Unit-3 marketing mix

Conceptual framework of marketing mix

The term marketing mix became family here after an article written by Neil H Borden published in 1964.
components of marketing consists of planning, pricing, branding, distribution channels, personal selling,
advertising, promotions, packing, display, servicing, physical handling, and fact finding and analysis.
Edmund Jerome McCarthy an American Marketing professor in 1960 produce these marketing mix
concepts and group these ingredients into the four elements that are product, price, place and promotion
which are popularly called as 4p's of marketing.
Meaning and definition
According to Philip Kotler "A marketing mix is the mixture of controllable marketing variables that the
firm uses to pursue the sought level of sales in the target market"
Marketing mix is a combination of product, place, promotion and pricing strategy is designed to produce
satisfying exchanges with preferred consumers.
Marketing mix

Product Price Place Promotion

Product variety Pricing strategies Warehousing Sales promotion
Product attributes Discounts Transportation Advertising
Packaging Credit terms Inventory Direct marketing
Branding Channels Public Relations
Servicing Sales force
PRODUCT MIX
Product mix is product management it's a process of planning, development and marketing of products
throughout the product life cycle. It consist all activities needed to get the product to market and after sale
services. Product is classified into two categories on the basis of consumption that are consumer products
and business products.
Examples for consumer products are household items food items personal care products electronic products
jewelers automobiles medicine investment schemes etc,.
Examples for business products are raw materials maintenance products like office supplies office
equipments, Component products like spare parts business services like advertising outsourcing.
PRODUCT PLANNING AND DEVELOPMENT
Products are important part of marketing plants and also for marketer's competitive growth strategy. in
order to survive in the competitive environment market US should ensure that the product is built with
consumer Friendly features.
Product planning is the process of identifying developing and executing ideas for manufacturing and
marketing of products from concept to market.
NEW PRODUCT DEVELOPMENT
New product development is a task which involves creation or innovation or announcement of a product
and its feature to fulfill consumer's requirements. In other words new product development is the complete
phase of introducing a new product to market.
STEPS INVOLVED IN NEW PRODUCT DEVELOPMENT

Idea generation

Screening and evaluation

Marketing strategy development

Business evaluation

Product development

Test marketing

Commercialisation

Step 1 Idea generation:

In order to develop new product ideas are required and this may be through a variety of sources such as
employees, consultants, competitors, consumers, distributors and suppliers. Firms can also use marketing
research activities and survey and generate idea. If idea is Innovative and unique it will get success in
market
Step 2 Idea screening and evaluation
2nd stage in development new products is idea screening and evaluation. After gathering ideas from a
variety of sources, The generated ideas are evaluated by review committee to provide required market
validation to meet customer requirements. Each idea is technically evaluated on the basis of customer
requirement.
Step 3 marketing strategy Development
After screening and evaluation and attractive strategy has to be developed into a product concept to attract
customer. Under the step form has to identify target market, has to use segmentation strategies, product
Positioning.
Step 4 Business evaluation
Once the marketer decides marketing strategy, the next stage is to evaluate business. Under business
evaluation marketer has to review commercial potentiality and investment requirements. Business analysis
involves the review of sales volume, revenue, cost projection, potential demand for the product and ability
of the firm to acquire raw materials and collaboration to introduce the product.
Step 5 Product development
Next step in new product development is to turn the concept into actual product which is done by research
and development or engineering team. to gain a commercial success, research and development team has
to develop products properly. This step also includes apply for patent to prevent competitor from copying
the invention.
Step 6 Test marketing
In test marketing product and its complete marketing plan has to test in the market in a very small scale. if
the new product successful tested market, then it is introduced on a large scale. In case of product failure
then company has to find out reasons for failure and should re-introduced it again. Even though test
marketing is expensive but company has to do with this step.
Step 7 Commercialization
The last step in new product development is commercialization. If the test marketing is successful firm can
go for product launch and promoting its product in targeted market. This step includes large scale
production, distribution & advertising. This stage company has to give huge publicity for new product.
PRODUCT FAILURE
Even though company has undergone various market research because of you reasons product fail in
market. Common reasons for failure of product in market as follows;
1. Market factor: Market factor refers to external environmental factors that are most likely to change
and are beyond control of business. Some of the market factors responsible for product failure are
summarized below
 Poor demand management  Changes in Environmental factor
 Changes in consumer taste and  Low profitability on account of higher
preferences than the cost
2. Product factors: Product factor indicates the way a product is designed. Some of the products factors
responsible for product failure are summarized below.
 Un attractive features
 No uniqueness
 Institutional factors:
3. Institutional factor: Institutional factor refers to internal factors. Marketing firm has control over these
factors. Some of the institutional factors responsible for product failure are summarized below.
 Wrong segmentation and targeting  Distribution related problems
 Week positioning strategy  Wrong pricing strategy
PRODUCT LINE
 A product line is a group of related products under a single brand sold by the same company.
Companies sell multiple product lines under their various brands.
  The objective of having product lines is to ensure that all products within a line are purchased by all
kinds of customers.
PRODUCT LIFE CYCLE
 The term product life cycle (PLC) used for the first time in 1965 for the first time by ‘Theodore
Levitt’ in Harvard Business Review Article.
 According to Philip Kotler “PLC is an attempt to recognize distinct stages in the sales history of the
product”
 It means “analysis of a product’s life in the market from the time of its launch till its withdrawn
from the market”
PLC is derived from biological life cycle

