The Marketing Mix
THE MARKETING MIX 9
Acompetitive advantage is a benefit gained by a company over itscompetitors due to the high value of their products, high valuecombined with low prices or by providing greater benefits or servicesthat calls for higher prices. The ability to maintain sustainablecompetitive advantage for a product is the focus of mostcorporations. The firm acquires competitive benefits when it can gainhigher profits than the average in an industry (Lilien, 1986).
Accordingto Michael Porter, companies are faced with five external forceswithin their area of operation. The forces include threats from newcompetitors, existing competitors, substitute products, suppliers andcustomers bargaining power. To develop and maintain competitiveadvantage, Porter highlighted that companies have to choose astrategy from three strategies, which include cost leadership, focusand differentiation (Porter, 2008). Further, companies have threemore strategies they use to create and sustain a competitiveadvantage. These are cost leadership, differentiation and focus(Rouffignac, 1990).
Throughdifferentiation, a company distinguishes its products and services byusing its features to benefit from its competitors. The productsdesign is such that it is viewed as unique in the industry. As aresult of the uniqueness, the company can charge a premium price andearn profits with above average margins (Rouffignac, 1990).
Fora company to implement cost leadership, it must afford to produce andsell its products at a lower cost than that provided by itscompetitors. Through this, the cost leader is able to earn aboveaverage profits. Further, they are able to continuously develop andimprove the products from investing the extra profit (Richter, 2002).
Focusis the strategy that enables a company to create a niche in themarket. This enhances the company’s competitive advantage byconcentrating on a limited part of a market. To excel in thisstrategy, a company has to understand the dynamics and some of theunique customer needs. As a result of concentration, the company canattract a higher share of customers in that market than thecompetitors (Glazer, 1989).
Acompany’s decisions related to distribution, focus on making theproduct easily available in adequate quantities at the locationswhere customers are expected to go shop for them. The management aimsto keep physical distribution costs as low as possible. To enhanceconvenience, management can choose to put in place an exclusive,selective or intensive network of distributing the products as a keyfactor when choosing their appropriate dealers or wholesalers. Forexample, a low priced product that is consumed regularly should bedistributed intensively such that it is available in as many outletsas possible (Frey, 1956).
TheCorporations, to be successful, have to consider certain aspects ofbusiness and marketing that dictate the setting of prices andreflecting their objective. First is the time taken to produce theproduct needs to be considered in pricing so that the one producingit is paid fairly. Second is the cost of materials that has to beconsidered in the price accorded to the final product so that thebusiness does not lose money. Further, the company should considerits expected profit margin, which is the core reason it is in thebusiness instead of just a break even. This should be added up to theprice of the product. Ideally, a new startup is required to sell athigh prices as a set standard. This is a strategy to attract the highadopters or the ‘geeks’. As more people continue to buy theproduct, the company should lower the prices but ensure that theystill remain competitive. In pricing, the company’s ideals shouldnot be compromised. The key strategy such as efforts to set a certainstandard or attract a given customer should be maintained (Kotler,1980). .
Promotionalactivity is one of the many integrated strategies, which are requiredto achieve a marketing objective. Promotion is among the fourmarketing Ps that are product price and place. The promotion part isbased on the various ways that a company can use to distributeinformation to its customers about its existing products. It involvesthe various ways of advertising, personal selling, sales promotionand public relations. In Advertising, the company pays so that it cancommunicate its sales message to its consumers using differentapproaches such as television advertisements (Kotler & Armstrong,1991).
Thestrategy of Personal selling involves the services of sales people inpersuading the consumers to buy a product. The salespeople tend touse the concept of price so they can convince people. Further, theyhighlight the specific benefits of the product. Sales promotions aretemporary incentives intended to make a product more attractive tothe customer. They include such things as coupons and discounts.These strategies integrate well within the business pricing strategy.For example, the use of a coupon may end up inspiring customers intotrying a new product (Sandhusen, 2000).
Publicrelations involve promoting a product or a service in an informalsense. For example, the company can develop its reputation oncustomer service so that the current customers can recommend itsproducts to others (Kotler & Armstrong, 1991).
Amarketing mix involves the marketing activities that an organisationengages in to meet the products requirements of its customers in thebest way. Traditionally, the marketing mix consisted of just the four“Ps” that include the price, product, promotion, and place.Currently, are three additional Ps that add up to make them the sevenPs of the marketing mix. The additional Ps have been added to factorto the increase in customer orientation in marketing. First is thephysical layout, this has been improved due to the current needs ofthe customers to visit the seller`s factory. In contrast to the pastwhen the factory layout was considered since customers never madeefforts to view the factory. Second is the provision of customerservice. This is a new venture and a current trend by producers.Customer service is an effort to win the loyalty of customers fromenhancing the way a telephone query is handled by the face-to-facecommunications (Frey, 1956).
Third,are processes that are associated with customer service due to thestrategies that are used to improve the effectiveness of marketing inan organisation. These include the processes of handling customercomplaints, processes for identifying the customer needs andrequirements of the order handling process (Glazer, 1989).
Marketsegmentation is used to refer to the method used in subdividing amarket along some commonality, similarity or relationship. Thatinvolves identifying members who share a common thing. First, ageographical segmentation is the most common method of marketsegmentation. It involves companies choosing to concentrate on amarket within a restricted geographical location. A company maychoose to market various brands in selected countries and not inothers. A geographic segmentation in the United States could possiblybe composed of a selected market in a selected state (Richter, 2002).
Distributionsegmentation refers to the various ways of reaching different marketsby using different channels of distribution. A company may chooseseveral brand names for the same product. The products are thendistributed to wholesalers for one name that is different from thatgiven to retailers and other distribution channels. Hence, theconsumer receives the same product that is in different names(Rouffignac, 1990).
Themarketing of products to a single customer might be very complicatedas opposed to selling to a business. The hardship in selling to acustomer comes along because they are emotional in making theirpurchasing decisions. In contrast, a business-to-business purchasingdecision is more tasks oriented. Business to business relationshipsalso seems to be building up by the lengthy and complex sales cycles,which end up building brand loyalty. Compared to a business tocustomer relationship, which might not be so enhanced due to thesimplicity involved (Kotler & Armstrong, 1991). In addition, thefinancial implications involved especially from the customer’s sideare very low to create brand loyalty. Further, the firm, due to thesmall margins from each product sold to a customer, aims at sellingto the highest number, and this denies it the chance to establish aone to one relationship. Marketing products to a business mightfurther sound simpler when one considers the opportunities forcustomisation. The selling firm can approach the firm and enquire thespecific need for a product. In contrast with individual customers,putting to practice their individual customisation needs may be soexpensive for the company (Shapiro, 1984).
Domesticmarketing is convenient than international marketing. This is becauseit involves selling in a local market where there is only one set ofcompetition and economic issues. This makes it easy as compared tointernational marketing that involves many sellers hence highcompetition. Further, international markets bring in more factorsthat lengthen decision-making. For example, economic issues shallinvolve both considerations of the home and away issues likeinflation, which can be challenging (Sandhusen, 2000).
Domesticmarkets are easy to interpret compared to international markets. Thisis because there are no language barriers, and it is easier to marketa product, obtain and interpret results hence identifying the trendsof the markets. The absence of language barriers makes the domesticmarkets easy since one can respond to customers’ demands, needs ina much faster way, and make further gains from the change in demand.It is also easy to identify opportunities while they are still due asopposed to international markets where due to the many barriers,information is delayed and so is decision-making.
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