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Topic 10 :

Marketing (2)

Lecturer: Zhu Wenzhong

Copyright 2002 by Harcourt, Inc. All rights reserved.

LEARNING GOALS
Key learning goals:

1.
2.
3.
4.
5.

This topic will continue the discussion of


marketing management issues, especially
marketing mix and product life cycle.
Explain the four elements of marketing mix.
State the difference between place and promotion.
Explain the stages of product life cycle.
Explain how a business can extend its product life.
State the reasons why a business may analyze its
product life cycle.

Copyright 2002 by Harcourt, Inc. All rights reserved.

Marketing (2)
-Marketing Mix

What is marketing mix?


Marketing mix refers to those four elements
(product, price, promotion, and place) of a firms
marketing strategy which are designed to meet the
needs of customers. These are often known as the four
Ps.
Simply, to meet consumers needs, businesses must
produce the right product, at the right price, make it
available at the right place, and let consumers know
about it through right promotion.

Copyright 2002 by Harcourt, Inc. All rights reserved.

Marketing (2)
-Marketing Mix
Figure 10-1 Elements of marketing mix:
Marketing Mix
Product

Price

-Appearance

-Cost based

-Function
-production costs

-Competition based
-Consumer based

Capable or solution

Place /

-Retailers
-Wholesalers
-Distribution
-Transportation

Cost

Convenience

Copyright 2002 by Harcourt, Inc. All rights reserved.

Promotion

-Advertising
-Sales promotion
-Personal selling

Communication

Marketing (2)

1.
2.
3.

-Marketing Mix: Product


Product:
Products must be ensured to meet the needs of
customers in terms of the following aspects:
Appearance
Function
Cost

Copyright 2002 by Harcourt, Inc. All rights reserved.

Marketing (2)
-Marketing Mix: Product
Table 10-1 Features of a product to meet the needs of customers

Aspects

Brief explanations or examples

The appearance

Color, size, shape, etc. must meet the

The function

Able to be used
Convenient for use
Meeting special needs of customers
Production costs must be low enough to earn

The cost

consumer needs.

some profit.
High cost, higher price.
Too high price, customers unlikely to buy.

Copyright 2002 by Harcourt, Inc. All rights reserved.

Marketing (2)
-Marketing Mix: Price

Price:
The pricing policy that a business chooses is
often a reflection of the market at which it
is aiming.
The right price set must take into account of
production costs, competitors prices and
consumers purchase ability and demand
level.
Copyright 2002 by Harcourt, Inc. All rights reserved.

Marketing (2)
-Marketing Mix: Price

Table 10-2 Influences from the pricing factors


Factors

Influences on the price of a product

High production costs

High production costs would mean the high sale price


for the goods supplied by sellers.

High customer

High customer demand will lead to the increased price


of the goods or services. Suppliers are more wiling
to provide the goods or services as it is more
profitable for them to supply.

Low prices charged by


competitors

If the price of the substitute product offered by


competitors decreases, the demand for a product
will be decreased as well.

demand

Copyright 2002 by Harcourt, Inc. All rights reserved.

Marketing (2)
-Marketing Mix: Price
Attention: High-price strategy
In general, from the economic point of view, the higher

the price of a product is, the less quantity demanded by


consumers. Or there are few buyers who would like to
high-price products.
However, in practice, a business may charge a high price
because it is aiming to sell to those customers who regard
its products as unique and high quality although the
production costs are not high. For example, high pricing
strategy is one of the marketing strategies for China Haier.

Copyright 2002 by Harcourt, Inc. All rights reserved.

Marketing (2)
- Marketing Mix: Place

1.
2.

Definition:
Place refers to the means by which products can
be distributed to the consumers. The product
must get to the right place at the right time.
Decision making may be based on the following:
How the product is distributed physically, such
as air, sea, rail, or road.
How the product is sold, such as through
retailers, wholesalers, or direct mailing, etc.
Copyright 2002 by Harcourt, Inc. All rights reserved.

Marketing (2)
- Marketing Mix: Promotion

Definition:
Promotion refers to a number of promotional

methods, such as advertising, sales promotion,


competitions, and personal selling, etc.
A business must choose a method of promotion
which is the most effective in its particular market
and for its own product. For example, TV
advertising may be better for the product with a
high sales turnover or a wide appeal. But for hightechnology machines or equipment, it is better to
choose personal selling methods.
Copyright 2002 by Harcourt, Inc. All rights reserved.