When seed planted Introduction stage

When it begins sprout Growth stage

When it maturing into adult Maturity stage

When it begins to shrink or die out Decline stage

1. Introduction Stage
Characteristics:
 The product is newly launched in the market.
 Awareness and demand are low.
 Sales grow slowly as the market is not yet familiar with the product.
 High investment in marketing and promotion.
 Little or no profit due to high costs of production, distribution, and promotion.
Marketing Strategies:
  Promotion: Heavy advertising to create awareness and stimulate demand.
 Pricing: Companies may use price skimming (high initial price) to recover costs or penetration
pricing (low price) to quickly gain market share.
 Distribution: Limited distribution channels; focus on getting the product in the hands of early
adopters.
Example: The launch of electric vehicles (EVs) like the Tesla Roadster during their introduction phase.
2. Growth Stage
Characteristics:
 The product gains acceptance, and sales grow rapidly.
 Increasing profits due to economies of scale.
 New competitors may enter the market with similar products.
 Expanded distribution and market penetration.
 Focus on differentiating the product from competitors.
Marketing Strategies:
 Product Improvements: Introduce product variations or enhancements to maintain competitive
advantage.
 Distribution: Expand distribution channels and reach new market segments.
 Promotion: Shift focus from awareness to brand preference and customer loyalty.
Example: Smartphones experienced rapid growth after initial market acceptance, with companies like
Apple and Samsung introducing new features.
3. Maturity Stage
Characteristics:
 Sales growth slows down and reaches its peak.
 Market becomes saturated with competitors offering similar products.
 Intense competition may lead to price reductions, reducing profit margins.
 Market share stabilizes, and only a few major players dominate.
Marketing Strategies:
 Differentiation: Focus on differentiating through branding, product features, or customer service to
stand out from competitors.
 Cost Efficiency: Emphasize efficiency in production and distribution to maintain profitability
despite competitive pressures.
 Promotions: Use loyalty programs, discounts, and promotions to retain existing customers and
attract new ones.
Example: The soft drink industry, with brands like Coca-Cola and Pepsi, is in the maturity stage, where
they focus on brand loyalty and slight product innovations.
4. Saturation Stage
Characteristics:
 Market is fully saturated, with little or no room for growth.
 Sales plateau, and there is minimal opportunity for new customer acquisition.
 High competition forces companies to innovate or seek new markets.
 Declining profit margins due to price wars and increased competition.
Marketing Strategies:
 Innovation: Introduce new features, variants, or complementary products to refresh the product
line.
 Market Expansion: Seek out new markets or international expansion.
 Efficiency: Continue optimizing production and supply chain efficiency to cut costs.
Example: The fast-food industry is a good example, where companies continuously introduce new menu
items or expand into new markets to sustain growth.
PACKAGING
 According to philip kotler “packaging is an activity of designing & producing the container for a
product”
 In the words of William J Stanton “packaging may be defined as general group of activities in product
planning which involves designing & producing container or wrapper of product”
Objectives of packaging
 For Protection & preservation  To enhance product image
 To improve logistics efficiency  For product identification
 To provide Information  For Product positioning
 For Convenience  To promote Product
Packing strategies

