Marketing and event management unit 2 | Marketing mix and Market segmentation|MEM notes
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Chapter 2
Marketing Mix and Market Segmentation
1.Give the meaning of marketing mix
Marketing mix is a combination of factors that can be controlled by a company to influence consumers to purchase its products or services
The marketing mix consists of various elements, which have broadly been classified into four categories, popularly known as four P's of marketing. These are: (i) Product, (ii) Price, (iii) Place, and (iv) Promotion.
2.Describe the elements or the 4 P's of marketing mix.
1. Product:
- Product means goods or services or ‘anything of value’, which is offered to the market for sale.
- For example, soaps, detergent powder , food products, steel, trucks, salt televisions, refrigerators, monitors for computers, milk, ghee, chocolates, etc.
- The concept of product relates to not only the physical product but also the benefits offered by it from customer’s view point (for example, toothpaste is bought for whitening teeth, strengthening gums, etc.).
- The important product decisions include deciding about the features, quality, packaging, labelling and branding of the products.
2. Price:
- Price is the amount of money customers have to pay to obtain the product.
- For most of the products, level of price affects the level of their demand.
- The marketers have to decide and also analyse the factors determining the price and fix a price for the firm’s products.
- Decisions must be taken in respect of discounts to customers, traders and credit terms, etc., so that customers perceive the price to be in line with the value of the product.
3. Place:
- Place or Physical Distribution include activities that make firm’s products available to the target customers.
- Important decision areas include selection of dealers or intermediaries to reach the customers, and providing support to the intermediaries
- The intermediaries in turn keep inventory of the firm’s products, demonstrate them to potential buyers, negotiate price with buyers, close sales and also service the products after the sale.
- The other decision areas relate to managing inventory, storage and warehousing and transportation of goods from the place it is produced to the place of purchase.
4. Promotion:
- Promotion of products and services include activities that communicate availability, features, merits, etc., of the products to the target customers and persuade them to buy it.
- Most marketing organisations, undertake various promotional activities and spend substantial amount of money on the promotion of their goods
- This is done using tools such as advertising, personal selling and sales promotion techniques (like price discounts, free samples, etc.).
- In case of advertising it is important to decide about the message, the media to be used (example, print-media– newspaper, magazines etc.).
- The success will depend on how well these ingredients are mixed to create superior value for the customers
- This simultaneously achieve their sale and profit objectives.
3.Explain the 7 P's for service marketing
Services also satisfy customers like products.Customers buy and discriminate among service brands.Depending on the performance of the service providers customers can achieve satisfaction.
When the marketing mix of 4 ps is applied to services , the distinct qualities of services need three additional components people,processes and physical evidence.Hence they are called 7 ps of marketing
They are product,price,place,promotion,people,processes,and physical evidence.
1.Product
- When the term product comes to services, it is invisible and intangible and hence cannot be felt.
- Here the 'feel' cannot be created without consumption of the service.
- This in turn creates an opportunity for personalising the services to the customers.
- The service package refers to what a service marketer bundles up in terms of goods and services in an environment for customer satisfaction.
- It involves supporting facilities,facilitating goods,explicit services which are directly observable and implicit services that have psychological benefits.
2.Price
- Service being intangible opens unique challenges in the element of pricing.
- In the case of services customers arrive at quality perceptions on the basis of price.
- Therefore costly doctor's, lawyers,hotels and educational institutions are perceived to be better.
- Apart from monetary cost there are other aspects to be considered like non-monetary aspects while pricing the services
- These are time cost(wait for a dental procedure),psychological cost(feeling of fear)etc, which are to be considered while setting price of services.
3.Promotion
- The process of buying service is not much different from the process of buying goods.
- In both the cases consumers has to pass through same decision making process.
- Here information plays an important role in pre-purchase stages.
- Services being intangible and is highly dependent on experience, create a perception of greater risk.
- These have implications(the state of being involved in something)on promotional strategy.
- So it is important that promotion must involve tangible clues in communication
- to make the services tangible.
- Eg. Fed Ex shows lot of trucks and jets to suggest faster mobility.
4.Place
- In case of a service, the production and consumption place of service is one and same.
- Services carry the place utility.
- Hence where services are provided is mattered the most for majority of customers.
- So service providers has to take a lot of care about the place of service.
- Location of services also influence the success of business for eg services such as such as restaurants lodging etc influence the success of the business
5.People
- Services are provided by the people and hence are defined by the people. they are inseparable.
- Thus people in different service areas like schools banks departmental stores etc become an important factor.
- So customer relationship management has become an important factor in providing services.
- The service providers even train people and make them skilled in the art of rendering services as a part of customer relationship management as in many services there is direct interaction between the customer and the employees.
- customer contact brings the unique aspects of 'what' and 'how' to the service.
- 'What' represents the outcome that is created for customer. eg. timeliness of an airline and 'how' represents process of service like treatment given in an airline by its crews or room service etc.
- 'How' aspect determines the perception of what aspect of the service quality
6.Process
- It is the activities that must be taken to make the service reach the customer.
- Being intangible it is very challenging to carry the process quality through various service activities.
- Big reputed companies always have a service blueprint prepared and kept ready and always make sure that they are implemented correctly.
7.Physical Evidence
- This is the last p of service marketing.
- Since services are intangible customers depend upon physical evidence to extract what a service is all about.
- Physical evidence is a collection of tangible cues that signals the quality of service provided.
- It is a domain of interest in marketing as it has the ability to impact the customers.
