Topic 4.

5: The seven Ps of the marketing mix

Watch: https://www.youtube.com/watch?v=dV1LbZg0if4

Marketing - The Marketing Mix

The marketing mix is a combination of critical factors that make up the marketing strategy for a
product, which helps the company to successfully achieve the set marketing objectives.

The 7 Ps of marketing mix

The 4 elements of the marketing mix that are relevant to all products (goods & Services) are:

 Product - the good (or service) that the customer obtains.

 Price - how much the customer pays for the product.
 Place – how the product is distributed to the customer.
 Promotion - how the customer is found and persuaded to buy the product.

The 3 elements that are related to services are:

 People
 Process
 Physical evidence

Not all of the seven Ps have the same degree of significance in every marketing mix. It is vital
that these elements fit together into a coherent and integrated plan – targeted at clear
marketing objectives.

Define coordinated marketing mix.

a business tool used to pursue its marketing objectives in the target market
Marketing Mix of the KFC

Product

Uses no artificial colorants or banned additives and meets all EU food standards.

Personality of the KFC Brand is fun and novel to target the young trendy and female market
segment (new food range)

Packaging is colourful, to attract the children, teenage and young adult market.

KFC UK emphasizes on the need for strong brand image, and therefore all the decisions they
make with regards to its products are in line with the brand image. The product and packaging
are designed to project and communicate the brand image reflecting KFC as who they are. The
product reflects the innovation, high quality and nutritional value it provides to its customers,
whilst the packaging clearly reflects the familiar purple corporate brand color and corporate
brand logo, associated with reliability and quality.

People

KFC is having very courteous sales staff for the front line. Also, they are very friendly and
efficient compared to other competitive restaurants. They are undergoing service trainings. Also,
all cooks having proper training on cooking and additional concern on protect the exact taste.

Process

Process is very efficient and not waste time of any customer. Quickly ask the customer
requirement and settle payments very quickly. Keep some fast-moving food item in stocks or
else cater within 10 minutes time.

Physical Evidence
KFC is having unique physical evidence all around the world. It is changing as per season and
special occasions. Also introduced music and televisions to each outlet and creating nice
experience to each customer.

Class activity

In pairs or as a group, produce a presentation about the marketing mix of LPC or of a company of your
choice. In your presentation consider the importance of the elements of the marketing mix in the way
LPC or the company is marketed.

McDonald’s marketing mix

https://www.cleverism.com/7ps-additional-aspects-marketing-mix/

https://www.youtube.com/watch?v=JIirzTdaey4

http://money.cnn.com/2018/04/30/technology/xiaomi-india-smartphone-manu-jain/
index.html

4.5.1 Marketing mix- PRODUCT

https://www.youtube.com/watch?v=g2OKqeKFndg

Introduction: What is a product?

What is a product? A product is “anything that is capable of satisfying customer needs and
wants”.

This definition therefore includes both:

 Goods – tangible products

e.g., trainers, games consoles, DVD players, take-away pizzas

 Services – intangible products

e.g., dental treatment, accountancy, insurance, holidays, music downloads

“Product” includes consumer goods and industrial goods and services. Consumer goods can be
both consumer durables (used over a period of time) e.g. TV, washing machine, car- and single
use consumer goods such as ice-cream.

Industrial products such as mining equipment, factory equipment etc, are purchased by
businesses, not consumers.

Products are at the heart of marketing. The product needs to exist for the other elements of
the mix to happen.

A product can be said to have three elements:

What the product does - the main functions of the product. E.g.
Core benefits washing machine – it cleans clothes
Cinema – it shows a film you want to see.

Coke- quenches thirst.

Tangible or physical What the product is made of; what it looks like; dimensions or duration
element E.g. A flat-screen, plasma television which is HDTV compatible.

