Marketing Mix Marketing Plan Product Price Promotion Place Marketing Mix Marketers have essentially four variables to use when crafting a marketing strategy and writing a marketing plan. They are price, promotion, product and distribution (also called placement). They are sometimes referred to as the four p's. Marketing Mix A marketing mix is a combining of these four variables in a way that will meet or exceed organizational objectives. A separate marketing mix is usually crafted for each product offering. When constructing the mix, marketers must always be thinking of who their target market are. Marketing Mix Mixcoherency refers to how well the components of the mix blend together. A strategy of selling expensive luxury products in discount stores has poor coherency between distribution and product offering. Marketing Mix In the long term, all four of the mix variables can be changed, but in the short term it is difficult to modify the product or the distribution channel. Therefore in the short term, marketers are limited to working with only half their tool kit. This limitation underscores the importance of long term strategic planning. Marketing Mix Some commentators have increased the number of p's in the mix to 5, 6 or even 8. "People" is sometimes added, recognizing the importance of the human element in all aspects of marketing. Others include "Partners" as a mix variable because of the growing importance of colaberative channel relationships. Marketing plan A Marketing Plan is a written document that details the actions necessary to achieve a specified marketing objective(s). It can be for a product or service, a brand, or a product line. It can cover one year (referred to as an annual marketing plan), or cover up to 5 years. Marketing plan In general terms, it must: describe and explain the current situation specify the expected results (objectives) identify the resources that will be needed (including financing, time, and skills) describe the actions that will need to be taken to achieve the objective(s) devise a method of monitoring results and adjusting the plan where necessary Marketing plan There are many formats for marketing plans and every company does it a little different, but the outline that follows is a very complete format. Using this format will produce a 30 to 40 page plan. Many companies prefer an abridged format that would yield a 10 to 20 page plan. Marketing plan Title page Executive Summary Current Situation - Macroenvironment economy government legal technology ecological sociocultural supply chain Marketing plan Current Situation - Market Analysis market definition market size market segmentation industry structure and strategic groupings Porter 5 forces analysis competition and market share competitors' strengths and weaknesses market trends Marketing plan Current Situation - Consumer Analysis nature of the buying decision participants demographics psychographics buyer motivation and expectations loyalty segments Marketing plan Current Situation - Internal company resources financial people time skills Marketing plan objectives mission statement and vision statement corporate objectives financial objective marketing objectives long term objectives corporate culture Marketing plan Summary of Situation Analysis external threats external opportunities internal strengths internal weaknesses key success factors in the industry our sustainable competitive advantage Marketing plan Marketing research informationrequirements research methodology research results Marketing plan - Product Marketing Strategy - product product mix product strengths and weaknesses perceptual mapping product life cycle management and new product development Brand name, brand image, and brand equity the augmented product Marketing plan product portfolio analysis B.C.G. Analysis contribution margin analysis G.E. Multi Factoral analysis Quality Function Deployment Marketing plan - Price Marketing Strategy - Price pricing objectives pricing method (eg.: cost plus, demand based, or competitor indexing) pricing strategy (eg.: skimming, or penetration) discounts and allowances price elasticity and customer sensitivity price zoning break even analysis at various prices Marketing plan - Promotion Marketing Strategy - Promotion promotional goals promotional mix reach, frequency, flights, theme, and media sales force requirements, techniques, and management sales promotion publicity and public relations electronic promotion (eg.: Web, or telephone) Marketing plan - Place Marketing Strategy - Distribution geographical coverage distribution channels physical distribution and logistics electronic distribution Marketing plan Implementation personnel requirements assign responsibilities financial requirements management information systems requirements month-by-month agenda pert or critical path analysis monitoring results and benchmarks adjustment mechanism contingencies (What if's) Marketing plan Financial Summary assumptions pro-forma monthly income statement contribution margin analysis breakeven analysis Monte Carlo analysis Marketing plan Appendix pictures and specifications of the new product results from research already