F.

MARKETING MIX

1. Product
• Product item: a particular good that a company sells
• A product line (dòng sp): a set of products that are similar or complementary.
• For example: dòng mỹ phẩm/ đồ trang sức/ quần áo thời trang/ hàng gia dụng
• Trong dòng hàng mĩ phẩm sẽ bao gồm: son môi, kem nền, kem che khuyết điểm…
• Product line depth: refers to the number of products in the line
• Product line width: refers to the number of product lines a brand carries
• Product line filling: add products to the product line to ensure that competitors do not
enter their market.
• Product line stretching: add more product lines
• Product mix: contains all the products that a company sells (contains all product line)
• Product line là 1 tập hợp con của Product mix

• Layers of product: multi-layer concept, 3 layers:

▪ Core value - the inner layer: what is the buyer really buying? - the need. For example, a
car: to move from point A - B, or smartphone: to communication => depending on the
person and the specific demand.
▪ When a marketer designs a product, the core value should always be the starting point.

▪ Actual product: the middle and most obvious layer. Marketers should turn the core
benefit they identified into an actual product. This involves developing product features,
design, a quality level, a brand name, and a packaging.

▪ Augmented product: the outer layer. While the actual product offers most
differentiation potential, the augmented product adds further options to differentiate.
▪ For example: if you buy a tablet device, you get more than the core value
(communication), and also more than the actual product (brand, design, features…).
You also get the augmented product, which turns the product into a complete solution to
your connectivity problems such as warranty, after-sale service, product support,
instructions on how to use the device and so further.

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• Product life cycle
▪ The product line cycle begins in the introduction stage. This is when
consumer awareness is building and sales are starting to grow.
Nhận biết: Profitable is low due to costs to launch and scale a new product.
=> The marketing investment is high because brands invest heavily in advertising and
sales promotion to encourage trial.
• rapid skimming strategy: sets a high price along with extensive advertising and
sales promotion to establish the product in the marketplace.
• slow skimming strategy: sets high prices with low advertising and sales
promotion investment. (few competitors)
• rapid penetration pricing strategy is appropriate when volume sales will increase
market share quickly, and a lower-priced strategy is employed.
• slow penetration pricing strategy establishes low prices and low promotion
to capture share more slowly in a market that typically does not readily react
to promotion.

▪ Once a product catches on the marketplace, it enters the growth stage of the product life
cycle.
Nhận biết: Increasing sales and the potential for copycat brands to enter the market once
they see revenue and profitability.
=> Investment in product and place is essential at the growth stage to maximize market
share and scale quickly.
=> Brands use promotion to shift their message from awareness to preference. The shift
from a niche market to a mass market typically involves an advertising investment.

▪ The product enters the maturity stage when sales growth slows and profitability
levels taper off.
Is the longest stage, for years or even decades.
Profitability may remain if the brand has a solid competitive advantage or decline if too
many competitors enter the market. Marketing investment can increase if the brand has a
rival, and product modification can alter the product to meet consumers' need.
Brand will often retain a low level of marketing to remind consumers of its benefits.
=> Brands must defend their market share from increasing product replication and
product innovation from competitors.

▪ Eventually, most products enter the decline stage.

Significant decrease in sales and profitability. Sometimes the decline occurs because the
market has changed: technology has evolved, consumer tastes have shifted, or the need
that the product satisfies id no longer relevant.
Other times, the product is pushed out by rising costs or competitors
=> companies typically try to divest a product. Another company may pick up the brand,
invest in it, and bring the product back to a growth or maturity stage.

▪ Products do not always travel through the product life cycle at a linear rte, nor do they
all travel through all product life cycle stages. This phenomenon occurs when products
are fads.