The shape of coke bottle

http://www.shanghaidaily.com/business/consumer/The-CocaCola-
 Bottle-is-100-years-young/shdaily.shtml

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utm_source=taboola&utm_term=eslmedia-
theindependent_1018671&utm_content=48651494_http%3A%2F
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%2F8034d2750e5ac8636aff2ac65d22686f.jpg_15+Ugliest+Cars+Ever+
Made_Smartphone_2019-11-
28+12%3A56%3A46&utm_medium=referral&utm_campaign=Ugly2-
ALL-DTM-TCM-TB

Augmented benefits The extra elements which add to the perceived value of the product in
the eyes of the consumer.

Augmented benefits can be tangible (e.g. materials, weight, extra

features) or intangible (e.g. brand name, after-sales service, reputation
for reliability)

https://www.reuters.com/business/autos-transportation/china-evergrande-auto-
unit-lay-off-10-workers-source-2022-12-02/

https://www.notebookcheck.net/Purported-Apple-Car-assembler-nets-10-000-
preorders-for-its-first-electric-SUV.647178.0.html

Often the augmented benefits of a product are the key determinant of whether a customer
decides to buy. Why did you buy that phone?

Businesses differentiate their products by developing these three elements and that enables
them to charge a higher price.

https://www.investopedia.com/terms/p/product_differentiation.asp

You can sell any product to consumers once, but to establish loyalty and good customer
relationships, the product must be right. If the product does not meet customer expectations, as
discovered by market research, regarding:

 Quality
 Durability
 Performance
  Appearance

Then no matter how low the price, or how expensive the adverts for it costs, it will not sell
successfully in the long term (no repeat purchases and they will tell their friends about it as well).

On the other hand, if you produce a good or offer a service which meets customers’ demand, you
may even charge a premium price and still sell.

Explain why these 5 car-models failed:

http://www.investopedia.com/slide-show/worst-selling-cars/?partner=vcb&utm_campaign=inv-
dsq-pfs-012813&utm_source=dsq&utm_medium=cpc&utm_content=adg-na_adv-na_mtp-
na_adc-con_adf-mix_ptp-cp_geo-na

http://www.foxnews.com/auto/2017/09/01/10-reasons-why-ford-edsel-floundered.html

4.5.1.2 Product life cycle

 Define the product life cycle.

the stages that a product moves through in the marketplace as it enters, becomes established,
and exits the marketplace

 Describe the 4 stages of the product life cycle.

 Introduction
when the product launches, focused on building product awareness & reaching
the target market

 Growth
the product became more popular, focused on al strategy & growth marketing to
generate as much interest in your product as possible
  Maturity or saturation
market is becoming more competitive, particularly as mrore time is spent
fending off competition.

 Decline
Even though you will do everything you can to keep your product alive,
including product recommendations, your product will eventually decline

https://arstechnica.com/gadgets/2022/11/amazon-alexa-is-a-colossal-failure-on-pace-to-lose-10-billion-this-year/

The product life cycle – the length of each stage will vary from product to product.

Product portfolio

What is a product portfolio?

The collection of all the products/services offered by a company, each with a different growth rate &
market share.

Identify the product portfolio of a business of your choice.

Apple: iPhone, iPad, Mac, iPod, Apple Watch, Apple TV

Position the business products in the product life cycle.

Growth-Macbook

Maturity-iPhone, Apple Watch

Decline-iPod, Apple TV, iPad

Why is it important for a business to have a diversified product portfolio?

- open the door to growth opportunities

- reduces risks of business failures
- maintain competitive in the market (distinguish from competitors)
4.5.1.2 How product life cycle impacts on the marketing mix.

One of the key applications of the product life cycle concept is as a guide to making changes to
the elements of the marketing mix. For example:

 When would you advise a business to lower the price of its product?
 In which phase is advertising likely to be most important?
 When should variations be made to the product?
 At what stage should new products be researched and developed to update and augment
the product portfolio?

The table below explains how marketing-mix decisions can be influenced by knowledge of
the product life cycle.

