In this assignment I will be looking at how product and services are marketed and look at how a marketing mix is developed using the four P’s: Product, Price, Place, and Promotion. The Marketing Mix provides an excellent framework for developing marketing plan. They are generally accepted as being made up of four parts which are: •Product
These are ideas to consider when marketing a product and shall be described in more detail below:- The Four ‘P’s
A product is anything that can be offered to the market to satisfy a customer needs and desires. Product include physical goods, services experiences, events, person, place and etc. It is therefore the combination of goods and service that are offered to the target consumer. A business will constantly change and update its product range and mix to constantly please their customers and be above competitors. A product can be viewed in three different levels:
Level 1: The core Product (rather than the physical product) is the benefit of the production that makes it valuable to you. Level 2: The actual product is the physical item. At this level branding and added features and benefits are important as this what will differentiate the product from competitors. Level 3: The augmented product is additional value beyond the physical product: it usually consist of after-sales service, warranties, delivery and so on.
The extent of the mix is another significant issue. If a business doesn’t have many products, there is a chance that one will go out of date as newer type of products are in the market and this can seriously damage the business scale. It is recommended to never have one product in one market as if the product isn’t successful and fails this could mean a complete failure of the business. Some businesses will adapt and anticipate change, while others reacts to the need to change. An example of this is that IPhone makes changes to their products such as their mobile phones, they add more features to their products giving their customers a range of features to look for in a product. Once a business has identified their target group of customers it has to know what products or services it needs to do and provide in order to appeal and attract to them.
The information they provide their customers should illustrate the features of the product or service so that the customers know what to expect and it reaches their expectations and the business will make a profit. However it’s important to take into consideration that the benefits to a customer are not always for a practical sense there are psychological benefits such as status for example. An example of this is if everyone has a specific phone and a person went and got the same phone they may get it more for a status reason. The product life cycle concept reflects the theory that product, like people, live a life. They go through 4 stages. 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 So understanding what part of the cycle your product is in will shape your marketing mix. Price
Price is the one element of the marketing mix that revenue; the others produce costs. A business must set a price for a product and in deciding the products price; marketing must follow a six-step-process. 1.Select the price objective-This could be to survive or to maximize market share. 2.Determine demand-the higher the price, the lower the demand. 3.Estimate cost-charge a price that covers the cost of producing, distributing and selling the product. 4.Analyze competitors’ costs, prices and offers-take into account its competitors cost and prices setting its price. 5.Select a pricing strategy-there a number of pricing, which is listed below. 6.Select the final place-this is decided after testing on a range of pricing points. Premium pricing
This is where the business will keep the price of a product or service high in order to encourage customer to associate it will high quality. Penetration pricing
This is when a product is sold into a market at a low initial price in order to generate sales before the price is increased. Economy pricing
Economy pricing is the deliberate setting of low price in order to boost sales. Skim pricing
when launching a new product there will be less competition in the marketplace. Skimming involves setting as reasonably high initial returns from those consumers willing to buy the new product. Psychological pricing
This based on customer pricing method. It relies on consumer’s emotive responses, subjective views and feeling towards specific purchases. Captive product pricing
This is a strategy that can apply to products with consumable supplies. This is where the pricing at high prestige levels, otherwise they will not sell; customers equate higher quality with higher prices. Product line pricing
This is the pricing of different products within the same product range at different price points. Place
Place in marketing mix refers to where the product is purchased from and how it’s distributed. For example, most consumer of confectionery will buy products form retail stores. Businesses need to adapt their marketing mix depending on the end customers- that is whether they are a consumer or reseller- as each seek different benefits from the same product. Distribution
A business may use two types of distribution method: indirect or direct. Indirect distribution is when a business sells its products via an intermediary such as wholesaler, who then sells to retailers. Direct distribution is where the business sells and distributes direct to the customers. Choosing indirect distribution may mean that a business loses some of the control over the pricing of their products, as they have offer discounts to wholesalers and retailers, who may choose to pass on saving to their customers. Online
The growth of online shopping have given businesses a new place to sell their products to customers. This offers businesses an advantage as they can sell directly to the customers. This mean they can avoid the wholesaler and therefore increasing the profit margin on their products. The promotional mix involves the blending of number of variables to satisfy the needs of a business’s target market and achieve its organizational objectives. With the promotional mix, a business attempts to achieve the best blend of promotional elements to suit their promotional objectives. The components of the promotional mix are:
This may be defined as paid promotions through various media by businesses, non profit organizations and individual’s that are in some way identified in the advertising message and hope to inform or persuade members of particular audience. Advertisers have many tricked up their selves such as:
•Put-down: Business put down their competitions
•Jumping on the bandwagon: Advertisements encourage the audience to join the crowd.
This is where a seller presents a product direct to a consumer often face to face but can be done over the phone and through video conferencing. Public relations
This covers a firm’s communications and relationships with its public. This includes customers, suppliers, stockholders, employees, the government, the general public and the society in which the organization operates. This can be formal or informal. Publicity is important part of effective public relations efforts. It can be defined as the non-personal stimulation of demand for a good, service, person or cause. Sales promotion
This is related to marketing activities that fall outside of the categories such as coupons, trade shows, displays, samples and other promotional efforts that occur on an irregular basis. Some of these promotions are short term and opportunistic. In this assignment I have examine how products and services are marketed and look at how a marketing mix is developed using the four p’s: Product, Price, Place and Promotion.
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Topic: Developing a marketing mix for a new product or service
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