Marketing Decision Making

BM032-3-3

Chapter 8
Concept of Marketing Mix
 LEARNING OUTCOME
Reviewing the concept of marketing mix;
-product
-price
-place
-promotion
-people
-process
-physical evidence for services

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 The Marketing Mix

The tools available to a business to gain the

reaction it is seeking from its target market in
relation to its marketing objectives
7Ps Price, Product, Promotion, Place, People,
Process, Physical Environment
Traditional 4Ps extended to cope with today's
changing environment

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 The Marketing Mix

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 Product

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 Product

The firm must come up with a product or

service that people will want to buy.

It must fulfil some need or want.

It must be (or at least seem) unique.

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 Product
Methods used to
improve/differentiate
the product and increase
sales or target sales more
effectively to gain
a competitive advantage e.g.
Extension strategies
Specialised versions
New editions
Improvements real or
otherwise!
Changed packaging
Technology, etc. Image copyright: www.freeimages.co.uk

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Product/service or brand Core Product Actual Product Augmented
Product

Freedom to
BMW A motor car
travel

Sheraton Rooms Room service

An airline
Egypt Air Flight
journey

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 Marketing Mix Adaptation

In India, McDonalds serves chicken, fish, and vegetable burgers, and the
Maharaja Mactwo all-mutton patties, special sauce, lettuce, cheese,
pickles, onions, on a sesame-seed bun.
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 Price

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 Price

The price must be one that the

customer thinks is good value
for money.
This is not the same as
being cheap!
Prices have a great
psychological effect on
customers.

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 Pricing Strategy
- Comparative
- Cost plus
- pricing to meet objective
- pricing for positioning strategy or to prevent
competition
- pricing to achieve a target ROI
- pricing for survival
- pricing to stabilise price and margin
- pricing to reach a market-shares target and pricing for
survival.

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 Price

Pricing Strategy
Importance of:
knowing the market
elasticity
keeping an eye
on rivals

Image copyright: www.freeimages.co.uk

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 International Pricing

Twelve European Union countries have adopted the euro as a common

currency, creating pricing transparency and forcing companies to
harmonize their prices throughout Europe.
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 Promotion

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 Promotion

Strategies
to make the consumer aware of the
existence of a product
or service
NOT just advertising

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 The promotional message should

Grab Attention

I
Stimulate nterest

Create Desire

Promote Action
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 Colgate Goes to China

Using aggressive promotional and educational programs, Colgate has

expanded its market share from 7% to 35% in less than a decade.
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 Place

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 Place

The means by which products and

services get from producer
to consumer and where they can be
accessed by the consumer
The more places to buy the product and the
easier it is made to buy it, the better for the
business (and the consumer?)

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 Place

The means by which products and

services get from producer
to consumer and where they can be
accessed by the consumer
The more places to buy the product and the
easier it is made to buy it, the better for the
business (and the consumer?)

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 People

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 People

People represent the business

The image they present can be important
First contact often human what is the lasting image
they provide to the customer?
Extent of training and knowledge
of the product/service concerned
Do staff represent the desired culture
of the business?

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 Process

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 Process

How do people consume services?

What processes do they have to go through
to acquire the services?
Where do they find the availability
of the service?
Contact
Reminders
Registration
Subscription
Form filling
Degree of technology

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 Physical Environment

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 Physical Environment

The ambience, mood or physical presentation of the environment

Packaging.
Internet/web pages.
Paperwork (such as invoices, tickets,..).
Brochures.
Furnishings.
Uniforms.
Business cards.
The building itself (such as prestigious offices or scenic
headquarters).
Mailboxes and many others . . . . . .

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 Five Global Product and
Promotion Strategies

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 Global Product Strategies

Straight Product Extension:

Marketing a product in a foreign market
without any change.
Product Adaptation:
Adapting a product to meet local conditions or
wants in foreign markets.
Product Invention:
Creating new products or services for foreign
markets.
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 Global Promotion Strategies

Can use a standardized theme globally,

but may have to make adjustments for
language or cultural differences.
Communication Adaptation:
Fully adapting an advertising message for
local markets.
Changes may have to be made due to
media availability.

