Chapter 13: The Marketing Mix: product, place, promotion and price

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• Product mix:
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a business’s portfolio of product lines
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• Product line:
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a group of similar products
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• Classifying consumer products: (4)
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o Convenience products: products that consumers buy frequently, instinctly with minimum thought o Shopping products: consumers buy carefully and less frequently o Speciality products: products that consumers buy infrequently with a deliberate thought process o Unsought products: products that consumers do not initially or readily recognise they need or want e.g. insurance
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• Classifying business products: (3)
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o Materials and parts: products businesses resell or use to create other products o Capital items: products businesses buy that have a life longer than one year and used in the acquiring, manufacturing and selling of products and services o Supplies and services: products businesses buy to operate the business that are not classified as materials and parts or capital items
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• Product features:
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relate to the physical and mental attributes that provide customers satisfaction when they use the product
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• Product quality:
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relates to a products lack of defects
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• Branding:
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relates to a business’s attempt to differentiate its product from the product of competitors with a brand: o Creates value by reducing customer uncertainty and risk associated with their buying decision
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• Brand:
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a name, term, symbol, design, or combination thereof that identifies a product or business
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• Trademark:
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when a business registers its brand with the law
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• Brand equity:
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the term used to describe the ability of the brand to create value
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• Generic products:
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unbranded products
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• Packaging:
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: relates to the designing and producing the container in which a product is sold or delivered o Creates value by creating benefits such as convenience and storage
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• Labelling:
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entails a business attaching printed words or graphics to its products to educate the customer o More informed customer, reduces risk
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• Warranties:
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a seller’s promise regarding the property’s quantity and quality • Guarantee: a promise by the business to the customer that the customer will be satisfied with the product o Warranties and guarantees reduce the risk of purchasing the product
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• Support services:
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relate to the at-sale or post-sale services that a seller promises to the buyer
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• Place:
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the location and means of distributing the product
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• Distribution:
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how and when a business delivers its product to its customer
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• Marketing channel or distribution channel:
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composed of the organisations that help the business make its product available for ultimate consumption
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• Marketing intermediaries:
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members of the marketing channel
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• Direct marketing channel:
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where the business doesn’t use a marketing intermediary
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• Indirect marketing channel:
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where the business uses one or more marketing intermediaries
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• Wholesaler:
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an organisation that buys products for resale to retailers
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• Retailer:
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an organisation that sells products to the ultimate consumer of the product
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• Specialty store:
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carries a limited product line
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• Department store:
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carries several product lines
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• Supermarkets:
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carry numerous lines of food and household products
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• Convenience stores:
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small retailers, located in easily accessible places which sell a number of products used in everyday life
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• Discount stores:
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• sell numerous product lines of household products to price-conscious customers
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• Deep discount stores:
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sell product lines at very low prices
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• Non-store retailers:
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retailers that have limited or no physical presence
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• Merchant wholesalers
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buy and resell products
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• Broker:
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• brings the buyer and seller together
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• Agent:
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represents either a buyer or seller
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• Variable costs
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vary directly with the amount sold
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• Fixed costs:
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costs that do not vary with eh amount sold
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• Contribution margin:
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o Contribution margin per unit of sales = (Price per unit of sales) – (variable cost per unit of sales) o CM = P – VC
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• Break even point:
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o The point a business must achieve to generate a 0 operating profit o Break even point = Fixed costs/Contribution margin o BE = FC/CM
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• Cost-volume-profit analysis:
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the analysis of different pricing alternatives on the business’s profitability
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• Cost-plus pricing:
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when a business prices its products based on costs and desired profit
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• Pricing-on-the-margin:
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when a business focuses only on variable costs (marginal costs)
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• Marginal revenue:
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price per sale
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• Cyclical product:
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when the state of the economy affects the demand for the product
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• Non-cyclical product:
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: when the state of the economy doesn’t affect the demand for the product
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• Counter-cyclical products
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opposite of cyclical products
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• Seasonal products:
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products that are affected by the seasons of the year
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• Price and the decision to buy:
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o Perceived absolute value of the product: customers create a perception of a products’ value based on perceived benefits from owning the product o Perceived relative value of the product: customers compare the benefits and costs of that product with those of alternative or competing products
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• The communication process:
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1. Sender 2. Message 3. Communication medium 4. Noise 5. Receiver 6. Feedback process
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• Promotion process:
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1. Target a market segment and customer 2. Determine the communication objective 3. Design the message to be communicated (AIDA model: attention, interest desire and act) 4. Choose a medium to communicated the message 5. Execute by delivering the designed message through the selected medium 6. Collect feedback, review the feedback, and make adjustments as needed
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• The promotional mix:
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the mix of advertising, sales, promotion, personal selling, direct-marketing techniques and public relations used by a business to communicate a marketing message
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• Personal selling process:
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1. Prospecting and qualifying potential customers 2. Researching and understanding how to approach targeted customers 3. Approaching targeted customers 4. Presenting and demonstrating the product 5. Dealing with customer concerns 6. Completing or closing the sale 7. Following up the sale to ensure customer satisfaction
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• Direct marketing:
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the techniques used to get customers to purchase products from their home, office or other non-retail settings
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• Public relations:
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refers to the process of communicating to a business’s public that the business creates value for the public as a whole
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• Publicity: i
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information that creates an image of the business and its products • Promotional pull strategy: the product producer uses a lot of advertising focused on the ultimate consumer
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• Promotional push strategy:
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where the producer’s promotional efforts are focused on retailers and other channel members
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Advertising:
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o any non-personal presentation of ideas about a product or product line
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o Sales promotion:
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techniques used to encourage the customer to buy the product in the short-term, businesses use them to create an immediate sale
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o Personal selling:
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the personal interaction, intended to create a sale, between a business’s sales force and potential customers

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