The marketing mix and phases of the product life cycle

 Product life Price Promotion Place Product
cycle phase
Introduction May be high High levels of Restricted outlets Basic model
compared to informative – possibly high e.g. iPhone 1
competitor advertising to class outlets if
(skimming) or make consumers skimming
low (penetration) aware of the strategy is
product’s arrival adopted
on the market.
Growth If successful, an Consumers need Growing number Planning of
initial penetration to be convinced of outlets in product
pricing strategy to make repeat areas with strong improvements
could now lead to purchases – consumer and
rising prices. branding will help demand. developments
establish to maintain
consumer loyalty. consumer
appeal.
Maturity Competitors Brand imaging Highest New models
likely to be continues as there geographical (iPhone 2, 3,
entering the is a need to stress range of outlets 4,5), colours,
market. There the positive as possible- accessories, etc
will be a need to differences with developing new as part of
keep prices at competitors’ types of outlets extension
competitive products. where possible. strategies.
levels.
Decline Lower prices to Advertising likely Eliminate Prepare to
sell off stocks or to be limited, may unprofitable replace with
if product has a be just to inform outlets/countries. other products
small ‘cult’ of lower prices. while slowly
following, prices withdrawing
could even rise. from certain
markets.

Boston Consulting Group (BCG) matrix analysis of the product life cycle helps marketing
departments to make key marketing mix decisions. For example, the matrix helps marketing
managers to:

 Analyse the performance and current position of existing product portfolios.

 Decide what marketing actions to take with existing products.
 Plan for the introduction of new products.

Boston matrix is a method of analysing the product portfolio of a business in terms of market
share and market growth. It highlights the position of a firm’s products when measured by
market share and market growth.
 The four categories/sectors can be described as follows:

 Stars are high growth products competing in markets where they are strong compared
with the competition. Often Stars need heavy investment to sustain growth. Eventually
market growth will slow and, assuming they keep their market share, Stars will become
Cash Cows.

 Cash cows are low-growth products with a high market share. These are mature,
successful products with relatively little need for investment. They need to be managed
for continued profit - so that they continue to generate the strong cash flows that the
company needs for its Stars.

 Problem children, also known as ‘question marks’ are products with low market share
operating in high growth markets. This suggests that they have potential but may need
substantial investment to increase market share at the expense of larger competitors.
Management must think hard about “problem child” - which ones should they invest in?
Which ones should they allow to fail or shrink?

 Unsurprisingly, the term “dogs” refers to products that have a low market share in
unattractive, low-growth markets. Dogs may generate enough cash to break-even, but
they are rarely, if ever, worth investing in. Dogs are usually sold or closed.

By identifying the position of all products of the business on the matrix, a full analysis of the
portfolio is possible. This should focus on which products need marketing mix support, or which
need corrective actions. This action could include the following marketing decisions:

 Building market share- supporting problem child products with additional advertising or
further distribution outlets to turn them into stars. The finance for this could come from
the cash cows.
  Holding (Stars) – continuing support for star products so that they can maintain their
good market position. The product may need ‘refreshening’ in the eyes of the consumers
so that high sales growth can be sustained.
 Milking/Harvesting (Milk Cows) – taking the positive cash flow from established
products and investing in other products in the portfolio. The harvest for example can be
used to turn the stars into milk cows. This would require huge amounts of advertising.
 Divesting (Dogs) – identifying the worst performing dogs and selling them off or
stopping their production. This strategic decision should not be taken lightly as it will
involve other issues such as dissolving the relevant SBU, and whether the spare capacity
freed up can be used profitably for another product.
https://edition.cnn.com/2020/09/17/tech/nintendo-3ds-discontinued/index.html

TheStreet: Coca-Cola surprisingly ending most sales of popular beverage line.

