Product & Price Essentials: Core Marketing Mix Strategies

Product: Core Marketing Mix Element

A product is a good or service that satisfies a need. Without a defined product, it's impossible to effectively implement strategies for price, distribution, or promotion.

Key Elements of a Product

• Product Attributes

  These are the specific characteristics of a product, such as its color, quality, size, and design.

• Brand Identity

  A brand is a name, term, symbol, or design (or a combination of these) that identifies a company's product and differentiates it from competitors.

  • Unique Brand: A single brand used for all of a company's products.
  • Multiple Branding: Several distinct brands for different product lines or market segments.
  • Private Label: Products manufactured by one company but sold under another company's brand name (e.g., Carrefour, Hacendado).
  • Second Brand: A variant within multiple brands, often for products of lower quality or a different market segment than the main brand.

• Packaging and Labeling

  • Packaging: Crucial for protecting the product and differentiating it from competitors on the shelf.
  • Labeling: Conveys essential information, including the brand name, instructions for use, ingredients, and product characteristics.

• Other Services

  These are additional services offered when purchasing a product, such as warranties, installation, after-sales support, or deferred payment options.

Product Life Cycle Stages

Understanding the product life cycle helps businesses manage their offerings effectively.

• 1. Introduction Phase

  • Product launch into the market.
  • Sales grow slowly, and the company may experience initial losses.
  • Objective: To build product awareness and encourage trial.
  • Investment in informative advertising is key.

• 2. Growth Phase

  • Public acceptance of the product increases rapidly.
  • Sales experience rapid growth.
  • The number of competitors typically increases.
  • Objective: To add features and improve the product to maintain competitive advantage.
  • Persuasive advertising focuses on highlighting product superiority over competitors.

• 3. Maturity Phase

  • Sales growth slows down and eventually stabilizes.
  • This stage often sees the highest number of competitors.
  • Objective: To reach new customer segments and defend market share.
  • Advertising shifts to reminding customers about the product and its benefits.

• 4. Decline Phase

  • Better substitute products emerge, or consumer preferences change.
  • Sales and profits begin to decline.
  • The product may eventually be withdrawn from the market.
  • Alternatively, companies can attempt to revitalize the product through improvements or repositioning.

Price: Revenue Generation in Marketing

Price is the amount of money consumers must pay to acquire a company's product or service.

It is the only variable in the marketing mix that generates revenue for the company, while others represent costs.

Price can be adjusted in the very short term and significantly influences consumer purchasing decisions.

It also communicates the company's positioning of its product within the market.

Effective Pricing Methods

• 1. Cost-Based Pricing

  The price is determined by adding a profit margin to the total cost of producing and distributing the product. This method is commonly used by smaller companies.

• 2. Demand-Based Pricing

  This method involves studying consumer sensitivity to price variations. If a company perceives that consumers place a high value on its product, it may set higher prices. Conversely, lower prices might be used to stimulate demand.

• 3. Competition-Based Pricing

  Prices are set primarily in relation to competitors' pricing strategies.

  • Price Higher than Competition: Justified when the product offers superior quality, unique features, or a strong brand reputation.
  • Price Lower than Competition: Used when the product's quality is lower than rivals, or as a strategy to gain market share by attracting price-sensitive customers.
  • Price Similar to Competition: Often adopted when the product is similar to competitors' offerings, or to avoid initiating a price war in a competitive market.