Category:4.5 The Four P's

The Four P's
1.Promotion

2.Product

3.Place

4.Price

What is a product Life Cycle ?
-Illustrates a timeline of a companies beginning till its decline in a market. There are six stages to this which are the following:
 * 1)  Development --> Brainstorming on how to satisfy consumer needs + wants
 * 2)  Introduction --> The launch stage of the product (sales are low during this time)
 * 3)  Growth -->  Recognition increases as well as profit
 * 4)  Maturity -->  Sales continue to rise but at a slow rate
 * 5)  Saturation -->  Competitors enter and sales begin to fall
 * 6)  Decline -->  Drop in sales

Extension Strategies
-An attempt by firms to stop sales from falling. This is done during the maturity or saturation stages
 * Sell existing products into new markets/regions


 * Find new uses of the product
 * Change the products packaging
 * Target different market segments
 * Create new promotional strategies

The Boston Consulting Group (BCG) Matrix
-A process in which a firm will decide which products to invest more resources into and phase out the weaker ones with a less chance of gaining profit.
 *  Stars  -> Have high market growth and market share.
 * They are the successful products and are high in profit.
 *  Cash Cows  -> Have low market growth and high market share.
 * They have a steady rate of income
 *  Problem Children/Question Marks -> Have high market growth and low market share.
 * Concerning to firms due to the large amount of money needed to increase their share in the market
 *  Dogs -> Have low market share and low market growth.
 * No growth and generate little income. Impossible to sustain

BCG Matrix Strategies
-The following strategies can be used to support the stars,cash cows,problem children, and dogs
 *  Holding Strategy 
 * Focuses on products with high market share, to ensure they keep their current position in the market
 *  Building Strategy 
 * Focuses on problem children turning into stars.
 * Money from cash cows could be invested in those products to increase market share
 * Harvesting Strategy
 * Focuses on products with a good cash flow to provide the necessary finance for investments in other products
 *  Divesting Strategy 
 * Where dogs are taken out or sold off
 * The resources attained from this will help in boosting the performance of other products

Branding
-A name, symbol, sign, or design that differentiates a firms products from another.

Aspects of Branding

 *  Brand Awareness 
 * Consumers ability to recognise a firms good or service
 *  Brand Development 
 * A plan to improve the image of a product in the market
 * This is achieved by increasing the power of its name, symbol, or sign.
 *  Brand Loyalty 
 * When consumers become committed to a firm's brand
 * Consumers will repeatedly purchase that item continuously
 *  Brand Value 
 * How much a brand is worth in terms of its reputation, potential income, and market value
 * Brands that have a high value (Gucci) are powerful assets to a firm because consumers are willing to pay a high price to own a well known ~Expensive~ brand.

The Importance of Packaging
-The designing and production of the physical container/wrapper of a product. (Plays a huge role in marketing)
 * P rovides physical protection -> Protects a product from getting spoiled or damage
 *  Offers convenience -> Easy to handle + Ability to recycle
 *  Provides Information -> Lables on the package to relay important information to the consumer (Ingredients)
 *  Helps reduce security risks -> Packages designed with tamper-proof features can help decrease tampering with products.
 *  Aids promotion -> Eye-catching product, appealing.

Cost-Plus Pricing (Mark-up Pricing)
-Adding a mark-up to the average cost of a producing product
 *  Mark up  is a % of the profit a firm wishes to gain for every product that it sells
 *  Average cost  is the cost per unit or the total cost of items being produced

Formula: Selling Price = Cost per unit / Profit Margin
 Ex.)  If the total cost of producing 10,00 packets of biscuits is US$20,000, and the business wants to calculate how much it would sell each packet for and get a 50-per-cent-mark-up on each packet. It would use the following method
 * 1)  Calculate the average cost -> US$2 (20,000/10,000)
 * 2)  Work out the mark-up profit -> $1 (50 per cent of US$2  Mark-up:  A % over the cost
 * 3)  Add the average cost to the mark-up to -> US$3 is the selling price

Penetration Pricing
-Setting a low initial price for a product in order to attract a large number of customers and gaining a high market share.

Price Skimming
-When firms set high prices to new products in the market. Done for a limited time with the goal of gaining as a high profit as possible.

Psychological Pricing
-When firms consider how pricing affects consumers perception of the value of their products

Loss Leader
-Charing a low price for a product below its average cost (To attract consumers to buy other higher-priced products)

Price Discrimination
-Charging different prices to different groups of consumers for the same product

Competitive Pricing
-Charging a price that is in line or below the competitors price

Promotion
-Aim is to obtain new customers or to retain existing ones.
 * Informing consumes of a new or improved product in the market
 * Convincing consumers to purchase a product instead of its competitors
 * Reminding consumers of the existence of a product
 * Enhancing brand image of the product

~Promotion can be categorised into two forms~
 * 1) Above-the-line promotion
 * 2) Below-the-line promotion

Above-The-Line Promotion
-Paid form of communication that uses mass media to promote a firm's product.

