Unit 4. Fundamentals of Marketing for CBSE

Fundamentals of Marketing

1. Fundamentals of Marketing mix Unit 4

2. Concept of Marketing Mix Marketing is the process of identifying, anticipating, and satisfying customers' requirements with the purpose of making profits. This process involves the marketing managers and representatives take various marketing decisions to make the operations profitable. They are required to identify suitable combination of marketing policies and procedures so as to adopt and bring about desired behaviour of trade and consumers at minimum cost.

3. Definition According to Philip Kotler , “ Marketing mix is the combination of four elements called the 4P’s- Product, Price, Promotion and Place that every company has the option of adding, subtracting or modifying in order to create a desired marketing strategy”. According to Kotler and Armstrong, “Marketing mix is the set of tactical marketing tools that the firm blends to produce the response it wants in the target market”.

4. CHARACTERISTICS OF MARKETING MIX Works Together- All parts of the marketing mix (Product, Price, Place, Promotion) need to work together. Changing one part often affects the others. Lowering the price might require more advertising to show customers the new value. Focuses on Customers- The marketing mix is designed to meet what customers want and need. It helps create products and services that people will like and buy. A toy company designs its toys based on what children enjoy and what parents find safe and affordable. Flexible and Changeable- The marketing mix can change based on new trends, customer preferences, or competition. Businesses must be ready to adapt their strategies. A fashion store may change its product line and promotion strategies to match seasonal trends. Aims for Profit- The goal of the marketing mix is to help the business make money. Each part should contribute to earning a profit. Setting a price that covers costs and ensures a good profit margin. Helps with Planning- The marketing mix is a tool for planning how to sell products or services successfully. It guides businesses on positioning in the market. A coffee shop decides on its menu, prices, store location, and promotional deals to attract customers.

5. Controlled by the Business- The business has control over all parts of the marketing mix, like what products to sell, how much to charge, where to sell, and how to promote. Helps Stand Out- The marketing mix is used to make a business different from its competitors. It shows why customers should choose their product or service. Works Together Smoothly- All parts of the marketing mix need to align and support each other to send a clear message about the brand. A car company uses high-quality materials (Product), premium pricing (Price), luxury dealerships (Place), and celebrity endorsements (Promotion) to promote a high-end brand image. Based on Research- The marketing mix is built using information about the market, like customer behavior, competitor actions, and current trends. Can Be Adjusted for Different Markets- The marketing mix can be adapted to suit different locations, cultures, and customer groups. A fast-food chain offers different menu items in different countries to match local tastes .

6. Short-Term and Long-Term Goals- The marketing mix helps achieve both immediate goals (like a sales boost) and long-term goals (like building brand loyalty). A company runs a limited-time discount (short-term) while working on improving product quality (long-term). Based on Data- Decisions in the marketing mix are often based on data and facts. Companies use data to understand customer preferences and improve their strategies. An online store uses sales data to decide which products to promote more. Affected by Outside Factors- While the marketing mix is controlled by the business, it is also influenced by external factors like the economy, laws, and new technologies. New health regulations might require a food company to change its product ingredients.

7. Features Combination of Elements The marketing mix includes various elements (Product, Price, Place, Promotion) that work together to form an effective marketing strategy. Customer-Focused The marketing mix is designed to satisfy customer needs and preferences, ensuring that products or services deliver value to the target audience. Flexible and Adaptable The marketing mix can change in response to market conditions, customer feedback, competition, or new trends to stay relevant. Interdependent Components The elements of the marketing mix are closely connected; a change in one element often affects the others. Controlled by the Business The business has direct control over all elements of the marketing mix, including product offerings, pricing, distribution, and promotion.

8. Helps in Positioning The marketing mix aids in positioning the product or brand in the market and defining how it is perceived compared to competitors. Supports Decision-Making It provides a framework for making key marketing decisions about reaching customers, pricing strategies, and promotional methods. Influenced by External Factors The marketing mix is affected by external factors such as market trends, economic conditions, regulations, and competition. Profit-Oriented It is designed to help the business achieve financial goals, including maximizing sales, revenue, and profit. Integrative and Coordinated All elements of the marketing mix must work in harmony to create a consistent marketing message and strategy.

