Marketing-mix-in-the-development-of-marketing-strategy.pptx

A marketing mix includes multiple areas of focus as part of a comprehensive marketing plan.

1. Marketing mix in the development of marketing strategy Chapter 6

2. LEARNING OUTCOMES Define the meaning of product, price, place, promotion, people, packaging, positioning and their importance; Determine the appropriate strategies in pricing, products, place, promotion, packaging, positioning and people; Evaluate how effective the marketing mix to the organization; Discuss the product life cycle to create strategies; and Identify the other P's in marketing.

3. MARKETING MIX Marketing mix combines controllable elements to develop a strategy for satisfying the market. Used by marketers within organizations. Determines a product or brand's offering. Includes: product, price, place, promotion, positioning, packaging, and people.

4. MARKETING STRATEGY Marketing strategy combines all marketing goals into one comprehensive plan. Derived from market research, including surveys, interviews, and personal observation. Focuses on the right product mix to achieve goals and objectives. Basis for formulating a marketing plan. Utilizes pathways and footholds to make the limited marketing budget more effective. Aims to achieve sustainable competitive advantage.

5. Product A product can be an idea, physical entity (a good), a service, or a combination of both. It's the bundle of satisfaction received by the buyer after lease or purchase. Includes the physical attributes (form, taste, smell, color, etc.), function, packaging, labeling, warranty, and manufacturer's/retailer's services.

6. Product: Its Nature and Sustainability Entrepreneurs must grasp the products needed in society to satisfy the target market. Products should be clear, unique, and easily identifiable. Market research aids entrepreneurs in understanding target market needs. Products can be tangible (goods) or intangible (services, ideas). Product satisfaction is what buyers experience after lease or purchase. Includes physical attributes (form, taste, odor, color, texture), function, packaging, labeling, warranty, and manufacturer/retailer services.

7. LEVELS OF PRODUCT Tangible products Augmented Product Generic Product

8. Tangible products refer to physical items, including services or ideas, with specific specifications and offered under a designated description or model number. Augmented Product Includes the image and service features of a certain entity, emphasizing intangible benefits for the customer. Examples: Car insurance, Medical and dental benefits, and Fire insurance Generic Product Emphasizes the impact of the product on the consumer, focusing on its purpose and primary objective . Examples: Prestige, Status signal, Professional image

9. TYPES OF PRODUCT Goods Services CONSUMER PRODUCTS INDUSTRIAL PRODUCTS

10. TYPES OF PRODUCT ( Goods ) Goods are physical products sold from the manufacturer to the consumer or end user. They are tangible and can be measured for satisfaction through physical development or evidence.

11. TYPES OF PRODUCT ( Goods ) TYPES OF Goods Durable goods Examples include steel, stainless steel, and appliances Non-durable goods Example: perishable items, disposable goods, and products influenced by fashion trends.

12. TYPES OF PRODUCT ( Services ) Services are intangible products that satisfaction can be measured in future preferences. Example: Relaxation in salon and spa Education from school

13. TYPES OF Services PRODUCT Rented-goods services Owned-goods services Non-good service

14. TYPES OF PRODUCT ( Services ) Rented-goods services Example: Car rental, space, office for rental Owned-goods services Example: Laundry business, car wash Non-good service Example: Teacher, accountant, Lawyer, receptionist,

15. CHARACTERISTICS OF SERVICES Intangibility is the services that cannot be displayed, transported, stored, packaged or inspected before buying. Variability is when the service is difficult to standardize because it varies upon the performance of the provider

16. TYPES OF PRODUCT (CONSUMER) Consumer product are goods and services destined/produced for the final consumer for personal, family, or household use. Example: Products normally and routinely used by consumers..

17. TYPES OF CONSUMER PRODUCTS Convenience products Shopping products Specialty products

18. TYPES OF CONSUMER PRODUCTS 1. Convenience products Convenience products are bought with minimal effort because buyers are already familiar with their characteristics. Consumers typically don't search for information and are willing to accept substitutes rather than visit other stores.

19. TYPES OF CONSUMER PRODUCTS TYPES OF Convenience products Staples are low-priced items bought regularly for everyday use. Examples: rice, soup, toothpaste. Impulse products are items not planned for purchase, bought due to factors like attractive promotions or discounted prices. Customers are drawn to buy these products impulsively.

