Esrat Jahan

Lecturer
Department of Agribusiness and Marketing
Bangladesh Agricultural University, Mymensingh

Marketing Mix
• Marketing Mix is a collection of marketing tools and
strategies used to promote and sell a product or service
in the marketplace.
• It was first introduced by E. Jerome McCarthy.
• It involves positioning a product and determining
when, where, and at what price it will be sold.
• Afterward, the product will be sold in accordance with
the marketing and promotional strategy. The marketing
formula consists of the 4Ps: Product, Price, Placement,
and Promotion.
 4Ps of Marketing
A product is a commodity, produced or built to satisfy the need of an individual or a group.
The product can be intangible or tangible as it can be in the form of services or goods.

The price of the product is basically the amount that a customer pays to enjoy it. Price is the
most critical element of a marketing plan because it dictates a company’s survival and profit.

The right product at the right price available in the right place is important to sell in the
market.

Promotion is a marketing communication process that helps the company to publicize the
product and its features to the public.

Product
• Product is anything that can be offered to a
market for attention, acquisition, use, or
consumption that might satisfy a want or
need.
• Services are a form of product that consists of
activities, benefits or satisfactions offered for
sale that are intangible.
• While developing products, marketers first
must identify the core customer value that
customers seek from the product. Then design
the actual product and find ways to augment
it to create customer value and most
satisfying brand experience.
 Product and service classifications
• Consumer products: are products and services bought by final
consumers for personal consumption. It includes convenience
products, shopping products, specialty products and unsought
products.
• Industrial products: A product bought by individuals and
organizations for further processing or for use in conducting a
business.

Marketing considerations for consumer poducts

 Product and service decisions
• Product quality: the characteristics of a product or service that bear on its ability to
satisfy stated or implied customer needs.
• Product features: features are a competitive tool for differentiating the company’s
product from competitor’s products.
• Product style and design: Style describes the appearance of the product whereas
design contributes to a products usefulness as well as to its looks.
• Branding, packaging, and labeling: Branding is assigning a name, sign, symbol, or
design that identifies a seller’s product and differentiates it from those of
competitors. Packaging involves designing and producing the container or wrapper
for a product. A label identifies, describes, and promotes a brand or product.
• Product support services: keeping customers happy after the sale is the key to
building lasting customer relationships. Support services include warranties,
installation, after-sale services, etc.
• Product line decisions: A product line is a group of products that are closely related
because they function in the same manner, are sold to the same customer groups,
are marketed through the same type of outlets, or fall within the same price range.
• Product mix: the set of all product lines and items that a particular seller offers for
sale.
 Papaya Juice (Product)

Item My Product My Competitors Product

Product Papaya Juice Mango Juice, Orange Juice
Product Variety Less variant at the introductory They have variations on their
phase products but don’t produce
papaya juice.
Product Appearance Processed juice with no artificial Well packaged but they use
flavor in a colorful pack artificial flavor most of the time
Product Quality Highly qualified with several Highly qualified
certifications
Product Features Healthy and nutritious Not rich in nutritious value
Product Functionality Bring consumer satisfaction and Try to earn more profit with less
also safe and hygienic quality management
Warrenties For expired date packets, I will They also back expired date
back my products. products.

1. What features are considered basic

features by your customers that must be
offered?
Further 2. What additional value your product will be
assessment provided compared to your competitors to
the customers?
(Product) 3. How can your product give you an
advantage in the marketplace?
 Price

• The amount of money charged for a product or service, or the sum of the
values that customers exchange for the benefits of having or using the
product or service.

• Smart marketers treat pricing as a key strategic tool for creating and capturing
customer value as a small percentage improvement in price can generate a
larger percentage increase in profitability.

Pricing Strategies
• Customer value-based pricing: setting prices based on buyers perception of
value rather than on the sellers cost.
• Cost-based pricing: Setting prices based on the costs of producing
distributing and selling the product plus a fair rate of return for effort and risk.
 Pricing Strategies
• Value-added pricing: Attaching value-added features and services to
differentiate a company’s offers and charging higher prices.

• Cost-plus pricing (Markup pricing): Adding a standard markup to the cost of

the product.
Markup price=Unit cost/(1-desired return on sales)
Unit cost= variable cost +(fixed costs/unit sales)
• Competition-based pricing: Setting prices based on competitors’ strategies,
prices, costs, and market offerings.

