The Marketing Mix

Marketing Mix
The marketing mix is one of the most famous
marketing terms. The marketing mix is the tactical
or operational part of a marketing plan. The
marketing mix is also called the 4Ps. The 4Ps are
price, place, product and promotion. The services
marketing mix is also called the 7Ps and includes the
addition of process, people and physical evidence.

Bon Voyage
The holiday market represents a highly segmented and targeted market. For example we have Saga
type holidays aimed at the over 50s and designed to fill this groups needs. On the other hand we
have had Club Med and Club 18-30, the latter in particular suggesting the age group
these two operators were targeting.
You have been appointed as the new marketing manager for a large travel group, Bon Voyage,
offering a range of holiday packages aimed at several parts of the market. The group
includes package tour operations, a nationwide chain of travel shops and a fleet of aircraft.
One of the fastest growing parts of the travel market in recent years has been the cruise market.
Once the domain of the privileged few, cruises are now available to a much wider target market as
costs have come down and incomes have risen. Until now, the company that just been
appointed by you has not been part of the cruise market. It now realizes it may have made a mistake
in this respect and wishes to enter the market as soon as possible. The company has negotiated the
provision of two cruise ships for the next season, which will sail round the Mediterranean and
the Caribbean respectively. The ships have just been refurbished and offer the most up-to-date
facilities. Other companies in this market have been predominantly targeting the middle-income
groups. However, there remains a part of the market which is aimed only at the luxury end, with
high prices and prestigious ships.
Bon Voyage
The company has asked you to give them some preliminary advice about
how to segment this market and which target segments might be most
appropriate and why.

It also wants to know how its product offerings in this area might be positioned
so as to differentiate it from existing competitors.
The Pizza Puzzle

George Hansen is General Manager for the Marigold Inn in Augusta, Georgia. Sharon
Coombs is Restaurant and Food Services Manager for the Inn. She reports to George. Two
years ago, Sharon noticed a decline in room service business, the highest margin portion of
her operation. This decline coincided with an increase in the national sales of pizza delivery
and carryout firms as well as an increase in the number of empty pizza boxes from these
firms being left in guest rooms in the Inn. Her immediate response was to install a pizza
oven in the kitchen and offer room service pizza to guests. The effort met with modest
success, though it was well below her expectations. Questionnaires completed by departing
guests revealed a problem of product quality.

Focusing on this problem, Sharon improved the Inns pizza until blind taste tests judged it at
least equal in quality to the products of the two major pizza delivery competitors in Augusta.
Sales did not improve, convincing Sharon that the problem was a perceived mismatch
between the hotels image and guests expectations of pizza makers. Guests simply did not
seem to believe that the traditional steak and seafood restaurant at the Inn could make a
high-quality, authentic pizza.
The Pizza Puzzle

Based on this conclusion, Sharon presented the following proposal to George:

Sales of room service pizza are stagnant due to guests misperception that our product is
lower in quality than that of competitors. This misperception is based on the belief that until
we disassociate our pizza from the Marigold Inn name. Therefore, to capture more room
service pizza business, we should create a Napoli Pizza image for our guest room delivery
service by:
Preparing Napoli Pizza brochures for each guest room, complete with a phone number
with a prefix different from that of Marigold Inn. The number will reach a special phone
in room service, which will be answered, Napoli Pizza, authentic Italian pizza from old,
family recipes.
Using special Napoli Pizza boxes for delivering room service pizza to guests.
Issuing Napoli Pizza hats and jackets to room service personnel for use in pizza
delivery. Room service waiters and waitresses will wear these garments to deliver pizza.
They will change to their regular uniforms for other deliveries.

How should George respond to this proposal?
The Marketing Mix
The Marketing Mix
The tools available to a business to gain the
reaction it is seeking from its target market in
relation to its marketing objectives
7Ps Price, Product, Promotion, Place, People,
Process, Physical Environment
Traditional 4Ps extended to encompass growth of
service industry
Price
Price
Pricing Strategy
Importance of:
knowing the market
elasticity
keeping an eye
on rivals
Image copyright: www.freeimages.co.uk


Pricing Strategies
Penetration Pricing
Penetration Pricing
Price set to penetrate the market
Low price to secure high volumes
Typical in mass market products chocolate bars,
food stuffs, household goods, etc.
Suitable for products with long anticipated life
cycles
May be useful if launching into a new market

Market Skimming
Market Skimming
High price, Low volumes
Skim the profit from the
market
Suitable for products that have
short life cycles or which will
face competition at some
point in the future (e.g. after a
patent runs out)
Examples include: Playstation,
jewellery, digital technology,
new DVDs, etc.

