MULTITECH BUSINESS SCHOOL

PRINCIPLES OF MARKETING

COURSEWORK

LECTURER: MR KALYESUBULA

NAME: NAMBATYA JOAN

REG NO: 2017/BU/2730

BBAM

YEAR2 SEM1
1. With the help of relevant examples examine the concept of marketing mix.

Marketing mix is the policy adopted by the manufacturers to get success in the
field of marketing. Those days, when goods were matched with the market, have
gone. The modem market concept emphasizes the importance of the consumer’s
preference. Manufacturers take various policies to get success in the market and
the marketing mix is one of the important policies.

In marketing planning, we make use of marketing information to assess the

situations. Therefore, a manufacturer first analyses the nature of the consumer’s
needs and then plans his product to give satisfaction to the consumers. All the
marketing effort focuses attention around the consumer’s need.

The management therefore is concerned with the markets and market behaviors to
identify the target groups of consumers through market information. Then the
management plans to meet the consumer’s needs and to face the competitors. All
these programs involve a number of functions, which are to be planned carefully;
and planning’s need analysis of the market to take a decision-prediction and
forecasting, to the future needs of the public.

Marketing departments perform the operations and the market offering mix is the
result. Thus, the identification of demand and supply involves various functions of
marketing to attain success in the market and the combination of these functions is
known as marketing mix.

Definition of Marketing Mix:

According to Borden, “The marketing mix refers to the appointment of efforts, the
combination, the designing and the integration of the elements of marketing into a
program or mix which, on the basis of an appraisal of the market forces will best
achieve an enterprise at a given time”.

According to Stanton, “Marketing mix is the term used to describe the combination
of the four inputs which constitute the core of a company’s marketing system-the
product, the price structure, the promotional activities and the distribution system.”

Thus marketing mix is the combination of the product, the distribution system, the
price structure and the promotional activities. The term marketing mix is used to
describe a combination of four elements-the product, price, physical distribution
and promotion. These are popularly known as “Four Ps.”

These four elements or sub-mixes should be taken as instruments, by the

management, when formulating marketing plans. As such, marketing manager
should have a thorough knowledge about the four Ps. The marketing mix will have
to be changed at the change of marketing conditions like economic, political, social
etc. Marketing mix is developed to satisfy the anticipated needs of the identified
markets.

The four elements of marketing mix (Four Ps) is:

1. Product:

The product itself is the first element. Products must satisfy consumer needs. The
management must, first decide the products to be produced, by knowing the needs
of the consumers. The product mix combines the physical product, product
services, brand and packages. The marketing authority has to decide the quality,
type of goods or services which are offered for sale.
A firm may offer a single product (manufacturer) or several products (seller). Not
only the production of right goods but also their shape, design, style, brand,
package etc., are of importance. The marketing authority has to take a number of
decisions as to product additions, product deletions, product modifications, on the
basis of marketing information.

2. Price:

The second element to affect the volume of sales is the price. The marked or
announced amount of money asked from a buyer is known as basic price-value
placed on a product. Basic price alterations may be made by the manufacturer in
order to attract the buyers. This may be in the form of discount, allowances etc.
Apart from this, the terms of credit, liberal dealings will also boost sales.

3. Promotion:

The product may be made known to the consumers. Firms must undertake
promotion work-advertising, publicity, personal selling etc., which are the major
activities. And thus the public may be informed of the products and be persuaded
by the customers. Promotion is the persuasive communication about the products,
by the manufacturer to the public.

4. Distribution (place):

Physical distribution is the delivery of products at the right time and at the right
place. The distribution mix is the combination of decisions relating to marketing
channels, storage facility, inventory control, location, transportation warehousing
etc.
Companies should view the four Ps in terms of the customer’s four Cs.

A firm’s marketing efforts should start and end with the customers. The marketing
mix-Four Ps, are the important tools or instruments used by the marketing manager
in formulating marketing planning to suit the customer’s needs. A share in the
market and the goodwill depends upon the marketing plans. Change is constant.

The customer’s need and desire may change often, because of the changes that take
place in the market. The decisions on each element of four Ps are .aimed to give
greater consumer satisfaction. The elements of Four Ps are interrelated,
complementary and mutually supporting ingredients.

Thus marketing mix is used as a tool towards the customers in order to ascertain
their needs, tastes, preferences etc. Marketing mix must face competition. It must
satisfy the demands of the society. Then firms can attain the objectives-profit,
market share, return on investment, sale-volume etc.

2. Using an illustration explain what is meant by product life cycle.

A product processes through a number of stages, such as from introduction to

growth, maturity, and decline.

This sequence of stages is called Product Life Cycle (PLC). The PLC influences
the marketing strategy and marketing mix of an organization.

Illustration of the stages involved in PLC:

The life cycle analysis of a product enables an organization to make efficient

pricing policies with respect to each stage of the product. Moreover, it plays a
crucial role in various organizational functions, such as corporate strategy, finance,
and production.

