Day 2

Report
Day 2
Product
The Marketing Mix
The marketing mix deals with the way in which a business uses price, product, distribution and
promotion to market and sell its product.
The marketing mix is often referred to as the “Four P’s”:
Product - the product (or service) that the customer obtains
Price - how much the customer pays for the product
Place – how the product is distributed to the customer
Promotion - how the customer is found and persuaded to buy the product
It is known as a “mix” because each ingredient affects the other and the mix must overall be
suitable to the target customer and create a competitive advantage for the business
For most businesses, one or two elements of the mix will be seen as relatively more important
Product
Price
Place
Promotion
Luxury
High
Selective
High positioning
Niche
Medium
Extensive
High positioning
Compare the mix of two products: Campari Red passion and LV bags in a
grid that considers the 4 P . What is the distinctive element of the mix for
each product? Now find a product where each of the 4 Ps is prevalent.
What is a product?
Products
are: “anything that is
capable of satisfying
customer needs” :
Product life cycles
The product life cycle is an important concept in marketing. It describes the stages a product
goes through from when it was first thought of until it finally is removed from the market. Not all
products reach this final stage. Some continue to grow and others rise and fall.
The main stages of the product life cycle are:
Introduction – researching, developing and then launching the product
Growth – when sales are increasing at their fastest rate
Maturity – sales are near their highest, but the rate of growth is slowing down, e.g. new
competitors in market or saturation
Decline – final stage of the cycle, when sales begin to fall
This can be illustrated by looking at the sales during the time period of the product.
Product life cycles
Product life cycles
Some goods can enjoy continuous growth, such as Microsoft softwares, because the product is
being constantly improved and advertised, and maintains a strong brand loyalty.
Extension strategies extend the life of the product before it goes into decline. Examples of the
techniques are:
Advertising – try to gain a new audience or remind the current audience
Price reduction – more attractive to customers
Adding value – add new features to the current product, e.g. video messaging on mobile phones
Explore new markets – try selling abroad
New packaging – brightening up old packaging, or subtle changes such as putting crisps in foil
packets or Seventies music compilations.
Product range
Most businesses sell more than one product. Often they will produce several similar products
that appeal to different customers. A collection of such products is known as a “product group”
or “product range”. Good examples of product groups include: Sony’s range of DVD players and
televisions.
There are several advantages to having a product range rather than just one product:
Spread the risk – a decline in one product may be offset by sales of other products
Selling a single product may not generate enough returns for the business (e.g. the market
segment may be too small to earn a living)
However, a disadvantage is that a greater range of products can mean that the marketing
resources (e.g. personnel and cash) are spread less efficiently . In order to allocate resources
more efficiently some companies adopt a strategy called umbrella branding : which means having
all the product range under one brand. But this is not always possible.
The Boston Matrix
Product range can be analysed using the Boston Group Consulting Matrix.
The Boston Matrix
Question marks are products with low market share operating in high growth markets. This
suggests that they have potential, but may need substantial investment to grow market
share at the expense of larger competitors. Management have to think hard about
“Question Marks” - which ones should they invest in?
Stars are high growth products competing in markets where they are strong compared with
the competition. Often Stars need heavy investment to sustain growth. Eventually growth
will slow and, assuming they keep their market share, Stars will become Cash Cows
Cash cows are low-growth products with a high market share. These are mature, successful
products with relatively little need for investment. They need to be managed for continued
profit - so that they continue to generate the strong cash flows that the company needs for
its Stars
Making a product stand out : USP
An important part of the marketing of the product is product differentiation. It can be achieved
through:
Distinctive design– e.g. Dyson; Apple iPod
Branding - e.g. Nike, Reebok
Performance - e.g. Mercedes, BMW
A key term to remember is USP, which is the acronym for Unique Selling Point.
A Unique Selling Point is a feature or benefit that separates a product from its competitors.
A USP could be a lower price, a smaller version of the product, offering extra functions, or even
simply producing a standard product in a range of colours or designs.
A business needs to look at its unique selling points compared to competitors. If it doesn’t
Brands
A brand is a product with unique character, for instance in design or image. It is consistent and
well recognised.
The advantages of having a strong brand are that it:
Inspires customer loyalty leading to repeat sales and word-of mouth recommendation
•
The brand owner can usually charge higher prices,
•
The strength of a brand can be exploited by a business to develop new products. This is known
as brand stretching and it is where the brand is used for a diverse range of products, not
necessarily connected. E.g. Pan di Stelle biscuits and cereals or cakes.
•
Some brands are so strong that they have become global brands. This means that the product is
sold in many countries and the contents are very similar. Examples of global brands include:
Microsoft, Audi, Coca Cola.

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