Marketing Mix

Dr. Mushtaq Ahmad BhatReader, Department of Commerce,

University of Kashmir, Srinagar. 190006

Marketing MixMarketing mix is the set of marketing tools that the firm uses to pursue its marketing objectives in the target market.

A marketing mix is the combination of the four controllable variables - product, price, place, and promotion - that an organization creates to satisfy its target market, the organization's market offering is the result of combining the four controllable variables in the marketing mix. Marketing mangers blend these variables to create a mix that satisfies the target market.

CustomerService

Place

Price

People

Process

Product/Service

Promotion

Elements of Marketing Mix

Benefits of Targeting• Fuller knowledge and understanding of the unique characteristics and

needs of the group to be satisfied. For marketing decision, especially as to how marketing mix should be planned, the target acts as a reference point. Thus greater effectiveness of mix is achieved which provides for the success of the programme.

• Better knowledge and understanding of who your competitors are. The study of target markets helps to detect those who have made similar selection of target markets. If an organisation does not clarify the markets it aims to target, it may treat every other company in its sector as an equal competitor. If main competitor is identified their marketing efforts can be more precisely followed.

• Better knowledge and understanding of changes and developments in the needs of the target market. Awareness is heightened by the focus upon the target groups actions and reactions to lightly different forms on marketing mix.

• The target market helps in tailoring the marketing mix so that the targeted customer will judge it to be superior to that of the competition. Segmentation and target marketing are central to marketing because different customer groups should dictate the search for the correct marketing mix strategy.

Service Offer

Service Product• A product is a bundle of satisfaction that a customer buys.

It is a set of attributes put together in some distinct form.• A product is anything that can be offered to market for

attention, acquisition use or consumption that satisfies a want or need. It includes physical object (television), service (banking), person (political person), place (holiday resort), organization (red cross) and idea (aids awareness). (Philip Kotlar)

• Services are, “activities, benefits or satisfactions which are offered for sale or are provided in connection with sale of goods”. (AMA)

• Service is, “ an act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product. (Philip Kotlar)

Service Levels

Core / Generic offer

Expected offer

Augmented Offer

Potential Offer

Type, Definition and Example of Various Levels of the Service

Type of Service Definition/Contents Example

Core or Generic product/service

This is basic service offering/product

A bed in a hotel for the night

Expected Product/Service

Basic product and minimum purchase conditions that must be met.

When customers buy an airline ticket, they expect in addition to seat and aero-plane, comfortable waiting area, prompt in-flight service and good meals.

Augmented Product/Service

Basic product and minimum offering with the product be met and something different which enables one product to be differentiated from another.

Two competitors are having excellent reputation of customer service but one may be differentiating itself from the other by adding values to the core product in terms of reliability and responsiveness.

The Potential Product/Service

Contains potentially feasible features and benefits that play significant role in holding and attracting the customer. These features and benefits are useful or likely to be useful to the buyers.

A customer orders the food in a restaurant based on selections made on menu but is offered a drink within the same cost. This offer exceeds the expectation of the customer and enables marketers to win loyalty of the customer.

Product LevelProduct Level Definition Example (Banks)Generic Service This is basic service offering/product Banking space, lonable funds,

safety of deposits

Expected Service Basic product and minimum purchase

conditions that must be met. Correct transaction recording, timely service, designated banking hours, minimum courtesy.

Augmented Service

Basic product and minimum offering with the same product be met and something different which enables one product to be

differentiated from another.

Congenial waiting room, friendly employees, may i help you courtesy, welcome note, attitude, relationship orientation, quicker service than the normal, admission of faults in the event of mistake.

Potential Service

Contains potentially feasible features and benefits that play significant role in holding and attracting the customer. These features and benefits are useful or likely to be useful to

the buyers.

Occasional greeting at home, the how are you Mr. X culture, surprise gifts, readiness to go out of way to satisfy the individual customer.

Service Levels (Gronroos)• Core Service: consists of the basic service i.e. the

fundamental service or benefit that the customer is really buying. For the marketers the core service are essentially all those services that define that kind of business they are in.

• Facilitating service: the facilitating services like reception in a hotel, check-in services in airlines, facilitating goods like ATM’s in banks or debit/credit cards in banks, facilitate the use of core service.

