Unit 2 The Marketing Mix 1
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Unit 2 The Marketing Mix 1
Read the text and say whether the statements given below the text are true or false.
The marketing mix (also known as 4Ps) is used by business to help them to reach their objectives and to plan and visualize their strategy. These 4Ps are controllable variables, which have to be carefully managed and must meet the needs of the defined target group of customers.
Product
When placing a product within a market many factors and decisions have to be taken into consideration. These include:
Product design: Will the design be a USP (Unique Selling Point i.e. the things that make the product special and different from other similar products) for the organization?
Product quality: Quality has to be consistent with other elements of the marketing mix. A premium pricing strategy has to reflect the quality a product offers. Product features: What features will you add that may increase the benefit offered to your target market?
Branding: A brand is a tool which is used by an organization to differentiate itself from competitors. Think about the Nike logo and how this influences people’s ideas on the product.
Price
Pricing is one of the most important elements of the marketing mix, as it is the only one of the 4Ps which generates a turnover for the organization. The remaining 3Ps are costs for the organization. Pricing should take into account the following factors: costs of producing the product, prices competitors charge, company objectives, target group and willingness to pay.
There are three main pricing strategies an organization can adopt:
1.Penetration pricing – the organization sets a low price to increase sales and market share.
2.Skimming pricing – the organization sets an initial high price and then slowly lowers the price to make the product available to a wider market. The objective is to skim profits off the market layer by layer.
3.Competition pricing – setting a price in comparison with competitors.
Place
This refers to how the organization will distribute the product or service they are offering to the end user. The organization must distribute the product to the user at the right place at the right time.
There are two channels of distribution they can use:
1.Indirect distribution involves distributing the product by the use of a ‘middleman’, for example, a manufacturer can sell to a wholesaler and then the wholesaler sells to the retailer.
2.Direct distribution involves distributing direct from a manufacturer to the consumer – for example, Dell Computers selling directly to its target customers. The advantage of direct distribution is that it gives a manufacturer complete control over the product.
Promotion
A successful product or service means nothing unless the benefits are communicated in an effective message delivered on a channel that is seen or heard by the target market. Examples of channels include advertising, public relations or developing positive relationships with the media, personal selling or selling a product or service one-to-one, direct mail, sports sponsorships, in-store promotions, etc. Companies with effective message strategies included: Nike Just do it and Toyota: The car in front is a Toyota.
Read the statements and decide whether they are true or false.
1.The 4Ps are used by companies to think about their marketing strategy.
2.The company changes its marketing mix to satisfy the needs of its target market.
3.If you have high prices, you need to provide a high-quality product.
4.A logo doesn’t add any value to a product.
2.Find these phrases in the text and match them with the correct definition, (a or b).
1)controllable variables
a)factors which are under the company’s control
b)factors which control the company
2)a USP (Unique Selling Points)
a)an exclusive place where the product is sold
b)an exclusive feature of the product that no other competitor product has
3) premium pricing strategy
a)a strategy of high prices
b)a strategy of competitive prices
4)target market
a)aims and objectives of the company in a specific market
b)groups of customers that the company is aiming its products at
5)differentiate itself from the competition
a)show clear differences from competitor products
b)avoid difference with competitor products
4.Answer the questions below.
Price
1. How is Price different from the other 3Ps?
2. What are the differences between penetration pricing, skimming pricing and competition pricing?
Place
1. What does Place mean to the organisation?
2. What is indirect distribution? What is direct distribution?
Promotion
1. Why is Promotion important to the company?
2. What examples of promotion channels are given
5.The following terms in italics appear in the interview. Underline the correct words to complete the definitions of these terms.
1. A niche – refers to specialist / mass markets or products which cater for a small / large number of customers. It is often a segment of a larger market.
2. A commodity product – refers to a product that is very different / very similar to other competitor products.
3. A lifestyle product – refers to a product that is the opposite of a commodity product. Consumers are mainly influenced by it’s ‘feel good factor’ / competitive price.
4. Turnover – refers to the total value of company’s sales. This is calculated by multiplying the number of units sold / produced by the price / cost of each unit.
5. Price sensitive – usually refers to customers or products who are highly sensitive to price changes, so if there is a small increase in price, there will be a small / large drop in demand.
6. Profit margin – refers to the difference between the cost of producing a unit and the cost / price of selling that unit. It is expressed as a percentage, e.g. a 100% margin.
6.Complete the description of turnover and margin in niche and mass markets. Use the words high or low.
Niche market low turnover / high margin
Mass market high turnover / low margin
7.Answer the following questions.