Family packaging Multiple packaging

Reuse packaging Ecological packaging

1. Family packaging
  Marketers offer entire product range that closely resemble to one another in same design of package.
 Family packaging strategy has nothing to do with families.
 It means products in the same brand have a similar type of visual packaging.
 Benefits:
o Easy to recognize the brand & to save time
o To reduce packing cost
 Example: Dettol products
2. Multiple packaging
 In multiple packaging marketer offer a number if closely resembling yet different in features product
used by one customer in a single packaging.
 The concept behind Multiple packaging is to meet a combination of needs of a consumer.
 It best, quickest & easiest way to increase the volume of sales.
3. Reuse packaging
 Marketer offer products in packages that can be reusable after consumption.
 Reusable packaging offers a wide range of economic, social & environmental benefits
 Eg: products sold in plastic jars & glass can be reused by the customer
4. Ecological packaging
 Marketer offer products in eco-friendly packing products.
 It is cost saving packing method
 This method is a part of Green marketing.
 Marketer tries to create awareness among customers.
PRICE MIX
Price
 According to Philip kotler “Price is the amount of money charged for a product or service”
 Michael R Solomon “price is the assignment of value, or the amount the consumer must exchange to
receive offering or product”
 In the words of J Walker “Price is equal to the total product offering”
Pricing: Pricing is the process of coating or deciding price for a product.
Objectives of pricing
 Profit maximization objective  Survival objective
 Price stabilization  Cash flow management
 To achieve market share  Prestige & brand image
Factors influencing pricing
1. Internal factor
a) Product uniqueness: The term product uniqueness indicates how different a product in comparison
with its competitors. Customers are always willing to pay more than they would like for unique
products. If any unique products are manufactured then marketer can claim his pricing strategy with
the uniqueness.
b) Cost of production: Cost of producing a product plays a big role when firm decide what to charge for
it. Production costs include startup costs variable cost and fixed costs. For example cost of raw
materials, rent salaries and wages maintenance expenses, advertising and promotion, packaging cost,
transportation. if company in incurred more cost for its product to produce then it has to charge more
price for its product. If company incurred less cost for its products then it can charge a less price for
its product.
 c) Stage of product life cycle: A stage in which company's product is situated in the product life cycle
decides price of a particular product. If company product is an introduction stage normally company
will charges less price for this product. If company's products are in growth stage the company will
think regarding price flexibility.
If company's product maturity stage company will look towards product modification and it will not
go for price changes.
If company's products are in decline stage then company will decide to reduce the cost to increase the
sales.
d) Pricing objectives: Pricing objectives provides direction to the whole pricing process. These
objectives provide guidance to decision makers in formulating price policies. Pricing objectives are
profit maximization in long run, in short run and maintaining market share.
e) Distribution channels: Distribution channel is the network of intermediaries it includes wholesaler,
distributor and retailer. Specifically when multiple channels of distribution are employed parallelly
increases the cost for these channels. Then, company will transfer the cost burden to customers in
terms of price.
2. External factors
a) Product supply and demand: Basic laws of demand and supply have an influence on pricing strategy.
if supply of a product is low then price will normally high & vice versa. If product demand is higher,
than normally price will be high and vice versa.
b) Economic situation: Economy goes through a series of situation associated with many economic
activities. Price varies during the various economic situations such as inflation, deflation, recession
and prosperity.
c) Government regulations: Another important factor in the environment that influences how marketers
develop pricing strategies in government regulations. For example in some industries, government
regulation may set ceiling and taxes.
d) Suppliers: Suppliers are part of the supply chain management who supplies the resources needed to
produce goods and services this includes manufacturers, importers and wholesalers. Supplier inputs
like raw materials can influence the price of the product if supply decreases price will more higher
because the product is more scarce.
Methods of pricing of pricing strategies

