Fundamentals of

Marketing
Session -05
 Marketing Mix Strategies (product, price, place & promotion).
 Extended Marketing Mix Strategies (people, process & Physical evidence).
Content
• Marketing Mix
• Product
• Price
• Place
• Promotion
• Extended Marketing Mix
• People
• Process
• Physical evidence
Marketing Mix
Introduction
Marketing deals with seven main strategies and decisions
1. what a company is going to produce (product).
2. How much it is going to charge (price).
3. How it is going to deliver the product/services to the customer
(place).
4. How it is going to tell its customers about its
products/services(promotion)
Example
Marketing
Mix
Extended Marketing Mix
1. Who is involved in this process (people involvement).
2. What process it is going to use (process).
3. What physical evidence it is going to use (Physical evidence).
Product
• Successful companies find out what customers need or want and then
develop the right product with the right level of quality to meet their
expectations, both now and in the future.
• To develop a product we use two approaches
1. New Product Development Process (NPD)
2. Product Onion
 Product (Cont.)
• New Product Development Process
Product (Cont.)
• Product Onion
Product (Cont.) – Product onion
• Core product - The most fundamental level is the core benefit. This is the
fundamental product or service benefit that the customer is really buying. E.g. A
hotel guest is buying 'rest and sleep'. This is the core benefit offered.
• Basic product - At the second level, the marketer has to turn the core benefit into
a basic product. Thus, a hotel room includes a bed, bathroom, towels, desk,
dresser and closet etc.
• Expected product - At the third level, the marketer prepares an expected product,
a set of attributes and conditions buyers normally expect when they purchase this
product. Hotel guests expect a clean bed, fresh towels, working lamps, and a
relative degree of quietness. Because most hotels can meet this minimum
expectation, the traveler normally will settle for whichever hotel that’s most
convenient or least expensive.
Product (Cont.) – Product onion
• Augmented product - At the fourth level, the marketer prepares an
augmented product that exceeds customer expectations. A hotel can include a
remote control television set, fresh flowers, rapid check in, express check out,
fine dining and room service. Augmentation benefits may also soon become
expected benefits. E.g. Today’s hotel guests expect a remote control television
set in their hotel rooms.
• Potential Product - At the fifth level stands the potential product, which
encompasses all the possible augmentation and transformations the product
may undergo in the future. This stage is where companies search for new ways
to satisfy customers and distinguish their offering. Ritz Carlton hotels,
example, remember individual guest preferences and prepare rooms with these
preferences in mind.
Price – Pricing strategies
• When considering the price of your product, it’s important to look at it
from the customer’s perspective:
1. Penetration pricing - Enter market with special offer pricing to get
market share quickly. This was used by utilities entering European
deregulated markets.
2. Skim the cream (Skimming pricing) - Start with a high price to get
the early adopters and then gradually reduce. This happens in
technology markets such as PCs and Hi-Fi.
3. Premium pricing - Adopt a platform of high prices and stick to it.
For example, Rolex watches.
Price – Pricing strategies (Cont.)
• Cost plus pricing – Adding a profit margin on top of the cost.
• Target pricing - Fixing price by market segments or distribution
channels.
• Price discrimination - For example, fixing a price too high (or too
low) to exclude certain customers. For instance, some airport
customers will pay extra to park in the short term or business car park
while others won’t.
• Odd number pricing - Psychologically ending a price with a 9
makes it appear disproportionately cheaper. For example, £4.99 seems
considerably cheaper than £5.00.
Place -
• The product must be available in the right place, at the right time and
in the right quantity, while keeping storage, inventory and distribution
costs to an acceptable level.
• Factors to consider are which channels to use to get the product to
market. Traditional options are retailers, wholesalers, agents, resellers
and distributors. The Internet has meant that product owners have been
able to offer goods and services directly online by direct marketing
activity. In some cases this has cut out the middle man
(disintermediation).
Place (cont.)
• Distribution channels
Promotion
• Promotion is the way a company communicates what it does and what
it can offer customers. It includes branding, advertising, PR, corporate
identity, social media outreach, sales management, special offers and
exhibitions.
• Promotional activity is generally both:
• a) Pull – using advertising to generate a demand from the customer.
• b) Push – encouraging the channels to stock the product.
• The promotional mix includes: • advertising • sales promotion • direct
marketing • public relations and media • selling • exhibitions /
conferences • web activity.
Promotional Mix
Promotional Mix / Communication Mix
• Marketing communication mix consists of eight major modes of
communication
• Advertising - Any paid form of nonpersonal presentation and promotion
of ideas, goods, or services by an identified sponsor via print
media( newspaper & magazines), broadcast media (radio & television),
network media (telephone, cable satellite, wireless), electronic media
(audiotape, video tape, video disk, CD-ROM, web page), and display media
(billboards, signs, posters)

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

purchase of a product or service including consumer promotions ( such as
samples, coupons, and premiums), trade promotions (such as advertising
and display allowances), and business and sales force promotions .
Promotional Mix / Communication Mix(cont.)
• Events and experience – company-sponsored activities and programs
designed to create daily or special brand-related interactions with
consumers, including sports, arts, entertainment, and cause events as well
as less formal activities.

• Public relations and publicity – A variety of programs directed

internally to employees of the company or externally to consumers, other
firms, government, and media to promote or protect a company’s image or
its individual product communication.

• Direct Marketing – Use of mail, telephone, fax, e-mail, or internet to

communicate directly with or solicit response or dialog from specific
customers and prospects.
Promotional Mix / Communication Mix(cont.)
• Interactive marketing – online activities and programs designed
to engage customers or prospects and directly or indirectly raise
awareness, improve image, elicit sales of products and services.

• Word-of-mouth marketing – people-to-people oral, written, or

electronic communications that relate to the merits or experiences
of purchasing or using products or services.

• Personal selling – Face-to-face interaction with one or more

prospective purchasers for the purpose of making presentations,
answering questions, and procuring orders.
Extended Marketing Mix
Physical evidence
• For service brands with intangible products like utilities, selling
airtime or providing a service, physical evidence is very important.
For instance, a university is dependent on the quality of its literature
and imagery to sell the quality of the university to prospective
students.
• Therefore, the logo, design, use of imagery, key words, style, tone and
quality of thought that goes into literature and promotions is extremely
significant. Differentiation has to be expressed in words and often
relies on independent research and quotes to justify the buying
decision.
Extended Marketing Mix (Cont.)
Processes
• With the absence of product, the processes have to be really good to
achieve customer satisfaction. For instance, a book club or Fed Ex
must have the item arriving on time to the customer. Complaints must
be handled well, correctly and to market relevant speed.
• A pizza delivery firm cannot deliver cold pizzas. A taxi must turn up,
and utilities bills and bank statements must be accurate. A worrying
trend is global outsourcing which can represent a huge risk if quality
standards fall.
Extended Marketing Mix (Cont.)
People
• Marketers depend on the quality of people to deliver marketing messages in a
service environment. In this sense, the staff members are the brand since they
represent the organisation to customers.
• A company needs to have values that staff members adhere to, such as the
tone in which to address customers, support for the customer and training for
operatives.
• It is important to have a culture of customer focus, relevant competences,
professionalism and accountabilities. In addition, the staff need to understand
the market proposition, why is the service better, what does the company
offer that is better? In other words, what is the differentiation?