-Advertising through TV, radio, or newspaper
 *  Informative advertising -> To provide information about a product's features, price, or other details
 * Useful for increased consumer awareness + enables them to make rational decisions of what to buy
 *  Persuasive Advertising -> Aim is to convince customers to buy one firm's product instead of a competitors
 *  Reassuring Advertising -> Focus is on existing customers to remind them that they made the right purchasing decisions and that they should continue buying it

Below-The-Line-Promotion
-Form of communication where the business has direct control over its promotional activities

-Does not depend on the use of independent media  Public Relations -> Aimed at enhancing the image of the business + products. Includes use of publicity or sponserships
 *  Direct Marketing -> Ensures that the product is aimed directly at the consumers
 *  Personal Selling -> Involves the sale of a firm's product through personal contact. Can be done face to face or over the phone

Sales Promotion
-Short-term motivation provided by a business with the aim of increasing sales

 Examples include the following: 
 *  Money off coupons -> Discounts provided to customers when a product is purchased
 *  Point-of-sale products -> Used for display of products at the location where business sells the items
 *  Free -> Offers or free gifts can be given to customers, free samples or features.
 *  Competitions -> After buying a product customers can enter a draw where they can win a prize in the competition. Used to attract large number of customers.
 *  Buy one get one free -> Promotional strategy used to attract new customers or help in eliminating excess stock.

The Promotional Mix
-A successful promotional mix will involve a good balance of both above-the-line and below-the-line promotional methods.

-The following factors will need to be considered for an effective promotional mix
 *  Cost -> Does the marketing budget support the use of a certain promotional method?
 *  Legal Framework -> Has the law been taken into account when deciding which promotional methods to use?
 *  Target Market -> What specific segment of the market is the product aimed at?
 * Stage in the product life cycle -> Which promotional methods will be most appropriate at different product life cycle stages?
 *  Type of product  -> Has the promotional method considered the nature of the product and how it would be successfully sold to customers?

The Impact of New Technology on Promotional Strategies
-In the marketing context technology is: The information or tools required to sell a firm's good or service
 *  Social Media -> Technology that connects people
 *  Social Networks -> Places where social interactions happen and where information is advertised discovered and shared on social media apps
 *  Social Networking Service -> A platform to build social networks
 *  Social Media Marketing -> The way technology is used to build relationships and attract new customers
 *  Viral Marketing -> A form of peer-to-peer communication where individuals are encouraged to pass on promotional messages within their social networks.

Guerrilla Marketing
-A marketing form which involves the use of "untraditional" activities that help companies weaken their rivals and stay

successfully on the market.

-The use of unconventional or unusual marketing strategies that are innovative.

Principles of Guerrilla Marketing

 *  Activity -> Firms need to be aware of opportunities that come at them to make their product known and they should always find ways of achieving this.
 *  Presence -> Firms should always look for ways to make their business known to the market through: email,forums,discussion boards,radio,magazine,posters,etc

Methods used in Guerrilla Marketing

 *  Peer Marketing -> Bringing people with similar interests + ages together to build up interest in the product
 *  Product give-aways -> Free demonstrations and consultations
 *  Media -> SMS texting and video messaging
 *  Roach baiting and buzz marketing -> Where actors are used to behave as normal customers to create interest
 *  Intrigue -> The process of generating mystery to engage the customers
 *  Live commercials -> Using people to do these at clubs and pubs
 *  Bill stickers -> A method used to promote DJ's and club events

Place
-How the product reachers consumers

-Concerned with how the product is distributed to make it available to consumers

Types of Distribution Channel
-The path taken by a product from the producer to the consumer  Channel of Distribution -> Path taken by a product from the producer or manufacturers to the final consumer
 *  Zero Intermediary Channel 
 * Where a product is sold directly from the producer to the consumer
 *  Ex.)  Agricultural products can be sold through this method, airline ticket bookings, etc
 *  One Intermediary Channel 
 * Involves the use of one intermediary such as a retailer or an agent to sell the products from the producer to the consumer
 *  Ex.)  Selling expensive furniture or jewellery through retailers.
 *  Two Intermediaries Channel 
 * Two intermediaries which usually include wholesalers and retailers are used by producers to sell the product to the consumer
 * Useful when selling goods over long geographical distances