• Market-Skimming pricing: Setting a high price for a new product to skim

maximum revenues from the segments willing to pay the high price; the
company makes fewer but more profitable sales.

Pricing Strategies
• Market-penetration pricing: Setting a low price for a new product to attract a larger number
of buyers and a large market share. The market must be highly price-sensitive so that a low
price produces more market growth.

• Optional product pricing: offering to sell optional products along with the main product.

• Product bundle pricing: combining several products and offering the bundle at a reduced
price.

• Discount: A straight reduction in price on purchases during a stated period or in larger

quantities. Cash discount- “2/10, net 30”. Examples include quantity discount, functional
discount, seasonal discount etc.

• Reference pricing: buyers carry prices in their minds and refer to when they look at a given
product.
 Pricing Strategies
• Psychological pricing: Pricing that considers the psychology of prices and not
simply the economies.

• Promotional pricing: Temporarily pricing products below the list price,

sometimes below cost, to increase short-run sales. Such as discounts, special-
event pricing, limited-time offer etc.

• Segmented pricing: selling a product or service at two or more prices, where

the difference in prices is not based on differences in costs. Customer
segment, product segment, location segment, and time-segments.

• International pricing: Adjusting price for international markets.

Price
Pricing Strategy Advantages and disadvantages
Cost-plus Advantage: Getting minimum profit with no loss, no risk.
Disadvantage: Appear as a high price for middle and poor-class
customers.
Value based Advantage: I can sell at a good price if customers are concerned about
value.
Competitive Advantage: Higher prices can be charged when there is less
competition.
Disadvantage: Need to charge low prices when there is a high
competition
Going rate Advantage: If I can be a monopoly in the market, I can fix a good price.
Disadvantage: If there are existing products like mine in the market, I
have no control over price.
Discount Advantage: Reduce advertisement cost
Disadvantage: Sometimes the company faces loss.
 Price

Pricing Strategy Advantages and disadvantages

Skimming Advantage: Involves the production of a
product at a high price for affluent
consumers.
Disadvantage: The price is decreased as the
market becomes saturated.
Loss-leader Advantage: Attract consumer to buy high
volume
Disadvantage: Price is lower than cost

1. How sensitive is your target market to change

Further in prices?
assessment 2. How does your expected pricing compare to
your competitor’s pricing?
(Price) 3. How will your product provide a better price
performance than others?
 Place

• focuses on where the company sells its products so that they're easily available
to the target market.
Item My Product My Competitors Product
Direct Sale Supply direct to retailers, Direct retail sale
mail order
Reseller Sale Selling to the intermediary Sell to intermediary also
Market coverage Cover all over the country Country market
market
Inventory Sometimes used Sometimes used
Transportation Factory to retail shop From factory to wholesale
to retail

1. What is the best way to sell your

Further product?
assessment 2. How will you plan for coverage and
(Place) other price decisions compared to those
of your competitors?
The promotion mix (or marketing communication mix)
The specific blend of promotion tools that the company uses to persuasively
communicate customer value and build customer relationships.
The major communication tools are:
✓Advertising: Any paid form of nonpersonal presentation and promotion of
ideas, goods, or services by an identified sponsor. It includes broadcast, print,
internet, mobile, outdoor and other forms.

✓Sales promotion: Short-term incentives to encourage the purchase or sale of

a product or service. It includes discounts, coupons, displays, and
demonstrations.

✓Personal selling: personal presentation by the company’s sales force to make

sales and build customer relationships. It includes sales presentations, trade
shows, and incentive programs.

The promotion mix (or marketing communication mix)

✓Public relations: building good relations with the company’s various publics by
obtaining favorable publicity, building up a good corporate image, and handling
or heading off unfavorable rumors, stories and events. It includes press releases,
sponsorships, events, and web pages.

✓Direct marketing: direct connections with carefully targeted individual

consumers to both obtain an immediate response and cultivate lasting
consumer relationships. It includes catalogs, direct-response TV, the internet,
and mobile marketing.

✓Word of mouth influence: personal communications about a product between

target buyers and neighbors, friends, family members, associates, and other
consumers.
 Promotion

Items My product My competitor’s Product

Advertising Yes Yes
Radio Yes No
Television Yes Yes
Social Media Yes No
Word of Mouth Yes Yes
Public Relation Yes Yes
Sales Promotion Yes Yes
Personal selling Yes Yes

Further 1. What promotional efforts are more

effective for your product market?
assessment
2. How can your promotion strategy give
(Promotion) you an advantage in the market place?