Researching the Marketing Mix
Within this assignment I am going to research the marketing mix and I am going to apply this to Tesco. I will be explaining the 4 parts of the mix, Product, Price, Place and Promotion.
Development – The key features of this stage include researching, developing and then launching the product.
At the development stage of the product life cycle, you should ensure that your idea will meet:
• Potential customer expectations
• Design, resource and manufacturing requirements
• The strategy outlined in your business plan
The development stage should also involve creating a prototype, testing this prototype to find potential faults, sourcing and pricing the materials that will be used and communicate with suppliers.
Form and function – Form refers to the shape, size, dimensions, mass, weight and other visual parameters that uniquely distinguish a part. For example, you might describe a screw that will be used in your product. Function, on the other hand, refers to the action or actions that a part is designed to perform. In our example, the screw is intended to hold other parts of the product together.
Packaging – The purpose of product packaging is to protect the product from damage. Product packaging not only protects the product during transit from the manufacturer to the retailer, but it also prevents damage while the product sits on retail shelves. How a product is packaged may be what attracts the consumer to take a look on the product as is sits on store shelves. For this reason, many companies conduct extensive research on colour schemes, designs and types of product packaging that is the most appealing to its intended consumer. Packaging also plays an important role for portraying information about the product. Outside packaging may contain directions on how to use the product or make the product. Packaging can also differentiate one brand of product from another brand. Because the product packaging can contain company names, logos and the colour scheme of the company, it helps consumers to identify the product as it sits among the competition’s products on store shelves.
Branding – Branding was once defined as a name, slogan, sign, symbol or design, or a combination of these elements that identify products or services of a company. The brand was identified of the elements that differentiated the goods and or service from the competition. Today brand is a bit more complex, but even more important in today’s world of marketing. It’s the perception that a consumer has when they hear or think of your company name, service or product. That being said the word “brand” or “branding” is a moving target and evolves with the behaviour of consumers.
There are four different pricing strategies that businesses use for effective sales. Businesses may use one or two of these pricing strategies to create an effective selling position.
Penetration Pricing – Penetration pricing refers to a marketing strategy used by businesses to attract customers to a new product or service. Penetration pricing is the practice of offering a low price for a new product or service during its initial offering in order to lure customers away from competitors. This marketing strategy relies on the idea that low prices can help make a customer aware of and more willing to buy a new product. Penetration pricing, similar to loss leader pricing, can be a successful marketing strategy when applied correctly. It can often increase both market share and sales volume. Additionally, the high sales volume can also lead to lower production costs and higher inventory turnover, both of which are positive for any firm with fixed overhead.
Skimming Pricing – Price skimming is a product pricing strategy by which a firm charges the highest initial price that customers will pay. As the demand of the first customers is satisfied, the firm lowers the price to attract another, more price-sensitive segment. Therefore, the skimming strategy gets its name from skimming successive layers of “cream,” or customer segments, as prices are lowered over time.
Skimming is a useful strategy when:
• -There are enough prospective customers willing to buy the product at the high price.
• -The high price does not attract competitors.
• -Lowering the price would have only a minor effect on increasing sales volume and reducing unit costs.
• -The high price is interpreted as a sign of high quality.
Competition Pricing – Competitive pricing is setting the price of a product or service based on what the competition is charging. This pricing method is used more often by businesses selling similar products, since services can vary from business to business, while the attributes of a product remain similar. This type of pricing strategy is generally used once a price for a product or service has reached a level of equilibrium, which occurs when a product has been on the market for a long time and there are many substitutes for the product. Businesses have three options when setting the price for a good or service: set it below the competition, at the competition or above the competition. Above the competition pricing requires the business to create an environment that warrants the premium, such as generous payment terms or extra features.
Cost Plus Pricing – Cost plus pricing is a cost-based method for setting the prices of goods and services. Under this approach, you add together the direct material cost, direct labour cost, and overhead costs for a product, and add to it a mark-up percentage (to create a profit margin) in order to derive the price of the product. Cost plus pricing can also be used within a customer contract, where the customer reimburses the seller for all costs incurred and also pays a negotiated profit in addition to the costs incurred.
Distribution channels – A distribution channel is a chain of businesses or intermediaries through which a good or service passes until it reaches the end consumer. It can include wholesalers, retailers, distributors and even the internet itself. Channels are broken into direct and indirect forms, with a “direct” channel allowing the consumer to buy the good from the manufacturer, and an “indirect” channel allowing the consumer to buy the good from a wholesaler or retailer. A distribution channel is the path by which all goods and services must travel to arrive at the intended consumer. Conversely, it is also used to describe the pathway that payments make from the end consumer to the original vendor. Distribution channels can be short or long, and depend on the amount of intermediaries required to deliver a product or service.
Direct to end users – A person or organisation that actually uses a product, as opposed to the person or organization that authorizes, orders, procures, or pays for it.
Retailers and Wholesalers – Selling through an intermediary may be a more cost-effective way of reaching your end-customers than selling to them directly. If you are targeting business customers who prefer to deal with large suppliers, selling directly to them may not be a realistic option. Instead, you might aim to supply wholesalers who have existing relationships with those businesses. If individual consumers buy low value quantities of your products, the best option might be to target retailers that sell similar products. Or you might choose to focus your efforts on a relatively small number of wholesalers who can in turn supply your products to many retailers.
Tesco – Tesco uses this distribution channel to efficiently get their produce from Producer to customer in the quickest possible way. Tesco has applied the multichannel marketing (distribution), which uses many different marketing channels to reach a customer. That is to say, each channel targets a different segment of buyers, of different need states for one buyer, and delivers the right products in the right places in the right way at the least cost. According to Tesco, the multichannel marketing has successfully applied to its marketing strategy.
Public relations – Public relations is the part of an organisation’s work that is concerned with obtaining the public’s approval for what it does. Customers, suppliers, employees, investors, journalists and regulators can have a powerful impact. They all have an opinion about the organisations they come into contact with – whether good or bad, right or wrong. These perceptions will drive their decisions about whether they want to work with, shop with and support these organisations.
Sponsorship – Sponsorship advertising is a type of advertising where a company pays to be associated with a specific event. In fact, sponsorship advertising is very prevalent with charitable events. Besides from charitable events, companies may sponsor local sporting teams, sports tournaments, fairs, and other community events. A corporate sponsorship is a form of marketing in which a corporation pays for all of some of the costs associated with a project or program in exchange for recognition.
Social media – Social media marketing (SMM) is a form of Internet marketing that utilises social networking websites as a marketing tool. The goal of SMM is to produce content that users will share with their social network to help a company increase brand exposure and broaden customer reach. Through social media, anyone with internet access can interact with millions of people online. It is not necessary to be a journalist, a politician, a CEO or to hold any other position that was traditionally necessary to be able to disseminate one’s thoughts or ideas to a wide audience.
Guerrilla marketing – A marketing tactic in which a company uses surprise or unconventional interactions in order to promote a product or service. Guerrilla marketing is different than traditional marketing in that it often relies on personal interaction and has a smaller budget, and it focuses on smaller groups of promoters that are responsible for getting the word out in a particular location rather than on wide-spread media campaigns. The use of this tactic is not designed for all types of goods and services, and it is often used for more “uneasy” products and to target younger consumers who are more likely to respond positively.
Personal selling – Personal selling is where businesses use people to sell the product after meeting face-to-face with the customer. The sellers promote the product through their attitude, appearance and specialist product knowledge. They aim to inform and encourage the customer to buy, or at least trial the product.
Product placement –
Researching the Marketing Mix