https://www.thestreet.com/restaurants/coca-cola-surprisingly-ending-most-sales-of-
popular-beverage-line

 http://www.standardmedia.co.ke/business/article/2000156879/kenya-listed-brewer-eabl-
to-sell-bottle-making-subsidiary
 Microsoft is finally getting rid of its most-hated product - CNN
 PepsiCo is selling Tropicana as customers continue to ditch juice
https://www.cnn.com/2021/08/03/business/pepsico-tropicana-naked-
juice-sale/index.html

In conclusion, within the Boston Matrix, the problem children are the main users of cash
while the cash cows are the main generators of cash. The optimal product portfolio is one
that takes advantage of the firm’s strengths (cash cows and stars) to develop other attractive
opportunities (problem children and rising stars)

Activity

Undertake detailed research into the product portfolio of one well-known business that sells a
range of products and:

1. Analyse the firm’s product portfolio using the Boston Matrix. [4 marks]
2. Evaluate two strategies that the business could adopt for any one of the products.
[6
marks]

4.5.1.3 Extension strategies

Define ‘extension strategies”.

marketing plans that extend the maturity stage of the product before a brand new one is needed

Product life cycle- showing the effect of extension strategies.

Evaluation of extension strategies

Strategy example benefits limitations

Adding features Adding a camera and Can usually be developed and If the variant is
to the original larger screen to an old marketed more quickly since the not significantly
product Smartphone. product (brand) is already known, different from
McDonald’s is upgrading and at a lower cost than a the old model,
its burgers.
https://www.cnn.com/ completely new product some people
2023/04/17/business/ will not buy it.
mcdonalds-burgers

Adding new Taco Bell is testing two Original

new Mexican Pizza
variants of the varieties product is still
product https://www.cnn.com/ ageing
2022/12/15/business/taco-
bell-mexican-pizza-test/
index.html

Repackaging a Convenient and easy to make Easy for

product (a new happen consumers to
 look) recognize that it
is the same
product
Discount the Tesla Low income customer can now Concerns over
https://www.wsj.com/articles/
price tesla-cuts-prices-of-model-x-and- afford the product quality of
model-s-1898bc5d cheaper
products
Rebrand - French oil giant Total rebrands in May appear as more appealing Loss of existing
shift to renewables - BBC News
and can target a different recognition
Pepsi has a new logo demographic
https://www.cnn.com/
2023/03/28/business/
pepsi-new-logo/index.html

Sell into new Starbucks is planning to Increase market development Requires

open 2 new stores in tea-
markets loving India each week. adjustment (no
including https://www.cnn.com/2024 previous
/01/09/business/starbucks-
online. india-china-intl-hnk experience)

https://www.tutor2u.net/business/reference/product-life-cycle#:~:text=Examples%20of
%20extension%20strategies%20are,the%20specifications%20on%20a%20smartphone

Victoria's Secret's 'sexy for all' strategy boosts sales and shares
https://www.cnn.com/2021/06/24/business/victorias-secret-turnaround/index.html

Windows 11 gets a launch date. It's surprisingly soon

https://www.cnn.com/2021/08/31/tech/windows-11-launch-date/index.html

Evaluating the Product Life Cycle Model

The product life cycle model is by definition simplistic. It is used to predict a

likely shape of sales growth for a typical product.

Whilst there are many products whose sales do indeed follow the classic
shape of the life cycle model, it is not inevitable that this will happen.

For example, some products may enjoy a rapid growth phase, but quickly
move into a decline phase if they are replaced by superior products from
competitors or demand in the market overall declines quickly.

Other products with particularly long-life cycles seem to enjoy a maturity

phase that lasts for many years.
4.5.1.3 The relationship between the product life cycle, investment, profit and cash flow

Investment is capital expenditure which aims to return a profit.

 R&D stage: Cash flow is negative during the R&D of the product as costs are
high, but nothing has yet been produced and sold (no inflows). No profit either.