20. TYPES OF CONSUMER PRODUCTS 2. Shopping Products Shopping products are items that consumers acquire after gathering knowledge and information to make a final purchase decision. Consumers invest effort in searching for information because these products have prices and are purchased infrequently.

21. TYPES OF CONSUMER PRODUCTS TYPES OF Shopping Products Attribute-based shopping products offer information on features, performance, options, warranties, and more for customers to evaluate. Price-based shopping products assume similar attributes, and customers seek the least expensive option by comparing prices.

22. TYPES OF CONSUMER PRODUCTS 3. Specialty products Specialty products are items with specific brands and stores that customers are loyal to. Customers are willing to exert significant effort to acquire desired brand units and are willing to pay a higher price compared to similar products.

23. INDUSTRIAL PRODUCTS

24. TYPES OF PRODUCT (INDUSTRIAL) INDUSTRIAL PRODUCTS Industrial products are goods or services bought for use in the production or manufacturing of other goods, for business operations, or for resale. They are categorized based on the degree of decision-making involved, cost, rapidity of consumption, role in production, and change in form.

25. They are categorized based on several factors: Accessory Equipment: Portable goods with a long lifespan, requiring moderate consumer decision-making. Raw Materials: Unprocessed basic materials sourced from extractive and agricultural industries. Industrial or Operating Supplies: Inexpensive convenience goods quickly consumed in daily operations, not incorporated into the final product.

26. Component Materials: Semi-manufactured goods undergoing further form changes, contributing to product credibility. Installations: Expensive, non-portable goods used in production processes, not integrated into the finished product. Fabricated Parts: Finished products from other companies integrated into manufactured products without further changes in form, providing additional features.

27. Market Research Market Research is a process involving various activities to gather and analyze information linking the marketing organization with its customers. Purpose: Identifies information needed for successful product or service marketing. Systematically gathers necessary data. Serves as a foundation for analyzing and interpreting marketing data. Leads to conclusions and solutions for marketing problems.

28. RESEARCH DESIGN MAY BE QUANTITATIVE OR QUALITATIVE Research Design Overview: Quantitative Research: Involves numerical data analysis. Utilizes methods such as frequency distribution, descriptive statistics, and correlation/causation tests. Qualitative Research: Doesn't rely on precise measurements. Commonly used in social analysis for phenomena not easily quantifiable.

29. RESEARCH DESIGN MAY BE QUANTITATIVE OR QUALITATIVE TYPES OF RESEARCH Exploratory Research Descriptive Research Causal Research Historical Design Experimental Research:

30. RESEARCH DESIGN MAY BE QUANTITATIVE OR QUALITATIVE TYPES OF RESEARCH Exploratory Research: Conducted through literature search, surveys, and case studies. Analyzes and evaluates reasons for events, focusing on cause and effect without determining conclusive results. Descriptive Research: Aims to describe issues related to future demands of a product. Determines population usage or predicts future demand, focusing on current conditions and relationships.

31. RESEARCH DESIGN MAY BE QUANTITATIVE OR QUALITATIVE TYPES OF RESEARCH Causal Research: Investigates cause-and-effect relationships among variables affecting market conditions. Involves laboratory or field experiments to determine causality. Historical Design: Utilizes historical approaches to collect and interpret data, answering questions about the past. Focuses on determining the accuracy of statements about past events.

32. RESEARCH DESIGN MAY BE QUANTITATIVE OR QUALITATIVE TYPES OF RESEARCH Experimental Research: Manipulates variables in controlled conditions with randomly selected subjects. Compares results in one topic or area of study, providing valuable insights.

33. RESEARCH DESIGN MAY BE QUANTITATIVE OR QUALITATIVE Sampling Techniques Considerations: Population size Study population Margin of error Proportion of study population used

34. RESEARCH DESIGN MAY BE QUANTITATIVE OR QUALITATIVE Types of sampling: Pure random sampling Systematic random sampling Stratified random sampling Cluster sampling Combination of techniques Process: Determine sample size. Choose sampling technique. Perform actual computation of the sample.

35. RESEARCH DESIGN MAY BE QUANTITATIVE OR QUALITATIVE Respondents of the Study Definition: Individuals who respond to a survey or set of questions. Sample size representing the population in the study.

36. RESEARCH DESIGN MAY BE QUANTITATIVE OR QUALITATIVE Different Sources of Data Abundant sources of information include: Bureau of Census and Statistics : Provides data on population, housing, industry, and trade. Land Transportation Commission : Offers information on vehicles such as cars, trucks, motorcycles, and jeeps. Department of Education : Records enrollments and graduates in schools, colleges, and universities (public and private).

