FOCUS ON SATISFYING CUSTOMER NEEDS PROFITABLY MARKETING MIX - - PowerPoint PPT Presentation

FOCUS ON SATISFYING CUSTOMER NEEDS PROFITABLY

Marketing Mix is the set

• f

controllable, tactical marketing tools that the firm blends to produce the response it wants in the target market. The marketing mix consists of everything the firm can do to influence the demand for its product. (Philip Kotler – 12th edition)

MARKETING MIX

Thus, in performing their key tasks marketing managers have at their disposal a number of tools or ingredients they can use to develop marketing programs to create customer satisfaction and, ultimately profits for the organisation. The marketing mix is the combination of elements used by a business to enable it to meet the needs and expectations of customers. These tools or ingredients are often referred as the as the “4 P’s”: Product, Price, Place and Promotion and decisions on how to use these ingredients require ‘Marketing Research and Information’.

MARKETING MIX

MARKETING MIX

“Marketing Mixes have to be changed from time to time in response to new factors in the marketing picture. The firm can react to environmental changes in an expedient or a systematic fashion” Philip Kotler

MARKETING MIX ELEMENTS

Product

Variety Design Quality Features Brand name Packaging

Place

Channels Coverage Assortments Locations Inventory Transportation

Price

List Price Discounts Strategies Allowances Payment terms Credit terms

Promotion

Advertising Personal Selling Public Relations Sales Promotions Direct Marketing

Marketing Mix

Target Market

MARKETING MIX ELEMENTS

• Product: is anything that can be offered to a market for attention,

acquisition, use or consumption that might satisfy a want or need. A product is everything both favorable and unfavorable that is received in an exchange.

• Price: is the amount of money customers has to pay to obtain the

product, or the sum of the values that consumers exchange for the benefits of having or using the product.

• Place: includes all activities in order to make the product available to

target consumers in the ‘right place’ and at the ‘right time’.

• Promotion: are the means by which an organisation attempts to inform,

persuade, and remind consumers – directly or indirectly – about the products they sell.

THE EXTENDED MARKETING MIX Why Extended Marketing Mix?

The advent of service into the marketing equation created issues for marketers to manage service situations with the existing marketing mix. Therefore there was a requirement to extend the traditional marketing mix with other extended elements. Thus, the traditional 4 P marketing mix was extended to a 7 P marketing mix.

• People:

Relates to all personnel dealing with delivering the marketing experience to the target audience.

• Process: All procedures, systems and policies a consumer needs to

go through in dealing with the organisation.

• Physical Evidence: Deals with all aspects of giving tangibility to

the intangible service offered to the consumer

EXTENDED MARKETING MIX ELEMENTS

EXTENDED MARKETING MIX ELEMENTS

Product

Marketing Mix

Focus on satisfying customer’s needs profitably

Price

Process Physical Evidence Promotion People Place

PEOPLE

Relates to all personnel dealing with delivering the marketing experience to the target audience. Anyone who comes into contact with your customers will make an impression, and that can have a profound effect – positive or negative on customer satisfaction levels. The reputation of your organisation rests in your peoples hands.

• People are an essential ingredient in service provision; recruiting

and training the right staff is required to create a competitive advantage.

• Customers make judgments about service provision and delivery

based on the people representing your organisation. This is because people are one of the few elements of the service that customers can see and interact with.

• Staff

require appropriate interpersonal skills, aptitude, and product/service knowledge in order to deliver a quality service.

PEOPLE

PROCESS

All procedures, systems and policies a consumer needs to go through in dealing with the organization.

• Processes are the way in which customers are served
• Co-ordination of activities and concern that customers be

fully satisfied must underpin the systems and procedures.

• Efficient processes creates a competitive advantage

Service areas to be considered:

• Procedures, Ordering systems and Policies
• Automation of processes (online or automated systems)
• Queuing and waiting times
• Information flow to service units and customers
• Capacity management, matching supply to demand in a timely and cost

effective way.

• Accessibility of facilities, premises, personnel and services

PROCESS

PHYSICAL EVIDENCE

Deals with all aspects of giving tangibility to the intangible service offered to the consumer. Physical evidence gives the consumer something to refer to and to show other people if necessary. Since service products are usually intangible, the consumer of (say) an insurance policy will need some written evidence of its existence in order to feel confident in the product”

Jim Blythe – 2005

• Physical layout - supermarket, college, university, banks, airports
• Image - Is Everything
• Signage – providing instructions, information
• Logos
• Company vehicles, parking area
• Employee Uniforms/name tags
• Packaging - certificates
• Letterheads
• Business Cards, Catalogues, brochures
• Ambience

PHYSICAL EVIDENCE

Confirmation is always sought. If the physical evidence does not match customer expectations then the customer will withdraw. The role of the marketer is to design and implement such tangible evidence.

