The marketing mix
The marketing mix is often called the four Ps: Product, Price, Place and Promotion. This note covers product and price. A business must blend all four so they work together.
Product
The product must meet customer needs. A brand is a name or symbol that makes a product recognisable and can add value. Many products follow a product life cycle: introduction, growth, maturity and decline.
Example
When sales start to fall in the decline stage, a firm may use an extension strategy, such as a new design or fresh advertising, to keep the product selling for longer.
Price
Pricing methods include:
- Cost-plus pricing: add a percentage mark-up to the unit cost.
- Penetration pricing: set a low price to enter a market and win customers.
- Skimming: set a high price for a new, unique product, then lower it later.
- Competitive pricing: set a price close to that of rivals.
- Promotional pricing: a temporary low price to boost sales.
Remember
- Penetration pricing suits a new product in a competitive market.
- Skimming suits an innovative product with little competition.
The right price depends on costs, competitors and how much customers will pay.