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• Marketing Mix is defined as a combination of elements
Marketing Mix -PRODUCT
Grade 12
Marketing Mix -4P’S
The marketing mix is often simplified and is commonly described as the 4 P’s. This
approach identifies four elements in the mix (all beginning with the letter P)
• Product. Consumers require the right product. This might be an existing product, an
update to an existing product or a newly developed one.
• Price. The right price is important too. If the price is set too low, then consumers
might lose confidence in the product’s quality. If the price is set too high, then many
consumers will be unable or unwilling to afford it.
• Promotion must be effective, telling consumers about the product’s availability and
convincing them, if possible, that the brand is the one to choose.
• Place refers to how the product is distributed to the consumer through distribution
channels. If the good or service is not available at the right time in the right place, even
the best product in the world will not be bought in the quantities expected.
Marketing Mix - Product
The term ‘product’ includes consumer & industrial goods & services.
• Goods have a physical existence, i.e. Washing machines & chocolate bars.
• Consumer goods – these are the tangible goods which are sold to the
general public.
▪ Durable goods i.e. Machinery, garments & mobiles can last for a long time
▪ Non-durable goods i.e. Edible things soon become damaged.
• Industrial/capital goods – they are physical products, manufactured
specifically to be sold to other industries for production of other goods &
services like commercial vehicles.
• Services have no physical existence, but satisfy consumer needs in other
ways − hairdressing, car repairs, child-minding & banking are examples of
services.
that influence a customer’s decision whether or not to
buy a product.
• It is also defined as the combination of product, price,
promotion and place that is used to make sure that the
customer’s requirements are met.
Marketing Mix - Product
• Product refers to what the business sells
• This could be a good – tangible or a service – intangible
• Products are composed of different features which help
consumers identify them e.g. their size, their colour
• Products need to be developed to meet customer needs
and wants
Recognising that products have a combination of tangible & intangible attributes
Brand: Refers an identifying symbol, name, image / trademark that distinguishes a
product from its competitors.
- Intangible attributes of a product: refers to subjective opinions of customers about
a product that cannot be measured / compared easily.
- Tangible attributes of a product: measurable features of a product that can be
easily compared with other products.
- Why do consumers pay more for a well-known brand than a generic, non-
branded, cheaper alternative?
• Consumer decisions are not always easy to weigh up / explain – which makes market research less
accurate. However, marketing managers try to understand what ‘intangible features / attributes’
customers are looking for when purchasing products & the ‘tangible features / attributes’ they are
likely to prefer. Meeting customers ‘intangible expectations’ for a product is most commonly achieved
by effective branding.
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The importance of product development The success of product

The objective of product development from a business standpoint is to cultivate, maintain and increase a
company's market share by satisfying consumer demand. From a customer standpoint, it's to ensure For a new product to succeed, it must:
value in the product as a quality good or service. Product development is important for the following
reasons:- • have desirable features that consumers are prepared to
Ø Change in consumers’ taste and preference pay for
Ø Maintaining competitive edge E.g Apple Iphone and Samsung
Ø Technological Advancement -Innovation • be sufficiently different from other products to make it
Ø Opportunity for growth - Developing new product for existing market stand out and offer a unique selling point (USP)
Ø Risk Diversification
Ø Improved brand image -Continuous innovation -retain customers
• be marketed effectively to consumers, who need to be
Ø Use of excess capacity - Making use of idle resources profitably informed about it.

Unique Selling Point

Product differentiation: refers to the degree to which customers perceive a product
or brand to be different. The main focus for most of the businesses is to make A unique selling proposition (USP, also seen as unique selling point) is a factor that differentiates
a product from its competitors, such as the lowest cost, the highest quality or the first-ever product
customers see that the brand or product is the only one that meets their wants. of its kind. The USP may be something unique to the product, the distribution arrangements or the
The differentiation may be through an actual advantage in design, performance, or marketing methods.
price, or an imaginary but real process in which the customer is convinced that the Here are a few famous examples of USPs:
product or brand has something over and above its physical characteristics. •  Domino’s Pizza deliveries“ it arrives in 30 minutes or it’s free” promise.
Product differentiation can be an effective way of distancing a business from its •  FedEx’s “When it absolutely, positively has to be there overnight.”
rivals and creating competitive advantage. Effective product differentiation creates a
USP.
Ways to achieve product differentiation:
Ø Advertising and marketing campaigns to make the product stand out e.g Nike
Ø Branding and packaging e.g Coca Cola
Ø After sale services and guarantees
Ø New designs

Product portfolio analysis Product life Cycle

As one product declines, other product are being developed. Knowing
when to launch a new product or to update an existing one can give a Product life cycle describes the
stages a product goes through
business a crucial advantage. Product portfolio analysis helps when from when it was first thought of
making these decisions. The two product portfolio analysis techniques until it finally is removed from the
to be considered are: market. Not all products reach
this final stage. Some continue to
• Product life cycle grow and others rise and fall.
• Boston Matrix analysis. This can be illustrated by looking
at the sales during the time
period of the product.

