Chap 5: Elements of the marketing mix

Explain the elements of the marketing mix

Various frameworks for the marketing mix have evolved over time, including:
- The 4 Ps framework — product, price, promotion and place (place is more easily
understood as distribution). The 4 Ps framework was the first approach to the marketing
mix.
- The 5 Ps framework which evolved from the 4 Ps model by adding a fifth P, ‘people’, to
the 4 Ps framework.
- The 6 Ps framework which added ‘process’ to the 5 Ps framework
- The 7 Ps framework which added ‘physical evidence’ to the 6 Ps framework. A target
market is a group of customers with similar needs and wants.

What is a product?
- A good, service or idea offered to the market for exchange
- Without a product, a marketer has nothing to offer -> Product plays a vital role in the
marketing process.
- Goods: physical, tangible offerings that are capable of being delivered to a customer
- Services are intangible offerings to the market -> experience a service - Ideas: the
products of community organisations, charities and political parties

What is the total product concept?

- To make a product of more value than competing offerings, the marketer must take a more
comprehensive view of the product.
- Describes the 4 levels; core product, expected product, augmented product and potential
product -> to analyse how the product creates value for the customer.

- Core product: comprises the fundamental benefit that responds to the customer’s problem
of an unsatisfied need or want
- The expected product: describes those attributes that actually deliver the benefit that
forms the core product
- The augmented product: the product delivers a bundle of benefits that the buyer may not
require as part of the basic fulfilment of their needs -> significantly differentiate their
offerings from those of competitors
- The potential product:
+ Comprises all possibilities that could become part of the expected or augmented
product.
+ Includes features that are being developed, planned or prototyped, as well as
features that have not yet been conceived.
What are the relationships between the organisation’s products?
- Product item: a particular version of a product that can be differentiated from the
organisation’s other product items by characteristics such as brand, ingredients, style or price. -
Product line: a set of closely related product items. The close relationship is usually in terms of
end use, target market, technology or raw materials
- Product mix: the set of all products that an organisation makes available to customers.

How can products be classified?

- Consumer products: products purchased by households and individuals for their own
private consumption. shopping products: moderate to high engagement in the decision-making
process, with the purchase decision based on features, quality and price
convenience products: Inexpensive, frequently purchased, products bought with little
engagement in the decision-making process
specialty products: Highly desired products with unique characteristics that consumers will make
considerable effort to obtain
unsought products: To meet a sudden, unexpected need
- Business-to-business products: products purchased by individuals and organisations for
use in the production of other products or for use in their daily business operation

What is product differentiation?

- Is the creation of products and product attributes that distinguish one product from
another. - In terms of the product, most of the differentiating features are part of the augmented
product layer of the total product concept.
- Characteristics that customers may perceive to be differentiators: design, brand, image,
style, quality, features and price.

What are the elements related to branding?

- Brand: a collection of symbols, such as the name, logo, slogan and design, intended to create
an image in the customer’s mind that differentiates a product from competitors’ products.
- Brand image: the set of beliefs that a consumer has regarding a particular brand.
- Brand name: part of a brand that can be spoken, including words, letters and numbers. -
Brand mark: part of a brand not made up of words — it often consists of symbols or designs.
- Trade mark: a brand name or brand mark that has been legally registered so as to secure
exclusive use of the brand.
- Brand equity: Added value that a brand gives a product.
- Brand loyalty: Customer’s highly favourable attitude and purchasing behaviour towards a
brand.
- Brand metrics: Measure the value of brands and include brand assets, stock price analysis,
replacement cost, brand attributes, and brand loyalty.
 Price
- For the buyer, the benefit is the satisfaction derived from the consumption or ownership of
the product. In normal circumstances, a buyer will only engage in an exchange if that benefit
is in excess of what they must give for the product.
- For the seller, the benefit is primarily the revenue derived from purchases. In normal
circumstances, a seller will only engage in an exchange if that benefit is in excess of the cost
of creating and delivering the product.
- Bartering (the direct exchange of goods and services in payment for other goods and
services)
- An important indicator of the importance of price in consumers’ purchasing decisions is the
perceived uniqueness or differentiation of the product.
- Different market segments will have varying levels of sensitivity to price.

