c/w Chapter 22 notes 26.3.

21

Marketing means understanding and communicating with customers so effectively that

they want to buy from you. For Apple it means designing a must- have product that fits in
with modern lifestyles and enhances the customer’s personal image. Therefore, the
customer expects- and is willing to pay- a high price for the product.
The example of Apple effectively explains the marketing mix. This mix is the combination of
factors used by a business to persuade customers to buy. Four factors that make up the
marketing mix, usually referred to as the 4p’s:
. product
. price
. promotion
. place
For Apple’s iPhone product has to be the best-designed and most technologically advanced
the price has to be at the top-end of the market, confirming the product quality; the
promotion is via classy advertising plus a lot of celebrity endorsement; and the place at
which Iphones are sold should be as prestigious as possible.
After careful market research, a firm should be able to design a product or service that
meets a specific market need. This targeting is at the heart of the mix. For example, Lindor
chocolates are targeted at special occasions. Having the right luxury product to appeal to
the audience is then backed up by:
. the right price
. the right place
. the right promotion

All consumers expect value for money, so price is always important. In many cases, having a
low price may be crucial to achieving high sales, for instance when selling packets of sugar
or butter. At other times though, being cheap may cause image problems. No one wants
cheap baby food or cut-price perfume.
The ideal situation for a business to have brands so powerful that price is not an important
factor for customers. They want Nike, not just trainers ; they want a Mercedes , not just a
car. Consumers see both products as unique and are therefore willing to pay a higher price.
Other products must be priced in relation to others in the marketplace. Esso would not do
well if tries to price its petrol above the level of Shell or BP. Drivers buy the cheapest
because they regard the different brands of petrol as the same thing.
Promotion is the way a business can promote sales of its products. It lumps together
methods of promoting the long-term image and sales of the business, using methods such
as Tv or cinema advertising, and short-term sales promotions.
Place is where the product is distributed, so that customers can get it when they want it.
Mass market products usually seek as much distribution as possible. For other products, the
same does not apply. Chanel would not allow cut-price retailers such as Superdrug to sell its
perfume; its managers worry that cutting prices may damage the image of the brand.
For success, a firm must make sure that its mix is co-ordinated and coherent. A stylish
product aimed at a stylish product aimed at a stylish market should have a high price.
Similarly , a product aimed at the environmentally conscious buyer should have little
advertising support, a moderate price premium and aim to be sold through a limited
number of local outlets.
Sometimes companies need to rebalance their marketing mix because of increasing
competitive pressures. While apple did so by quietly reducing prices, cosmetics companies
such as Rimmel have been switching their promotion spending towards social media.
Reports from America suggest that Instagram is the most powerful medium affecting
cosmetic purchasing.
A long-standing consumer trend is needed for greater convenience. Once, cooked
breakfasts gave way to bowls of cereal; now the bowls of cereal have been given away to
breakfast bars and other on the go food. As consumer habits change , so must the
marketing mix. Packets of cereal were brought from supermarkets, so Kellogg’s developed
terrific distribution.
In July 2016, a global success phenomeon arose when Pokémon go was launched by
Nintendo. For small businesses in particular, buying Pokémon lures boosted customer
numbers- often significantly . So, the marketing mix was tweaked to allow for high spending
lures. This might cut spending on traditional media, such as advertising in the local paper, or
might lead to a boost in the overall budget for marketing as companies seized the short-
term opportunity created Pokémon craze.

Video notes
The marketing mix describes how businesses encourage customers to buy products and
services. It is made up of four elements: price, product, promotion and place. Together they
are referred to as the 4 p’s. Each component is important, but it is important that the
business knows how to link them all together. This ensures that they are selling the right
product at the same price, in the most appropriate place.
If all 4 factors work together effectively, the business will be competitive and therefore
would need to be able to adapt to changing customer needs and wants and as a result make
profit . Price is how much the business wants customers to pay for product or service. It is
often dependent on the products quality. They charger higher price for niche products and
as customers will pay more money for the better quality and for better customer service.

Chapter 21 questions 1 and 2

1) The probable reasons why Robyn and Ed located production in a railway arch in Dalston
is that because a railway arch is where a lot of people, especially workers in the busy tube
times would be hungry and thirsty and for there to be a shop there for them to buy drinks. I
think it is a great location to start your business up as there will be many people going past
your shop during the rush hour and for there to be a shop like this , there would be a great
income and money made from the business.
For a first-time location this is one of the best places to place your business. Especially with
the fact that there are many bars and pubs near the location, makes it easier for you to
produce your drinks to the bars and pubs and with a lot of people buying the drinks, this
would encourage the bars and pubs too buy the product from you and for them to sell your
products at their shop and in this case you would also make a lot of profit and money and so
would the bars and pubs and therefore it is a great way for you to start your business off.

2) I think Option 1 is the more sensible option to take and it is the better option. Option 1
means you would not have to work, and you would have another company/ producers
working for you and this saves you a lot of time, but not money. However, during the time
you save you can think about your business and how you could possibly make it better and
generate more sales and make more profit than before. Especially with the fact that it is an
established producer makes it better and more reliable.
Another advantage is that since you’re paying the production company makes sure that the
producers put 100 percent effort in the work they put in to produce soda, which is most
likely going to be more than the work effort the owner puts in as he does not get paid by
himself and does not need to put that much effort into it. However, the owner does put a
lot of effort and so will the producers.
However, a disadvantage of doing this is that sometimes they might not put the effort and
care you put in when you make your soda. This will ruin your business and make the bars
and pubs from not buying your products, which then means no sales and no revenue and no
profit and may end up with business failure, which is the last thing any business would want
to happen.
I did not choose option 2 because by choosing option 2 you may be paying your staff so
much, but not getting as many sales and revenue, and therefore you would be losing money
and this could damage the financial situation of the business. Renting the place would also
add to your problems as if there are not as many sales going then, then you would find it
hard to pay the rent , using the money you get from the business, resulting in you having
too you use your own money to pay rent.
However, an advantage of Option 2 is that if the business location is well and good and if the
business does get the same amount of sales and profits as the first location, them this would
make your business a huge success and make sure you have enough money to pay rent and
also pay your workers and make sure you have some profit. Especially with the fact that you
have double workers and therefore more sodas produced making the waiting time for
customer and pubs and bars slower, which could be an advantage to your business.
As a conclusion, I would say that option 1 is the safer option compared to Option1. As by
choosing option 2 your business may not be making enough money to pay rent and
therefore your business would have to close quite quickly. You would have to also pay your
workers and therefore this would put you in even more debt. After seeing your business
shutdown, then public might think your business is not that good and therefore stop buying
from your first location, which would cause big problems and business failure.