Based on customer Based on competition

Based on geographical
Based on cost & demand
location
1. Based on customer
a) Odd-even pricing: (ex: fixing Rs 499 for Rs 500 ranged products)
b) Dual pricing: selling same product for different price in different market
c) Psychological pricing: deals with emotions of customer [consumer assumes higher price indicates a
higher level of quality & vice versa]
d) Prestige pricing: also known as premium pricing. Marketer set higher price than normal price to
create superior quality & image.
 e) Price lining: prices are set with certain price points (ex- car seller come up with 3 verities of pricing
for same model, Movie tickets)
2. Based on competition
a) Penetration pricing: strategy in which firm introduces new product at a very low price to encourage
more customers to purchase it. This strategy aims to encourage customers to purchase new product &
to increase market share.
a. Eg: News papers, Jio
b. The major drawback is difficult for marketer to increase price in future.
b) Skimmed pricing: Marketer charge very high price initially.
a. Eg: home appliances, electronic gadgets
b. Firm set a high price during the first stage of product life cycle. When product reaches to
maturity stage price is lowered
c) Monopoly pricing: A monopoly is when business dominates the entire segment whit no competitors.
Marketer prices a product to maximize profits. Monopoly pricing is higher than the normal price.
d) Administered pricing: price of a products or services is set by govt. or regulatory bodies. Instead of
determined by regular market forces demand & supply.
Eg: Petroleum products in India is governed by the administered pricing system based on
recommendations of the “Oil pricing Committee”
3. Based on cost & demand
a) Cost plus pricing method: Seller totals all the costs incurred for the product & then adds profit to
cost for fixing price. Product price include cost of operating the business & profit.
b) Target return pricing: Here firm determines the price that would yield its target rate of return on
investment (ROI) pre-determined percentage of return (profit) is added.
c) Demand based pricing: If demand is high then price will be more & if demand is low the price will
less.
4. Based on geographical location
a) FOB Pricing (Free on board): Includes price of goods plus cost service of loading goods to vehicle
or vessel. Ownership is transferred to the buyer as soon as it leaves the point of origin.
b) Zone pricing: price of goods & services based on the location where they will be offered for sale to
customers.
c) Base point pricing: Marketer first decide one or more locations as base points & the transport cost
is collected from the base point of the buyer’s location.

PLACE MIX OR PHYSICAL DISTRIBUTION

 Physical distribution in marketing implies to set of activities dealing with handling, movement &
storage of goods from the point of origin to the point of consumption.
 The supply chain: supply chain refers to set of activities that flow of goods amongst network of
interconnected business to maximize total profitability.

Distribution channel
 According to William J Stanton “distribution channels for a product is the route taken by the title to the
goods as they move from the producer to the ultimate customer.
 Types of Channels of distribution.
 Zero – channel: Producer – Customer
 One – Level Channel: Producer – Retailer – Customer
 Two - Level Channel: Producer – Wholesaler - Retailer – Customer
 Three - Level Channel: Producer – Distributor - Wholesaler - Retailer – Customer
Functions of intermediaries
 Procurement & Assembling  Financing
 Warehousing & storing  Supply of market information
 Grading & packing  Advertising & communication
 Selling

Promotion
Promotion is persuasive communication. Persuasion stands for the various activities the company
undertakes to inform, persuade and convince the target consumers that its products satisfy their needs.
Types of promotion
Marketer needs to formulate an effective Promotional mix to capture the market to fullest advantage.
different elements of Promotion Mix are:
1. Advertising
2. Sales Promotion
3. Public Relation
4. Direct Marketing
>Personal Selling
> Tele Marketing
>Tele shopping
> Mail Order etc.
5. Others: Event Marketing, POP Displays, Trade Shows & Exhibitions,
Internet Marketing and Word Of Mouth