Many are predicting a firesale in laptops
as supply exceeds demand.

Copyright: iStock.com
Value Pricing
Value Pricing
Price set in accordance
with customer
perceptions about the
value of the
product/service
Examples include status
products/exclusive
products
Companies may be able to set prices according to
perceived value.

Copyright: iStock.com


Loss Leader
Loss Leader
Goods/services deliberately sold below cost to
encourage sales elsewhere
Typical in supermarkets, e.g. at Christmas, selling
bottles of gin at 3 in the hope that people will be
attracted to the store and buy other things
Purchases of other items more than covers loss on
item sold
e.g. Free mobile phone when taking on contract
package
Psychological Pricing
Psychological Pricing
Used to play on consumer perceptions
Classic example - 9.99 instead of 10.99!
Links with value pricing high value goods priced
according to what consumers THINK should be the
price
Going Rate (Price Leadership)
Going Rate (Price Leadership)
In case of price leader, rivals have difficulty in competing
on price too high and they lose market share, too low and
the price leader would match price and force smaller rival
out of market
May follow pricing leads of rivals especially where those
rivals have a clear dominance of market share
Where competition is limited, going rate pricing may be
applicable banks, petrol, supermarkets, electrical goods
find very similar prices in all outlets
Tender Pricing
Tender Pricing
Many contracts awarded on a tender basis
Firm (or firms) submit their price for carrying out the
work
Purchaser then chooses which represents best value
Mostly done in secret
Price Discrimination
Price Discrimination
Charging a different price
for the same good/service
in different markets
Requires each market to
be impenetrable
Requires different price
elasticity of demand in
each market
Prices for rail travel differ for the same journey at
different times of the day

Copyright: iStock.com
Destroyer Pricing/Predatory Pricing
Destroyer/Predatory Pricing
Deliberate price cutting or offer of free
gifts/products to force rivals (normally smaller
and weaker) out of business or prevent new
entrants
Anti-competitive and illegal if it can be proved
Absorption/Full Cost Pricing
Absorption/Full Cost Pricing
Full Cost Pricing attempting to set price to cover
both fixed and variable costs
Absorption Cost Pricing Price set to absorb some of
the fixed costs of production


Marginal Cost Pricing
Marginal Cost Pricing
Marginal cost the cost of producing ONE extra or ONE
fewer item of production
MC pricing allows flexibility
Particularly relevant in transport where fixed costs may be
relatively high
Allows variable pricing structure e.g. on a flight from
London to New York providing the cost of the extra
passenger is covered, the price could be varied a good deal
to attract customers and fill the aircraft
Marginal Cost Pricing
Example:
Aircraft flying from Bristol to Edinburgh Total Cost (including normal profit) =
15,000 of which 13,000 is fixed cost*
Number of seats = 160, average price = 93.75
MC of each passenger = 2000/160 = 12.50
If flight not full, better to offer passengers chance of flying at 12.50 and fill the
seat than not fill it at all!
*All figures are estimates only
Contribution Pricing
Contribution Pricing
Contribution = Selling Price Variable (direct costs)
Prices set to ensure coverage of variable costs and a
contribution to the fixed costs
Similar in principle to marginal cost pricing
Break-even analysis might be useful in such
circumstances
Target Pricing
Target Pricing
Setting price to target a specified profit level
Estimates of the cost and potential revenue at different
prices, and thus the break-even have to be made, to
determine the mark-up
Mark-up = Profit/Cost x 100

