Chapter 12 - Marketing Mix, Product and Price
Lesson Objective: To understand the importance of the Marketing Mix and to be introduced to the Product decision
In the world of Marketing there are four (4) extremely important decisions that can be made businesses to influence the overall success of the company and its products in the market:
Such decisions are called the Marketing Mix or the 4P's:
Let's start by looking at the Product: a decision that involves a lot more than just what we customers see on the surface. It is obvious why the Product decision is an important one: products that can be sold repeatedly to customers aid on the success of the business.
Bloomberg reports that Apple spent $2.6 billion on R&D from the moment the initial iPhone research began.
Developing new products is an extremely expensive process: it involves research, development (R&D), marketing, etc. So why do companies keep on spending so much money on this process?
- Cost of Market Research for identifying needs/wants before development;
- Cost of Development such as engineering, labs, tests, etc.;
- Opportunity Cost of having the option to invest in something else.
The main reason businesses continue to make such large investments in Product Development include:
Customers' ever changing needs, wants, and demands;
Competition actions and developments.
Such large investments, therefore, are unquestionably important. However, they are also risky and can jeopardize the business survival due to their size.
The benefits of investing in Product Development, however, are worth it:
- Fast-changing markets (e.g. electronics) require constant innovation to allow businesses to compete;
- New products allow businesses to charge premium and sell more before the competition catches up;
- It helps businesses to spread their risk over more products than simply relying on one;
- It can leverage economies of scale.
Developing new products is part of what makes a product/business successful. Having a strong Brand Image is also crucial!
- A Brand is a name, symbol, image that distinguishes a product from its competitors.
- A Brand Image is the impression/associations that customers have regarding a certain brand.
Why do you think having a strong brand is beneficial to businesses?
A strong brand image can help businesses increase sales, revenues, and profits:
It aids customer identification making it more likely to be sold;
Strong brands can be priced higher than less well-known ones;
It makes it easier to introduce new products under an already strong brand than for an unknown business.
Brand Image Discussion - What is your general impression of the following brands?
Still under the Product element of the Marketing Mix we have another very important aspect for the success of a product in the market: its Packaging:
The design and quality of materials of packages directly influences the customers' perceptions and ideas regarding specific products.
Remember, however, packaging is an additional cost: companies should not overdo it or the final price of the product can be negatively impacted.
Packaging influences customers' perceptions of products. They also serve other purposes:
To protect and keep the product from being damaged as well as from getting spoiled;
To provide information about the product (e.g. ingredients, specs);
To help customers identify the product within a crowd of multiple brands;
To add value to the overall look and feel of the product.
To-Do List
Term 2 - Chapter 12 Questions
Do you think every business should invest in R&D? Justify your answer.
Pick a brand you are familiar with and analyze the following:
The roles the packaging of its products play;
What advantages does this business have of its brand image?
Chapter 12 - Marketing Mix, Product and Price
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