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2.4 The Action Plan: The Marketing Mix Decision [4 P's] (1. Product …
2.4 The Action Plan: The Marketing Mix Decision [4 P's]
1. Product
The product or service offered is at the center piece of the marketing mix. The product offering is the complete set of ways that a firm delivers value to its chosen customers.
Evolving product lines -
A firms product offering changes over time.
Additions -
Adding an item to a product line alongside existing products can represent a
trade up
or
trade down
Modifications -
"New and Improves" features to existing items are quite common and model changes may occur at regular intervals.
Product Testing -
The key success factor is to have the output of the product design process be " a differentiated product that delvers unique benefits and a compelling value proposition".
Testing with customers can be done in a number of ways, including surveys, taste tests and simulated/ actual test markets.
Product Depth and Line Organization -
How deep should a given product line be? How many offering of a given type will there be (within a product line).
A "good, better, best strategy is common"
Product Breadth -
Refers to the verity and number of product lines offered. Some firms have a narrow focus with few product lines.
2. Promotion
How organizations communicate with potential customers about product positioning.
Tasks
A useful mnemonic for tasks in planning a communication strategy is the
6Ms
model.
Tactics
3.
Message.
What are the specific points to be communicated?
4.
Media.
Which vehicles will be used to convey the message?
5.
Money.
How much will be spent in the effort.
Results
6.
Measurement.
How will impact be assessed after the campaign?
Objectives
1.
Market.
To whom is the communication to be addressed?
2.
Mission.
What is the objective of the communication?
Tools
Mass addressable vs customized communication
Mass medium communication -
usually one way eg) TV
Customized communication -
usually two-way eg( salesperson where the message is customized to the communication needs of the recipient.
Promotion
Customer Promotion -
May include Free samples, continuity programs and coupons.
Trade Promotions -
Include incentives to retailers , such as free goods or discounted prices if the product is provided in end-of-isle displays.
One-way vs. Two-way communication
One-way
outbound communication eg) TV ad
Two-way
communication involves an interaction with an initiator and a receiver. eg) speaking with a sales person
3. Place
Refers to distribution channels or where and how an organization decides to go to market.
4.Price
Has the role of tapping into the value of the product to create revues for the firm and thus cover costs and generate profit. Pricing mechanisms can differ eg) in auctions, the buyer determines the price OR google advertising, the customer determines the price per click.
The Value-Based Approach -
The key element is the perceived value
(PV)
of the product by the customer.
The true economic value
(TEV)
must take place relative to the next-best alternative as seen by the customer and can be
calculated as follows:
TEV :arrow_right: [price of next best alternative] :heavy_plus_sign: [value of the performance differential compared to the next-best alternative].
Perceived value can be assessed through market research.
Price Sensitivity
A customers price sensitivity increases in the following circumstances:
1.
When the end user, rather than a third party bears the cost.
2.
When the cost of the item represents a large fraction of a customers total expense.
3.
When the buyer is not the end use but rather sells the end product in a competitive market.
4.
When the buyer is able to asses the quality without using price as an indicator.
5.
When customers can asses the relative performance and price of alternatives.
6.
When customers have no urgency to make a decision.
7.
When customers can easily switch from one supplier to another without incurring additional costs.
Price Customization
Some organizations follow a
uniform pricing
policy meaning that the price is the same for all customers at all times.
Price can be customized in the following ways:
2.
Pricing based on transaction characteristics.
Tickets that are booked in advance are usually at a lower price than
"day of sale"
tickets.
Quantity and volume(bulk) discounts are also common.
3.
Pricing based on product line variations.
The
product line sort
is a strategy where a verity of products are offered and price-sensitive customers select the "base" model, while performance-sensitive customers with a higher willingness to pay select the "upgraded"model.
1.
Pricing based on buyer characteristics.
The hey is to find a observable characteristic of buyers that sorts the buying population into groups on higher and lower willingness to pay. eg) Age groups student discounts.
Pricing can also be based on institution types.
eg) corporate accounts or educational institutions are priced differently.
One an organization has made the aspiration decision, it can address the marketing mix decision.
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