1. Advertising-Non-Personal
Paid Communication using Mass media. Impersonal Salesmanship for promoting products,
services or ideas by an identified sponsor.
2. Sales Promotion- Non-Personal
Short term promotion tools to stimulate consumer purchasing and dealer effectiveness.
3. Public Relation-Non-Personal
Placing commercially significant news in media that is not paid for by the sponsor
4. Direct Marketing: Organizations communicate directly with customers on one-on-one basis to
generate a. response and/ or a transaction.
5. Others:
• Event Marketing: Companies link the brand to special events. They can arrange special events
themselves or participate in events by other parties.
• Trade Shows & Exhibitions: Companies in a specific industry get together to showcase their
products called exhibits, in specially designed booths. They are attended by industry members,
suppliers, buyers, media, and by general public during specific hours. Eg. Auto Expo; Plastex.
• POP Displays: Manufacturer provides dealer with the attractive POP displays such as Stands,
Billboards, Wall signs, counter displays etc. that act as the silent salesman.
 • Online Marketing: There has been dramatic growth of communication through interactive media
– Internet and Mobile. Companies have developed websites to inform, interact, promote, sell as well
as entertain their customers. The new media allows users to: receive and alter information and
images, respond to questions, make comparisons/ evaluations and purchases.
• Word Of Mouth: Word-of-mouth communication is informal communication among friends/
personal contacts regarding a product/ service or company. Customers having good experiences
generate positive WOM and vice versa. Companies need to create Positive WOM and take remedial
actions to correct negative WOM.

Advertising
It is a paid form of non-personal presentation and promotion of ideas, goods or services buy an identified
sponsor. Advertisement is the presentation to a group an oral and/or visual message regarding a
product/ service.

Features of advertising
 It is non personal form of communication
 It is paid by a sponsor’
 It process of influencing customers
Benefits/ Arguments in favor of Advertising
 Stimulates demand, production, employment and income, leading to rising purchasing power and
better living standards.
 Facilitates mass production and mass distribution.
 Promote acceptance of new innovations.
 Informative advertising give consumers relevant and adequate information about all products and
exercise their right to choose in an intelligent manner.
 Builds up brand preference and brand loyalty and therefore greater emphasis is on brand quality.
 Educative Value as it teaches new ways of life. Increase in sales volume.
 Facilitates large scale of production.
 Protection from competitors.
 Minimization of seasonal variation in business
 Stabilization of price.
 Securing dealers.
 Less expensive than salesmanship.
 Provide information and visualization of product.
 It creates employment opportunities for society.
Drawbacks/ Arguments against Advertising
 Increases the prices of goods
 Wasteful expenditure
 Enables creation of monopoly by preventing entry of small firms
 Some advertising is fraudulent, misleading or deceptive. Makes one buy products, they do not want
and at prices they cannot pay.
 It is less flexible than other methods.
 It is one sided form of communication
 Company cannot ensure that advertisement has reached their target audience
 It used to mislead the customers by giving false information
 It creates monopolistic tendencies especially for branded products

Salesmanship/ Personal selling

A salesman is one who practices the profession of selling. It is practice of investigating and satisfying
customer needs through a process that is efficient, fair, sincere, and mutually beneficial and aimed at long-
term productive relationship.
“The process of inducing and assisting a prospective buyer to buy a commodity or services or to act
favourable upon an idea that has commercial significance to the seller” By American Management
Association.
Personal selling or salesmanship refers to oral presentation in conversation (by a sales representative) with
one or more prospective customer for the purpose of making sales.

