Marketing Mix – Literature Review and Company Example

Marketers develop strategies for each of these components to facilitate mutually satisfying exchanges with a target market. (Lamb et al, 2009). Each or all of the components are variable and may be fine tuned, depending on external and internal influences, to achieve the best blend that will produce the desired result for the companies offering. This report describes a literary review of each of the four components and an example of how each is implemented in a real world scenario. 3Marketing Mix 4P’s Place Literary Review The “place” component of the marketing mix 4P’s refers to the distribution channel through which products are marketed and sold. In the view of Lodish et al. (2001) distribution encompasses all the activities that need to be performed so that the product’s offering bundle is transfered productively from seller to customer who will buy and benefit from the offering.

Similarily Lamb et al. (2009) state marketing channels facilitate the physical movement of goods through the supply chain, representing “place” in the marketing mix and encompasses he processes involved in getting the right product to the right right place at the right time. In the book Rethinking Marketing, Hakansson et al. (2004) quote the wording of Kotler (1991) which describes “place” as various activities the company undertakes to make the product easily accessible and available to target customers The choice of distribution channel, and which intermediaires are involved between the seller and final customer, through which the transfer occurrs and how these are managed has a big impact on the offering bundle. Lodish et al. 2001) Selection of the distribution channel(s) will determine whether the product is sold directly, indirectly or both (multichannel distribution). Trade-off’s and balances will be determined depending on how direct or indirect the distribution system is designed (Lodish et al.

2001). Selling direct may reap higher margins and profitability but at a possible cost of lower sales volumes. Selling indirectly through distributors may produce higher sales volumes but at a lower profit margins.The choice of direct channel distribution only offers one route from the manufacturer to the end user, direct. 4 The choice of indirect channel distribution requires further evaluation and assessment as there are a mulitude of routes from the manufacturer to the end user ie, multiple distributors, exclusive distributors, wholesaler, retailer, franchisee, value add reseller, agent etc. The choice of sales channel maybe somewhat limited by the type of product on offer, ie sweets and candy require a different marketing channels to luxury cars or industrial machinery (Lamb et al. 009).

The literature reviewed highlighted multiple variables and considerations that need to be assessed when establishing marketing channels. In all the literature was there no mention of the environmental impact that marketing channel decisions can have. The place component of the marketing mix is fundamentally concerened with how the product gets from manufacturer to buyer, therefore it is inevitable that marketing place decisions will have some impact, good or bad, on the environment.In a world pre-occupied by climate change and consumer concern and awareness of the environmental impact of everything we do, it can surely only be a matter of time before consumer awareness starts questioning and rationalising the real cost of distribution channels utilised by manufacturers. Will consumer pressure permit goods to be manufactured and transported half way around the world when similar goods, produced locally, are available? The world, consumer awareness and the marketing mix, including the place and distribution channels, are constantly evolving.Will tomorrows marketers and entrepeneurs have to include environmental cost as a criterior in their evaluation of sales and distribution channels? Will proximity of where a product is produced and ultimately sold become a factor in establishing the marketing distribution channel? How will this influence or be reflected in the various common concepts of “place” mentioned in paragraph 2, ie delivering the right product to the right right place at the right time? 5 Company Example of Marketing Mix 4P’s Place – Ritchie Bros.Auctioneers Ritchie Bros.

Auctioneers (RBA) is the world’s largest industrial auctioneer, with 39 auction sites located worldwide. RBA sold US$3. 57 billion of used and unused equipment at 340 unreserved auctions in 2008, including a wide range of heavy equipment, trucks and other assets for the construction, transportation, agricultural, material handling, mining, forestry, petroleum and marine industries. (http://www. rbauction. com/index. jsp) RBA offer a unique sales proposition to both sellers and buyers of equipment at their auctions.

