P.o.M 5.

1 Product
The Marketing Mix

The marketing mix refers to the 4Ps of marketing: product, price, place, and promotion.

These are the essential components of marketing a product or service, and they interact heavily with
one another.

4Ps of Marketing

Product

Refers to the goods or services being offered by the business 

The customer must perceive its value

Price

refers to how much the customer must pay to obtain a product or service

Determined by a variety of factors

Place

Refers to how the product will reach rhe customers

To make the product attractive and accessible to the target market

Promotion 

Refers to all operations to make the product or service known to the target market

Advertising, word-of-mouth, newspaper coverage, etc.

Product 

a collection of characteristics (features, functions, advantages,and uses) that a person may perceive as
valuable

Anything a company supplies to provide client hapiness

may be material or intangible 

Services

a form of intangible products offered to consumers

purchase does not result in an exchange of ownership between the provider and receiver

Experiences

the total benefit, satisfaction, and value associated with consuming a product or service

Levels of Products and Services

Core Benefit
the underlying need or want that the consumer meets when they purchase the goods
Generic Product
a stripped-down version of the product that has only the functionality required to function
Expected Product
the collection of attributes that buyers anticipate when purchasing a product
Augmented Product
any product modifications, extra features, or services that differentiate the product from its rivals
Potential Product
contains all future improvements and adjustments to the product
to continue to surprise and please customers

The product Mix

also referred to as product assortment or product portfolio

a company's whole variety of goods and services
 to diversify their market offerings

 Product Mix Dimensions

Width
the number of product lines supplied by a corporation
Length
the total number of goods in a company's product mix
Depth
the number of variants within a product line
Reliability
the application, production, and distribution routes
 
Categories of Products

Convenience Products
low-cost item that should take the least amount of work on the buyer's part to pick and acquire
marketing approach: widespread distribution
Shopping Products
more expensive and are purchased on a sporadic basis
weighed by customers based on assess quality, cost, and features before being purchased
Categories of Products (Shopping Products)
Heterogeneous
One-of-a-kind
buying choice is more likely to be focused on finding the correct match for needs or
wants than on price alone
Homogeneous
pretty comparable
varying prices but similar core functionality
lowest price is typically sought
Specialty Products
one-of-a-kind
for customers, going to tremendous efforts to acquire and purchase these is worthwhile
Unsought Products
customer never intends or aspires to purchase
tend to attract aggressive sales approaches

Product Life Cycle

starts when it is presented to the consumers

ends when it is removed from the shelves
 Product Life Cycle

Introduction
developing the product or service and its market strategy
to raise customer awareness of the product
sales tend to be slow
Growth
growing demand
increased manufacturing and  availability of the product
branding becomes increasingly crucial to keep market position
Maturity
market saturation
many customers will have bought the product
retailers will become distributors and order takers
Decline
other companies offer additional product features or lower pricing
may be triggered by new technologies

Lesson 5.2 Product Pricing

Price

the monetary worth of goods or services

Pricing

the process of estimating the worth of a product or service

Basic Pricing Laws

Prices must cover both costs and profits.

Lowering expenses is the most efficient approach to cut the price.
Prices should be reviewed regularly to reflect the dynamics of cost, market demand, reaction to
competition, and profit objectives.
Prices must be set to ensure sales.

What is Product Pricing?

Price is the only element in the marketing mix that generates revenue, and the rest incurs costs. It is
crucial to business success.

Product Pricing Strategies

Cost-Based pricing
based on the costs for producing, distributing, and selling the product or service with a
reasonable return for the company's investment and risks
Cost-Plus Pricing
considered the simplest pricing method
also known as markup pricing
Customer Value-Based Pricing
involves understanding how much consumers value the market offering based on the benefits
and satisfaction
not based on the seller’s cost but on the buyer’s perception.
Competition-Based Pricing
entails setting prices based on competitors' tactics, costs, price, and market offers
pays attention to the price levels currently set in the market

Cost-Plus Pricing for Cookies

To illustrate, say that you are selling cookies by the dozen. You need to calculate the selling
price for a dozen cookies. Consider the following costs
incurred during the production process of one dozen cookies.

Raw materials and ingredients: ₱120.00

Fixed cost: ₱30.00
 The total cost of producing one dozen cookies is ₱150.00. You decided to add a 40% markup on
the price to generate profit. These formulas will then calculate the final selling price:

Markup = Total cost x Markup rate

Selling Price = Total Cost + Markup      
Markup = ₱150.00 x 0.40

Markup = ₱60.00

Selling Price = ₱150.00 + ₱60.00

Selling price = ₱210.00

The selling price for one dozen cookies is ₱210.00.

New Product Pricing Strategies

Market-Skimming Pricing
establishes a high price for the new product to skim maximum revenues
fewer but more lucrative sales
Market-Penetration Pricing
sets a low price for the new product or service to attract many buyers and a large market share
commonly used as market entry pricing
Product-Mix Pricing Strategies
Product Line Pricing
sets the price steps in a product line based on cost differences, customer evaluations, and
competitors' prices
Optional-Product Pricing
to sell optional or accessory products to their main product
Captive-Product Pricing
sets a price for products that must be used with the main product
By-Product Pricing
sets a price for by-products to make the main product's price more competitive
Product Bundle Pricing
combines several products and offers the bundle at a reduced price
Sublesson 1 (Heading 1)

Price Structure
a method of establishing multiple prices, discounts, and offers for products and services that are
compatible with the organization's goals and strategy
Price Format
involves how a price is expressed when it is communicated to potential customers

Categories of Pricing Issues

Buyer-Seller Interactivity
Prices are the final price consumers pay throughout history, a result of bargaining between
sellers and buyers.
Price Segmentation
entails charging different prices to different clients for the same or comparable goods or services