Seven P’s might be better described as the seven C’s: Producers View (7P’s)

• Product
• Price
• Place
• Promotion
• People
• Process
• Physical Evidence

Customers View (7C’s)

• Customer Value
• Cost
• Convenience
• Communication
• Consideration
• Co-ordination
• Confirmation

DEFINITION OF A PRODUCT

Anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need. (Philip Kotler – 12th Edition)

A PRODUCT

• A Physical good: Car, television, soap, laptop
• Person: Kumar Sangakara, Cristiano Ronaldo, Bill Gates
• Place: Bentota, Sydney, Paris, New York.
• Organization: UNICEF, Red Cross, SLIM, CIM,
• Idea: Safe Driving, Family Planning
• Services: Banking, Telecom, Health care, Transportation, Education
• Experience: Disney, Movies, Sports

FIVE LEVELS OF A PRODUCT

• Potential Product
• Augmented Product
• Expected Product
• Basic product
• Core benefit

Level 1 - The Core benefit

The fundamental level is the core benefit: the service or benefit the customer is really buying. For example, in the case of a car this might be, say, “transport”, a hotel guest is buying "rest and sleep", the purchaser of a drill is buying "holes”. Marketers must see themselves as benefit providers.

Level 2 - The Actual or Basic Product

At the second level, the marketer must turn the core benefit into a basic product. They need to develop product features, design, quality level, a brand name and packaging. For example for a car: design, efficiency, air bags, power steering etc.

FIVE LEVELS OF A PRODUCT

Level 3 - The Expected Product

At the third level, the marketer prepares an expected product, a set of attributes and conditions buyers normally expect when they purchase a

• product. Clearly, when these attributes exceed the buyer’s expectations

the organisation will have satisfied and delighted customers.

Level 4 - The Augmented Product

At the fourth level, the marketer prepares an augmented product around the core benefit and actual product by offering additional services and benefits that differentiates the organisation’s offer from competitors.

Level 5 - The Potential Product

The fifth level

• f

the product is the potential product, which encompasses all the augmentations and transformations that the product might ultimately undergo in the future to enhance or develop the product.

PRODUCT CLASSIFICATIONS

Products fall into one of two general categories such as Consumer products and Industrial products or Business-to business products. Consumer products are products and services for personal consumption and classified by how consumers buy them

• Convenience products
• Shopping products
• Specialty products
• Unsought products

CONSUMER PRODUCTS

• Convenience Products - Staple, Impulse, Emergency
• Relatively inexpensive & Frequently purchased
• Customer puts little effort into the purchasing decision
• Convenience takes priority over brand loyalty
• Example- Bread, Milk, Soap, Groceries (FMCG)

SHOPPING PRODUCTS

• Less frequently purchased
• Customers compare on suitability, quality, price and style
• Purchase is usually made after a good deal of advance

planning and shopping around

• Examples:- bicycles, cameras, furniture, consumer durables

etc…

SPECIALTY PRODUCTS

 Products with unique characteristics or brand identification  Significant group of buyers are willing to make a special purchase effort.  Examples:- designer clothes, specific brands and types of cars, high priced photographic equipment and the service of medical and legal specialists.  Buyers normally do not compare specialty products.

UNSOUGHT PRODUCTS

 Consumer products that consumer either does not know about

• r knows about but does not normally think of buying.

 Examples:- mail catalogues, life insurance, magazine subscriptions and blood donations.  These products require a lot of advertising, personal selling and

• ther marketing efforts.

PACKAGING

Packaging is defined as “all the activities of designing and producing the container or wrapper for a product”. (Philip Kotler – 13th edition)

Functions of Packaging

• Protection of contents from damage, deterioration or tampering.
• As a promotional tool – by packaging attractively a marketer can get the

attention and interest of the customers.

• Acts as a silent salesman in self service shops.
• Instant recognition of the brand.
• Innovative packaging creates competitive advantage.
• User convenience – storage and carrying.
• Provides information – how to use the product/safety, expiry information.
• Compliance with government regulations/ legal function.
• Must be hygienic and environmental friendly/recyclable.
• Management information as bar codes can be used to track sales.

WHAT IS PRICE?

Price is the amount of money charged for a product or service, or the sum of all the values that consumers exchange for the benefit of having or using the product or service.

(Philip Kotler - 12th edition)

ROLE AND IMPORTANCE OF PRICE

• Price is the only element of the marketing mix which generates revenue (all
• ther elements represent cost).
• Can be used as a communicator, a bargaining tool and a competitive

weapon.

• Is the most flexible element of the marketing mix (Prices can be changed/

negotiated quickly)

• Price should not be set in isolation; it should be well blended with other

marketing mix variables.

• For certain products price can be the primary customer criterion for choice
• Customers often use price to compare competing products
• Customers often equate price with quality.