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 Global Pricing Strategies

Companies face many problems in setting their

international prices.
Possible approaches include:
Charge a uniform price all around the world.
Charge what consumers in each country will pay.
Use a standard markup of costs everywhere.
International prices tend to be higher than
domestic prices because of price escalation.
Companies may become guilty of dumping a
foreign subsidiary charges less than its costs or
less than it charges in its home market.
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 The 7Ps of Marketing:
(1) Product
Embrace all aspects of service performance that create
value
Core product responds to customers primary need
Array of supplementary service elements
Help customer use core product effectively
Add value through useful enhancements
Planning marketing mix begins with creating a service
concept that:
Will offer value to target customers
Satisfy their needs better than competing alternatives

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 The 7Ps of Marketing:
(2) Place
Delivery decisions: Where, When, How
Geographic locations served
Service schedules
Physical channels
Electronic channels
Customer control and convenience
Channel partners/intermediaries
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 The 7Ps of Marketing:
(3) Price
Marketers must recognize that customer outlays involve
more than price paid to seller
Traditional pricing tasks:
Selling price, discounts, premiums
Margins for intermediaries (if any)
Credit terms
Identify and minimize other costs incurred by users:
Additional monetary costs associated with service
usage (e.g., travel to service location, parking, phone,
babysitting, etc.)
Time expenditures, especially waiting
Unwanted mental and physical effort
Negative sensory experiences
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 The 7Ps of Marketing:
(4) Promotion
Informing, educating, persuading, reminding customers
Marketing communication tools
Media elements (print, broadcast, outdoor, retail, the Internet, etc.)
Personal selling, customer service
Sales promotion
Publicity/PR
Imagery and recognition
Branding
Corporate design
Content
Information, advice
Persuasive messages
Customer education/training

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 The 7Ps of Marketing:
(5) Process
How firm does things may be as important as what it does
Customers often actively involved in processes, especially
when acting as co-producers of service
Process involves choices of method and sequence in service
creation and delivery
Design of activity flows
Number and sequence of actions for customers
Nature of customer involvement
Role of contact personnel
Role of technology, degree of automation
Badly designed processes waste time, create poor
experiences, and disappoint customers

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 The 7Ps of Marketing:
(6) Physical Environment
Design servicescape and provide tangible
evidence of service performances
Create and maintain physical appearances
Buildings/landscaping
Interior design/furnishings
Vehicles/equipment
Staff grooming/clothing
Sounds and smells
Other tangibles
Manage physical cues carefully can have
profound impact on customer impressions
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 The 7Ps of Marketing:
(7) People
Interactions between customers and contact personnel
strongly influence customer perceptions of service quality
The right customer-contact employees performing tasks well
Job design
Recruiting
Training
Motivation
The right customers for firms mission
Contribute positively to experience of other customers
Possessor can be trained to have needed skills (co-
production)
Can shape customer roles and manage customer behavior
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 The 8Ps of Services Marketing:
(8) Productivity and Quality*
Productivity and quality must work hand in hand
Improving productivity key to reducing costs
Improving and maintaining quality essential for
building customer satisfaction and loyalty
Ideally, strategies should be sought to improve both
productivity and quality simultaneouslytechnology
often the key
Technology-based innovations have potential to
create high payoffs
But, must be user friendly and deliver valued
customer benefits
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 Marketing Must Be Integrated with
Other Management Functions
Three management functions play central and interrelated roles in
meeting needs of service customers

Operations Marketing
Management Management

Customers

Human Resources
Management
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 Summary: New Perspectives
on Marketing in the Service Economy
Reasons for studying services:
Service sector dominates economy in most nations, many new industries
Most new jobs created by services
Powerful forcesgovernment policies, social changes, business trends,
IT advances, and globalizationare transforming service markets
Understanding services offers personal competitive advantage
The service concept and its definition:
Services create benefits without transfer of ownership
Most employ time-based performances to bring about desired results in
recipients or in assets for which they have responsibility
Customers expect value from access to goods, facilities, labor, professional
skills, environments, networks & systems in return for money, time, effort
Services present distinctive marketing challenges relative to goods,
requiring:
Expanded marketing mix comprising 8Ps instead of traditional 4Ps
Integration of marketing function with operations and human resources

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 Summary: New Perspectives
on Marketing in the Service Economy
Reasons for studying services:
Service sector dominates economy in most nations, many new industries
Most new jobs created by services
Powerful forcesgovernment policies, social changes, business trends,
IT advances, and globalizationare transforming service markets
Understanding services offers personal competitive advantage
The service concept and its definition:
Services create benefits without transfer of ownership
Most employ time-based performances to bring about desired results in
recipients or in assets for which they have responsibility
Customers expect value from access to goods, facilities, labor, professional
skills, environments, networks & systems in return for money, time, effort
Services present distinctive marketing challenges relative to goods,
requiring:
Expanded marketing mix comprising 8Ps instead of traditional 4Ps
Integration of marketing function with operations and human resources

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