Having a reputation for conducting fair ethical auctions, without artificial price manipulation, every RBA auction is unreserved, meaning there are no minimum bids and no reserve prices. Every item is sold to the highest bidder on auction day, regardless of price. (http://www. rbauction. com/buying/buying-benefits. jsp) All buyers (bidders) cannot resist the chance or opportunity to purchase something below its intrisic value. Conducting unreserved auctions provides the opportunity for this to occur and thus generates a large stream of potential fee paying bidders.

For the sellers of equipment, RBA conducting unreserved auctions provides them with a pool of targetted and focused potential buyers for their equipment, and a guaranteed minimum sell price, provided by RBA. Although RBA are not a manufacturer of any physical product, the “product” they are selling is the conducting and facilitation of unreserved auctions. This product is sold directly to a large worldwide customer base of equipment buyers and traders and no intermediaries, franchisees or agents are used. Equipment ready for auction 6The cornerstone of RBA business is their database of potential bidders (buyers) to whom they target marketing material directly. The advsertising department is their secret weapon and by the 1980’s had built a preeminent mailing list of over 100,000 potential buyers to whom brochures are mailed prior to all auctions. (Rodengen 2001) Considering the growth of the company since then it can be safely assumed today’s direct mailing list is now many times this Sample direct mail flyer. Millions of these are sent out annually directly to customers.

size.RBA revenue is generated from 10-20% sales commission, charged to the buyer, on every product sold. The key to their business success is their direct access to a large number of bidders (RBA customers) and their willingness to participate in unreserved auctions, always looking for a bargain. RBA are able to aggorgate large amounts of new and used equipment under one roof in one auction and thus provide potential buyers with right product at the right place at the right time. RBA are a worldwide organisation and the epitomy of direct marketing.RBA direct marketing approach to customers is legendary in generating customer loyalty and satisfaction and the organisation is very open and approachable from the top down. The pre auction barbecue parties are an important part of the overall auction event giving the staff, from company owner downwards, the chance to mingle with customers and make contacts (Rodengen 2001).

7 Their customer service approach is in total contrast with other large direct marketing channel corporations whose management and owners generally remain annonmous, distant and isolated. An auction taking placeIn 2004 RBA introduced live internet auctions enabling biddings from anywhere in the world to bid on any piece of equipment and thus virtually bring the product to the buyer, where ever they may be. “RBA auction brochures are sent to buyers around the world to ensure the success of the sale is not completely reliant upon local bidders. ” (Rodengen 2001) 8 Marketing Mix 4P’s Product Literary Review Product is the most important element of the marketing mix. Without product, an organization will not be able to determine or carry out the entire element in the marketing mix.Suffice to say that without a product or service to sell, there would be no business (Pigden. J ; Foley.

J, 1999). Product can be tangible or intangible; it can be a physical good, service or even an idea such as advertisement. Tangible values include values which can be measured or touched such as the audio system of your home. Intangible values are values that cannot be measured or touched such as the enjoyment the customer will get from the product. Remember that you do not sell a ‘product’ to a customer, but you sell a ‘benefit’ that the product gives to the customer (Westwood. J; 2002).It is important that a product is continuously improved to bring it up to date and prevent it from being overtaken by competitors.

For example, Hero, a company with various products in the food sector but a low market share in the breakfast cereal category, was thinking about how to gain market share in the cereals market. The breakfast cereal category was highly fragmented and saturated with varieties. Hero was not finding opportunities within this market. The solution was to redefine the utility of the cereals. Instead of marketing them as a breakfast complement, the thought occurred to sell them as a healthy snack at any time of the day.By merging the concepts of cereals and chocolate bars, a new category was born: cereal bars. This product was a breakthrough and today we consider it something standard.

9 A product must have the right features and supporting elements such as attractive design, function well, warranties, guarantees, after sales support and so forth. ? Pricing must be right – company will generate a healthy profit when consumers purchase in bulk. ? Placement of product goods must be in the right place at the right time. Ensuring that the goods arrive when and where they are wanted is an important operation. Promotion is a key aspect of marketing mix. It involves disseminating information about the product and advantages of the product to the target consumers. Promotion can be divided in to above the line and below the line.