Cost-Plus Pricing
Cost-Plus Pricing
Calculation of the average cost (AC) plus a mark up
AC = Total Cost/Output
Influence of Elasticity
Influence of Elasticity
Any pricing decision must be mindful of the
impact of price elasticity
The degree of price elasticity impacts on the level
of sales and hence revenue
Elasticity focuses on proportionate (percentage)
changes
PED = % Change in Quantity demanded/%
Change in Price
Influence of Elasticity
Price Inelastic:
% change in Q < % change in P
e.g. a 5% increase in price would be met by a fall in
sales of something less than 5%
Revenue would rise
A 7% reduction in price would lead to a rise in
sales of something less than 7%
Revenue would fall
Influence of Elasticity
Price Elastic:
% change in quantity demanded > % change in
price
e.g. A 4% rise in price would lead to sales
falling by something more than 4%
Revenue would fall
A 9% fall in price would lead to a rise in sales of
something more than 9%
Revenue would rise
Product
Product
Methods used to
improve/differentiate
the product and increase sales
or target sales more effectively
to gain
a competitive advantage e.g.
Extension strategies
Specialised versions
New editions
Improvements real or
otherwise!
Changed packaging
Technology, etc.

Image copyright: www.freeimages.co.uk
Promotion
Promotion
Promotion is the business of communicating with customers. It will
provide information that will assist them in making a decision to
purchase a product or service. It is the razzmatazz, pace and
creativity

The cost associated with promotion or advertising goods and
services often represents a sizeable proportion of the overall cost of
producing an item. However, successful promotion increases sales
so that advertising and other costs are spread over a larger output.

Though increased promotional activity is often a sign of a response
to a problem such as competitive activity, it enables an organisation
to develop and build up a succession of messages and can be
extremely cost-effective.
Promotion
Strategies
to make the
consumer aware of
the existence of a
product
or service
NOT just advertising

Promotion
Promotion falls into two main categories:
Above-the-line promotion
Below-the-line promotion.

Above-the-line
Above-the-line promotion is paid-for and includes traditional advertising routes
such as television, radio and the press. These are good for carrying marketing
messages to a large audience. However, it is less easy to measure the impact of
these channels, for example, whether a TV advert has increased sales.
Special displays or positioning in stores or advertising on supermarket trolleys
are also examples of above-the-line promotional activity.


Promotion
Below-the-line
Below-the-line promotion can take many forms and is usually more under the
control of the business. Typical examples include events or direct mail.
door-to-door leaflet drops or books of vouchers which give customers discounts
over a period of time. These help to attract consumers and establish brand
loyalty so the consumer buys the product again.
email newsletter for consumers. This creates a relationship with consumers,
which is unusual for a B2B organisation. It not only allows the company to
communicate directly with and listen to consumers, it also enables the business
to collect information, for example, about their lifestyles and product choices.
This is used for feedback, research and promotions.
PR and sponsorship
Public relations (PR) is a form of promotion that is concerned with developing
goodwill and understanding between organisations and the public.
Sponsorship is supporting an event, activity or organisation by providing money
or other resources that is of value to the sponsored event. This is usually in
return for advertising space at the event or as part of the publicity for the event.

Promotion
Manchester United
The product includes providing an excellent football team that
plays and wins in an exciting way.
Manchester United markets itself as a global brand. The club also engages
in a range of joint promotional activities, for example with the mobile
phone company Vodafone. The club has positioned itself at the upmarket
premier end of the market and, as a result, it tends to charge premium
prices as evidenced by the high cost of a season ticket to watch home
league games.
Additionally there are other ingredients of the product including
merchandising such as the sale of shirts, and a range of memorabilia. The
product also relates to television rights, and Manchester United's own
television channel. Its products are sold across the globe, through the club's
website and a range of other sales media. Manchester United books, shirts,
programmes, keyrings and many other items are sold and promoted
through its website.

What are the main elements of the marketing mix of Manchester
United?


Blood Donors Respond
During summer, the Pennsylvania/New Jersey regional branch of the
American Red Cross invited people to get their kicks on Route 56.
That's the name of the summer blood drive campaign just completed.
During the campaign, all donors receiveed a Route 56-logoed Red Cross
keytag, and the chance to win a year's supply of gas. When people came
in to give blood, they got a keytag and a scratch-off game piece that gave
them a chance to win T-shirts, visors, coffee mugs, or the grand prize of
$2,000 in gas money.
The campaign was particularly important because it helped increase
blood donations during the summer, a time when levels are typically
become dangerously low. "This was our emergency summer campaign,"
says Jennifer Lawser, account manager for blood services at the regional
office. "In the summertime, people are on vacation, kids are home from
school, and nobody really thinks about donating blood.
The fun auto-related theme was a big hit during a time of record-high
gas prices. Donations increased more than 16% over the prior year. By the
way, the free gas was donated in a nice public relations move by Lukoil
Corp. "Most people thought it was a great incentive. Others felt it wasn't
the reason they donated, but it was nice to walk away with a token of
appreciation," Lawser says. "Either way, we won