FACTORS TO CONSIDER WHEN SETTING PRICES

• Costs – Fixed costs, variable costs, marketing costs etc
• Demand
• Competition
• Marketing Objectives
• Government Regulation

• Cost Based/Internal oriented pricing
• Demand/Market Based pricing
• Competitor-Based pricing

PRICING STRATEGIES

DEMAND/MARKET BASED PRICING

• Price skimming
• Penetration pricing
• Psychological pricing
• Promotional pricing
• Value-based pricing

PLACE OR DISTRIBUTION The role of this element of the marketing mix is to ensure that products and services are available to target customers in the 'right place' and at the 'right time'.

• Distribution is the process of making a product or service available

for use or consumption by a consumer or business user, using direct means, or using indirect means using intermediaries.

• In other words, the main task of distribution management is

placing the goods in hand of potential customers at the right time and place.

PLACE OR DISTRIBUTION

The Nature and Importance

• f Marketing Channels
• A marketing channel (also called distribution channel) is

a set of interdependent organisations that help make a product or service available for use or consumption by the consumer or business user.

• A marketing intermediary or middleman links producers

to other middleman or to those who ultimately use the products.

• Retailers
• Wholesalers
• Distributors
• Agents/Brokers
• Franchise
• Modern trade (supermarkets/Hypermarkets)
• Vending machines
• E-commerce (electronic retailing)

TYPES OF INTERMEDIARY

How Channel Members Add Value

• Assortment of Products
• Information
• Promotion
• After Sales Support
• Contact
• Matching
• Negotiation:
• Physical distribution
• Financing
• Risk taking

MARKET COVERAGE STRATEGIES

• INTENSIVE DISTRIBUTION
• SELECTIVE DISTRIBUTION
• EXCLUSIVE DISTRIBUTION

MARKET COVERAGE STRATEGIES

INTENSIVE DISTRIBUTION

Intensive distribution occurs when the product is placed in as many outlets as possible and no interested intermediary is barred from stocking the product. The key benefit to customer is that convenience and availability may be just around the corner. Example: convenience goods such as bread, newspapers, milk, soap, soft drinks etc.

SELECTIVE DISTRIBUTION

A more selective approach in using a small number of carefully selected

• utlets within a defined geographical area to distribute the products.

Example: shopping goods such as consumer durables, furniture, clothing etc which need a specialist retailer who might be expected to offer technical advice and after sales services.

EXCLUSIVE DISTRIBUTION

Exclusive distribution is the opposite of intensive distribution, and means that only one outlet is used in a relatively large geographical area to distribute the product. Example: specialty products of high value and prestigious. (higher image control) Mercedes, Rolex watches, Designer labels etc.

“Promotion or Marketing communications are the means by which firms attempt to inform, persuade, and remind consumers - directly,

• r indirectly - about the products and

brands that they sell” Phillip Kotler

PROMOTION/ COMMUNICATIONS

PROMOTION/ MARKETING COMMUNICATION MIX

The marketing communications mix or the promotions mix – consists of the specific blend of communication tools the

• rganisation uses to persuasively communicate customer

value and build and maintain customer relationships with customers and public.

PROMOTION/ MARKETING COMMUNICATION MIX ELEMENTS

MARKETING COMMUNICATION MIX ELEMENTS

• Advertising: Any paid form of non-personal presentation and promotion of

ideas, goods or services by an identified sponsor. (Philip Kotler)

• Sales Promotion: A variety of short-term incentives to encourage trial or

purchase of a product or service. (Philip Kotler)

• Public Relations: Building good relationships with the company’s various

publics by obtaining favorable publicity, building a good “corporate image” and handling or heading off unfavorable rumors, stories and events. (Philip Kotler)

• Personal Selling: Personal presentations by the firms sales

force for the purpose of making sales and building customer relationships. (Philip Kotler)

• Direct Marketing: Direct connections with carefully targeted

individual consumers to both obtain an immediate response and cultivate long term relationships. (Philip Kotler)

INTEGRATED MARKETING COMMUNICATIONS (IMC) An approach to achieving the objectives of a marketing campaign, through a well-coordinated use of different promotional tools that are well blended together as a unified force, rather than permitting each to work in isolation, in

• rder

to deliver a clear, consistent and compelling message about the

• rganisation

and its products.

ADVERTISING MEDIA

• Print Advertising

: newspapers, magazine, directories

• Broadcast advertising

: radio, television, cable television

• Outdoor advertising

: billboards, poster, signs

• Transport advertising

: buses, trains, company vehicles

• Digital advertising

: Social Media, websites, banners,

• Mobile advertising

: Smartphones, iPad

• Cinema advertising

: On the screen & inside the cinema

THE COMMUNICATION PROCESS MODEL

SENDER

Encoding

Media

Decoding

RECEIVER

Message Noise

Response Feedback

AIDA MODEL

ATTENTION INTEREST DESIRE ACTION

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