The different stages of PLC (as shown in Figure-11) are explained as follows:

i. Introduction:

Refers to the initial stage where an organization creates awareness among

customers about the availability of a product and develops a market for the new
product. The sales of the organization during this period are constant. In this stage,
the pricing policy depends upon the availability of dose substitutes. Moreover, in
this stage, the prices are either fixed higher to cover the production cost or low to
attract customers.

iv. Growth Stage:

Implies a stage where the focus of the organization is on lowering the cost of
production. At this stage, there are various substitutes of products available in the
market leading to competition. The product is exported to other countries to gain
economies of scale and market share.

v. Maturity Stage:

Refers to the longest stage in the product life cycle. In the maturity stage, the
growth in the sale of the product slows down because the price competition
increases in the foreign markets. As a result of this, the organizations shift their
manufacturing facilities to the countries where the cost of labor is low to reduce
cost of production.
In this stage, the organizations that loose the market share exit from the industry.
In the maturity stage, the promotion plays a great role in increasing the product
sale. In such a situation, organizations should try to explore the new uses of the
product.

vi. Decline Stage:

Implies a stage in which the growth of the product in the market is declining at a
fast pace. In this stage, sales and profits of the organization decrease because of
new products and technologies are introduced in the market. A product produced
by an organization may have different stages in different countries at the same
time. For example, a product may face growth stage in one country and decline
stage in another country. In such a situation, loses in one country’ can be covered
by the profits earned in another country.

Product Life Cycle Examples

Here is the example of watching recorded television and the various stages of each
method:

1. Introduction – 3D TVs
2. Growth – Blue ray discs/DVR
3. Maturity – DVD
4. Decline – Video cassette

The idea of the product life cycle has been around for some time, and it is an
important principle manufacturers need to understand in order to make a profit and
stay in business.
However, the key to successful manufacturing is not just understanding this life
cycle, but also proactively managing products throughout their lifetime, applying
the appropriate resources and sales and marketing strategies, depending on what
stage products are at in the cycle.

3. Illustrate how marketing strategies change at different stages of product life

cycle.

Product life cycle strategies

The product life cycle contains four distinct stages: introduction, growth, maturity
and decline. Each stage is associated with changes in the product's marketing
position. You can use various marketing strategies in each stage to try to prolong
the life cycle of your products.

Product introduction strategies

Marketing strategies used in introduction stages include:

 Rapid skimming - launching the product at a high price and high

promotional level
 Slow skimming - launching the product at a high price and low promotional
level
 Rapid penetration - launching the product at a low price with significant
promotion
 Slow penetration - launching the product at a low price and minimal
promotion

During the introduction stage, you should aim to:

  Establish a clear brand identity
 Connect with the right partners to promote your product
 Set up consumer tests, or provide samples or trials to key target markets

Price the product or service as high as you believe you can sell it, and to reflect the
quality level you are providing.

You could also try to limit the product or service to a specific type of consumer -
being selective can boost demand.

Product growth strategies

Marketing strategies used in the growth stage mainly aim to increase profits. Some
of the common strategies to try are:

 Improving product quality

 Adding new product features or support services to grow your market share
 Enter new markets segments
 Keep pricing as high as is reasonable to keep demand and profits high
 Increase distribution channels to cope with growing demand
 Shifting marketing messages from product awareness to product preference
 Skimming product prices if your profits are too low.

Diagram showing strategies that are used in the introduction stage of a

product:
The two types of pricing strategies in the introduction stage (as shown in
Figure-12) are explained as follows:

 ii. Price Skimming:

Refers to a pricing strategy in which a producer sets high prices initially when
the product is newly introduced in the market. After that, there is a gradual
reduction in the prices of a product. This strategy is used to capture maximum
consumer surplus and spread profits over a period of time.

 iii. Penetration Pricing:

Refers to charging minimum price for a product for gaining large market share.
In this strategy, it is expected that customers switch to the product because of
lower price.

Main benefits of penetration pricing are as follows:

 Discourage the entry of competitors as low prices do not suit them

 Results in the fast adoption of products

The limitations of penetration pricing are as follows:

  Raises the expectations of customers that the prices will remain low for a
long period
 Creates a low-profit margin that makes it difficult for the organization to
survive
 When the objective of penetration pricing is achieved, the price of the
product is increased.

Growth stage is when you should see rapidly rising sales, profits and your market
share. Your strategies should seek to maximize these opportunities.

Product maturity strategies

When your sales peak, your product will enter the maturity stage. This often means
that your market will be saturated and you may find that you need to change your
marketing tactics to prolong the life cycle of your product. Common strategies that
can help during this stage fall under one of two categories:

 Market modification - this includes entering new market segments,

redefining target markets, winning over competitor’s customers, converting
non-users
 Product modification - for example, adjusting or improving your product’s
features, quality, pricing and differentiating it from other products in the
marking

Product decline strategies

During the end stages of your product, you will see declining sales and profits.
This can be caused by changes in consumer preferences, technological advances
and alternatives on the market. At this stage, you will have to decide what
strategies to take. If you want to save money, you can:

 Reduce your promotional expenditure on the products

 Reduce the number of distribution outlets that sell them
 Implement price cuts to get the customers to buy the product
 Fin another use for the product
 Maintain the product and wait for competitors to withdraw from the market
first
 Harvest the product or service before discontinuing it

Another option is for your business to discontinue the product from your offering.
You may choose to:

 Sell the brand to another business

 Significantly reduce the price to get rid of all the inventory

Many businesses find that the best strategy is to modify their product in the
maturity stage to avoid entering the decline stage.