A successful promotion plan will help a company to spread costs over a larger output. When producing a product it is vital to consider the needs of target consumers. The product element is the product itself, getting the price right involves examining customer perceptions and rival products as well as costs of manufacture, promotion involves engaging in a range of promotional activities e. . competitions, product popularity etc, and place involves using the best possible channels of distribution such as leading supermarket chains depending on what is the nature of the business. The product is the central point on which marketing energy must focus. Finding out how to make the product, setting up the production line, providing the finance and manufacturing the product are not the responsibility of the marketing function.

However, it is concerned with what the product means to the customer. Marketing therefore plays a key role in determining such aspects as: ?The appearance of the product – in line with the requirements of the market ? The function of the product – products must address the needs of customers as identified through market research. The product range and how it is used is a function of the marketing mix. The range may be broadened or a brand may be extended for tactical reasons, such as matching competition or catering for seasonal fluctuations (Kotler. P ; Bes. F; 2003). Alternatively, a product may be repositioned to make it more acceptable for a new group of consumers as part of a long-term plan.

10Company Example of Marketing Mix 4P’s Product – Qian Hu Corporation Therefore, a good example would be Qian Hu Corporation Limited. It is an integrated “onestop” ornamental fish service provider ranging from breeding of Dragon Fish, farming, importing, exporting and distributing of ornamental fish as well as manufacturing of aquarium and pet accessories and distributing them to local and overseas customers. Its product elements in the marketing mix can be categorized into three main areas which are manufacturing of fish and pet accessories, manufacturing of plastic bag and farming, importing, exporting and distributing of ornamental fish.Ornamental Fish The Company currently involves the wholeprocesses of import, export, breeding, quarantine, conditioning, and farming and distribution activities. All this decorative and attractive fish are imported from countries in South-East Asia, South Sample product ornamental fish America and Africa which then be breed in Singapore whichever can. The Company currently exports more than 500 types of species and varieties of ornamental fish directly to more than 80 countries as well as distributes to local retailers and exporters.The ‘Dragon Fish’ which the Company breeds is increasingly regarded as a premium brand in Northeast China and spreading fast across the whole China.

Accessories The Company does not only provide fish as their only product as they care and think of customers’ needs and wants. Therefore, Qian Hu take a step further by distributing, supply and selling of pet and fish accessories complements the ornamental Sample product accessories fish operations as a complete “one-stop” shop. 11 The Company distributes more than 5000 types of aquarium and pet accessories for more than 20 major manufacturers and principals to local retailers and o wholesalers in Asia, including supermarkets operated by NTUC FairPrice, Cold Storage, Carrefour, Lotus and Tesco, etc. Other than that, Qian Hu has developed its own brands of aquarium and pet accessories under the name “Ocean Free”, “Delikate”, “BARK”, “Nature’s Gift” and “ARISTO-CATS YI HU”. The Group also has production facilities in Guangzhou, China to manufacture aquarium and pet accessories for the Group as well for other businesses. Plastic bags As an ancillary business, the Group manufactures plastic bags for its own use in the packing of ornamental fish for sale in a separate factory located in Woodlands.The plastic bags are also supplied to third parties in the ornamental fish, food and electronics Sample product plastic bag industries.

12 Marketing Mix 4P’s Pricing Literary Review In the simplest sense, price is that which is given up in exchange for the good or service. Price is also previously called fees , tariffs , charges , interests. (Kotler P, Bes TD, 2003) Among the 4 main element present in the marketing mix ; Price is the only element that produces revenue; all other elements represent costs.Price has the utmost flexibility among all the elements of the marketing mix. Pricing can be changed quickly as it is not bounded by fixed components such as product features or channel commitment. At the same time, pricing is the key issue faced by many organizations small and large alike. (Hussey D, 1998) Factors to consider when setting price Before setting a price, the company must decide on its objectives for the product.