• Supporting service: the supporting services do not facilitate the use of core service, but are used to increase the value or differentiate the services from those of the competitors.Facilitating services are mandatory as the service package will fail without it. The facilitating services can and should be so designed that they also become means of competition and thus help to differentiate the service. However, the supporting services are used as a means of competition only. Without them the core services can be used but the total service package may be less attractive.

New Service Development

Reasons for Development:– Build recognition as an innovator in the market.– Provide a new service offering to develop a market.– Proactive territorial expansion through a new or

modified offerings at the existing service place.– Defensive action to challenge competitors.– Initiate the success of an organization.– Take advantage of the technological break-through.– To reposition i.e. fit consumer requirements more

accurately.

Service Development is Different

Intangibility Risk of conducting the development process too quickly.

Easy to copy competitor's product.

Risk of confusing customers with too many services.

Difficulties in conducting market research.

Absence of physical prototype to test market.

Difficulties in measuring success.

Effect of new product on corporate image.

Inseparability Increased importance of delivery system.

Higher levels of customer input.

Need for inter-organizational involvement.

Heterogeneity Difficulties in concept testing.

Quality control becomes issue.

Perishability Difficulties in demand/supply management.

Need for higher level integrations among department.

Sources of New Service Ideas• External SourceCustomers

Competitors

Specialists

•Trade customers•Intermediaries•Consumer feedback•Complaints and suggestions•Imitation•Improvement/enhancements•Consultants•Market Research Agencies

Others •Suppliers•Joint ventures•Franchising / Licensing partners (own country)•Franchising / Licensing partners (overseas)

Sources of New Service Ideas• Internal Source

Research and Development

Ongoing / Basic research

Engineering

Manufacturing

Purchasing

Development and operation

Market Research

Sales Personnel

Customer Service

Market Studies

Analysis of Previous Research

Product Testing

Management Ideas of senior management

Others Employee suggestions, Brain storming

Stages in New Product DevelopmentIdea Generation – Internal and External Sources

Idea Screening – against the Firms Mission and Objectives

Service Concept Development – to Develop the Service Idea

Business Analysis – Test for Profitability and Feasibility

Service Development – Business Proposal Converted into Actual Service

Market Testing – In Relation to Marketing Mix Variables

Launch – Commercialization of Service

Post Introduction – Feedback of Introduction

Service Life Cycle Concept

Sales

Profits

Time

Incubation Introduction Growth Maturity Decline

Rup

ees

Branding in Services

Advantages of branding services are:-–To tangibilise the intangible.–To support the positioning strategy.–Offers a powerful tool for relationship building. –To create an image of quality and consistency.–To reduce price comparison.– Keeps current customers satisfied by developing and sustaining a unique service advantage.–Encourages repeat usage using sales promotion.

Branding in ServicesService customers do not switch brands frequently because of the following reasons:-

–Services cannot be standardized and therefore the risk in shifting the brand in case of services is much more than products.

–The firm can achieve zero defections by providing proactive services for their own customers and retain them to be loyal but because of the same strategies adopted by competitors it is rather difficult to make their customers effect in your favour.

–Augmenting the services offer is a dynamic phenomenon and in service business you cannot survive as “me too” service product. The core product may be the same, competitors in addition to providing more peripherals to the core product, are also making concerted efforts to create brand differentiation.

–Repeat buyers provide an opportunity to service providers to serve them better.

–Relationship building concept is catching up at supersonic speed for making the customers brand loyal in service sector.

Product/Service Mix DecisionsAn organization's entire offering of products/ service items is called product/service mix.•Product/Service item: is a specific model, brand or a service a company sells.•Product/Service line: is a group of closely related items. In each line, the items have some common characteristics, customers and /uses. They may also share technologies, distribution network, prices and related services.•Product/Service mix: consists of all the different product/service lines offered by a company. The product mix of a large bank might easily include more than 100 different bank related services. It is usually described in terms of three dimensions as follows:-

–Width of the product/Service mix – is the no. of product lines

–Depth of the product/Service mix – is the no. of product items within each product line.

–Consistency of product/Service mix – is the relationship amongst product lines in terms of their sharing the end use, distribution outlets, consumer group/s, and price range.