Marketing (2)
-Marketing Mix

Question for your critical thinking:


Please guess what each of the four Ps on
the side of business represents on the side
of customers (four four Cs) in the
marketing mix?

Copyright 2002 by Harcourt, Inc. All rights reserved.

Marketing (2)
-Marketing Mix

Factors for making choices of marketing mix:

1.

The type of product sold, e.g. for high tech.-equipment, the business needs to
emphasize the product and its quality rather than promotion.
The market sold to, e.g. for consumer markets, promotion may be
emphasized.
The degree of competition, e.g. if the competition is high, price is needed to
be emphasized in order to gain some advantages in the market.
The position of the business in the industry, e.g. if the business is large or
the market leader, it has more freedom to choose the market mix.
The stage of product life cycle in which a product is, e.g. if the product is in
the stage of introduction, of course, promotion must be emphasized...

2.
3.
4.
5.

Copyright 2002 by Harcourt, Inc. All rights reserved.

Marketing (2)
-Product Life Cycle
Definition:

Products pass through several stages of development in its life from


introduction to decline:

1.
2.
3.
4.
5.
6.

Stages of product life cycle usually include:


Development
Introduction
growth
Maturity
Saturation
Decline
Explanations:
See the following tables and figures.

Copyright 2002 by Harcourt, Inc. All rights reserved.

Marketing (2)
-Product Life Cycle

The stages of the product life cycle:

Development Introduction

Growth

Maturity Saturation Decline

Copyright 2002 by Harcourt, Inc. All rights reserved.

Table 10-4 Explanations of the stages of Product life cycle


Stages

Brief explanations

Development

The product is being designed.


Suitable ideas are tested.
Decision is to be made whether or not to produce the product.
If OK, the business begins to produce.

Introduction

The product is new in the market.


Sales are still low and increasing.
Promotion is needed to increase the sales and make it aware widely.
Product is still not profitable.

Growth

The product is established in the market.


Sales begin to grow rapidly.
The product becomes very profitable.
The business needs to seek new opportunities and enlarge the market.

Maturity

The product has a stable market share.


The growth levels off in the sales.
Sales have reached the top.
Competitors have entered the market.
The business needs to consider new product development or innovate the product.

Saturation

Decline

Too many competitors have entered the market.


Some businesses are forced out of their business.
Businesses have to develop some extension strategies to extend their product life cycle. For example,
find new uses of the product; finding new markets for the product; changing components of the
products, etc.

Sales decline.
Consumers have changed their taste or styles.
New products have to be produced by competitors
Businesses have to develop new products or improve the old product with new technology or simply
give up the product.
Copyright 2002 by Harcourt, Inc. All rights reserved.

Marketing (2)
-Product Life Cycle
Uses of product life cycle:
1.
2.
3.
4.
5.

The reasons why the business needs to analyze the


product life cycle are as follows:

It can help a business find out which stage its product is in;
It can help to find out when to launch a new product or stop the
production of a product;
It can help to identify when to introduce an extension strategy;
It can help to identify the revenue trends or profitability of a product
at each stage;
It can help to plan different marketing strategies for a product in
different life cycles

Copyright 2002 by Harcourt, Inc. All rights reserved.

Marketing Strategy Implications of the


Product Life Cycle

Copyright 2002 by Harcourt, Inc. All rights reserved.

Categories of Nontraditional Marketing

Copyright 2002 by Harcourt, Inc. All rights reserved.

Expanding Marketings Traditional


Boundaries

Nontraditional Marketing

Person Marketingefforts designed to attract


attention, interest, and preference of a target
market toward a person

Place Marketingattempts to attract people to


a particular area, such as a city, state, or nation

Copyright 2002 by Harcourt, Inc. All rights reserved.

Expanding Marketings Traditional


Boundaries

Nontraditional Marketing

Cause Marketingefforts to promote a cause


or social issue, such as the prevention of child
abuse, antilittering efforts, and anti-smoking
campaigns

Copyright 2002 by Harcourt, Inc. All rights reserved.

Expanding Marketings Traditional


Boundaries

Nontraditional Marketing

Event Marketingmarketing or sponsoring

short-term events such as athletic competitions


and cultural and charitable performances

Organization Marketingattempting to

influence consumers to accept the goals of,


receive the services of, or contribute in some
way to an organization

Copyright 2002 by Harcourt, Inc. All rights reserved.

Developing a Marketing Strategy

Target Market and Marketing Mix


within the Marketing Environment

Copyright 2002 by Harcourt, Inc. All rights reserved.