Developing Your Developing Your Marketing MixMarketing Mix

Chapter 18Chapter 18

What is a Marketing What is a Marketing Plan?Plan?

Used to communicate a product Used to communicate a product to the customers:to the customers:Shows competitive advantageShows competitive advantageExplains value proposition Explains value proposition

(benefits vs. price) (benefits vs. price) Example: Disney Vacations, Example: Disney Vacations, Satellite TVSatellite TV

Market Driven- All decisions are Market Driven- All decisions are based on the market.based on the market.

4 Steps of 4 Steps of Developing a Marketing Developing a Marketing

PlanPlan Consumer AnalysisConsumer Analysis Market AnalysisMarket Analysis

Ex. Nielsen (www.nielsen.com)Ex. Nielsen (www.nielsen.com) Development & Combination of the Development & Combination of the

Marketing Mix (4P’s)Marketing Mix (4P’s) Break –even analysisBreak –even analysis

Step One: Consumer Step One: Consumer Analysis (Profile)Analysis (Profile)

Market Segmentation: Consumers Market Segmentation: Consumers who have a similar response to a who have a similar response to a certain type of marketing. certain type of marketing. Example: Volvo – Target’s women with Example: Volvo – Target’s women with

young children – “Safety”young children – “Safety” Surveys and Questionnaires Surveys and Questionnaires Focus Groups and Product TestingFocus Groups and Product Testing

Step Two: Market Step Two: Market AnalysisAnalysis

Use Market Segmentation to break Use Market Segmentation to break down by Psychographics, down by Psychographics, Demographics, Geographic's, and Demographics, Geographic's, and Buying Characteristics. Buying Characteristics.

Niche Segment: Very small group of Niche Segment: Very small group of customers. customers. Example: Rolls-Royce – Sells low Example: Rolls-Royce – Sells low

quantity at high pricesquantity at high prices

Step Three: The Step Three: The Marketing MixMarketing Mix

Combine the 4P’s (Product, Place, Combine the 4P’s (Product, Place, Price, Promotion)Price, Promotion)

Be careful, if you change one “P” it Be careful, if you change one “P” it might affect the rest. might affect the rest. Example: Location of a fur coat store. Example: Location of a fur coat store.

Break-EvenBreak-Even Analysis Analysis

The The break-even pointbreak-even point (BEP) is the point at (BEP) is the point at which cost or expenses which cost or expenses and revenue are equal.and revenue are equal.

Break-Even AnalysisBreak-Even Analysis

Marketing Mix | 4 P’s of Marketing Mix | 4 P’s of MarketingMarketing

Marketers use different tools in Marketers use different tools in order to get the desired response order to get the desired response from the customer or best satisfy from the customer or best satisfy their needs. These tools are known their needs. These tools are known as as The Marketing MixThe Marketing Mix. .

Marketing Mix is probably the most Marketing Mix is probably the most famous term in famous term in marketing..

Marketing MixMarketing Mix

The important thing to note is that all The important thing to note is that all these these four P’s (variable) are four P’s (variable) are controllablecontrollable, subject to internal and , subject to internal and external constraints of marketing external constraints of marketing environment. environment.

Marketers, using different blends of Marketers, using different blends of these variables, can target different these variables, can target different group of customers having different group of customers having different needs. So, a needs. So, a customer may call  customer may call  marketing  mix “the offering”marketing  mix “the offering”..

Marketing MixMarketing Mix

Pricing Strategies Pricing Strategies

Penetration Strategy:Penetration Strategy: Initial low Initial low prices to gain market shareprices to gain market share Example: Low Airline Prices, Wal-MartExample: Low Airline Prices, Wal-Mart

Skimming Strategy:Skimming Strategy: High initial High initial prices to recoup costs prices to recoup costs Example: Plasma TV’sExample: Plasma TV’s

Meat Beat the CompetitionMeat Beat the Competition: : Match what competitors are doing Match what competitors are doing (Wal-Mart Article)(Wal-Mart Article)

Pricing StrategiesPricing Strategies

KeystoningKeystoning: Doubling the : Doubling the COGS to arrive at the retail COGS to arrive at the retail price. price. Example: You pay $2 for a Example: You pay $2 for a

bracelet and sell is for $4bracelet and sell is for $4 Cost-Plus:Cost-Plus: Figure costs and Figure costs and

then add profitthen add profit

Pricing StrategiesPricing Strategies Value PricingValue Pricing: Find the balance : Find the balance

between quality and price. between quality and price. Value is NOT the same as cheap! Value is NOT the same as cheap!

e.g. Some customers will pay extra for prompt e.g. Some customers will pay extra for prompt delivery. (Fed-X)delivery. (Fed-X)

Customers assign a personal value to a product Customers assign a personal value to a product or service e.g. a teenager is willing to pay a or service e.g. a teenager is willing to pay a premium price for a concert performed by his premium price for a concert performed by his idol. idol.