37. RESEARCH DESIGN MAY BE QUANTITATIVE OR QUALITATIVE Supreme Court and Lower Courts of Justice : Maintains records of judicial cases. Police Regencies and Offices : Records criminal cases. Department of Health : Registers births, deaths, and pathological cases. Securities and Exchange Commission: Registers trade, industrial, and commercial establishments, as well as other profit or non-profit organizations. Other government departments, offices, and private organizations : Provide various types of information.

38. PRODUCT LIFE CYCLE Stages of Product Life Cycle Product Development stage Introduction stage Growth Maturity Decline

39. PRODUCT LIFE CYCLE Product Development Product development is the process of creating or modifying a product to meet the needs and preferences of consumers. It involves innovation, creativity, and adaptation to ensure that the product remains relevant and competitive in the market.

40. PRODUCT LIFE CYCLE Stages of Product Development Idea Screening Concept testing Business Analysis Product Development Test Marketing

41. PRODUCT LIFE CYCLE Idea Generation Idea Screening Concept testing ideas Business Analysis Product Development Test Marketing Steps in new Product Planning Process:

42. PRODUCT LIFE CYCLE Steps in new Product Planning Process : Idea Generation: Search for new product or business opportunities. Sources: Employees, channel members, competitors, and customers .

43. Methods of Idea Generation : Brainstorming: Group members share ideas, comments, and suggestions. Analyzing Existing Products: Study successful products for inspiration. Reading Trade Publications: Learn from successful entrepreneur stories. Visiting Suppliers Facilities: Use suppliers' raw materials for innovation. Surveys: Gather feedback from customers and potential market.

44. 2. Idea Screening: Evaluate ideas to identify unsuitable, unattractive, or poor ones for elimination. Categories for rating ideas include: General characteristics, Marketing characteristics, Production characteristics 3. Concept Testing: Ideas passing screening undergo concept testing, where consumer feedback measures enthusiasm by reacting to a picture, statement, or oral description of the product.

45. 4. Business Analysis: Review of market factors, revenues, costs, and trends. a. Demand Projections: Sales potential, sales growth, rate of repurchase, distribution intensity. b. Cost Projections: Per unit cost, raw materials cost, cost of existing facilities and resources, breakeven point. c. Competition: Market share of company and competitors, strengths and weaknesses of competitors, potential competitors.

46. c. Competition: Market share of company and competitors, strengths and weaknesses of competitors, potential competitors. d. Required Investment: Engineering, patent search, product development testing, promotion, production, distribution. e. Profitability: Time to recover initial cost, per unit profits, distribution intermediaries, control over price, Return on Investment.

47. 5. Product Development ideas are converted into tangible form. This stage involves: a. Product Construction: Type and quality of materials, method of production, time and cost requirements per unit. Plan capacity, sizes, and colors. b. Packaging: Materials used in promotion or storage, cost, sizes, and colors.

48. c. Branding: Choice of new or existing name, exclusivity, trademark protection. d. Product Positioning: Selecting a market segment. e. Consumer Attitude and Usage Testing: Launching the product in a selected market for real-world feedback.

49. 6. Test Marketing: Involves selling a fully developed product in a selected city. Observes the actual or on-the-spot performance under the chosen marketing plan. Based on the results, the firm can decide to proceed or modify the product.

50. PRODUCT LIFE CYCLE 2. Introduction: Launching a new product in a market with limited competition. Targeting early adopters willing to take risks. Using informative promotions and offering free samples to drive initial sales. 3. Growth: Product gains popularity; expand distribution and product range. Increased competition in the profitable market; high profits due to high demand. Product enhancements and wider distribution with mass advertising.

51. PRODUCT LIFE CYCLE 4. Maturity: Stable sales; prioritize lower prices and product improvements. Saturated market; profits decrease from discounting and high advertising costs. Products are available at most outlets with varying prices; promotion is competitive. 5. Decline Sales decline with new competitors; firms adjust production, outlets, or promotion. Revive product through repositioning, packaging changes, or termination.

52. Strategies for Mature Products: Develop new uses or functions and new purposes for products. Develop new or add latest product features. Find new classes of consumers or new potential markets for present products. Increase product use for new product users. Change marketing policies or strategy.