Objectives are divided into 3 main classes as follow; 1. Profit –Oriented Pricing Objectives 2. Sales – Oriented Pricing Objectives 3.Status-Quo Pricing Objectives Many companies use current profit maximization (profit- oriented pricing objectives ) as their pricing goal. They estimate demand and costs will be at different prices and choose the price that will produce the maximum current profit, cash flow, or return on investment. 13 Other companies want to obtain market share leadership (sales-oriented pricing objectives ) To become the market share leader, these firms set prices as low as possible. Strategy for the above objectives are as follow ; 1.

Price Skimming When you are offering a new or innovative product you can initially charge a high price, since the “early adopters” aren’t very price sensitive. Then you lower prices to “skim” off the next layer of buyers, etc. Eventually, the price will drop as the product matures and competitors offer lower prices. 2. Penetration Pricing You set a low initial price in order to penetrate quickly into the mass market. A low initial price discourages competitors from entering the market, and is the best approach when many segments of the market are price sensitive.Amazon.

com, for example, offers a discount price and may lose money on the first sale, but this way they gain more customers who will purchase products later at a lower marketing cost (since it costs much less to attract them back for the second or third sale if they are happy with their first purchase experience). Cheap products are not taken seriously by some buyers unless they are priced at a particular level. 3. Odd-even pricing takes advantage of human psychology that feels like $499. 95 is less than $500.Studies of price points by direct marketers have found that products sell best at certain price points, such as $197, $297, $397, compared to other prices slightly higher or lower. 4.

Bundle pricing is offering two or more products together in a single package price. This can offer savings to both the buyer and to the seller, who saves the cost of marketing both products separately. And the customer is willing to pay more because he perceives that he is getting a lot more, even though the cost to the seller may not really be that much more. 4 Considerations to be taken in when choosing a strategy for pricing are divided into 4 main classes as follow ; 1. Unfair Trade Practices 2. Price Fixing 3. Price Discrimination 4.

Predatory Pricing Two Main pricing objectives stand out : ? To maximize short –term profits. Here you try to squeeze as much money out of the sales of the product as possible , even though fewer customers may make a purchase of the product. Strategy maybe to charge premium prices for website design services.However it may result in fewer customers , but then dealing with a lot of customer multipiles your problems. ? To gain market share , the other main strategy is to price your service lower to gain market share. The profit may decrease however , we can slowly fine tune the prices back as time passes (Holden K, 1994). Pricing Approaches Here are some cost-oriented approaches to pricing that I’m sure you are familiar with: ? Standard mark-up pricing.

Typically a manufacturer marks his price up 15% over his costs, a wholesaler 20% over his costs, and a retailer 40% over his costs.The retailer gets a larger markup based on the idea that, since he is closest to the end user, he is required to spend more services and individual attention meeting the buyer’s needs. ? Cost-plus pricing adds a small percentage to the retailer’s costs — and “cost plus 5%” sounds so harmless and will in turn attract buyers. 15 ? Experience curve pricing assumes that it costs a company less to produce a product or provide a service over time, since learning will make them more efficient. Then there are competition-oriented approaches to pricing that you’ll recognize: Customary pricing is where the product “traditionally” sells for a certain price. Candy bars of a certain weight all cost a predictable amount — unless you purchase them in an airport shop. Example at vivocity candy empire ? Above-, at-, or below-market pricing.

Certain stores advertise “low cost” or “discount” pricing. Others price at the market, while others deliberately price abovethe-market at premium prices to attract prestige buyers. ? Loss-leader pricing works on the basis of losing money on certain very low priced advertised products to get customers in the door who will buy other products at the same time. Flexible-price policies offer the same product to customers at different negotiated prices. Cars, for example, are typically sold at negotiated prices. Many B2B sales depend on negotiated contracts. Marketing element pricing main key points are what price level to adopt after comparison with the market trends and analyst ,various competitors price range and consumer perception towards the pricing ; Specific prices to adopt ; price policy such as one price or varying price price maintenance , usage of list prices ; Profit margin to adopt for the price or the entire trade itself .

