Marketing Management

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Marketing Mix is a strategy which a company uses to formulate a product/service offering for its customers. Marketing mix strategy is created using the 4Ps of marketing - Product, Place, Price, Promotion and 7Ps in case of service- Physical Evidence, People, Process. The term Marketing Mix is attributed to Neil Bordon. The term is named marketing mix because it suggest how a marketer mixes various elements (Product, Price, Place, Promotion etc) in order to make a relevant/just right offering to the customer. The main objective of marketing mix strategy is to make the right product at correct price at the right place with right promotion.

Product Marketing Mix

When a company is offering products or goods, it comes under the purview of the product marketing mix. It talks about the product strategies, pricing strategies, place where the products are distributed and promotional strategies. Elements of a product marketing mix can be explained in detail as below:

1) Product : It is the main part of the offering, the product itself. It is most important aspect of the mix. Product is something which has some functional value and can be used by the customer to achieve something. A marketer needs to define his product very carefully thinking about its value, its USP, features, competition etc

2) Price : Pricing the second most important element in our marketing mix. This is value we will get in exchange for our product. This is what the customer will pay in return for the utility of the product. Pricing is mainly determined by the cost of the product and also how much the customer would be willing to pay. If we price it too high no one buys, if we price it too low, company makes losses. So we have to devise the right pricing strategy to make our marketing mix perfect.

3) Place: Also called the Distribution. If we are making a product as the right price, that is not enough, we need to make it available at the right place too. The customer mostly would not come to you until and unless our product and price is unbeatable. The product needs to be where customer is likely to buy. If we are soft drink manufacturer and the product is not available in grocery stores, supermarkets, restaurants etc then the first two elements of marketing mix are of no use and the offering fails.

4) Promotion : Also referred to as Communication about the product. This is the 4th element in marketing mix which means the communication done about the product to the customer. Advertising on TV, print and digital media would come under promotion.

Service Marketing Mix

In case of a service brand like a restaurant, telecom service, hospitality etc, there are additional points apart from the 4Ps. The additional Ps i.e. physical evidence, people and processes are collectively known as the service marketing mix. These can be described as below:

5) Physical Evidence : A service is intangible but there has to be a reassurance to the customer that service happened. It can be a receipt of a service or may be an invoice. Physical evidence should be positive meaning that customer should be assured that service completed as expected.

6) People : These are the employees which help deliver the service e.g. delivery boy or a cab driver. They may become the face of the service hence are very important that is why very important to chose right people.

7) Process : The steps undertaken for completion/delivery of the service. The process is very crucial. The process should not only consist of the positive path but should also should consider the negative paths to address issues in the service delivery. e.g. Complain management, reverse supply chain etc.

Product Life Cycle Stages

As consumers, we buy millions of products every year. And just like us, these products have a life cycle. Older, long-established products eventually become less popular, while in contrast, the demand for new, more modern goods usually increases quite rapidly after they are launched.

Because most companies understand the different product life cycle stages, and that the products they sell all have a limited lifespan, the majority of them will invest heavily in new product development in order to make sure that their businesses continue to grow.

Product Life Cycle Stages Explained

The product life cycle has 4 very clearly defined stages, each with its own characteristics that mean different things for business that are trying to manage the life cycle of their particular products.

Introduction Stage: – This stage of the cycle could be the most expensive for a company launching a new product. The size of the market for the product is small, which means sales are low, although they will be increasing. On the other hand, the cost of things like research and development, consumer testing, and the marketing needed to launch the product can be very high, especially if it’s a competitive sector.

Growth Stage:-  The growth stage is typically characterized by a strong growth in sales and profits, and because the company can start to benefit from economies of scale in production, the profit margins, as well as the overall amount of profit, will increase. This makes it possible for businesses to invest more money in the promotional activity to maximize the potential of this growth stage.

Maturity Stage:-  During the maturity stage, the product is established and the aim for the manufacturer is now to maintain the market share they have built up. This is probably the most competitive time for most products and businesses need to invest wisely in any marketing they undertake. They also need to consider any product modifications or improvements to the production process which might give them a competitive advantage.

Decline Stage:-  Eventually, the market for a product will start to shrink, and this is what’s known as the decline stage. This shrinkage could be due to the market becoming saturated (i.e. all the customers who will buy the product have already purchased it), or because the consumers are switching to a different type of product. While this decline may be inevitable, it may still be possible for companies to make some profit by switching to less-expensive production methods and cheaper markets.

New Product development is a journey. It’s the road which leads to the actual product and then the actual product to the market. Every product goes through a number of stages before being introduced in the market.

Idea Generation

The first stage of the New Product Development is the idea generation. Ideas come from everywhere, can be of any form, and can be numerous. This stage involves creating a large pool of ideas from various sources, which include –

§  Internal sources – many companies give incentives to their employees to come up with workable ideas.

§  SWOT analysis – Company may review its strength, weakness, opportunities and threats and come up with a good feasible idea.

§  Market research – Companies constantly reviews the changing needs, wants, and trends in the market.

§  Customers – Sometimes reviews and feedbacks from the customers or even their ideas can help companies generate new product ideas.

§  Competition – Competitors SWOT analysis can help the company generate ideas.

Idea Screening

Ideas can be many, but good ideas are few. This second step of new product development involves finding those good and feasible ideas and discarding those which aren’t. Many factors play a part here, these include –

§  Company’s strength,

§  Company’s weakness,

§  Customer needs,

§  Ongoing trends,

§  Expected ROI,

§  Affordability, etc.

Concept Development & Testing

The third step of the new product development includes concept development and testing. A concept is a detailed strategy or blueprint version of the idea. Basically, when an idea is developed in every aspect so as to make it presentable, it is called a concept.

All the ideas that pass the screening stage are turned into concepts for testing purpose. You wouldn’t want to launch a product without its concept being tested.

The concept is now brought to the target market. Some selected customers from the target group are chosen to test the concept. Information is provided to them to help them visualize the product. It is followed by questions from both sides. Business tries to know what the customer feels about the concept. Does the product fulfil the customer’s need or want? Will they buy it when it’s actually launched?

Business Strategy Analysis & Development

The testing results help the business in coming up with the final concept to be developed into a product.

Now that the business has a finalized concept, it’s time for it to analyse and decide the marketing, branding, and other business strategies that will be used. Estimated product profitability, marketing mix, and other product strategies are decided for the product.

Other important analytics includes

§  Competition of the product

§  Costs involved

§  Pricing strategies

§  Breakeven point, etc.

Product Development:- Once all the strategies are approved, the product concept is transformed into an actual tangible product. This development stage of new product development results in building up of a prototype or a limited production model. All the branding and other strategies decided previously are tested and applied in this stage.

Test Marketing:- Unlike concept testing, the prototype is introduced for research and feedback in the test marketing phase. Customers feedback are taken and further changes, if required, are made to the product. This process is of utmost importance as it validates the whole concept and makes the company ready for the launch.

Commercialization:- The product is ready, so should be the marketing strategies. The marketing mix is now put to use. The final decisions are to be made. Markets are decided for the product to launch in. This stage involves briefing different departments about the duties and targets. Every minor and major decision is made before the final introduction stage of the new product development.