 At introduction /launch stage: the development costs might have ended but heavy
promotional expenses are likely to be incurred to persuade users to switch over to
this product. In addition, there is likely to be much unused factory capacity,
putting further strain on costs. As sales increase, then cash flow should improve.
Little, if any profit can be made at this stage.

 The maturity phase is likely to see the most positive cash flows, because sales are
high, promotional costs might be limited to reminding consumers and spare
capacity should be low (economies of scale). Profits are high but growing slowly,
if at all.

 Decline stage: There is little, if any investment at this stage. Such investment
may be in the form of extension strategies. There is profit but, it’s falling. Cash
flow is positive but falling.

Conclusion
 If a business has too many products either at the introduction stage or at the
decline, the consequences of cash flow could be very serious. Firms will benefit
from a balanced portfolio of products at different stages of their life cycle so
that cash from those entering maturity can be used to provide investment
funds for developing eventual replacement products.
4.5.1.4 Branding

Branding is a method used to differentiate a firm’s products from those of its competitors.
Businesses brand themselves and their products by using unique symbols, names, images
or trademark that distinguishes a product from its competitors. Examples of brands:
 Aspects of branding

1.Brand awareness/recognition – the extent to which a brand is recognised by potential

customers and is correctly associated with a particular product. Can be expressed as a % of the
target market.
 http://www.chinadaily.com.cn/business/2013-05/11/content_16491686_2.htm

2. Brand development - Brand development is the process of strengthening and building the
name and image of a brand in order to boost its sales. (Creating a strong brand).

Brand development always involves very expensive and extensive advertising but, if successful,
it can help to extend the maturity stage of a product’s life cycle. Firms such as Coca-Cola are so
successful in doing this that their products have stayed at this stage almost indefinitely.

It is measured usually per thousand of population. Therefore, if 100 people out of 1000 buy a
product, it has a brand development of 10.

http://www.chinadaily.com.cn/business/2013-05/07/content_16481183.htm

3. Brand value

This refers to the premium that customers are willing to pay for a brand name over and above the
value of the product itself. Customers are willing to pay more for a reputable brand, such as
Starbucks coffee, than for the coffee itself, such as coffee from 7-Eleven. This is because
consumers believe that a well-known brand has a better value for money than products that are
not well known.
4. Brand loyalty – the faithfulness of consumers to a particular brand as shown by their repeat
purchases irrespective of the marketing pressure from competing brands. For example, some
people are loyal to Apple and will buy it even if Samsung comes up with a better phone.

Businesses use customer loyalty schemes to entice the customers to stick to the brand. Examples
of such sales promotion schemes are; Air Miles and VIP cards that entitle the holder to a
discount. Do you know of other examples?

What is the importance of brand loyalty to a business?

 Discuss the role and importance of branding to a business.

Victoria’s Secret hires actress and footballer in rebrand

- https://www.bbc.co.uk/news/business-57508848

PS: It can cost millions of dollars to create an effective brand image. However, if a brand image
receives bad publicity –such as KFC’s rotten food scandal in China – then the image of all
products in the ‘corporate brand’ [marketing a company’s products under the company’s name]
will be damaged.

(65) What is a brand? - YouTube

HW
 Product and the Concepts

Creativity & Sustainability

https://edition.cnn.com/2020/06/15/business/unilever-climate-change-commitments/index.html
Burger King becomes first UK fast food chain to offer vegan nuggets | Burger King | The
Guardian

French oil giant Total rebrands in shift to renewables - BBC News

Change

https://www.theguardian.com/world/2021/mar/09/chinas-appetite-for-meat-fades-as-vegan-
revolution-takes-hold?CMP=Share_AndroidApp_Other

Simply Lemonade is becoming a boozy beverage - CNN

Victoria’s Secret hires actress and footballer in rebrand

- https://www.bbc.co.uk/news/business-57508848

Pizza Hut is selling its spiciest pizza ever - CNN