Borden, N H, Baker M J 2001) Last but not least many companies fine-tune the base price with other pricing tactics such as discounts , allowances , rebates , value –based pricing , geographic pricing and other pricing tactics. 16 Company Example of Marketing Mix 4P’s Pricing – Qian Hu Corporation Taking into consideration Qian Hu key competitive strengths as follows: ? Proven track record for the quality of fishes which they bred ?Having their own factories in china Quangzhou which inevitably results in the choosing of the Pricing objective – ( Profit Oriented ) Strategy – ( Price Skimming Strategy ) Therefore, a good example would be Qian Hu Corporation Limited. It is an integrated “onestop” ornamental fish service provider ranging from breeding of Dragon Fish, farming, importing, exporting and distributing of ornamental fish as well as manufacturing of aquarium and pet accessories and distributing them to local and overseas customers.Qian Hu Corporation has its own manufacturing factories based in Guangzhou china and given the fact that they have a proven track record of quality for its fishes hence the pricing is slightly above average. Advantages ; ? High Profit margin as there is the absence of a middle man in the product life cycle ? Perceived Premium quality fish bred by QIAN HU Corporation Disadvantages ; ? High Prices attract entries of new competitors ( however this will not affect Qian Hu Corporation much as they have a wide network around the world and ith their given reputation they have quite a solid foothole in the ornamental fish industry) 17 Due to the fact that the company is acting as the one of the main exporter in the industry of ornamental fish and also the foremost agent in the product life cycle hence their pricing objectives would be profit oriented and strategy that they applied is price skimming. 18 Marketing Mix 4P’s Promotion Literary Review Promotion is defined as an activity, such as a sale or advertising campaign, designed to increase visibility or sales of a product. (http://www.

investorwords. om/3897/promotion. html) Promotion is one of the most exciting elements in the marketing 4 Ps. The word “promotion” excites both business owners and end users. To business owners successful promotion campaigns bring high sales revenue to the company and at the same time increasing its products awareness and gain market share. To end consumers, promotion campaigns mean that consumer can get the product that they want at a special price or come with free gifts or bundle. Successful promotion campaign is like a “bridge” that brings business owners and consumers together.

Promotion for different product mix is happening every single second in our daily life. Within promotions, there are many modes of promotion activities available to drive Sales Revenue. They includes Personal Selling, Sales Promotion, Public Relations, Direct Mailer, Trade Fair and Exhibitions, Advertising and Sponsorship just to name a few. All of these elements are closely knit together for a product launch or marketing campaign. 19 Sales Promotion. Sales promotion is the act of influencing customer/ consumer perception and ehavior to build market share and sales that reinforce brand image (Kotler et al. , 2006) However defined, the following statements by industry respresentives provide perspective on what is expected from Sales Promotion ? “Providing consumers with a reason – beyond price – to buy now or again.

” – Kelvin Smith, Kellogs ? “Reinforcing the brand and creating an action” – Shireen Moore, Communicator ? “Giving consumers a reason to buy now. ’ – Pam Laufman, Nickeloden Sales promotion tends to be thought of as being all promotions apart from advertising, personal selling, and public relations.For example the BOGOF promotion, or Buy One Get One Free. Others include couponing, money-off promotions, competitions, free accessories (such as free blades with a new razor), introductory offers (such as buy HDMI TV and a Free HDMI Player plus free installation), and so on. Each sales promotion should be carefully costed and compared with the next best alternative. 20 Advertising Advertising is the paid promotion of goods, services, companies and ideas by an identified sponsor. Marketers see advertising as part of an overall promotional strategy (http://www.

