Mod 6 Flashcards
4 P’s of marketing
McCarthy (1960) identified four principle elements of the marketing mix:
Product (the core of marketing mix)
Price
Promotion
Place (Distribution)
New marketing mix
In addition to the traditional 4Ps, the marketing mix has been expanded to include three “softer” elements:
People
Physical evidence
Process management
Three elements of the product
Product attributes: the core product; features, styles, product quality, brand name, packaging, size, and color…
Product benefits: elements that consumers perceive as meeting their needs; typically refer to the product’s performance and its image.
Marketing support services: additional elements to the core product; include delivery, installation, guarantees, after-sales service and reputation.
4 Types of product strategy
Market leader
Market challenger – challenges the leader and other firms (more aggressive)
Market follower (less aggressive)
Me-too/market nicher: focus on part of the market; if succeed, can be very profitable (e.g. Porsche)
Four brand strategies
Corporate umbrella branding
Family umbrella branding
Range branding
Individual branding
Brand stretching (brand extension)
use the same brand name in different product categories.
Examples:
Marks & Spencer: from clothes to foods, home furnishing, etc.
Google: from technology services to mobile phone, etc.
Starbucks: from coffee to ice cream, etc.
New product development
Acquisition
- Buy other firms
- Buy a license or franchise
- Buy patents
Internal NPD
- In-house R&D
- Outsourcing
New product
New-to-the-world product: creates an entirely new market. E.g., when Apple first introduced ipod.
New product lines: allow a company to enter an existing product sector for the first time, e.g. Virgin’s entry into the mobile phone market.
Additions to existing product lines: e.g. Kellogg’s launch of Special K with red berries.
I
mprovements and revisions to existing product: e.g., Windows/Mac system updates
Repositioning or retargeting existing products in order to appeal to new market segments, e.g. Old Spice
Cost reductions: products are modified to provide similar performance but at a lower cost.
Pricing strategy
Price-takers=Follow the prices set by other firms
Price-makers=Possess the market power to determine the levels and patterns of price that others follow.
Pricing objectives
Survival
Return on investment
Market stabilization
Maintenance and improvement of market position
Meeting or following competition
Pricing to reflect product differentiation
Market skimming
Market penetration
Early cash recovery
Discouraging others from entering the market
Channel management
Objectives: how, when, and where the company’s offering should be made available to the target markets.
Relationship between price and quantities supplied
Price rises, quantities supplied go up;
price decreases, quantities supplied go down.
Price elasticity of supply
Price elasticity of supply = % change in quantities supplied / % change in price
Usually affected by changes in the supply chain and technological developments.