53. Pricing

54. FIVE STEPS IN DEVELOPING A PRICING STRATEGY Objective may be sales-based, profit-based and status-quo based. Broad Price Policy Price Strategies Implementing Price Strategy Price Adjustments

55. FIVE STEPS IN DEVELOPING A PRICING STRATEGY Objective may be sales-based, profit-based and status-quo based. Sales-Based: Drive sales growth and market share maximization. Boost sales via new product designs, lines, and promotions. Profit-Based: Maximize profit, ensure satisfactory returns, and optimize ROI. Prioritize investor satisfaction with immediate ROI.

56. FIVE STEPS IN DEVELOPING A PRICING STRATEGY Status Quo Based: Prevent government intervention, mitigate competitor impact, uphold channel relations, deter new competitors, ease supplier demands, and stabilize prices. Broad Price Policy: Establishes procedures, rules, and methods to act in specific situations. Links prices with the target market, image, and other marketing elements. Ensures that pricing decisions are coordinated with other sellers.

57. FIVE STEPS IN DEVELOPING A PRICING STRATEGY Types of Broad Price Policy: Penetration Pricing Skimming Pricing

58. Types of Broad Price Policy Types of Broad Price Policy: Penetration Pricing: Utilizes low prices to capture or attract the larger mass market for a product or service. Price set based on the preferences of the mass majority of the market. Skimming Pricing: Utilizes high prices to attract the market segment more concerned with product quality, uniqueness, or status than price. Seller chooses a high price to determine the true patrons of the product.

59. FIVE STEPS IN DEVELOPING A PRICING STRATEGY 3. Price Strategies Price strategies are methods or actions aimed at achieving the goals and objectives of the company in gaining profit. Price strategies can be classified into three different categories: a. Cost-based Price Strategy: b. Demand-based Price Strategy: c. Competition-based Price Strategy:

60. Price strategies can be classified into three different categories: Cost-based Price Strategy: Prices determined by calculating product, service, and overhead costs, then adding desired profit margin. Seller consolidates all production expenses and selects optimal profit margin as part of pricing strategy. Demand-based Price Strategy: Prices established through consumer research to align with target market preferences. Firms analyze product's marketability, adjusting prices upward based on demand if criteria are met.

61. Price strategies can be classified into three different categories: Competition-based Price Strategy: Prices are set in relation to competitors' pricing. Entrepreneurs research prices set by competitors to determine their own pricing strategy.

62. FIVE STEPS IN DEVELOPING A PRICING STRATEGY 4. Implementing Price Strategy Implementing a price strategy involves the readiness of the firm to sell the product effectively by offering an attractive pricing strategy listed below: Customary Pricing, Variable Pricing, One-price Policy, Flexible Pricing Odd Pricing, Price-quality Association, Prestige Pricing, Leader Pricing Multiple-unit Pricing, Price Lining, Price Bundling, Unbundled Pricing, Geographic Pricing

63. FIVE STEPS IN DEVELOPING A PRICING STRATEGY Here are explanations of the sample transactions: FOB Factory: The buyer pays for all freight charges regardless of the distance. The buyer covers all expenses incurred during the transfer of the product. Uniform Delivered Pricing: Buyers pay the same delivered price for the same quantity of goods. The entrepreneur considers the quantity of goods in setting the price.

64. FIVE STEPS IN DEVELOPING A PRICING STRATEGY Zone Pricing: Buyers within a geographic zone pay a uniform delivered price. The entrepreneur charges the same amount of fees to one particular location within the zone. Base-Point Pricing: The cost of transporting goods is computed from the base point nearest to the buyer. The most accessible and nearest buyer determines the base point for distributing the product.

65. FIVE STEPS IN DEVELOPING A PRICING STRATEGY Terms of Payments: Price agreements, including discounts, timing of payments, and credit agreements. Discounts: Reductions in the selling price given to customers for various reasons such as paying in cash, performing certain functions, buying in large quantities, or purchasing during off-seasons.

