Theoretical Concepts of the Marketing Mix Elements - Essay Example

?The Essentials of Marketing Mix Introduction Marketing strategies today have tremendously varied from that of olden days. The traditional marketing was seller oriented; whereas, the modern marketers give more focus on the ultimate customers because they hold that customers are the prime beneficiaries of marketing services. Hence, based on customer needs, products have been categorized into luxury goods, shopping goods, and convenience goods. Since each of these categories bears specific product characteristics, consumer behavior would be different with regard to different product groups. Therefore, the marketing mix for each of these product categories also needs to be different. It seems that marketers use different marketing mix strategies even for goods under the same product category. This paper will analyse the marketing mix strategies of two existing brands that market luxury goods. Theoretical Concepts of the Marketing Mix Elements The term ‘marketing mix’ was firstly used by Neil Borden in 1953. The theory of marketing mix contains four main elements called 4 P’s of marketing; product, price, place, and promotion. These four elements constitute the entire promotional campaign; and “when these are effectively blended, they form a marketing program that provides want-satisfying goods and services to the company’s market (Spiro, Stanton, and Rich, 2003, p.10). The term marketing mix reflects a broader concept that includes several marketing aspects which all work toward a similar objective of creating awareness and customer loyalty. Every firm considers marketing mix as a vital strategy as the elements of marketing mix play a significant role in each stage of product life cycle. In the modern days, ‘people’ is added as the 5th P to the marketing mix elements in order to represent the target people. The 4 P’s of marketing are briefly described below. 1. Product The term product not only indicates a tangible good but also stands for an intangible service. The tangible goods may be manufactured on a large scale with a predetermined volume of units while intangible services like cellphone load and credits are delivered according to the needs of consumers. Every product has its own life cycle including introduction, growth, maturity, and decline phases. Product is a crucial element that has the ability to lead the whole business operations to success or failure. Hence, in order to retain product competitiveness in the market, marketers usually employ product differentiation strategy as a tool to differentiate their products from those of its competitors. In short, while marketing a product, the marketer must take specific product decisions regarding ranges of factors like brand name, functionality, packaging, warranty, styling, and quality. 2. Price Simply, price determines the numerical value of the product or it is the amount that a customer pays for the product. A marketer may increase or decrease the price of his product according to its demand in the market. Different pricing strategies are used to price a product in various situations. Premium pricing is a most common pricing strategy by which a higher price is charged for the product; it is practiced if the product possesses a substantial competitive advantage over the competing products. In addition, penetration pricing, economy pricing, price skimming, psychological pricing, geographical pricing, and numbers of others pricing strategies are used to price a product. Marketers must take price flexibility and price discrimination into account while formulating pricing decisions. 3. Place Place represents a location where a product is marketed. It may either be a physical store or be a virtual store on the internet. According the theory of marketing mix, the place also refers to channel, distribution, or intermediary. In other words, place is the channel through which goods and services are moved from the marketer to the ultimate consumers. The marketer has to formulate clear decisions on distribution channels; for instance, he has to decide whether the distribution channel should be direct or indirect. Different types of channel intermediaries such as wholesalers, retailers, agents, and internet must be taken into account while deciding ‘place’ strategies. In addition, the market must consider market coverage which includes inclusive, selective or exclusive distribution. Warehousing and transportation are also significant determinants of ‘place’ decisions. 4. Promotion Promotion is a concept that enables a marketer to communicate with customers. According to Berman and Evans (2007, p. 568), the concept of promotion has distinct elements such as advertising, direct mail, public relations, personal selling, trade and fair exhibitions, sponsorship, and sales promotion. The integrated application of different aspects of the promotion mix assists the marketer to generate a positive consumer response by passing product information. The Burberry’s Marketing Mix Strategy The Burberry is a British brand (Burberry group plc) that markets luxury fashion goods such as clothing, fragrance, and fashion accessories. In the case of luxury goods, “demand increases more than proportionally as income rises”; in other words, luxury goods have high elasticity of demands since people would buy more and more luxury good as they become wealthy (The international man). The brand is famous mainly for its iconic trench coat that was developed by the founder Thomas Burberry. According to the Business Weekly report, Burberry is the world’s 98th most valuable brand. It seems that the product differentiation strategy of the Burberry has played an important role in raising its brand reputation. The Burberry check, which was introduced in the 1920s, became a trend among the British middle to upper classes. By the end of the 20th century, the Burberry brand redesigned its raincoats and other traditional products to fit them with the preferences of new generation customers. Similarly, the Burberry group plc timely extends its product lines that are marketed under the Burberry brand. In order to take advantages of its increased brand reputation by attracting new customers, the Burberry brand recently started printing its brand name on products such as children’s clothes, watches, personal products, bikinis, shoes, and homewares. The Burberry’s pricing strategy is to hold prices on its major product offerings such as trademark coats and cashmere scarves. However, it is observed that the brand’s price level compels it to compete with luxury brands like Gucci and Chanel. The Burberry’ place and distribution strategies are also distinct from those of competitors. For instance, it