricing itself out of the market and suffer from lower sales.

Example: Allowances and deals: By lowering the price artificially via a deal on a product you are increasing the demand for the product. The down side is that once the deal ends and the products goes back up to full price, your product might be seen as more expensive by customers who had previously purchased it at the discounted rate, and you could suffer from a lower demand as an aftermath.

Retailer mark ups: By adding an RRP to your product, you can be sure that it is offered at a similar price through out the retailers that stock your item. You will need to consider carefully before you place an RRP on an item, as higher end stores may wish to charge more for the item, and discount stores may want to sell it as cheaply as possible. By putting an RRP on your item you are designating the proportion of profit that a retailer makes from your product. Decisions about the amount a retailer should make should be taken carefully, if the retailer makes too little you could find yourself in a situation where the retailer does not want to re-order your item, as they deem they are not gaining enough return on it.

Place: An important decision when trying to determine the overall competitive marketing strategy is place. An item could be sold through larger chains, both large and small chains, internet only and a host of other options. The place you sell your product should be reflective on the consumer market who might buy your item. For example if you are selling a download package, you would market it on the internet. If you chose not to market the item here, and sell it through physical stores, your sales could suffer as a result, as the market for your item is most likely to check online sources first.

Outlet location: If you are trying to sell a higher value product, you might consider making it an exclusive brand with high end stores. These are mostly not likely to appear in the general high street, but more likely larger cities and high end shopping centres. By selling a high value item in a low end store you may inadvertantly ‘cheapen’ the brands name which cost you so much to build.

Warehousing system: Should your product be sold nationally, you will have to carefully consider the placement of the warehouses that contain your stock. Your warehouses should be distributed evenly over the regions where the stock is sold, allowing for quick and effective deployment of the items to the retailer. Delays in delivering stock can cause frustration for the retailer, and might prevent from ordering with you in the future.

Promotion: Promotions are activities such as advertising, personal selling, and sales promotion which communicate the merits of the product and persuade target customers to buy it (Armstrong and Kotler 63).

Advertising: Different types of advertising appeal to different markets, for example a formal, professional advert may not catch the attention of the youth market. Advertising needs to be tailored towards your target market to create the maximum impact. If your advert fails to attract the attention of, and subsequently the sales of your product, then you will sell a smaller amount of products, but have still incurred all the costs associated with a large advertising campaign.

Publicity: Creating publicity stunts can generate interest and subsequent sales of your products. Although you must think them out carefully as negative publicity can also decrease the sales of your product. They are a cost effective advertising medium, but must be used at the right time, in the right locations, and targeted towards the right markets in order to increase your sales, therefore revenue.

Question 2.

Consumers are grouped in the order in which they adopt a new product. The bell shaped curve of the adoption curve model demonstrates the demand for the product from each particular group. The rate of adoption depends on many factors including the following: price, ease of use, advertising efforts, feedback from those who have tried the product, benefits over alternative products, compatibility with values and other currently owned products, the intensity of the products placement in other retailers.

The five main groups are:

Innovators: Consumers who are willing to try an unproven product. The first 2.5% of the curve represents these people

Early adopters: Approx. 13.5% of consumers fall within this group. They purchase your product based upon the positive feedback they hear from the innovators.

Early majority: This group represents approx. 34% of customers. These consumers tend to avoid risk, but will purchase the product once its been proved and approved by the early adopters. The rely on the positive feedback from others to base their decision upon whether they will purchase the item.

Late majority: This group represents approx. 34% of consumers. They only purchase products after they have become common place in the market. Again they rely on the groups above for feedback.

Laggards: This group represents approx. 16% of customers. They are adverse to change, and often only purchase items when their favourite alternative is no longer available.

Question 3.

Each new products progresses through a series of stages from its growth through to its decline. I is associated with the changes in the marketing situation, therefor impacting the marketing strategy and marketing mix.

Introduction stage: Where the firm builds awareness and develops a market for the product. Impacting on the marketing mix I the following ways: Product: branding, quality levels are established and intellectual property rights are obtained. Pricing: low to generate higher market share, or high to recover development costs. Distribution: selective until customers are purchasing the product and showing a demand for it. Promotion: aimed at early adopters, aims to build product awareness and educate consumers about the product.

Growth stage: Where the company aims to increase market share. Product: Quality maintained and support features implemented where necessary. Pricing: Maintained throughout growth as the company enjoys a higher demand. Distribution: additional retailers are selected to stock the product as the demand for it grows. Promotion: aimed at the larger audience.

Maturity stage: Strong growth in sales diminishes, and rival firms may offer similar products on the market. At this stage the company needs to defend the existing market share while maximising the profit. Price: Features added to the product to make it different from that offered by the competitors. Pricing: Lower due to the increased competition. Distribution: A wider variety of retailers are selected to sell your product, and incentives may be offered to existing retailers with the aim of out pricing similar products. Promotion: Differentiating your product from other on the market.

Decline stage: At this stage the firm has several choices: Discontinue production of the product, possible selling right to another firm to maximise the return. Reduce the cost of the product and adapt it to niche markets, or continuation of the loyal customer base. Maintain the product by adding new features and marketing it towards different uses.

Question 4.

SWOT analysis is a model that provides direction and serves as a basis for the development of marketing plans. It assesses an organisations strengths and weaknesses, in addition to opportunities and threats. It determines if the company can do anything currently to improve its strengths and opportunities, or lessen its weaknesses and threats.

Strengths: Think about what your company does well. What makes you stand out from your competitors? What advantages do you have over other businesses? Use these to your advantage and let customers know why your product or service is better than your competitors.

Weaknesses: List the areas that are a struggle. What do your customers complain about? What are the unmet needs of your sales force? Work on your weaknesses to turn them in to strengths, this may eliminate the problem increasing in the future.

Opportunities: Are there any areas in which your strengths are not being fully utilised? Are there any trends emerging in the market which fit with your product or company image (for example environmental issues). Could you turn this trend to your advantage? (By marketing your items specifically as environmentally friendly). Are there markets for which your items can be adapted to gain a larger market share?

Threats: Look internally and externally at situations and events that could damage your business. Are there financial problems? Are your competitors being aggressive in their strategies? Is there any negative feedback from your product? These items if dealt with swiftly now, can be turned into advantages that you have over your competitors. If they are not dealt with they can manifest in to larger problems in the future which may take a lot more money and time to resolve.

SWOT analysis can be beneficial in marketing planning in order to not only predict future strengths and weaknesses, or threats and opportunities, but to deal with any issues in the present where the companies strengths and opportunities can be improved. This might not only improve efficiency now, which gives you a better base to work from, but could also save the company money and troubles in the future trying to deal with unforseen threats and weaknesses. The marketing manager can devise a rough outline from the SWOT analysis on how to convert their weaknesses into strengths.

Multiple choice questions:

answer = a) Monetary

answer = b) Micro-marketing

answer = d) Customer Lifetime Value analysis

answer = c) Business to wholesaler

answer = a) Automobiles

answer = b) Primary data

answer = a) Focus group interview

answer = c) are both competitors and collaborators

answer = a) product/service quality as defined by customer needs

answer = d) discrepancy of quantity

answer = c) ideal market exposure

answer = b) The Federal Fair Packaging and Labelling Act of 1966

answer = c) trying to increase sales by selling existing products in new markets

answer = a) market segment

answer = d) Attention-Interest-Desire-Action

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