66. FIVE STEPS IN DEVELOPING A PRICING STRATEGY 5. Price Adjustments Price Adjustments Changes in cost, competitive conditions and consumer demand require changes in price. Prices can be adjusted in the list prices, escalator clauses, surcharges, mark-ups, markdowns, and rebates

67. Prices can be adjusted via: List Prices : Published prices in catalogs, tags, and orders, facilitating clear negotiations for salesmen. Escalator Clauses : Contract provisions permitting pre-delivery price increases, contingent upon seller communication and buyer consent. Surcharges : Supplementary fees added to list prices, strategically employed to bolster loyalty and profitability. Mark-ups : Price adjustments in response to heightened demand or increased costs, demanding careful management to preserve loyalty. Markdowns : Price reductions aimed at matching competitors, clearing excess inventory, or stimulating customer footfall, influencing profitability.

68. Pricing Strategy determines the right price is crucial for achieving business objectives. Pricing Strategy

69. Factors to Consider: Customer Perception of Value: Understanding how customers perceive the value of the business's offerings. Costs Involved: Considering overhead, storage, financing, production, and distribution costs. Profit Objectives: aligning pricing with profit objectives, whether maximizing profits, achieving specific margins, or covering costs. Competitor Pricing: Determines prices based on prices charged by competitors. Market Pricing: Sets prices by adding per-unit merchandise costs, operating expenses, and desired profit.

70. Advantages and Disadvantages: Each method has corresponding pros and cons. Effective method depends on the specific situation and market dynamics. Flexibility in Pricing Strategies: Companies can use single or multiple strategies, or combine multiple policies. Adaptation of strategies to meet sales objectives and organizational needs.

71. PLACE/DISTRIBUTION

72. Place refers to making products available in the right quantities and locations where customers want them, involving the process of moving goods and services from the company to the customer. Distribution Strategy: The chosen distribution channel must provide a strategic advantage to the company.

73. Common Distribution Channels: Direct Sales : Goods directly to end users. Original Equipment Manufacturer OEM Sales : Manufacturer sells products. Manufacturer's Rep : Wholesaler sells for manufacturers on commission. Wholesalers : Sell to retailers or agents. Brokers : Buy from wholesalers, sell to retailers or users. Retailers : Sell to consumers. Direct Mail : Targeted marketing sent to consumers.

74. Channel of Distribution: Distribution involves individuals or organizations facilitating goods and services flow from manufacturer to consumer or business user. Channel Members: Can include manufacturers, service providers, wholesalers, retailers, marketing specialists, or consumers. Middlemen: Act as intermediaries between the producer and the consumer, including wholesalers, retailers, and marketing specialists.

75. PLACE/DISTRIBUTION Physical Distribution: Physical Distribution encompasses activities ensuring efficient delivery of goods from raw materials to finished products, prioritizing timely and proper conditions. Types of Physical Distribution Transportation Inventory Management Warehousing Retailing Scrambled Merchandising Wholesaling

76. PROMOTION

77. PROMOTION: Definition: Various communication forms to inform, persuade, and remind about goods, services, or ideas. Promotional Mix: Combination of strategies for promotion objectives.

78. Types of PROMOTION Advertising : Paid non-personal communication through media to promote goods, services, or ideas. Publicity : Non-personal communication through media without an identified sponsor. Personal Selling : Oral communication by paid representatives to make sales. Sales Promotion: Paid marketing activities stimulating purchases and dealer effectiveness.

79. PROMOTION STRATEGY: Advertising Aspects: Budget, positioning message, media schedule. Public Relations: Publicity strategy, media used, special event schedule. Sales Promotion: Incentives like special sales, coupons, contests, trade-ins. Personal Sales: Sales strategy including pricing, returns, sales presentations, lead generation, customer service, salesman compensation, and responsibilities. PROMOTION MIX: Includes advertising, publicity, personal selling, and sales promotion to inform, persuade, and remind customers about goods and services.

80. Selection Factors: Product Life Cycle (PLC): Different stages of the PLC require tailored strategies. Company Characteristics: Product lines influence available promotional tools. Relations with Middlemen: Dealer impact on company effectiveness and efficiency.

81. PRODUCT POSITIONING Definition: Creating a public image for the product by informing the target market about its features, benefits, and unique selling points.

82. Market Positioning: Innovator/Leader vs. Follower: Innovator/Leader: Initiates selling new products to the market with unique strategies. Follower: Copies existing products without introducing new ideas.

83. Domestic vs. International/Global: Domestic: Produces for local consumption, focusing on the local market. International/Global: Expands product line beyond national boundaries, overcoming cultural and social barriers. Quality vs. Price: Quality: Prioritizes high-quality materials and customer satisfaction. Price: Focuses on affordability and cost-effectiveness for the market.