Marketing Concepts

4 Ps of Marketing

Product Price Place Promotion

These are referred to as the marketing mix, and they must be properly combined for an effective marketing campaign

Product/Service Mix

Mixing of product and service e.g. retail stores such as Sears add

extras to the products they sell such as delivery, installation and extended product warranties

Can also have a service business, such as a movie theatre, that also sells products, e.g. popcorn

Price

How much is charged for the product or service

Can determine the success or failure of a product

Consumers are very aware of price and compare brands and stores

Marketers need to know if consumers are price sensitive How much sales will go up or down

based on changes in price

Place

Also known as channels of distribution Paths of ownership or control that

goods follow as they pass from producer to consumer

Methods that a business uses to sell and distribute its products

Types of Place

Direct Indirect Specialty

Direct Channel

Connects buyers to businesses that are selling the goods or providing services

No intermediaries (middle person) to increase the cost

Known as maker-user relationship

Indirect Channel

Have one or more intermediaries Could be an importer, wholesaler or

retailer

Importer Someone who searches for foreign

businesses that want to sell their product to Canadian consumers

Can have exclusive rights to distribute the product in a certain region/country

Wholesalers

Individuals or companies that buy goods from producers or importers and resell the products to retailers

Why use a wholesaler? Can buy in smaller quantities vs.

buying directly from manufacturer Usually located closer to the

wholesaler

Specialty Channels

An indirect channel of distribution that does not involve a retail store

Examples: Vending machines Telemarketing Catalogue sales E-commerce Door-to-door sales

Promotion

Any attempt to sell a product or service

Sales promotions encourage consumers to buy products using: Coupons Contests Premiums Samples Special events

Coupons

Offering consumers money off of the price of a product

They are treated like cash Most coupons end up in the garbage

Redemption Rate Measures the effectiveness of a coupon

program The larger the coupon, the higher the

redemption rate Average is about 5%

Contests

A way to increase brand recognition and sales

Law requires people to demonstrate a skill or answer a skill-testing question e.g. Tim Hortons Roll up the Rim

contest

Premium

Giveaways Sometimes the consumer gets

something for free when purchasing a product e.g. a toy in cereal box

Customer loyalty cards are another method Stamped each time the consumer

makes a purchase

Samples

Encourage consumers to try a product

Often small “trial” sizes of the product

Sometimes distributed door-to-door or at the supermarket

An effective way to increase sales but expensive

Special Events

Organizing special events to attract consumers and increase product sales e.g. book signing, celebrities that

promote shoes, perfume

Two Cs of Marketing

Consumer Competition

Must consider these when developing the marketing mix

Consumer Market

Companies study the types of consumers that buy their products

Can be identified by: Demographics Lifestyle

Demographics

The study of obvious characteristics that categorize people, such as: Age Gender Family life cycle Household income Ethnicity and culture Lifestyle

Competition

Competitive market Consists of all the sellers of a specific

product Often expressed in terms of annual

spending on a specific product

Market share The % of the market that a company or

brand has

Competition continued…

Market Segment Part of the overall market that has

similar characteristics e.g. soft drink market would have a diet

segment, flavoured segment

Competition continued…

Direct Competition Competition between products that

are very similare.g. Ritz Crackers vs. Premium

Plus crackers

Indirect Competition

Competition between products or services that are not directly related to each other e.g. movie and pizza

Income

Discretionary Income The portion of disposable income

that is not already committed to paying for necessities and can be used to buy items for comfort and pleasure

Income continued…

Disposable Income The amount of income that is left

after taxes have been paid Could be used for basic necessities

such as food, shelter and clothing