9. Data-Driven Decisions about the marketing mix are often based on data and market research to understand customer behavior, preferences, and market trends. Can Be Adjusted for Different Markets The marketing mix can be customized for different regions, segments, or customer groups to address specific needs or preferences. Short-Term and Long-Term Focus It balances short-term sales objectives with long-term goals for sustainable growth and brand building.

10. DEVELOPING A MARKETING MIX Understand Your Target Market- Identify the specific group of customers you want to reach. Understand their needs, preferences, behaviors, and pain points. Conduct market research to gather insights about demographics, buying habits, and trends. Define Your Unique Selling Proposition (USP)- Determine what makes your product or service unique compared to competitors. Your USP should highlight the key benefits and features that set you apart and appeal to your target audience. Develop the Product Strategy (Product)- Decide on the specific product or service you will offer, including its features, design, quality, packaging, and branding. Consider how your product will solve the customer’s problems or meet their needs. Also, plan for after-sales support and product lifecycle management. Set the Pricing Strategy (Price)- Establish a pricing strategy based on your market research, cost of production, customer perceived value, and competitive positioning. Choose from various pricing strategies, such as cost-plus pricing, value-based pricing, or penetration pricing, depending on your goals.

11. Choose the Distribution Channels (Place)- Decide where and how you will sell your product or service. Consider the most effective distribution channels (e.g., online stores, physical retail locations, direct sales) to reach your target audience. Plan for logistics, inventory management, and supply chain efficiency. Develop the Promotional Strategy (Promotion)- Plan how you will communicate with your target audience to create awareness, interest, and demand for your product. Decide on the mix of promotional activities (e.g., advertising, social media, public relations, sales promotions, direct marketing) that will effectively reach and engage customers. Align the 4 Ps to Create a Cohesive Strategy- Ensure all elements of the marketing mix work together seamlessly. Each component should complement the others to create a consistent brand image and message. For example, high-end products should be priced accordingly and promoted in a way that appeals to premium customers. Set Clear Objectives and Goals- Define specific, measurable, achievable, relevant, and time-bound (SMART) marketing objectives. These could include increasing market share, driving sales growth, improving customer loyalty, or launching a new product successfully.

12. Monitor and Adjust the Marketing Mix- Continuously monitor the performance of your marketing mix. Use key performance indicators (KPIs) such as sales data, customer feedback, market trends, and competition analysis to evaluate the effectiveness of each element. Be ready to make adjustments as needed to optimize results. Test and Refine Your Strategy- Consider testing different aspects of your marketing mix (e.g., A/B testing different promotional messages or pricing models) to see what works best. Use data and insights to refine your strategy and improve its impact. Ensure Compliance with Regulations and Ethics- Make sure your marketing mix complies with legal requirements, industry regulations, and ethical standards. This includes transparent pricing, honest advertising, and respecting customer privacy. Leverage Technology and Data- Utilize digital tools and analytics to gather data on customer behavior, preferences, and campaign performance. This data helps in making informed decisions and adjusting the marketing mix for better results.

13. Importance of Marketing Mix The marketing mix is crucial for shaping a company's marketing approach and creating value for both the business and its customers. Here’s how: Marketing Approach Strategic Planning : The marketing mix provides a framework for developing a strategic approach to marketing. By carefully planning the Product, Price, Place, and Promotion, businesses can create a cohesive strategy that aligns with their goals and market needs. Targeting the Right Audience : The marketing mix helps businesses understand and target their specific audience more effectively. Each element can be adjusted to appeal to the preferences, behaviors, and needs of the target market. Competitive Advantage : By differentiating each element of the marketing mix, businesses can create a unique value proposition that sets them apart from competitors.

