The Marketing Mix

Marketing Mix

• The blend of the four marketing elements of product, place (distribution), price and promotion

Product

• Product Mix: The different products and services a business offers

• Two Aspects to Consider:– Selecting Product Features

• Color, size, quality, hours of operation, warranties, delivery, and installation

– Branding, Packaging, and Labeling• Branding: the name, symbol, or design used to identify

the product• Package: the box, container, or wrapper in which the

product is placed• Label: information about the product on the package

Positioning

• Placing a product in a certain market to get a desired customer response

• What are the differences between a Hyundai and a Jaguar?

Place (Distribution)

• Channels of Distribution: the routes that products and services take from the time they are produced to the time they are consumed

• Aspects to consider:– Getting the product in a timely manner– Channels of distribution usually result in lower

costs than trying to do everything yourself– Channels save time for buyers and sellers

Channel of Distribution for Retail Goods

• Cotton fields/farmers (Raw Materials)• Textile Mills• Manufacturer • Wholesalers• Retailer• Consumers

Channel of Distribution for Retail Goods

• Stay open in evening hours and on weekends

• Use catalogs, fliers, other advertisements to reach customers outside living area

• Take orders by phone, fax, or ship directly

Distribution through Internet

• Websites• On-line Catalogs• ebay• On-line Auctions

Channels for Service Businesses

• Single direct channel from entrepreneur to customer

• Product and consumption happens at the same time

• Some services utilize retailers to distribute their product (film developers)

Channels for Manufacturing

• End customers are generally NOT the customer for manufacturing

• Broad distribution or narrow distribution

Physical Distribution

• How is the product transported?• How is product stored?• Transportation:

– Air– Train– Transfer truck– Pipeline– Ship– Combination of methods

Physical Distribution

• How is the product transported?• How is product stored?• Storage and Handling Options:

– Warehouses– Packages must protect the product from

production to sale

Price

• Set Your Price Objectives:– Maximize sales?– Increase profits?– Discourage competition?– Attract customers?– Maintain an image?

Return on Investment

• One pricing strategy is to determine cost involved and then decide how much you desire to gain as a return on your investment

Obtaining Market Share

• Market share: percentage of total sales by all companies in the market that a business captures

• Pricing strategy that gains market share will either be a lower price than competition or a comparable price for a higher quality product

Determining Price

• Demand-Based Pricing: price set by how much the customer will pay

• Cost-Based Pricing: determining wholesale cost and placing a markup amount on the price – Markup: amount added to the wholesale

price– Markdown: amount subtracted from the

retail price

Determining Price

• Competition-Based Pricing: price determined by what the competition is charging for the same good or service

Service Pricing

• Time-Based Pricing: hourly rate for a service performed

• Bundling: services are bundled together and sold at a discounted price

• Breakeven Point: all costs for a service are added to determine the lowest price a service may be sold at in order to cover costs (the point where sales revenues equal production cost)