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Stages of Product Life Cycle Decisions about extension strategies

Introduction Growth Maturity Decline Extension strategies: these are marketing plans to extend the
• At this stage, the product • Significant growth in • Sales stop growing • Sales decline steadily maturity stage of the product before a brand new one is needed.
has just been launched sales • Intense competition • End up in withdrawal - Extension strategies can include:
after development • Profit start increasing • No significant decline in from the market • Redesigning the product – new & improved
• Low sales sales
• No profit yet - R&D cost • Need for extension • Adding an extra feature – colour, quality, etc.
need to be covered strategies • Changing the packaging & advertising to appeal to a new market
• Sales may increase only segment
slowly, depending on the • Providing a unique selling point
product
• Advertising – gain new audience / remind the current audience
• Price reduction – more attractive to customers
• Adding value – add new features to the current product
• Explore new markets – selling the product into new geographical
areas / creating a version targeted at different segments

The use of a product life cycle Assisting with planning marketing mix decision
Phase of the Product Price Promotion Place
product life
• Assisting with planning marketing mix decision cycle

• Managing cash flow in-line with the product life cycle Introduction Basic Model Penetration Pricing /Price High level of informative Sell in restricted outlets,
Skimming advertising to maximise especially if price
• Recognising the need for balanced product portfolio consumer awareness of
the product
skimming strategy has
been used

Growth Planning of If successful, an initial Informative advertising Growing number of

improvements in basic penetration pricing strategy changed to persuasive to outlets
model to maintain appeal can be increased slowly encourage purchases

Maturity New models, colors, Maintain prices at Strong brand imaging Maintain the high
versions as part of competitive level to face required number of outlets - look
extension strategies competition for new ones if possible

Decline Slowly withdraw the basic Lower prices to sell off stock Cut back on advertising to Eliminate unprofitable
product and replace it just inform customers of outlets
with new one lower prices

Table above shows How marketing mix decisions needs to be adjusted with the stages of Product Life Cycle

Managing Cash flow in line with product life cycle Managing Cash flow in line with product life cycle

Stages Cash Flow Sales

Development Negative cash flow -Development Cost No sales

Introduction Negative cash flow - heavy promotional Very low sales

cost

Growth Improve cash flow Sales start increasing

Maturity Positive cash flow -Promotional cost is Low sales - Low idle resources/capacity
low

Decline Cash flow falls sales falls -price reduction and promotional
strategies to increase sales

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Recognising the need for balanced product portfolio
As one product declines, so other
products are being developed and
introduced to take its place. In this
way, cash flow from each product
are used to finance development of
other products accordingly. Product
life cycle helps to have a balanced
product portfolio as shown in the
A = Decline
diagram: B = Maturity
C = Growth
D = Just introduced
Product portfolio analysis and Boston Matrix
Product portfolio analysis means analyzing the range of existing
products of a business to help allocate resource effectively
between them. For a business to set up portfolio analysis, it has
to produce multiple products -Product Portfolio analysis cannot
be made if only one product is made.
Boston Matrix
On the Boston matrix, the different products
in a business’s product portfolio are shown
by the circle. The size of each circle
represent the total revenue generated by
each product. The bigger circle shows
product with high revenue.
There are four quadrants which illustrate four categories
as below:
1. Low market share + Low market growth = Dog
2. Low market share + High market growth = Question Mark
3. High market share + High market growth = Star
4. High market share + Low market growth = Cash Cow
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Evaluation of product life cycle
The product life cycle is indeed an important tool for assessing the
performance of a firm’s current product range and it is also an
important part of a marketing audit.
However, a product life cycle cannot predict future changes in sales
( the pattern predicted by the product life cycle may NOT necessarily
come true) -sales depend on several real-time factors.
Conclusion: To be really effective, product life cycle analysis should
be used together with sales forecasts and management experience
to assist with product planning.
What is the Boston Matrix?
It is a techniques of analysing the portfolio of products of a
business in terms of two variables -Market share , Market
growth. It highlights the position of each of a firm’s product
when measured by these two variables.
• Market share – does the product being sold have a low or
high market share?
• Market growth – are the numbers of potential customers
in the market growing or not
Boston Matrix
Categories Description Strategy
Dogs Products -Products offers little to the business in terms of existing sales or future Divesting Strategy
(low market share and prospects, because market not growing. To identify the worst performing ‘dog product’
low market growth) -May need to be replaced shortly or the the firm could decide to withdraw and stop their production. But, impact need to
from this market sector altogether be analyse
Question Marks -These products have potential as they are sold in growing market. Building strategy
Products -They consume resources but generate low return To support this product with additional
(low market share and - The future is uncertain, so quick decisions need to be taken advertising or further distribution outlet.
high market growth) Finance can be obtained from cash cow
products
Stars Products -These are successful product - they are sold in growing market Holding Strategy
(high market share and -High promotion cost to differentiate the product and reinforce the image in Continuing support for ‘star product’ so that
high market growth) order maintain product position they can maintain their good market position
-Despite these cost, they generate high revenue
Cash Cows Products These are mature, successful products with relatively little need for Milking Strategy
(high market share and investment. Taking the positive cash flow from established
low market growth) They generate high positive cash flows and are profitable. ‘cash cow products’ and investing them into
-Sales are high relative to the market and promotional cost are likely to be other products in the portfolio.
low, at a result of high consumer awareness
The business will want to maintain ‘cash cow’ product for as long as
possible
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Uses
Ø Analysing the performance and current
position of existing products
Ø Planning actions to be taken with existing
products
Ø Planning the introduction of new products
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Boston Matrix
Limitations
Ø Cannot tell a manager what will happen next
with any product -unpredictable
Ø It is only a planning tool and it has been
criticised as simplifying a complex set of
factors determining product success
Ø The assumption which is made that higher
rates of profit are highly related to high
market is false.