LO 02: Ways in which organisations use elements of

Marketing Mix to achieve overall business activities.

2.1 The 7P’s Marketing Mix

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2.1.1 Creating a unique selling proposition for
products and services
What Is a Product?
▪ In general, a product is defined as a “thing produced by labor or effort” or
the “result of an act or a process.” The word “product” stems from the verb
“produce”, from the Latin prōdūce(re) “(to) lead or bring forth.” Since 1575,
the word “product” has referred to anything produced.

▪ In marketing, a product is anything that can be offered to a market that

might satisfy a want or need. In retail, products are called merchandise. In
manufacturing, products are purchased as raw materials and sold as
finished goods.

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Goods, Services, or Ideas
▪ Goods are a physical product capable of being delivered to a purchaser
and involve the transfer of ownership from seller to customer.
▪ A service is a non-material action resulting in a measurable change of
state for the purchaser caused by the provider.
▪ Ideas (intellectual property) are any creation of the intellect that has
commercial value, but is sold or traded only as an idea, and not as a
resulting service or good.
Product and Service Classification
▪ Products are broadly classified into two categories – consumer
products and industrial products.

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Industrial Products
❑ Machine and Machine Parts: These goods are used entirely in the manufacturing process.
❑ Capital items: These are goods/products used to manufacture finished goods.
❑ Business Services and Supplies: These are industrial goods and services that facilitate the
manufacturing process.

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5 levels of Product
1. Core Benefit
2. Basic Product
3. Expected Product
4. Augmented Product
5. Potential Product

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Advantages of 5 Product
The real advantage of the model is that it enables an organization to identify the
needs and wants of customers. The organization can then match;

• the features they create to what the customer wants.

• operational processes to what customers want. In our hotel example, this would
mean strict processes around cleaning each room.
• marketing efforts to appeal to customers wants.
The model ultimately helps organizations differentiate themselves from their
competitors in a way that aligns with the wants and needs of their customers.

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Difference between Products and Services
BASIS FOR
COMPARISON
PRODUCT MARKETING SERVICE MARKETING
Product marketing refers to the process in
which the marketing activities are aligned to
Meaning promote and sell a specific product for a Service marketing implies the marketing of
particular segment. economic activities, offered by the business to
its clients for adequate consideration.
Marketing mix 4 P's 7 P's
Sells Value Relationship
Who comes to
whom? Products come to customers. Customers come to service.

It is neither owned nor transferred to another

Transfer It can be owned and resold to another party.
party.

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 Services cannot be returned after they are
Returnability
Products can be returned. rendered.

Tangibility They are tangible, so customer can see and They are intangible, so it is difficult to
touch it, before coming to the buying decision. promote services.

Separability Product and the company producing it, are

separable. Service cannot be separated from its provider.

Customization Products cannot be customized as per Services vary from person to person, they can
requirements. be customized.

Imagery They are imagery and hence, receive quick They are non-imagery and do not receive
response from customers. quick response from customers.
Quality
Quality of a product can be easily measured.
comparison Quality of service is not measurable.

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2.1.2 Product portfolios analysis
Boston Consultancy Group Matrix
▪ Boston Consulting Group (BCG) Matrix is a
four celled matrix (a 2 * 2 matrix) developed by
BCG, USA.
▪ It provides a graphic representation for an
organization to examine different businesses in
its portfolio based on their related market share
and industry growth rates. It is a two-
dimensional analysis on management of SBU’s
(Strategic Business Units).
▪ Relative Market Share = SBU Sales this year
leading competitors sales this year.
Market Growth Rate = Industry sales this year -
Industry Sales last year.

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GE-McKinsey Matrix
▪ The GE-McKinsey Matrix (a.k.a. GE Matrix,
General Electric Matrix, Nine-box matrix) is
just like the BCG Matrix a portfolio analysis
tool used in corporate strategy to analyse
strategic business units or product lines
based on two variables: industry
attractiveness and the competitive strength
of a business unit.
▪ By combining these two variables into a
matrix, a corporation can plot their business
units accordingly and determine where to
invest, where to hold their position, and
where to harvest or divest.

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Product Life Cycle
▪ Product life cycle is a representation of the cycle through which each product goes
through from introduction to decline and eventual demise of the product.
▪ There are four distinct stages in a product’s lifecycle. Right from the introduction of
the product in the market to its end. Every stage has its own distinct features. And the
company should change its marketing strategy every time the product makes its move
from one stage to another.

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New Product
Development
▪ There are 7 simple steps of
new product development.

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2.1.3 Reviewing pricing models

▪ Firstly, the perceived value of your product influences your product pricing strategy.
▪ The second factor that influences your product pricing strategy is the level of
competition.
▪ The level of market demand is another factor that influences your product pricing
strategy.
▪ The fourth factor that influences your product pricing strategy is the demographics of
the targeted customers, including age, educational status, income levels, etc.
▪ There are several types of pricing strategies that can be implemented but careful
consideration must be made to the aforementioned factors before developing the
pricing strategy. Once the firm's pricing objective has been determined, the pricing
strategy can be determined.

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2.1.4 Different Pricing Strategies
▪ Competitive pricing: pricing your product based on the prices your competitors have on the same
product.
▪ Penetration pricing: strategy used to gain entry into a new market to attract and grow market
share.
▪ Premium pricing: adopted when there is something unique about the product (very high quality and
small amount available) when the product just launched, there is a distinct competitive advantage.
▪ Skim pricing: similar to premium pricing strategy. However, here the price will eventually be
lowered as competitors enter the market.
▪ The loss leader pricing: refers to products having low prices placed on them in an attempt to lure
customers to the business and make further purchases.
▪ Multiple pricing: strategy used to get customers to purchase a product in greater quantities by
offering a slight discount on the greater quantity.
▪ Product line pricing: used when a range of products or services complement each other and can
be packaged together to reflect increasing value.

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Different pricing strategies and tactics
▪ While setting the price of a product or service the following points have to be kept in mind:

▪ Nature of the product/service.

▪ The price of similar product/service in the market.

▪ Target audience i.e. for whom the product is manufactured (high, medium or lower class)

▪ The cost of production viz. Labor cost, raw material cost, machinery cost, inventory cost,
transit cost, etc.
▪ External factors such as Economy, Government policies, Legal issues, etc.

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Thank you!

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