completed Pricing Pricing is one of the four aspects of marketing. The other three parts of the marketing mix are product management, promotion, and distribution. It is also a key variable in microeconomic price allocation theory. Pricing Pricing involves asking questions like: How much to charge for a product or service? What are the pricing objectives? Do we use profit maximization pricing? Do we use profit maximization pricing? How to set the price?: (cost-plus pricing, demand based pricing, rate of return pricing, or competitor indexing) Pricing Should there be a single price or multiple pricing? Should prices change in various geographical areas, referred to as zone pricing? Should there be quantity discounts? What prices are competitors charging? Do you use a price skimming strategy or a penetration pricing strategy? What image do you want the price to convey? Do you use psychological pricing? Pricing How important are customer price sensitivity and elasticity issues? Can real-time pricing be used? Is price discrimination or yield management appropriate? Are there legal restrictions on retail price maintenance, price collusion, or price discrimination? Do price points already exist for the product category? Pricing How flexible can we be in pricing? : The more competitive the industry, the less flexibility we have. The price floor is determined by production factors like costs, economies of scale, marginal cost, and degree of operating leverage The price ceiling is determined by demand factors like price elasticity and price points Pricing Are there transfer pricing considerations? What is the chance of getting involved in a price war? How visible should the price be? - Should the price be neutral? (ie.: not an important differentiating factor), should it be highly visible? (to help promote a low priced economy product, or to reinforce the prestige image of a quality product), or should it be hidden? (so as to allow marketers to generate interest in the product unhindered by price considerations). Pricing Are there joint product pricing considerations? What are the non-price costs of purchasing the product? (eg.: travel time to the store, wait time in the store, dissagreeable elements associated with the product purchase - dentist -> pain, fishmarket -> smells) What sort of payments should be accepted? (cash, cheque, credit card, barter) Pricing A well chosen price should do three things: achieve the financial goals of the firm (eg.: profitability) fit the realities of the marketplace (will customers buy at that price?) Pricing support a products positioning and be consistent with the other variables in the marketing mix price is influenced by the type of distribution channel used, the type of promotions used, and the quality of the product price will usually need to be relatively high if manufacturing is expensive, distribution is exclusive, and the product is supported by extensive and promotional campaigns a low price can be a viable substitute for product quality, effective promotions, or an energetic selling effort by distributors Pricing From the marketers point of view, an efficient price is a price that is very close to the maximum that customers are prepared to pay. In economic terms, it is a price that shifts most of the consumers surplus to the producer. The effective price is the price the company receives after accounting for discounts, promotions, and other incentives. Pricing A loss leader is a product that has a price set so low that it acts as a promotional device and draws customers into the store. Promotional pricing refers to an instance where pricing is the key element of the marketing mix. Pricing The price/quantity relationship refers to the perception by most consumers that a relatively high price is a sign of good quality. The belief in this relationship is most important with complex product that are hard to test, and experiential products that cannot be tested until used (such as most services). Pricing The greater the uncertainty surrounding a product, the more consumers depend on the price/quantity hypothesis and the more of a premium they are prepared to pay. Premium pricing Premium pricing (also called prestige pricing) is the strategy of pricing at, or near, the high end of the possible price range. People will buy a premium priced product because: They believe the high price is an indication of good quality; Premium pricing They believe it to be a sign of self worth - "They are worth it" - It authenticates their success and status - It is a signal to others that they are a member of an exclusive group; and They require flawless performance in this application - The cost of product malfunction is too high to buy anything but the best - example : heart pacemaker Demand based pricing Demand based pricing refers to any of the pricing methods that use consumer demand as the central element. These include : price skimming, price discrimination and yield management, price points, psychological pricing, bundle pricing, penetration pricing, price lining, and premium pricing. Promotion Promotion is one of the four aspects of marketing. The other three parts of the marketing mix are product