| | Marketing mix for innovations Seppo Mönkkönen M.Sc Agric., Senior Lecturer in Business...

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Marketing mix for innovationsSeppo Mönkkönen

M.Sc Agric.,Senior Lecturer in Business EconomicsSavonia University of Applied Sciences

Iisalmi, Finland

Innotools 16th April 2008

© Savonia University of Applied Sciences

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Marketing Plan

Two aspects:

1 Understand markets and customers behaviorPoint 1 Diffusion of innovationsPoint 2 Producut life cycle (PLC)Point 3 Market Segmentation

2 Marketing actions (Four P´s)ProductPricePlacePromotion

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Marketing mix - History

• The four P’s concept is explained in most marketing textbooks and classes

• One version of the origins of the marketing mix starts in 1948 when James Culliton said that a marketing decision should be a result of something similar to a recipe

• This version continued in 1953 when Neil Borden took the recipe idea one step further and coined the term 'Marketing-Mix‘

• A prominent marketer, E. Jerome McCarthy, proposed a 4 P classification in 1960

• Philip Kotler has made four P’s world wide known concept • Concept has also several extra versions (6 or 7 P’s)

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Four P’s for new innovations (SME business)

1 Product Decisions

The term "product" refers to tangible, physical products as well as services

Here are some examples of the product decisions to be made:• Brand name • Functionality • Styling • Quality • Safety • Packaging • Repairs and Support • Warranty • Accessories and services

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Example

http://www.saskatoonberry.com/products1.html

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Four P’s for new innovations (SME business)

2 Price Decisions

Price is the only element in the marketing mix that produces revenue; all other elements represent costs

Some examples of pricing decisions to be made include:• Pricing strategy (skim, penetration, etc.) • Suggested retail price • Volume discounts and wholesale pricing • Cash and early payment discounts • Seasonal pricing • Bundling • Price flexibility • Price discrimination

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• Companies bringing out an innovative product, that may face the challenge of setting prices for the first time

• In the narrowest sense, price is the amount of money charged for a product

• More broadly, price is the sum of all the values that consumers exchange for the benefits of having or using the product

• Price is also one of the most flexible elements of the marketing mix

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Four P’s for new innovations (SME business)

3 Distribution (Place) Decisions

Distribution is about getting the products to the customer

Some examples of distribution decisions include:• Distribution channels • Market coverage (inclusive, selective, or exclusive distribution) • Specific channel members • Inventory management • Warehousing • Distribution centers • Order processing • Transportation • Reverse logistics

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Four P’s for new innovations (SME business)

4 Promotion Decisions

In the context of the marketing mix, promotion represents the various aspects of marketing communication, that is, the communication of information about the product with the goal of generating a positive customer response

Marketing communication decisions include:• Promotional strategy (push, pull, etc.) • Advertising • Personal selling & sales force • Sales promotions • Public relations & publicity • Marketing communications budget

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• A - Attention (Awareness): attract the attention of the customer.

• I - Interest: raise customer interest by demonstrating features, advantages, and benefits.

• D - Desire: convince customers that they want and desire the product or service and that it will satisfy their needs.

• A - Action: lead customers towards taking action and/or purchasing.

Nowadays some have added another letter to form AIDA(S):

• S - Satisfaction - satisfy the customer so they become a repeat customer and give referrals to a product.

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EXAMPLES

• Teno river

• http://www.tenojoki.fi/tenopaasivut/pages_in_english.htm

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EXAMPLES

• http://www.arctictravel.fi/english_PHP/index_en.php

• http://www.kuusamoholidays.com/ollilanlomamajat/english/index.html

• http://www.tenojoki.fi/tenopaasivut/pages_in_english.htm

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Evaluation – is the 4 P’s concept history?

• It is good checklist for all marketers

• Mainly used for consumer markets (do not offer an appropriate model for industrial product marketing)

• Marketing mix approach may lead to unprofitable decisions because it is not grounded in financial objectives

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