thoughtfully sorted out distribution channels whereby unprofitable branches were closed and increased emphasis was given on flagship stores in cosmopolitan cities. As part of its placing strategy, the Burberry managed 20 small shops in Knightsbridge alone while it refused to open shops in Harrods. In addition, the Burberry has selected prestige UK retailers like Harvey Nichols to stock exclusive ranges. In order to expand the brand across the globe, “11 new stores were opened in 2002 including flagships stores in London, New York, and Barcelona.” (Reinventing Burberry). The Burberry brand has extensively employed film stars and other celebrities to reach product information to the customers. Appearances by Humphrey Bogart in Casablanca and Audrey Hepburn in Breakfast at Tiffany notably enhanced the appeal of Burberry trench coat. The brand also brought in advertising agency Baron & Baron and celebrity photographer Mario Testino to feature its ads. The primary goal of Burberry’s promotional mix is to highlight the brand’s new credentials without casting off its classic roots. The Mars’ Marketing Mix Strategy The Mars is a convenience brand that mainly markets chocolate bars; it is operated under Mars, Inc in United Kingdom. Convenience goods refer to a special category of goods that are available to customer without any extra effort. The Mars closely resembled the American Milky Way bar which was produced by Mars, Inc in USA. As part of its product strategy, the Mars sold different types of chocolate bars at different regions of the world. The Mars replaced its American version with slightly different Snickers Almond in 2002. Recently in 2010, the Mars reintroduced its US version and it is being sold through Wal-Mart stores. Similarly, the Mars is making adequate changes such as package style and slogan in its UK version also. In 2007, the Mars declared that some of their products would no longer be suitable for vegetarians as a result of the introduction of rennet (Mars bar). Later, the company abandoned these policies as they ended up in losing the Mars’ potential customers. Under its pricing strategy, the Mars has been ripping off the consumer. In other words, the Mars brand keeps the same price for its products while gradually reducing the size of the chocolate bar. It seems that this pricing strategy is mainly practiced in UK. However, the Mars exercises a discount pricing strategy in China in order to confront with strong market competition in China. The Mars has established its products globally. However, the brand gives first priority to its business operations in Europe and America as both continents possess greater market potentiality for chocolate products. Similarly, it is identified that the Mars gives great emphasis on promotional policies with the concept that promotion is the central point that regulates the volume of sales. It has designed large number of advertising slogans at different times. For instance, The Mars’ slogan ‘Work-Rest-Play’ got wide popularity across United Kingdom. The brand also depends on other forms of advertisements including TV shows. Analysis From a critical comparison, it is obvious that Burberry group plc has effectively used marketing mix strategies for its brand. Under product strategy, each brand competitively differentiates its products from similar products of the other. However, the process of product differentiation would be more difficult for Mars since there are ranges of other chocolate products in the market. Mars’ product strategy is comparatively thoughtless and it causes them to lose their valuable customers. For instance, the animal products controversy raised challenges to the brand in UK although Mars abandoned its controversial policies later. The pricing strategy of Burberry seems to be more classical. In other words, the Burberry does not try to increase profit margins by compromising with its pricing policies. Although, the Burberry is compelled to compete with luxury brands like Gucci and Chanel because of its conventional pricing tactics, this policy would benefit the brand in the long run. Evidently people mainly buy luxury goods in order to increase their social status; therefore, consumers would be reluctant to purchase Burberry products if the brand sets lower prices for its products. At the same time, the Mars adopts a ‘consumer rip-off’ pricing strategy in order to avoid price objections from customers to some extent. However, this policy is immoral and the brand may be ruled to pay damages if consumers file lawsuits against the company. Similarly, the place or distribution channel with regard to Burberry’s strategies is found to be effective. It timely closes the unprofitable branches and discovers new potential business areas. This practice would not allow unprofitable branches to continue business operations at the expense of profitable branches. The Burberry also opens more than one branch in a region once the management thinks that the area is potential for business. In contrast, lack of efficient planning can be seen throughout the global expansion process of Mars. Finally, promotional tactics of the Burberry is also better than that of Mars. The Burberry mainly employs film actors, models, and other celebrities to convey its product information to customers; and hence, Burberry’s advertising technique would enhance product knowledge among the public. Anyhow, Mars’ advertising slogans can also influence the people even though this technique is not effective as much as Burberry’s promotional tactics. Conclusion In total, marketing mix strategies for different categories of products must be different in order to meet customer interests. The 4 P’s of marketing (product, price, place, and promotion) play a significant role in determining the long term sustainability of a brand. From the analysis, it is clear that the Burberry practices marketing mix strategies more effectively than Mars. In order to improve its marketing operation, the Mars must firstly redesign its pricing policy. To be specific, price skimming would be the most recommendable strategy for Mars. Similarly, the Mars has to design effective strategies to differentiate its products since ranges of closer substitute products are available in the market. References Spiro, Stanton & Rich 2003, Management of a Sales Force, 11th Edn, Tata McGraw-Hill, Delhi. Berman, B & Evans, JR 2007, Retail Management: A Strategic Approach, 10th Edn, Pearson Education, Inc, India. ‘Must have luxury accessories & top brands’, n.d, The International Man, Viewed 25 July 2011, ‘Marketing mix decisions: Reinventing Burberry’, 2003, Scribd.com, pp.257-306, Viewed 25 July 2011, ‘Mars bar’, July 2011, TheSuperclick.com, Viewed 25 July 2011, Read More