Marketing basics – the marketing mix and product lifecycle

“Marketing” is a term that has been used so much and in so many ways that few people are sure what it really means... Here’s my definition and some great ways to get started on marketing your products and services.

 By Joanne Mansell.

 Why market?

 You may have “built a better mousetrap” but if people don’t know about it – no one will buy it.  The idea of marketing is to encourage the customer to make a buying decision to purchase your product.  This consists of a number of parts, depending on how well known your industry, product and business are.  The parts or decisions a customer must make are:

 Do I need to buy a product (or can I do it myself)? 

Which one will I buy? How much (if anything) will I pay for it?

 For example - a product like Coca-Cola has less decisions to overcome or be involved in.  Once the consumer has decided they want a drink and will buy a beverage, for many consumers it then becomes a question about whether to buy a coke or an alternative (Pepsi, Lemonade, water…).

 What is marketing?

 Marketing generally refers to the identification and fulfilment of customer needs – for the coke this is “I’m thirsty” or “I want a drink”.

Marketing also involves the creation and/or addition of value – the Coca-Cola company might say not only does it stop your thirst but you’ll look “cool” drinking one.  The marketing also centres around fun and weekends or holidays (and other desirable things) and not the office where many a caffeinated beverage is required!

Marketing, may also cover creating a need (demand) for a product or service that the business can produce or procure and distribute cost effectively. “Aren’t you hungry?” is a marketing phrase designed to create a need.

 What is the marketing mix?

 The marketing mix is commonly known as “the 4 P’s” that is product, price, placement and promotion.  These are the points you could emphasise in marketing messages (including brochures, business cards, advertisements etc).

 PRODUCT.  What is the business selling?  This should relate to customer needs and wants rather than what R&D [research and development] can (or has) developed.

 PRICE.  How much does the product or service cost?  In fixing or creating or determining your product price, you need to consider the cost of raw materials, fixed and variable costs, R&D costs, quality improvements, quantity discounts (if applicable) scarcity/demand and competitors pricing.

 PLACEMENT.  How is the product delivered or made available to the consumer or customer?  This can include location of stores if applicable, or online purchasing and distribution.  How convenient is it to order, or purchase this product.

 PROMOTION.  How the products existence, price and availability is made known to the target market – also called “advertising”.  Promotion also includes packaging, image, name/trademark/branding.  Promotions can be done by samples or by discounting and special offers or coupons. 

 The marketing mix is about how you use these four P’s.  All four will be included in the marketing “story” (advertising) but different emphasis may be placed on any of the P’s depending on the product and business as well as the industry in particular how competitive the industry is and on what the competition is based (often price). 

 Applying the marketing mix aims to make you memorable to your customer, and give them a reason to buy your product or service, when they are “looking to buy”.

 One way to determine the mix of the P’s is to categorise your SWOT elements (Strengths, Weaknesses, Opportunities and Threats) as related to Product, Price, Placement or Promotion and use that in the advertising story.  Make the strengths known and be sure to mention all of the P’s.  Consumers notice omissions as well as claims!

 Another way to determine the mix of P’s in your marketing is by using the product life cycle.

 The Product Life-cycle (PLC)  

 The life cycle can be considered for a product, company/business or an industry as a whole.  When launching new product lines the business owner or manager should be mindful to space out the launch so that the decline of one product will be offset by the growth of another which can help create a more even and dependable cashflow.

 The product life cycle has 4 distinct phases, which are not usually of equal length.

 Introduction is when the product is new and customers need to be made aware of its existence.  Advertising is largely informative.  At this stage money is being spent (on R&D and perhaps advertising) and very little is being recovered in sales.

 Growth is where the product sales are increasing and the profit may be starting to recover the costs of introduction.  This is the beginning of breaking even.

 Maturity is where the product has become accepted.  Sales are likely to be repeat business or new customers willing to try it now that it is common, accepted or more affordable.  Advertising may be more persuasive (to create brand loyalty) and present an image of “value for money”.

 Decline is where sales are dropping off.  Demand is dropping because customers already have all they need, are bored with the product or want something different.  At this stage the product is likely to be redeveloped (changed colors, sizes, features etc) or repackages to maintain interest or a reason to buy.  An example of this is the repackaging (new line) or breakfast spreads such as “Nutella” and “vegemite” into snack packs.  Advertising may resort to being comparative with competitors to win back market share or sales.  Advertising may be as a reminder to encourage consumers to keep thinking of buying the product or that a new (and improved) version will be on its way soon.

Phase and emphasis

Product

Price

Promotion

Advertising

Placement

Introduction

(placement)

New and unique

High

High, and targeted

Exclusive availability

Growth

(placement)

Still new and likely to be unique

Relatively high

Broader audience

Selective expansion of availability

Maturity (promotion)

Value added

 

Lower

Promotions in advertising.  Offers and discounts

Intensive distribution (easy to get)

Decline

(promotion)

Reformulate, repackage or discontinue

Low to divest or raise to support new development

Advertising is withdrawn and winds down

Move to discounters to run out.

 The marketing mix and product life cycle are related.  In the life cycle descriptions above the 4 P’s have been notes in capitals.  The mix and emphasis of product, placement, price and promotion is determined by where in the life cycle the product is, that is what elements should be emphasised to the consumer.  Similarly the advertising scope and purpose is tailored to the life cycle.  Ultimately the consumer is in charge (or should be given the illusion that they are!) that the product, it’s price and availability should suit the customer.

 In summary - key points to consider in your Advertising Budget:

 ·         The stage in the product life cycle for each of the product, business and industry.  New products typically need large advertising budgets to build awareness and gain consumer trial. 

·         Market share.  High market share requires higher advertising spend (related to sales) to maintain market share. 

·         Competition and clutter.  In a crowded market a brand must be advertised to be heard.  McDonalds advertises the brand “McDonalds” to get people in the door, they do not promote individual products like a  “Fillet o fish” or “Big Mac”.  Please note that I am using McDonalds and coke as examples of brand marketing strategies – and not as a diet I would encourage!

·         Advertising frequency.  Repetitions require budget.

·         Product differentiation requires advertising.  Advertising can be used to point out the USP.

 Marketing can be easy.  The points in this article should give you some starting points on what to say.  My October article should have given you ideas on who to say it to (market research).  The most important thing is to say or do something.  As I said at the start of this article – you may have a better mousetrap (or a better, faster, cheaper, etc ANYTHING) but if your potential customers don’t know, you won’t sell many!

 For more information on these concepts, or to book a business or life coaching session with the author, Joanne Mansell please phone 0416 181 654.  The first half hour consultation is complimentary.  For more articles (including business planning basics) see www.kaizencoaching.com.au

Joanne Mansell, Kaizen Coaching – “Mind, Body, Life Fitness”

 

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