14. Value Creation Customer Satisfaction : The marketing mix helps businesses create products and services that meet customer needs, enhancing satisfaction and loyalty. A well-executed mix ensures that the right product reaches the customer at the right price and place, with effective promotion. Building Relationships : The mix facilitates meaningful interactions with customers through targeted promotions and consistent messaging. This builds trust and long-term relationships. Optimizing Resources : By carefully managing the elements of the marketing mix, businesses can allocate resources more efficiently, reducing waste and maximizing returns on investment.

15. Types of Marketing mix Marketing mix is mainly of two types. 1 ) Product marketing mix – It comprises of Product, price, place and promotions and is mainly used in case of tangible goods. 2 ) Service marketing mix – The service marketing mix has three more variables included which are people, physical evidence and process.

16. Product - A product is an item that is built or produced to satisfy the needs of a certain group of people. Product can be tangible good or intangible service. It is defined as anything that can be offered to a market to satisfy a want. It not only includes physical objects and services but also the supporting services like packaging, installation, after sales services etc . They can be categorized on the basis of Usage Consumer Goods : They are meant for personal consumption by the households or the final consumers like soaps, biscuits or books I ndustrial Goods: They are meant for consumption or use as inputs in production of other products or provision of some service for example nuts and bolts, machinery etc

17. Durability Durable goods: Durable goods are products which are used for a long period i.e., for months or years together like mobile handsets, pressure cookers etc Non-durable goods: Non-durable goods are products that are normally consumed in one go or last for a few uses. Tangibility: Tangible goods: They have a physical form and can be touched and seen . Intangible goods: Intangible goods refer to services provided to the individual consumers or to the organisational buyers

18. One must have the right type of product that is in demand for the market. Hence during product development phase, a marketer must undertake an extensive research on the life cycle of the product that they are creating. Every product has a life cycle that includes the growth phase, the maturity phase, and the sales decline phase. It is important for marketers to constantly reinvent their products to increase demand once it reaches the sales decline phase.Marketers must therefore, create the right product mix.

19. Price - The price of the product is basically the amount that a customer pays for consuming it. Price is a very important component of the marketing mix definition. It is crucial in determining the organization’s profit and survival. Changes in price affect the demand and sales of the product. Pricing helps to shape the perception of a product in consumer’s eyes as a low price is associated with inferior goods. While too high prices might make them value their money over the product. Hence, examining competitor’s pricing while deciding prices becomes important. A new company which has not made a name for itself yet, is unlikely to have a target market which is willing to pay a high price. They might be able to charge higher prices once the product is acceptable in the markets.

20. Pricing Strategies Market Penetration Pricing: The objective of penetration price strategy is to gain a foothold in a highly competitive market. The firm prices its product lower than the others in competition to achieve an early breakeven point and to maximise profits in a shorter time span or seek profits from a niche. Market Skimming Pricing: Most commonly used strategy and refers to a firm’s desire to skim the market by selling at a premium price. Differential Pricing: It involves in a firm differentiate its price across different market segments. Geographic Pricing: It seeks to exploit economies of scale by pricing the product below the competitor’s in one market and adopting a penetration strategy in another.

21. A product line is a group of related products offered by a company under a single brand. These products share similarities in function, target market, or price range, but each product may vary in size, color, style, or other features to cater to different customer preferences. Example: Apple’s iPhone Product Line : Apple offers a range of iPhones , such as iPhone 13, iPhone 13 Mini, iPhone 13 Pro, and iPhone 13 Pro Max. Each model has different features, sizes, and price points but belongs to the same product line, targeting different segments of smartphone users.

22. Promotion - Promotion represents the different methods of communication that are used by marketer to inform target audience about the product. It is an essential component of marketing as it can boost brand recognition and sales. Promotion is comprised of various elements like: Advertising Sales Promotion Personal Selling Public Relations

23. Advertising typically covers communication methods that are paid for like television advertisements, radio commercials, print media, and internet advertisements. In contemporary times, there seems to be a shift in focus from offline to the online world. Sales Promotion comprises of tools used to promote sales in a given territory and time. They are short term in nature and aim at stimulating quick sales. Advertising aims at creating awareness and also provides a rationale to buy a product; sales promotion induces him/her to buy the products. They include discount coupons, price offs, prizes, lucky draws, free trials etc . Personal Selling is a direct display of the product to the consumers or prospective buyers. It refers to the use of salespersons to persuade the buyers to act favourably and buy the product . Public relations, on the other hand, are communications that are typically not paid for. This includes press releases, exhibitions, sponsorship deals, seminars, conferences, and events.