1. Is it good idea to offer price discounts?
2. Should companies spend more on promotion or finding good locations to sell the product or service?
Read the text and say whether the statements given below the text are true or false.
The marketing mix (also known as 4Ps) is used by business to help them to reach their objectives and to plan and visualize their strategy. These 4Ps are controllable variables, which have to be carefully managed and must meet the needs of the defined target group of customers.
Product
When placing a product within a market many factors and decisions have to be taken into consideration. These include:
Product design: Will the design be a USP (Unique Selling Point i.e. the things that make the product special and different from other similar products) for the organization?
Product quality: Quality has to be consistent with other elements of the marketing mix. A premium pricing strategy has to reflect the quality a product offers. Product features: What features will you add that may increase the benefit offered to your target market?
Branding: A brand is a tool which is used by an organization to differentiate itself from competitors. Think about the Nike logo and how this influences people’s ideas on the product.
Price
Pricing is one of the most important elements of the marketing mix, as it is the only one of the 4Ps which generates a turnover for the organization. The remaining 3Ps are costs for the organization. Pricing should take into account the following factors: costs of producing the product, prices competitors charge, company objectives, target group and willingness to pay.
There are three main pricing strategies an organization can adopt:
1.Penetration pricing – the organization sets a low price to increase sales and market share.
2.Skimming pricing – the organization sets an initial high price and then slowly lowers the price to make the product available to a wider market. The objective is to skim profits off the market layer by layer.
3.Competition pricing – setting a price in comparison with competitors.
Place
This refers to how the organization will distribute the product or service they are offering to the end user. The organization must distribute the product to the user at the right place at the right time.
There are two channels of distribution they can use:
1.Indirect distribution involves distributing the product by the use of a ‘middleman’, for example, a manufacturer can sell to a wholesaler and then the wholesaler sells to the retailer.
2.Direct distribution involves distributing direct from a manufacturer to the consumer – for example, Dell Computers selling directly to its target customers. The advantage of direct distribution is that it gives a manufacturer complete control over the product.
Promotion
A successful product or service means nothing unless the benefits are communicated in an effective message delivered on a channel that is seen or heard by the target market. Examples of channels include advertising, public relations or developing positive relationships with the media, personal selling or selling a product or service one-to-one, direct mail, sports sponsorships, in-store promotions, etc. Companies with effective message strategies included: Nike Just do it and Toyota: The car in front is a Toyota.
Read the statements and decide whether they are true or false.
1.The 4Ps are used by companies to think about their marketing strategy.
2.The company changes its marketing mix to satisfy the needs of its target market.
3.If you have high prices, you need to provide a high-quality product.
4.A logo doesn’t add any value to a product.
2.Find these phrases in the text and match them with the correct definition, (a or b).
1)controllable variables
a)factors which are under the company’s control
b)factors which control the company
2)a USP (Unique Selling Points)
a)an exclusive place where the product is sold
b)an exclusive feature of the product that no other competitor product has
3) premium pricing strategy
a)a strategy of high prices
b)a strategy of competitive prices
4)target market
a)aims and objectives of the company in a specific market
b)groups of customers that the company is aiming its products at
5)differentiate itself from the competition
a)show clear differences from competitor products
b)avoid difference with competitor products
4.Answer the questions below.
Price
1. How is Price different from the other 3Ps?
2. What are the differences between penetration pricing, skimming pricing and competition pricing?
Place
1. What does Place mean to the organisation?
2. What is indirect distribution? What is direct distribution?
Promotion
1. Why is Promotion important to the company?
2. What examples of promotion channels are given
5.The following terms in italics appear in the interview. Underline the correct words to complete the definitions of these terms.
1. A niche – refers to specialist / mass markets or products which cater for a small / large number of customers. It is often a segment of a larger market.
2. A commodity product – refers to a product that is very different / very similar to other competitor products.
3. A lifestyle product – refers to a product that is the opposite of a commodity product. Consumers are mainly influenced by it’s ‘feel good factor’ / competitive price.
4. Turnover – refers to the total value of company’s sales. This is calculated by multiplying the number of units sold / produced by the price / cost of each unit.
5. Price sensitive – usually refers to customers or products who are highly sensitive to price changes, so if there is a small increase in price, there will be a small / large drop in demand.
6. Profit margin – refers to the difference between the cost of producing a unit and the cost / price of selling that unit. It is expressed as a percentage, e.g. a 100% margin.
6.Complete the description of turnover and margin in niche and mass markets. Use the words high or low.
Niche market low turnover / high margin
Mass market high turnover / low margin
7.Answer the following questions.
1. Is it good idea to offer price discounts?
2. Should companies spend more on promotion or finding good locations to sell the product or service?