management, pricing, and distribution. Promotion is comprised of four subcategories: personal selling sales promotion publicity and public relations Sales Sales, or the activity of selling, forms an integral part of commercial activity. As a practical implementation of marketing, it often forms a separate grouping in a corporate structure, employing separate specialist operatives known as salesmen (singular: salesman or salesperson). Sales The primary function of sales is to find and close leads, turning propective customers into actual ones. From a marketing point of view, selling is one of the methods of promotion used by marketers. Other promotional techniques include , sales promotion, publicity, and public relations. Sales Moral strictures applied to marketeers often apply even more vigorously to those in sales. People selling second-hand cars, real estate or encyclopedias (of the non- Wikipedia variety) often come in for particular disdain. Sellers of snake oil have become stock figures for mirth at their quackery: they merge with the category of the confidence trickster or the carny. Sales Small wonder that many organisations contract out sales to end-users. Moral strictures applied to marketeers often apply even more vigorously to those in sales. People selling second- hand cars, real estate or encyclopedias (of the non-Wikipedia variety) often come in for particular disdain. Sales Sellers of snake oil have become stock figures for mirth at their quackery: they merge with the category of the confidence trickster or the carny. Small wonder that many organisations contract out sales to end-users. Sales Forms of selling include: door-to-door multi-level direct mail-order telephone retail consignment Also see Sales Planning and Operations Sales promotion In marketing, sales promotion is one of the four aspects of promotion. The other three parts of the promotional mix are , personal selling, and publicity/public relations. Sales promotions are non- personal promotional efforts that are designed to have an immediate impact on sales. Sales promotion Sales promotion is media and non- media marketing communications employed for a pre-determined, limited time to increase consumer demand, stimulate market demand or improve product availability. Sales promotion Examples include: coupons discounts and sales contests point of purchase displays rebates Sales promotion Sales promotions can be directed at either the customer, your sales staff, or distribution channel members (such as retailers). Sales promotions targeted at the consumer are called consumer sales promotions. Sales promotions targeted at retailers and wholesalers are called trade sales promotions. Consumer Sales Promotion Techniques Price deal: A temporary reduction in the price cents-off deal: offers a brand at a lower price. Price reduction may be a percentage marked on the package price-pack deal: The packaging offers a consumer a certain percentage more of the product for the same price (eg: 25% more free) Coupons: coupons have become a standard mechanism for sales promotions. Consumer Sales Promotion Techniques Free Standing Insert (FSI). A coupon booklet is inserted into the local newspaper for delivery on-shelf couponing: Coupons are present at the shelf where the product is available. checkout dispensers: On checkout the customer is given a coupon based on products purchased Consumer Sales Promotion Techniques on-line couponing: Coupons are available on line. Consumers print them out and take them to the store. Rebates: Consumers are offered money back if the receipt and packaging is mailed to the producer. contests/sweepstakes/games: The consumer is automatically entered into the event by purchasing the product. Consumer Sales Promotion Techniques Point-of-Sales displays: Aisle interrupter: A sign the juts into the aisle from the shelf Dangler: A sign that sways when a consumer walks by it Dump Bin: A bin full of products dumped inside Glorifier: A small stage that elevates a product above other products Wobbler: A sign that jiggles Lipstick Board: A board on which messages are written in crayon Necker: A coupon placed on the 'neck' of a bottle Y.E.S unit: Your Extra Salesperson is a pull out fact sheet. Trade Sales Promotion Techniques include Trade Allowances: short term incentive offered to induce a retailer to stock up on a product. Dealer Loader: An incentive given to induce a retailer to purchase and display a product. Trade Contest: A contest to reward retailers that sell the most product Trade Sales Promotion Techniques include Point-of-purchase displays: Extra sales tools given to retailers to boost sales Training Programs: dealer employees are trained in selling the product Push Money: also known as spiffs. An extra commission paid to retailer employees to push products. Publicity Publicity is one of the variables that comprise the promotional mix. The other components of promotions are , sales promotion, and personal selling. Promotion is one of the variables that comprise the marketing mix. The other three are product management, pricing, and distribution. Publicity Publicity is closely related to public relations. Whereas public relations