Chapter 7 Chapter 7

Marketing Mix and Marketing PlanMarketing Mix and Marketing Plan

What What isis marketing? marketing?

• Marketing…Marketing…– is not ADVERTISINGis not ADVERTISING– is not SELLINGis not SELLING– is not PROMOTIONis not PROMOTION

• ““The aim of marketing is to make The aim of marketing is to make selling unnecessary.” Peter selling unnecessary.” Peter Drucker (1973)Drucker (1973)

What is marketing?What is marketing?

• Businesses need to sell Businesses need to sell products if they are to products if they are to achieve their objectives.achieve their objectives.

• Marketing is about Marketing is about ensuring that businesses ensuring that businesses can sell as many products can sell as many products as possible in order to as possible in order to make profits.make profits.

What does it involve?What does it involve?

• Marketing is a very complex concept.Marketing is a very complex concept.

• It involves:It involves:– ResearchResearch– Product designProduct design– Setting pricesSetting prices– Making sure the customer knows about Making sure the customer knows about

productsproducts– Choosing how and where to sell productsChoosing how and where to sell products

Why is it needed?Why is it needed?

• Each year millions of new products Each year millions of new products are launched:are launched:

Without careful marketing

these products would fail

“Marketing is the science and art of exploring, creating and delivering value to satisfy the needs and wants of a target market maintaining loyalty at a profit.”

Professor Philip Kotler

Needs Eat, Dress, Move

Wants Cheeseburger, Tuxedo, Car

Marketer

The Marketing MixThe Marketing Mix

• The tools available to a business to gain The tools available to a business to gain the reaction it is seeking from its target the reaction it is seeking from its target market in relation to its marketing market in relation to its marketing objectivesobjectives

• 7Ps – Price, Product, Promotion, Place, 7Ps – Price, Product, Promotion, Place, People, Process, Physical EnvironmentPeople, Process, Physical Environment

• Traditional 4Ps extended to cope with Traditional 4Ps extended to cope with today's changing environmenttoday's changing environment

The Marketing MixThe Marketing Mix

ProductProduct

ProductProduct• The firm must come up with a product The firm must come up with a product

or service that people will or service that people will want to buywant to buy..

• It must fulfil some It must fulfil some needneed

or or wantwant..

• It must be (or at least seem) It must be (or at least seem) uniqueunique..

PricePrice

PricePrice

• Pricing StrategyPricing Strategy

- International- International– ComparativeComparative– Cost plusCost plus

• The price must be one The price must be one that the customer thinks that the customer thinks is good is good value for moneyvalue for money..

• This is not the same as This is not the same as

being being cheap!cheap!

• Prices have a great Prices have a great psychological effect on psychological effect on customers.customers.

PromotionPromotion

PromotionPromotion

• Strategies Strategies to make the to make the consumer aware consumer aware of the existence of the existence of a product of a product or serviceor service

• NOT just NOT just advertisingadvertising

The promotional message should

Grab Attention

Stimulate Interest

Create Desire

Promote Action

PlacePlace

PlacePlace

• The means by which products and The means by which products and services get from producer services get from producer to consumer and where they can be to consumer and where they can be accessed by the consumeraccessed by the consumer– The more places to buy the product and The more places to buy the product and

the easier it is made to buy it, the better the easier it is made to buy it, the better for the business (and the consumer?)for the business (and the consumer?)

PeoplePeople

PeoplePeople

• People represent the businessPeople represent the business– The image they present can be importantThe image they present can be important– First contact often human – what is the lasting First contact often human – what is the lasting

image they provide to the customer?image they provide to the customer?– Extent of training and knowledge Extent of training and knowledge

of the product/service concernedof the product/service concerned– Do staff represent the desired culture Do staff represent the desired culture

of the business?of the business?

ProcessProcess

ProcessProcess• How do people consume services?How do people consume services?• What processes do they have to go What processes do they have to go

through to acquire the services?through to acquire the services?• Where do they find the availability Where do they find the availability

of the service?of the service?– ContactContact– RemindersReminders– RegistrationRegistration– SubscriptionSubscription– Form fillingForm filling– Degree of technologyDegree of technology

Physical EnvironmentPhysical Environment

Physical EnvironmentPhysical Environment

• The ambience, mood or physical presentation of the The ambience, mood or physical presentation of the environmentenvironment

• Packaging. Packaging. • Internet/web pages. Internet/web pages. • Paperwork (such as invoices, tickets,…..). Paperwork (such as invoices, tickets,…..). • Brochures. Brochures. • Furnishings. Furnishings. • Uniforms. Uniforms. • Business cards. Business cards. • The building itself (such as prestigious offices or scenic The building itself (such as prestigious offices or scenic

headquarters). headquarters). • Mailboxes and many others . . . . . . Mailboxes and many others . . . . . .

What Is A Marketing Plan?What Is A Marketing Plan?