wordiq. om/definition/Advertising) Advertising is often used to create awareness, gain consumers’ mind share, develops attitudes and transmit information in order to gain a response from the target market. There are many advertising ‘media’ commonly available such as ? Daily newspapers (Straits Times, The New Paper, Sin Min, Wan Bo, Business Times) ? Magazines (Human Resource Magazine, MediaCorp’s I Weekly Magazine, Go Magazine, FHM), ? Television (Mediacorp Channels, Starhub Cable TV) cinema ? Outdoor advertising (such as posters at Bus Stops, Posters on SMRT, Taxi and bus sides) and ? Internet advertising (such as Google Ads, Yahoo Ads, MSN).Advertising is a “Paid For” communication and often, one of the more expensive way compared to direct mailer. How much to pay for Advertising is often in relation to the scale of the marketing campaign and how much mindshare and revenue that the company hope to achieve from the consumer. 21 Company Example of Marketing Mix 4P’s Promotion – Comat Training Services Pte Ltd Established in 1984, COMAT is an established leader in Information Worker Education ; Training over the last 25 years. COMAT is invested by Singapore Technologies Electronics, through its subsidiary ST Elect (Training ; Simulation).

As a natural extension, COMAT is the extended training arms to ST Elect (T;S). COMAT offer internationally recognized certification programs from Microsoft Certified Application Specialist (MCAS) for Office 2007, Microsoft Office Specialists (MOS) for Office 2003/XP, International Computer Driving License (ICDL) to in-house developed programs in performance-centric SkillzXpress™ series. It also remains fully cognizant with advance technologies and offers comprehensive technical training programs for IT Professionals and Developers. These programs cover vendor-centric technologies such as Microsoft and IBM to Open Source Training.COMAT serves 3 major sectors. ? Public Sector – Government Bodies, Government Step boards and Agencies ? Corporate Sector – Major MNCs Companies and SMEs ? People Sector – Consumers COMAT has always been engaging Corporate and Public Customers using the B2B (Business to Business) business model for the last 25 years. Realizing that there is a huge demand in the consumer market for Microsoft Certifications (both technical and end users), Project Management and ITIL (Information Technology Infrastructure Library) Certifications, COMAT has decided to compete in the consumer market in 2004.

2 To gain market mind share and product awareness, COMAT held regular promotion for Microsoft Advance Technologies Certifications, Microsoft Information Workers Certifications and Project Management courses and certifications. The methods of promotion adopted by COMAT marketing team, are advertising on newspaper (via Straits Times, Today Newspaper), corporate magazine (Via Human Resource Magazine), internet advertising (via yahoo and Google search ads) and also participate in regular road shows, exhibitions and seminars to gain public awareness.COMAT also uses promotion strategy like bulk discounts, Buy One Get One Free (BOGOF) and Certifications bundling at special promotion rates. Types of promotions strategies adopted by COMAT Sales Promotion Sales promotion is the most commonly used promotion strategy in the training industry. This strategy is often used by COMAT to promote newly launch products or current “Hot” products. Being consumer of 20th century, one of the buying factors that the consumer will consider before buying anything is the price of the certification that they have to pay and also what kind of bundling the training company is offering.The consumers will normally compare the sales promotion prices and how the certification is bundled within competing companies that offer the same solutions, therefore a good promotion strategy is critical to the success of a good company.

Advertising on daily newspapers and corporate magazines This is one of the most effective promotion strategies as it has one of the best reach to the consumer market. Advertising on complimentary newspaper like Today has enabled the company to reach out to close 3 millions readers each day hence enhancing the consumers’ awareness on COMAT’s product, services and sales promotion. 3 Seminars COMAT has been conducting short regular seminars on subjects like Project Management, Microsoft Certifications and customized Microsoft Office “Brown Bag” sessions as part of its customer retention and customer acquisition program. Seminars are conducted in “Tips and Tricks” style of delivery. The speaker will cover the essential tips in their areas of expertise in a lighthearted and stress free environment to encourage learning. Attendees who have attended these seminars will gain some quick takeaways from the session. Promotion booths are set up to promote COMAT’s courses in the seminar location.

Each of the attendees will be given a handout for the information on the seminar as well as the sales promotion for some of the company offering. These handouts are all prepared by the marketing teams before commencement of seminars. Some of the seminars conducted have over 200 attendees. These seminars have created face to face opportunity chance for the sales people to engage with potential clients who attends the seminar. Electronics Direct Marketing (EDM) COMAT use EDM as a monthly update to existing customers on the latest offerings and new products.

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