Customer value perception

- Customers assess value by comparing expected product benefits with the price. Customers
thus often use reference prices to help them form an impression of value and price.
- For familiar products such as beer, soft drinks and petrol, consumers have clear expectations
about an acceptable price range based on past experience. In other words, they have an
internal reference price for the product.
- For less familiar products, however, consumers are more likely to rely on an external
reference price, such as a comparison price provided by retailers, advertisers or salespersons.
- Consumers’ reference prices are also influenced by their most recent purchases and their
expectations of prices in the future. Consumers will also consider their purchasing costs
including time, travel, inconvenience and uncertainty.
- For many organisations, it can be advantageous to set prices for groups of products rather
than to set a price for each individual product. This approach is known as product-line
pricing.
- Setting a limited number of prices for selected groups or lines of merchandise. This approach
is known as price lining.
Understand the integrated marketing communications (IMC) approach to marketing
promotion and the major elements of the promotion mix
- Promotion is the creation and maintenance of communication with target markets.
- In marketing, promotion is usually thought of as comprising a strategic mix of advertising,
public relations, sales promotions and personal selling.
a. Integrated marketing communications (IMC):
- The term given to the coordination of promotional efforts to maximise the communication
effect.
- The goal of IMC is to consistently send the most effective possible message
to the target market.
- The four main components of IMC are advertising, public relations, sales promotion and
personal selling.
b. The promotion mix:
- Four main elements of a promotion mix — advertising, public relations, sales promotion and
personal selling.
- Advertising:
+ The transmission of paid messages about an organisation, brand or product to a mass
audience.
+ The main benefit of advertising is the ability it offers to reach a lot of people at a
relatively low cost per person. It is also possible to aim advertising at particular target
markets by choosing appropriate media.
+ The main limitations of advertising are the difficulties in measuring its effectiveness.
Because of its mass market approach, there is very limited presentation and
personalisation of the marketing message carried by advertising.
- Public relations:
+ Refers to communications aimed at creating and maintaining relationships between
the marketing organisation and its stakeholders - include customers, suppliers, owners,
employees, media, financial institutions and those in the immediate and wider
environment
+ The main benefits of public relations promotions are credibility, the significant word-
of-mouth communications that can result, their low or no cost nature, and their
effectiveness in combating negative perceptions or events.
+ Limitations: many efforts are seen by the news media as attempts to obtain free
advertising and are thus rejected, marketing-savvy public.
- Sales promotion:
+ Offer extra value to resellers, salespeople and consumers in a bid to increase sales,
used on an irregular basis to smooth demand.
+ Benefits: smooth out sales in periods of low demand and to facilitate retailer support.
+ Limitations: lose effectiveness if overused, easily copied and the public is becoming
increasingly cynical about whether they offer any real value or whether they just
highlight that the usual price and conditions under which a product is purchased has a
great deal of extra margin built in.
- Personal selling:
+ Refers to personal communication efforts that seek to persuade consumers to buy
products.
+ Benefits: message can be very specifically and personally tailored to the individual
consumer, enables the marketing message to be adjusted based on feedback given by
the target of the selling effort.
+ Limitations: expensive and has a limited reach, labour intensive and time consuming
c. Integrating promotion mix elements:
- The most effective choice and mix of promotion elements will vary with the specific goals of
the marketing effort, individual product characteristics, individual target market
characteristics, the nature of the marketing organisation itself, and the resources and budget
available to the marketer.
- The appropriate promotion mix is likely to change over time as each of those characteristics
changes and as the effectiveness or otherwise of the current promotional mix is evaluated.
- Pull policies and push policies:
+ A pull policy is an approach in which the producer promotes its product to consumers,
usually through advertising and sales promotion, which then generates demand
upward through the marketing distribution channel.
+ A push policy is an approach in which the product is promoted to the next
organisation down the marketing distribution channel.

Understand the concept of place and how distribution channels connect producers and
consumers
- ‘Place’: the way products be ‘placed’ to the final consumer through a supply chain between
producers and consumers.
- ‘The distribution channel’ can include chain of wholesalers, industrial buyers, agents or
brokers, and retailers, which divide into basic types:
● Intensive distribution
● Exclusive distribution
● Selective distribution

( Well-managed distribution channel )

Describe how to develop and manage an effective marketing mix based on the unique
characteristics of services

Four characteristics of services

- Intangible
- Inseparability
- Heterogeneity
- Perishability
With 4P’s basic marketing mix, extending services marketing mix by combining 3 more P:

People Process Physical Evidence

Who make contact with Include functional Tangible things to evaluate

customers in delivering the expectations and customer service quality prior to
product service expectations purchase