Chapter 19 - The Marketing Mix, Product and Price
Learning Objectives: To understand the marketing mix (product) characteristics
The Marketing Mix are the four most important tools in a Marketer's toolbox:
The right or wrong decisions in the Marketing Mix will tell whether a business will sell its products profitably. These four decisions are interrelated and should always be thought of together rather than individually.
The need for consistency is key when deciding on those four elements.
Product includes consumer, industrial, goods, and services;
It is important to consider that products also have tangible and intangible attributes:
In some cases it is necessary for businesses to invest in New Product Development (NPD): rapidly changing industries (e.g. computer games);
In some other cases businesses can keep on selling the same product for a very long time with minor adjustments and changes (e.g. carbonated drinks).
Either way, NPD is an important process businesses go through for various reasons:
Change in consumers' tastes/preferences heavily impact products' success;
Increasing competition makes it so that NPD is required for businesses to stay relevant;
Technological advancements aid businesses to better and further develop products;
New opportunities for growth in different markets (e.g. IKEA in kitchen design/installation);
Risk diversification as the environment changes (e.g. oil companies and renewable energy);
Improved brand image as new products may be perceived differently from the customers perspectives (e.g. Lexus for Toyota);
Businesses may go through NPD to make use of excess capacity.
A new product doesn't need to be something completely new from the ground up. There are general categories of new products:
Obviously, it can be a complete novelty as something never seen before - an invention (e.g. smartphones);
It can also be a new product for the company launching it but not necessarily new to the market (e.g. Sony launching a videogame console in 1995);
It can also be a new product to a particular market where it wasn't available before.
There are three main characteristics of successful products:
They have desirable features which customers are willing to pay for;
They are marketed effectively so that customers are informed about them;
They are sufficiently different from other products so that they stand out - in other words, they offer a unique selling point:
Creating a USP is about differentiating a business product from the competition;
- Offering something special;
- Creates the opportunity to charge higher prices (higher profit margins) for such unique features);
- Creates free publicity from the media and word-of-mouth from consumers;
- Leads to higher sales than undifferentiated products;
- Creates an identification from customers towards the brand (potential loyalty).
Example of successful USP:
- Brand: a distinguishing name or symbol that is used to differentiate one manufacturer's products' from another.
- Companies invest in creating powerful images and perceptions in the mind of consumers - which can give products unique identities. This is called branding.
One important activity that businesses perform when launching a new product is brand positioning: the process of articulating the way a product or brand is viewed in comparison to other products or brands in the same market.
Example:
1. To perform a positioning there needs to be an identification of the features of the products which are relevant to customers of that product (e.g. taste for food products, comfort for hotel services, etc.);
- In this case, the features identified for the products on the image were sugar/calories and the type of customer (male/female)
2. Then, different products/brands that are already in the market are plotted on a positioning-chart:
- This can be used for the introduction of a new product/brand considering the existing ones;
- It is also used to identify empty spots on the chart which can be opportunities for the introduction of new products/brands;
- Empty spots are not necessarily opportunities though: they might be empty for a good reason.
Chapter 19 - The Marketing Mix, Product and Price
To-Do-List: Activity 19.1
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