- For eg the service provided by two hotels is known from the evidence that surrounds the services of these hotels
4.Give the distinction between goods marketing and service marketing
Basis for comparison | Product/goods marketing | Service marketing |
Meaning | process in which marketing activities are aligned to promote and sell a specific goods/Products | process of marketing services to customers |
Marketing Mix | 4 P's | 7 P's |
Sells | value | relationship |
Transfer | can be owned and can be resold | cannot be owned or sold |
Returnability | a product can be returned | service cannot be returned after it is rendered |
Tangibility | tangible-the customer can see and touch the product before making a decision | intangible-cannot see or touch |
Separability | product and company are separable | cannot be separated from its provider |
Customisation | cannot be customised | can be customised |
Imagery | goods are imagery and hence receive quick response from customer | non- imagery and hence do not receive quick response from customers |
Quality comparison | Quality can be measured easily for a product | quality cannot be measured for services |
Perishability | Non-perishable | Perishable |
5.Give the meaning of the term MIS(Market information system)
The marketing information system refers to the collection,analysis,interpretation,storage and distribution of data regarding market information from various sources which will aid the marketing management in making marketing decisions.
6.Give the meaning of the term Marketing Research
It is the systematic gathering,recording and analysis of qualitative and quantitative data about issues relating to marketing products and services.
The aim is to identify and evaluate how the changing elements of marketing mix effects the behaviour of the customer.
The marketing research involves
1.Identifying the problem
- This is the first step in any market research activity and has to clearly identify and define the problem that is to be solved
- Next the objectives of the research must be clearly expressed and must be easily understandable.
- This includes questions like what you want to understand by the time of completion of research,what specific recommendations are needed to come out of research etc.
Step 2 Develop a research plan
- This is the next step after having a problem definition,research objectives and preliminary set of research questions.
- and involves in identifying precisely what information is needed to answer your questions and achieve your objectives.
- after clarification of the information kind,timimg and budget for the project,the research design can be developed.
- This explains how you plan to collect and analyze the information you are in search of.
- The research plan also specifies who will conduct the activities of research which icludes collection,analysis and interpretation etc of data
- At times a marketing manager runs the entire research project.
Step 3. Conduct the research
- Data collection begins by reviewing any existing research or data about the problem
- This is called as secondary research
- Primary research involves asking questions and then observing the behaviour of the target market you are studying
- This involves transforming the primary and secondary data into information that can answer the research questions
- The analyses deeply go through the data to get a picture of what is going on
- The interpretation then explains what the data means and give recommendations about what managers must know and do based on these results.
- Research reports incorporate both the analysis and interpretation of data for achieving the objectives of the project.
Step 5 Take action
- Once the report is completed the presentation is delivered and the required recommendations are made and now the marketing research project is complete.
- By making the results accessible and available to the managers and the related execution teams the research project can serve as an ongoing guide
7.Give the meaning of the term Marketing Intelligence
- It is the data that is relevant to the marketing efforts of an organisation
- The data once collected it can be analysed to efficiently guide the decision making process
- It is used to assist a number of different marketing goals and at higher levels it is used to give decisions regarding competitors,products and consumer trends
8.Explain Market Segmentation
- It is the process of dividing target market into smaller well defined categories.
- The customers are segmented into groups that share similar characteristics such as demographics,needs or interests.
- This helps the marketers to give better attention in selection of customers.The marketer can offer the correct marketing mix for each selected segment of buyers having homogeneous demand.
1.Helps to spot and compare market opportunities
- The marketer can spot and compare the opportunities in the market
- The need of each segment can be examined and he can determine to what extend the present market offering satisfies these needs
- Segments which have low level of satisfaction represents better chance of opportunity for the marketer
- The knowledge about different segments helps the marketer to allocate budget in a better way
- Depending on how the customers react to different marketing tools, accordingly the allocation of market funds is done.
3.Can modify the product/service
- Segmentation helps the marketer to modify his product or service to suit a particular segment, as he now has a better understanding of the needs of that that particular segment
4.Facilitates setting up of realistic selling targets
- Segmentation helps in setting up realistic selling targets and priorities
5.Helps to identify profitable segments
- The marketing management can now identify which are the new profitable segments which need special attention
6.Helps to deal competition effectively
- It is now possible for the management to deal with the competition in the market more effectively by the effective use of resources
7.Development of service package
- Segmentation helps to develop appropriate service packages for each particular market segment.
10.Explain the disadvantages of market segmentation
1.Segmentation increases costs
- When a firm tries to serve many market segments there is an increase in the number of products.
- So cost of production rises due to variations in the product and also due to shorter production runs.
2.Need for larger inventory
- The manufacturer as well as the distributor both has to maintain a larger inventory
3.Increase in promotion and distribution expenditure
- As different programmes are used for different market segments, the expenditure for promotion and distribution will automatically increase.
4.Any change can make investment useless
- When due to any reason if the characteristic of the market segment change, the in that case all the investments which had been already made becomes useless.
11.What are the bases of market segmentation
The four bases or types of market segmentation are
1.Geographic Segmentation
2.Demographic Segmentation
3. Psychographic Segmentation
4. Behavioural Segmentation
1.Geographic segmentation
- It is the simplest form of segmentation
- It categorises customers based on geographic borders like city size of city or climate
Examples are
- ZIP code
- City
- Country
- Urban or rural
- Climate
2.Demographic segmentation
- It is the popular and the most commonly used
- It refers to the statistical data about a group of people.
Examples are
- age
- gender
- income
- location
- Education
- Ethnicity
3. Psychographic segmentation
- It categorises the customers on the basis of factors that relate to their personalities and characteristics
- These are slightly difficult to identify as they are subjective in nature.
- They are not data focused and hence require research to understand them better.
Examples are
- Values
- attitudes
- interests
- lifestyles
- conscious and subconscious beliefs
- motivations
- priorities etc
- This segmentation focuses on how the customer acts.
- It requires the marketer to know about the customers actions
- These actions will help to relate how a customer interacts with a brand
Examples are
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