Marketing Mix: Product and Price — notes

The marketing mix is the set of controllable decisions a firm combines to satisfy its target buyers: the four Ps.

• Product — what is offered, including design, brand, label and pack.
• Price — what buyers pay, including discounts and credit.
• Place — channels and physical distribution.
• Promotion — advertising, sales promotion, personal selling and publicity.

The four Ps are interdependent: each must support the others and match the target buyers, or the message to buyers becomes confused.

A product is anything offered to satisfy a need: a bundle of utilities, tangible and intangible.

Consumer goods (for personal use):

• Convenience goods — bought often, quickly, nearby; low price.
• Shopping goods — bought after comparing quality, style and price.
• Specialty goods — unique; buyers make a special effort and accept no substitute. They may also be durable or non-durable.

Industrial goods (for producing other goods): raw materials and components; capital items (installations and equipment); supplies and business services.

Services vs goods: services are intangible, perishable, inseparable (produced and consumed together), variable, and involve no transfer of ownership.

Brand: a name, term, sign, symbol or design that identifies a seller's product. Brand name — the spoken part; brand mark — the part recognised by sight; trademark — a brand given legal protection by registration.

Merits of branding: to sellers — differentiation, loyalty, easier launches, some price premium; to consumers — easy identification, assurance of quality, satisfaction, easier redress.

A good brand name is short, easy to pronounce and remember, distinctive, suggestive of benefits and capable of registration.

Labelling: describes the product, identifies the brand, grades, promotes, and carries legally required details.

Packaging levels: primary (touches the product), secondary (holds the primary pack), transportation (for shipping). Features of good packaging: protection, convenience, attraction, information, reasonable cost and care for the environment. In self-service stores, the pack acts as a silent salesman.

Price is the amount a buyer pays for a product.

Factors:

• Cost — sets the lower limit in the long run.
• Demand and utility — what buyers are willing to pay sets the upper limit.
• Competition — close rivals keep the price near theirs.
• Government regulation — some prices are capped or controlled.
• Marketing methods — outlets, services, credit and promotion change cost and value.
• Pricing objectives — market share, profit, image or survival.

• Cost-plus pricing — cost per unit plus a fixed mark-up.
• Competitive (going-rate) pricing — price in line with rivals.
• Skimming pricing — a high price at launch for a new product, lowered later as rivals enter.
• Penetration pricing — a low price at launch to win a large share quickly.
• Value-based pricing — price set by the value customers perceive.