2. Price
Price is the only element in the marketing mix that produces revenue, all others are costs.
Setting the right price is one of the most complex tasks. Good pricing starts with customers
and their perception of the value of the product.
characteristics, when to apply, advantages & disadvantages

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• Value-based pricing: businesses determines the price of its product based on the
perceived value to the customer. This means that rather than setting prices based on the
cost of production, companies using value-based pricing base their prices on what they
believe customers are willing to pay for their product or service.
• Advantages:
▪ It can help you better understand your customers and what they value, especially with
a new product, it can give you insights into how much customers are willing to pay for
it
▪ Can help you differentiate your products or services from those of your competitors. If
you can show that your product or service offers more value than what competitors are
offering, you may be able to charge a higher price.
• Disadvantages:
Difficult to accurately estimate the perceived value of your product. If you overestimate the
value, you may end up charging too much and losing potential customers. If you
underestimate the value, you may leave money

• Cost-based pricing: a pricing strategy in which the price of a product or service is set based
on the cost for producing, distributing and selling the product plus a fair rate of return for
effort and risk = fix cost + variable cost
• Advantages:
▪ Easy to calculate
▪ You can cover your costs
▪ You can win the business
• Disadvantages:
▪ It does not take into account customer demand or what customers are willing to pay ->
if customers are only willing to pay a certain amount for a product
▪ It could lead to underpricing

• Competition-based pricing: the pricing of products based on what the competitors are
charging, on competitors' strategies, costs, prices, and market offerings. Consumers will base
their judgments of a product's value on the prices that competitors charge for similar
products. The first step to competitor-pricing is to figure out who your competitors are, which
companies are selling similar products or services? --> research their pricing and positioning
strategies --> average the price of all competitors --> choose higher, lower, or matched prices

Higher-than-average price: When you want the premium price to signal luxury to potential
customers
Lower-than-average price: When you’re trying to undercut the competition with a low price
and acquire customers quickly
Matched price: When your pricing strategy will be in line with your competitors

• Advantages:
▪ Easy to calculate and understand. All you have to do is look at the competitors in your
market and find the average price they use for their services. From there, you can
choose whether to go with a lower or higher price or align with customer' expectation
▪ Low risk: when set price close to competitor' rates, you don't have to worry
about surprising customers with your price point.
▪ Evolves with the market
• Disadvantages:
▪ Disconnected from demand: doesn't look at the customer demand.
▪ Limited flexibility: b/c you're looking only at how competitors’ price their
product, you're limiting yourself to their knowledge and practice.
▪ Ignores customers
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• Price-Adjustment Strategies:

• New product pricing strategy

o Pricing skimming: setting a high price for a new product to skim maximum revenues layer
by layer from the segments willing to pay the high price, the company makes fewer but
more profitable sales.
o Innovative technology often uses price skimming.

o Market-penetration pricing means setting a low price for a new product to attract a
large number of buyers and a large market share.

3. Marketing channels:
• Is a system of people, organizations, and activities that work together to make goods
and services available to consumers to purchase.
• The goal is to create and deliver value to the final consumer by distributing these goods and
services. The final consumer is the end user of a good or service.
• Types: direct and indirect channel
Direct Channel: From Producer to Business/Industrial User: typically used when the
nature of the product is complex, is expensive, or requires intensive resources to move the
product from the manufacturer to the business customer.
Indirect Channels: From Producer to Intermediaries to Business/Industrial User

• An agent or broker is someone who acts as an extension to the manufacturer. While they
never take possession of the product or service they represent, they earn a commission or
collect a fee for facilitating the transaction between the customer and the manufacturer.
The agent serves as a representative who answers questions, gathers information, and
provides a quote on behalf of the insurance company.

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• A distributor takes ownership of the product and tends to align itself closely with
a manufacturer.
• Wholesalers are similar to distributors in that they take ownership of products; however, they
buy a variety of products in large quantities and bulk-break for the purpose of distributing an
assortment of products to retailers in a quantity aimed at meeting the needs of end users or
consumers.
• Retailers also take ownership of the product, and their sole focus is on reaching the end user
or customer directly. They purchase a wide variety of products in smaller amounts that meet
the wants and needs of consumers.