Features of personal selling

• It is persuasion
• Winning the buyer’s confidence
• Aims at mutual benefits
• An education process
• Creative process
• Problem solving approach

Advantages of Personal selling

 A salesman can pin point prospect
 Assures attention and interest of prospect
 Adjust sales presentation to meet expectations of buyers
 Two way communication
 Easily sales can take place
 Powerful mean of convincing

Disadvantages of personal selling

 High cost
 Good & competent salesman are scarce

Difference between Advertising and salesmanship

Sales Promotion
Those marketing activities other than personal selling, advertising and publicity that stimulate consumer
purchasing and dealer effectiveness such as display, shows, exhibitions, demos and other non-recurrent
efforts not in the ordinary routine.
Sales Promotion Tools: Consumers

1. Samples: Free samples to induce trial of new product (FMCG). It is expensive but powerful tool.
Eg. Knorr soupy noodle free with Knorr tomato soup.
2. Coupons: it is a certificate that entitles the consumer to a specific savings on the purchase of a
specific product. It is issued through inside the package/ by mail/ doorto-door. Accepted as Cash by
the retailer. But sometimes retailers are reluctant to accept the coupons due to fear of
reimbursement from the company
3. Bonus Offers/ premium: they are actual products or services offered as an incentive to buy other
product. Another product free or at less price. Eg. Bucket free with Surf 5Kg pack
4. Price-Off: Reduction in price per pack or multiple packs at a discount. Eg. 3 Dove Bars packed
together at reduced price
5. Money Refund offers–in this manufactures will refund the price of the product if customer is not
satisfied. Online shopping
6. Contests/ Sweepstakes/ Games: Consumer fills in the form which may have some word game,
puzzle, quotation writing and sends it to the company. The best entry or the lottery method, winner
is declared.
7. Demonstration– generally done for new product. Demonstrations of the product are staged at
exhibitions and fairs
8. Early Order Discount: Place orders before a particular cut-off date.

Advantages of sales promotion

 It enhances volume of sales which increase production and reduces cost.

 It stimulate positive attitude towards the product.
 It supplements the effort of personal selling and advertisement.

Public Relations
Public Relations (PR) is another tool of promotional mix designed to improve, maintain or project a
company or product image. PR is a two way communication between the organization and the target group
(publics) to establish understanding based on truth, knowledge and complete information.

Labeling is part of packaging. It provides written information about the nature of the product,
distinctive features, its composition, its performance etc.

Generally, the marketers are required to follow certain statutory labeling requirements. Central Packaged
Commodities (Regulation Order) 1975, makes it mandatory for the manufacturer to disclose the following
information on the label:
 Name of manufacturer
 Date of manufacture & Date of expiry
 Net weight of the product, MRP

Branding
Brand:
A brand is a name, term, sign, symbol, design or a combination of the above to identify the goods or
service of a seller and differentiate it from the rest of the competitors.
Brand is “The sum of all characteristics, tangible and intangible, that make the offer unique”. A brand
comprises of Tangible attributes and Intangible attributes
 Tangible attributes are : Product, Packaging, Labeling, Attributes, Functional benefits
 Intangible attributes are : Quality, Emotional benefits, Values, Culture, Image Brands &organizations
spend considerable sums telling customers what they

Types of Brands
1. Individual Brand Name: Each product has a special and unique brand name. Eg. Vim, Pond’s
manufacturer has to promote individually n market.
2. Family Brand Name: Family name is limited to one line of products that are similar in terms of end-
use. For eg. Kissan Jam, Kissan Tomato Ketchup; it helps in creation of strong self-display but one
member of family brand is rejected by the customers it will affect entire brand.
3. Umbrella Brand: All products have the name of the company/ manufacturer. For eg. Tata, Dabur It
helps to minimize cost of promotion.
4. Combination Device: Each product has an individual name but also has the umbrella brand to indicate
the business house producing the product. Eg. DaburVatika Shampoo.
5. Private or Middleman’s Brand: Manufacturer merely produces goods as per specifications and
requirement of distributors and the Middleman/ Wholesaler/ Retailer gives his brand name. For eg.
Superstores like M.K.Retail -Essentials, Total Mall , Food World…