is the management of all communications between the firm and the general public, publicity is the management of product or brand related communications between the firm and the general public. Publicity It is primarily an informative activity (as opposed to a persuasive one), but its ultimate goal is to promote the companies products, services, or brands. A publicity plan is a planned program aimed at obtaining favorable press coverage for a companies products. Publicity The most basic tool of the publicist is the press release, but other techniques include telephone press conferences, in- studio media tours, multi-component video news releases (VNR’s), newswire stories, and internet releases. Publicity For these releases to be used by the media, they must be of interest to the public ( or at least to the market segment that the media outlet is targeted to). The releases are often customized to match the media vehicle that they are being sent to. Getting noticed by the press is all about saying the right thing at the right time. Publicity A publicist is continuously asking what about you or your company will pique the reader's curiosity and make a good story? The most successful publicity releases are related to topics of current interest. These are referred to as news pegs. Publicity An example is if three people die of water poisoning, an alert publicist would release stories about the technology embodied in a water purification product. Publicity But the publicist cannot wait around for the news to present opportunities. They must also try to create their own news. Examples of this include: Contests Walkathons Art exhibitions Publicity Event sponsorship Arrange a speech or talk Make an analysis or prediction Conduct a poll or survey Issue a report Take a stand on a controversial subject Arrange for a testimonial Publicity Announce an appointment Celebrate an anniversary Invent then present an award Stage a debate Organize a tour of your business or projects Issue a commendation Publicity The advantages of publicity are low cost, and credibility (particularly if the publicity is aired in between news stories like on evening TV news casts). The disadvantages are lack of control over how your releases will be used, and frustration over the low percentage of releases that are taken up by the media. Public relations Public relations (PR) is internal and external communication (use of symbols and symbolic acts) to inform or influence specific publics using writing, marketing, advertising, publicity, promotions, and special events. Public relations Some public relations specialists work as full-time employees of companies, politicians, nonprofit organizations, or governments; while others work for PR agencies that contract their services to clients (usually corporations, wealthy individuals or other special interests) who pay for their expertise at keeping them in or out of the spotlight, whichever is necessary. Public relations According to the Public Relations Society of America (PRSA), one of the profession's leading trade associations, public relations "has been defined in many widely differing ways. Not unsurprisingly [sic], the earliest definitions emphasized the roles of press agentry and publicity since these were major elements from which modern public relations grew." Public relations More recently, the PR industry has pushed to redefine itself as a management function. From a more critical perspective, public relations is sometimes also referred to as the manufacturing of consent, following a phrase popularized by Edward Herman and Noam Chomsky (see Manufacturing Consent). Public relations The practice of public relations is often disparaged using terms such as "spin," and public relations practitioners are sometimes characterized as "spin doctors" or "flacks." Public relations Table of contents 1 History 2 The Industry Today 3 Ethical and Social Issues 4 See also 5 External links 6 Books Distribution (business) Distribution is one of the four aspects of marketing. The other three parts of the marketing mix are product management, pricing, and promotion. Distribution deals with how to get the product or service to the customer. It must answer questions such as: What kind of distribution channel to use? Distribution (business) Should the product be sold through retailing? Should the product be distributed through wholesale? Should multi-level marketing channels be used? How long should the channel be (how many members)? Where should the product or service be available? Distribution (business) When should the product or service be available? Should distribution be exclusive or extensive? Who should control the channel (referred to as the channel captain)? Should channel relationships be informal or contractual? References This Presentation is based on Fact Index Adaptation by Finntrack Distribution (business) Should channel members share (referred to as co-op ads)? Should electronic methods of distribution be used? Are there physical distribution and logistical issues to deal with? What will it cost to keep an inventory of products on store shelves and in channel warehouses (referred to as filling the pipeline)?