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• Differences between conventional and vertical marketing system strategies
Conventional marketing system strategies A vertical marketing system (VMS)
consist of one or more manufacturers, a system in which companies in the
wholesalers/distributors and retailers that marketing channel work together in a
operate under independent ownership coordinated, collaborative, and customer-
centric way.
all members of the marketing channel work
as one unified group.
which each intermediary works as a distinct all members of the marketing channel work
company, each trying to maximize profits at as one unified group.
the expense of other channel members.
less concerned with their profit margins
and have a laser-like focus on working
together to deliver value to consumers
VMS has grown in popularity over the
conventional system because it results in
fewer channel conflicts and increased
customer value.

• Types of VMS: corporate, administered, and contractual

In a corporate VMS, one member of the distribution channel owns the other members.
In a contractual VMS, there are independent companies that have joined together by
contract for a mutually beneficial purpose. Each company operates independently of the
others but integrates its activities to achieve its goals.
In an administered VMS, there is no ownership of channel members. However, there is one
member who is large and powerful enough to coordinate and manage the distribution activities
of other channels members.

4. Promotion

After determining and defining the target market, creating a good product, selecting a pricing
strategy and optimal price, and deciding on the distribution method, the marketer is ready to
communicate with the customer.

The best products are nothing until the consumer knows about them. Without good promotion, the
best products are just secrets. We all have things we want to say, and on any given day we make
phone calls, create Instagram posts, upload TikTok videos, send emails, shoot off text messages,
and talk face-to-face with people. And just like us, marketers also have things to say.

How marketers decide to say and send the message is the promotion mix.

The promotion mix is the set of strategies marketers use to communicate with their customers. The
full set of strategies that combine to make up the promotion mix include advertising, sales
promotion, personal selling, public relations, direct marketing, and Internet/digital marketing.

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The promotion mix allows marketers to reach customers in many different ways, ensuring that the
message is seen, heard, and understood. Also, messages sent by multiple methods provide a better
opportunity for consumers to see and hear the message and make the connection back to the
company.

• Advertising is paid, nonpersonal communication from an identified source that allows for
creative messaging about all aspects of a product, service, idea, person, or place. Advertising is
effective based on the frequency with which it is usually viewed. And because of the media,
the advertising message can usually be repeated many times, depending on the budget. Due to
its repeatability, production costs have a better return on investment (ROI) the more an ad is
used, and the recall of the ad increases significantly.
• Most consumers love a sales promotion (in the short term). Using sales promotions can be an
effective method of getting the consumer to try a product or buy more of a product, or it can be
a way to quickly deplete an inventory to make way for new products. (Buy One Get One
(BOGO), Enter to Win, Coupons)
• Personal selling is one of the most expensive forms of promotion because it is a one-on-one,
person-to-person form of communicating with the customer. The role of the salesperson is to
inform and persuade the customer. This is usually done in what is termed an exchange
situation. The salesperson is exchanging knowledge and something of value, while the
customer is exchanging money for the item of value. Personal selling is ideal for products that
can be customized, are complex, and have a relatively high price point.
• Public relations is a nonpaid, nonpersonal form of promotion. Because it is nonpaid, it has a
high degree of credibility and is beneficial because a typically credible, non-biased third party
is the messenger. While there are many tactics that marketers might use for public relations,
some of the most commonly used include press releases, press conferences, events, and annual
reports.
• Direct marketing allows for direct communication with the customer. Messages can be tailored
to specific market segments and even personalized toward individual consumers. Early tactics
of direct marketing included telephone and mail; however, technology has allowed for new
methods of connecting with the customer to include text messaging and email marketing.
• Internet/digital marketing includes uses of technology to reach customers at many different
points of interaction. Marketers have at their disposal a variety of methods to reach their
customers and brand products. Some of the tools include websites, landing pages, social media
pages, widgets, and customer relationship management (CRM) systems. All the digital
properties work together to drive traffic to the branded properties and engage the consumers.

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