24. Place - Place or distribution refers to making the product available for customers at convenient and accessible places. We have to position and distribute the product in a place that is accessible to potential buyers . This comes with a complete knowledge of the target market. Understanding them inside out will help discover the most efficient positioning and also increase the market share. Reaching out to the market can be through planning distribution structure and logistics. The distribution structure refers to the channel design and structure, and management of channels while logistics refers to the physical aspect of distribution. The distribution can be carried out through the channel members and they would comprise of manufacturer, distributor, wholesaler/dealer and retailer.

25. Organizations can employ distribution alternatives on the basis of their products and they, include: Intensive distribution: It involves making the product available at all possible outlets, example of soft drinks which are available through multiple outlets to ensure easy availability to the customer. Exclusive distribution: The firm decides to distribute through one or two major outlets, example of designer wear or high priced automobiles. Selective distribution: This is the middle path approach to distribution as the firm selects some outlets to distribute its products thereby enabling the manufacturer gain optimum market coverage and more control.

26. 4C'S - CONSUMER-ORIENTED MODEL OF MARKETING MIX Consumer - In this model the Product is replaced by Consumer. Marketers focus more on the needs, wants and demands of consumer. The product is designed and produced considering the requirements of consumer. Cost - Price is replaced by Cost. The cost refers to the total cost of owning a product. It includes cost to use the product, cost to change the product, and cost of not choosing the competitor's product. Communication - Promotion is replaced by Communication. According to Lauterborn promotion is while communication is cooperative. Communication includes advertising, public relation, personal selling, and any method that can be used to encourage proper, timely, and accurate communication between marketer and consumer. Convenience - Place is replaced by Convenience. It focuses on the convenience in getting product information, convenience in reaching to the store/product, and ease of buying.

27. 7 Ps of the Service Marketing Mix The 7 Ps of the Service Marketing Mix extend the traditional 4 Ps (Product, Price, Place, Promotion) to better address the unique characteristics of service-based businesses. The additional three Ps—People, Process, and Physical Evidence—focus on aspects critical to delivering high-quality services. 7 Ps of the Service Marketing Mix: Product : The service being offered, including its features, quality, and benefits. In services, this also involves the experience provided. Example : A hotel's product includes comfortable rooms, quality amenities, and excellent guest services. Price : The cost customers pay for the service, which can vary based on factors like quality, demand, and competition. Pricing strategies may include discounts, bundles, or premium pricing. Example : A spa may offer a loyalty discount or premium pricing for exclusive treatments.

28. Place : The location where the service is delivered and the channels through which customers can access it. For services, this also involves the ease of access and convenience . A restaurant located in a busy city center or offering delivery through an app. Promotion : The activities used to communicate and promote the service to customers, such as advertising, public relations, and digital marketing . A fitness center running social media campaigns and offering free trial classes to attract new members. People : All the individuals involved in delivering the service, including employees, customer service representatives, and support staff. Their skills, behavior, and interactions directly impact customer experience . Flight attendants on an airline are trained to provide excellent customer service and ensure passenger comfort. Process : The procedures, mechanisms, and flow of activities by which the service is delivered. It ensures consistency, efficiency, and quality in service delivery . An online retailer’s seamless ordering, payment, and delivery process enhances customer satisfaction. Physical Evidence : The tangible elements that customers see or experience, which help them evaluate the quality of the service. This can include the service environment, branding, and any physical materials or evidence of service quality. A bank's clean and well-organized branches, professional staff attire, and printed brochures contribute to a sense of trust and reliability.

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