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
? 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
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
? 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
(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.