A A marketing planmarketing plan is an outline of is an outline of price,price,

datedate and and quantityquantity objectivesobjectives used to used to

generate a generate a reasonable returnreasonable return for the for the

business given the business given the existing market existing market

conditionsconditions..

Types of Marketing Types of Marketing Planning Planning •Strategic MarketingStrategic Marketing

– Encompasses the entire farm strategyEncompasses the entire farm strategy

– Deals with the broader issue of determining Deals with the broader issue of determining firmfirm’’s strategic position in the market and how s strategic position in the market and how to create value from that positionto create value from that position

•Product Marketing/PricingProduct Marketing/Pricing– Deals with the tactical side of selling a productDeals with the tactical side of selling a product

– Similar to a set of standard operating Similar to a set of standard operating

procedures for marketing a particular product.procedures for marketing a particular product.

(Strategic) Marketing Plan(Strategic) Marketing Plan

1.1. Environmental Analysis (SWOT) Environmental Analysis (SWOT)

2.2. Identifying CustomersIdentifying Customers

3.3. Competitor/Value Creation AnalysisCompetitor/Value Creation Analysis

4.4. Marketing Mix: The 4 PMarketing Mix: The 4 P’’ss

5.5. Financial Analysis and BudgetFinancial Analysis and Budget

6.6. Implementation and Control PlanImplementation and Control Plan

1. Know Your Marketplace1. Know Your Marketplace

• Strengths, Weaknesses, Strengths, Weaknesses, Opportunities, and Threats Opportunities, and Threats (SWOT)(SWOT)

• Trends and changes:Trends and changes:

– Market analysisMarket analysis

– SegmentationSegmentation

– Prioritizing target marketsPrioritizing target markets

2. Who Are Your Customers?2. Who Are Your Customers?

Customer: firm or Customer: firm or person that buys person that buys

your productyour product

Consumer: firm or person Consumer: firm or person that eventually uses that eventually uses

your productyour product

Customersvs.

Consumers

Customer/Consumer Customer/Consumer TrendsTrends

CustomersCustomers

• Just-in-time Just-in-time inventoryinventory

• Business to Business to business (B2B)business (B2B)

• Manufacturing Manufacturing mentalitymentality

• Industrialization of Industrialization of agricultureagriculture

ConsumersConsumers• Households with Households with

fewer peoplefewer people• Active, on-the-go Active, on-the-go

lifestyleslifestyles• Concern over the Concern over the

health aspect of health aspect of food, with a desire food, with a desire for good tastefor good taste

• Less time for meal Less time for meal prepprep

Know What Is Important to Know What Is Important to Your CustomerYour Customer

• Get inside the mind of your Get inside the mind of your customerscustomers

• Find out why they would buy from Find out why they would buy from youyou . . . or why they would not. . . or why they would not

• Truly understand their needsTruly understand their needs– Intentional listeningIntentional listening– Customer analysisCustomer analysis– Solve their problemsSolve their problems

3. Competitor/Value 3. Competitor/Value Creation AnalysisCreation Analysis

•Competitive Competitive analysisanalysis

•Reallocation of Reallocation of resources if resources if necessarynecessary

•PositioningPositioning

Make sure you are distinctively differentMake sure you are distinctively differentfrom your competitionfrom your competition

in areas of importancein areas of importanceto your customersto your customers

4. Determining the Marketing 4. Determining the Marketing MixMix

•The set of controllable variables The set of controllable variables that will accomplish the that will accomplish the marketing objectives:marketing objectives:

•Product strategyProduct strategy

•Place (distribution) strategyPlace (distribution) strategy

•Promotion (communication) strategyPromotion (communication) strategy

•Pricing strategyPricing strategy

Pricing MethodsPricing Methods• Value-Based PricingValue-Based Pricing

– Set price based on buyersSet price based on buyers’’ perception of perception of value (rather than on the sellervalue (rather than on the seller’’s costs)s costs)

• Cost-Based PricingCost-Based Pricing– Add a standard markup to the cost of the Add a standard markup to the cost of the

productproduct

• Competition-Based PricingCompetition-Based Pricing– Set price based on following competitorsSet price based on following competitors’’

pricesprices

5. Financial Analysis and 5. Financial Analysis and BudgetingBudgeting• Estimate the demand given the pricing and Estimate the demand given the pricing and

promotion strategy.promotion strategy.• Determine expenses associated with Determine expenses associated with

production and marketing.production and marketing.• Determine anticipated cash flows.Determine anticipated cash flows.• Will strategy cash flow? When?Will strategy cash flow? When?• What are the critical assumptions of the What are the critical assumptions of the

financial analysis and what are the impacts financial analysis and what are the impacts of changes in those assumptions?of changes in those assumptions?

6. Implementation and 6. Implementation and ControlControl

• Focus attention of everyone on Focus attention of everyone on delivering what the customer wantsdelivering what the customer wants– Management of peopleManagement of people– Monitoring and controlMonitoring and control