Tattoos Build Awareness
What do the phrases "Run Your Own Race" and "Don't Cry Til' You Get
to the Car" have in common? They're both albums by Mulberry Lane,
a Nebraska-born pop group made up of four sisters. But unless you're one
of the 500,000 people who bought one, you likely wouldn't know that.
Mulberry Lane realizes the importance of keeping its name fresh in people's minds as one element in
helping CD sales and growing its overall fan base. Part of this is, as the majority of groups know, selling
logoed items such as T-shirts, posters and pins at its concerts.
But when it came time to release A Very Mulberry Christmas, its first holiday album, as well as launch its
Midwest tour, the group wanted to go beyond the fundamentals. "We wanted a branded piece that would
visually represent our music," says Bo Rizutto, one of the group's members. "We decided on temporary
tattoos. Kids love them, and parents approve because they're temporary. And kids always take handfuls to
give to their friends. They walk around with the tattoos for a few days, and it keeps our name out in
public."
As many of Mulberry Lane's songs deal with young love and many fans are also young, the tattoos
themselves were a very basic design: the words "I Love Mulberry Lane" with the copy in black and the
heart in red. An initial order of 500 was given away at the merchandise table at the tour's first concert. The
group ended up reordering them for the next show, and, says Rizutto, has been doing so "constantly" ever
since.
Fueled by the popularity of the tattoos at shows, the group now includes them in all of its press kits as
well. To date, thousands have been distributed, and they work. "The whole campaign has been wonderful,"
says Rizutto. "It's great to go into a radio station or record store and see people wearing Mulberry Lane
tattoos. We think they really add an extra element of fun."

Top U.S. Cities Play the Branding Game
No matter what business you're in, it's a good idea to think about branding. Whether you operate a
medical practice, a construction company, or a food distributor, you should be thinking about the
image of your business. Cities and towns that play the branding game well are part of a growing
trend of thriving destinations whose mottos and monikers are helping to market their appeal and
put them squarely on the map.
So says TaglineGuru (www.TaglineGuru.com), which recently released its survey of the Top 50 U.S.
City Slogans and Top 50 U.S. City Nicknames. It also announced the winners of the "Sloganville,
USA Awards," recognizing the most notable and notorious city slogans across the nation.
According to 100 leading branding, marketing and advertising professionals, "What Happens Here,
Stays Here" (Las Vegas) was ranked #1 out of 400 city slogans, followed by "So Very Virginia"
(Charlottesville, VA); "Always Turned On" (Atlantic City, NJ); "Cleveland Rocks!"; and "The Sweetest
Place on Earth" (Hershey, PA).
The well-known moniker "The Big Apple" was ranked #1 out of nearly 800 city nicknames, followed
by "Sin City" (Las Vegas); "The Big Easy" (New Orleans); "Motor City" (Detroit); and "The Windy
City" (Chicago).
Rankings were based on whether slogans and nicknames expressed a city's brand character and
personality; told a story in a clever, original, and memorable way; and inspired others to visit there,
move there or learn more.
According to Eric Swartz, president of TaglineGuru, "Re-branding your town with a memorable
motto or moniker is the most cost-effective way to leverage your assets, increase your visibility and
build brand identity. For small towns, it means creating slogans that are unique and specific
capitalizing on their history, values and individual style. For big cities, re-branding means staying
vibrant, contemporary and inclusive."

Guerilla Marketing Promotes Free ATM's
The signs were everywhere: billboards, newspapers, even posters on the subway. To promote its new
"no ATM fees at any bank anywhere" policy, TD Banknorth kicked off a multi-tiered campaign. The
bank launched its "Bank Freely" campaign - featuring a No ATM Fees Visa debit card - that spread
through Connecticut, New York, Pennsylvania and New Jersey.

