The Marketing Mix

By Scott Shaw,2014-01-20 21:33
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The Marketing Mix

    The Marketing Mix


    Marketing is the management process responsible for identifying, anticipating and satisfying customer needs profitably.

    Every business must develop a marketing strategy if it is to succeed.

    The creator of the luxury ice cream Häagen Dazs started his business

    in America. He chose the name because it sounded Danish and he put

    the Danish flag on each carton to reinforce this image. This was

    designed to convey a quality image and it allowed him market his ice

    cream at a premium price.

    A marketing strategy is a plan stating how a business will achieve its

    sales targets. To succeed the business must:

    ? Analyse the market to identify business opportunities.

    ? Select a target market - this may involve market segmentation

    and finding a market niche.

    ? Conduct the necessary market research.

    ? Create a marketing mix.

    The 'marketing mix' describes the relationship existing between the

    product, its price, its place (distribution) and its promotion. Car

    manufacturer Skoda is currently trying to change its marketing mix by

    emphasising the improved product (it contains Volkswagen parts), its

    value for money and its improved distribution network. This change of

    image is being conveyed by a series of television advertisements in

    which people express disbelief that the car they are seeing is a Skoda.



    On the Leaving Cert course, there are four main concepts to be

    discussed under Product (the good or service being supplied):

    (a) Product life cycle: This describes how the market for a product

    changes over time. This concept is illustrated clearly within the

    interactive lessons - click here.

    (b) Design: This involves the creation of an attractive product which works. The success of Apple Computer's iMac can be attributed to its

distinctive design features. Successful design depends on the following

    factors: ? Aesthetics: How the product looks. A car manufacturer may

    introduce a new model by changing the bodywork and the

    fittings as these appeal to people's senses. The engine may not

    change at all.

    ? Function: The product must do the job intended. Some car

    manufacturers are so confident in their design that they give

    their cars a five-year warranty.

    ? Economics: The design must be economically viable.

    ? Environmental impact: Many companies try to minimise the

    impact of their product on the natural environment. Careful

    design can reduce waste in the production and distribution of the


    (c) Packaging must protect the product from damage while it is in transit but it can also be used to promote the product by displaying

    the company's brand name. The packages must be easy to display and

    must facilitate the use of technology by containing barcodes. To be

    environmentally friendly, packaging should be minimal, reusable or

    capable of being disposed of harmlessly.

    (d) Branding involves the creation of a brand name (e.g., Coca Cola), which the company has the sole right to use. Brands create a

    personality for a product, which allows consumers to develop a

    lifestyle relationship with the products they consume. Brands have

    many benefits:

    ? They are easily identified - we all know that Ford sells cars.

    ? They differentiate products, which allows companies to target

    different markets. Levis created the 'Dockers' brand to satisfy

    the need for casual dress in the work place.

    ? They may convey trust and a quality image, e.g., AlB Bank.

    ? They facilitate the introduction of new products. Dyson are

    to launch a robotic vacuum cleaner in the near future.

    ? Within the Irish market, Lyons tea, Tayto crisps and Club orange

    are household names, yet just a handful of Irish brands are

    recognised worldwide. These include Waterford Glass, Guinness,

    Kerrygold, Baileys and Ireland itself, as marketed by the Irish

    tourist board.



    There are two main concepts to be discussed under Price (the amount

    paid for a product).

    (a) Pricing strategies: These involve the business developing the appropriate price for each product it sells. The following strategies are

    ? Cost plus: The firm works out the cost of production and then commonly used:

    adds on a profit mark-up, e.g., 20%, to allow it cover all its

    costs and earn a profit. This is used by companies whose main

    focus is production and not branding.

    ? Price skimming: The firm charges a high initial price in order to

    recoup the development costs, commonly used in the pricing of

    computer games.

    ? Premium pricing: The firm has created a high-quality brand

    which allows it charge a high price for its products, e.g., Nike.

    ? Dynamic pricing: The firm constantly changes its prices

    depending on the demand for its products. Ryanair uses this

    model to offer the best value to its customers while still making

    a healthy profit.

    ? Discriminatory pricing: Different prices are charged to

    different customers for the same product. Cinemas charge

    students a lower price even though they see the same film as

    those paying the full price.

    (b) Break-Even Analysis The Leaving Cert student must be able to draw a break-even chart

    from given data. A graphic example of this process is demonstrated

    within the interactive lessons - click here.



    The perfect product is of no use to the consumer if it is not readily

    available. It has been the aim of Coca Cola to have their product

    within a hands reach of desire. Manufacturers use different channels of

    distribution to deliver their goods to the consumer. The principal

    channels are:

    (i) Manufacturer; Wholesaler; Retailer; Consumer

    Musgraves is one of Ireland's leading private companies and it has

    fought hard to protect the role of the wholesaler. As well as supplying independent retailers, they have established the Supervalu and Centra brands. The owners of these stores buy their stock from Musgraves. (ii) Manufacturer; Retailer; Consumer

    This model is used by the large supermarket multiples such as Dunnes Stores. An order is placed with a manufacturer to supply all of their outlets, thus bypassing the wholesaler. This allows them to cut prices which benefits the consumer. A recent court case in England stopped multiples from selling top clothing brand items in their stores. The manufacturers were afraid of the effect on their image if their products were available at bargain prices in supermarkets.

    (iii) Manufacturer; Consumer

    This method is becoming more popular as technology allows a manufacturer to keep accurate records of customer requirements. Why buy an off-the-shelf computer in a retail outlet when you can order a custom-built model direct from the manufacturer? Dell has exploited this model to become the largest seller of personal computers in the world.



    Promotion means "making your customers aware." There are four elements to be considered in the promotion mix:

    (a) Advertising is the communication of information through various

    media about a product in order to create, maintain or increase sales in a target market.

    The style may be informative (sales offer) or competitive (washing powders). It may be institutional (banks) or generic (promoting an industry), but all advertising is designed to persuade and entice the consumer to action. It can get attention and create interest but ultimately, to be successful, it must lead to increased sales revenue. To ensure that the industry maintains certain standards and doesn't mislead the public, the Advertising Standards Authority acts as a watchdog and enforces codes of practice. In planning an advertising campaign, three key elements are:

    ? The message to be conveyed.

    ? The most appropriate medium (radio, TV, print, outdoor posters,


    ? The identification of the target market.

    (b) Sales Promotion is often referred to as 'below the line expenditure', as it involves areas other than direct advertising which

    support the marketing process. These include free samples,

    competitions, gift coupons, trade promotions and other devices. Petrol

    stations, grocery retailers, drinks suppliers and airlines use these


    (c) Public relations involves establishing and maintaining a good impression of the organisation in the minds of the public, i.e., existing

    customers, suppliers, general public, or shareholders.

    Good news is magnified and a positive spin is put on circumstances

    that are more problematic. Sponsorship of sporting, cultural,

    educational and social events is a very effective way of conveying a

    positive corporate image and of gaining exposure. Consider the

    hundreds of millions of dollars spent annually on the sponsorship of

    Formula One motor racing or the horse racing industry.

Large corporations also hire expensive consultants to redesign their

    corporate image and ensure that customers and the general public

    perceive them in the way they wish to be perceived. AIB, Aer Lingus,

    and eircom are good recent examples in the Irish context.

    (d) Personal selling involves contacting customers directly in order to generate sales. This method is often used to generate sales in a

    B2B (business to business) context as one order could be worth

    millions of euro. Telemarketing (contacting customers over the phone)

    allows business to use personal selling to attract individual customers.

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