TD Banknorth ads in popular magazines and TV spots helped snag consumers' attention. But the
campaign's guerilla marketing had the strongest effect. Bank reps, called "free agents," cruised
around in customized Honda Elements that looked just like the No ATM Fees card, handing out
branded coffee and popcorn cup holders, mock-up newspapers, bottled water, and door hangers.
"We gave out water at a baseball game and ice cream on a hot day," says Thomas Dyck, director of
marketing for TD Banknorth. "It was all about giving something free to the customer."

The popcorn cup holders stole the spotlight at movie theaters, and morning travelers who stopped
by their local cafes got their daily dose of caffeine and TD Banknorth advertising. Stickers that read,
"With the money you save from no ATM fees, you can get more of these" decorated all the products.
"Guerilla marketing gives you the opportunity to actually engage in a dialogue with customers," says
Dyck. "Customers could ask our 'free agents' questions about the no ATM fees offer and get answers
immediately."

"The goal for the entire campaign is to take a year to interact with customers firsthand and to learn
what else they might want in a bank," says Dyck. The buzz surrounding communities who use TD
Banknorth appears to have already pushed the campaign in the right direction.
Place
Place
The means by which products and services get from
producer
to consumer and where they can be accessed by the
consumer
The more places to buy the product and the easier it is
made to buy it, the better for the business (and the
consumer?)

People
People
People represent the business
The image they present can be important
First contact often human what is the lasting image
they provide to the customer?
Extent of training and knowledge
of the product/service concerned
Mission statement how relevant?
Do staff represent the desired culture
of the business?


Process
Process
How do people consume services?
What processes do they have to go through to
acquire the services?
Where do they find the availability
of the service?
Contact
Reminders
Registration
Subscription
Form filling
Degree of technology


Physical Environment
Physical Environment
The ambience, mood or physical presentation of
the environment
Smart/shabby?
Trendy/retro/modern/old fashioned?
Light/dark/bright/subdued?
Romantic/chic/loud?
Clean/dirty/unkempt/neat?
Music?
Smell?


The Marketing Mix
Blend of the mix depends upon:
Marketing objectives
Type of product
Target market
Market structure
Rivals behaviour
Global issues culture/religion, etc.
Marketing position
Product portfolio
Product lifecycle
Boston Matrix

4Cs of Marketing
4cs is also important for marketing mix.
The four Cs includes-
Customer Solution
Customer Cost
Convenience
Communication
The Marketing Mix- The 4 Cs
The Four Ps is being replaced by the Four Cs model, consisting of consumer,
cost, convenience, and communication.
The Four Cs model is more consumer-oriented and fits better in the movement
from mass marketing to niche marketing.
The product part of the Four Ps model is replaced by consumer or consumer
models, shifting the focus to satisfying the consumer.
Product is replaced by Customer: You have to study consumer wants and
needs and then attract consumers one by one with something each one wants.It
is to create a custom solution rather than pigeon-holing a customer into a
product.
Pricing is replaced by cost, reflecting the reality of the total cost of
ownership. Many factors affect cost, including but not limited to the customers
cost to change or implement the new product or service and the customers cost
for not selecting a competitors capability. You have to realize that price -
measured in dollars - is one part of the cost to satisfy. If you sell hamburgers,
for example, you have to consider the cost of driving to your restaurant, the cost
of conscience of eating meat, etc.

The Marketing Mix- The 4 Cs
Place is replaced by the convenience function. With the rise of internet and
hybrid models of purchasing, place is no longer relevant. Convenience takes
into account the ease to buy a product, find a product, find information about a
product, and several other considerations. You have to know how each subset
of the market prefers to buy - on the Internet, from a catalogue, on the phone,
using credit cards, etc. Lands End clothing, Amazon Books and Dell
Computers are just a few businesses who do very well over the Internet.
Promotions feature is replaced by communication. Communications
represents a broader focus than simply promotions. Communications can
include advertising, public relations, personal selling, viral advertising, and any
form of communication between the firm and the consumer. Be creative and
you can make any advertising "interactive". Use phone numbers, your web site
address, etc. to help here. And listen to your customers when they are "with"
you.




The Marketing Mix- The 4 Cs
The Marketing Mix- The 4 Cs