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See attached Lesson (Word Document) to answer the question:

Review the Marketing Mix Tutorial in the attached Word Document. In the tutorial, assume you are Connie, the Assistant Marketing Manager. Evaluate the marketing mixes presented, select between two options for a new product, and write which option you chose and why.


Marketing Channels

Every organization must decide what is the most efficient and profitable way to get its products into the hands of the end user. This is the final component of the marketing mix—place. Some companies have a direct channel, like Dell, which distributes its products directly to the end user online or over the phone because their products are customized. Another model is Ralph Lauren, which produces mass quantities of the same clothing products and uses a multichannel approach with a mix of its own retail stores, other department and warehouse stores that resell its products, and online. Channels may also be restricted, as would be the case of a large farm in California that because of legislative or union policy, must sell exclusively through a local produce co-op. In each of these cases, the marketplace has developed a system of distribution, a system of marketing channels, that keeps prices as low as possible. Most channels require the use of intermediaries, commonly referred to as middlemen, who are used to get the product in the hands of the customer. The most common intermediaries are wholesalers, distributors, dealers, and retailers, all of which are links in the value chain that connects the manufacturer to the end user.

In each step, the current intermediary pays for and takes ownership of the product, then resells it to the next intermediary. Each intermediary adds to the final price of the product, but each adds value to the product in some way. We measure the value they add as utility. When intermediaries pay for a product and take possession, they free the seller’s cash flow, which adds possession utility, or the ability to have something you would not otherwise have, in this case, free cash flow, which also reduces expenses for financing. Intermediaries distribute the product to retailers or wholesalers over a wide geographical area, often with their own trucks, providing place utility and reducing expenses for transportation and shipping as compared to using UPS, FedEx, or USPS. This also adds time utility because they deliver it in time for the next intermediary, all the way to the end user. They also capture data and insights on consumer trends and communicate that back to the seller, providing service utility and reducing expenses for secondary research. Intermediaries also provide sales, training, and education to the customer or the next link in the chain, another example of service utility.

However, if a particular type of intermediary is not adding value, it will be replaced with a less expensive way to distribute or eliminated altogether. Consider the decreased use of travel agents after the launch of Expedia, Travelocity, Orbitz, and Kayak. The disruptive technologies of purchasing and accessing information online and subsequent innovations in mobile platforms completely shifted the marketing mix. Services offered by the traditional travel agent, such as booking flights, reserving hotel rooms, and scheduling activities, were quickly replaced with online solutions and mobile solutions. Today, you can book an entire vacation and work directly with every service provider, so in most cases there is no perceived value in using a travel agent.

If each intermediary adds to the final price, how can the use of intermediaries keep costs low? The answer is simply that it is less expensive to use intermediaries than perform all of their functions independently.

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Four Ps Review

Product: A product is a good, service, or idea that satisfies consumers’ needs.

Coffee Bistro

Let’s take a look at an example of a coffee bistro. The product is the coffee, and the product attributes are the characteristics that define that particular product and will affect a consumer’s purchase decision. These may include the size, whether it is caffeinated or not, light or dark roast, organic, fair trade, as well as the packaging, in this example, the cup, lid, and insulating sleeve.

Price: Price is what is exchanged for the product. This is usually money, but could be an exchange of services or other compensation.

Coffee Bistro

At a coffee bistro, the price of a cup of coffee depends on internal and external factors. Internally, the bistro must consider the cost of the coffee beans, labor, rent, and marketing. Externally, the bistro must consider consumers’ willingness to buy, competitors’ pricing, and the strategy of penetrating the market while building brand equity.

Promotion: Promotion includes all communication from the seller to the buyer that informs the buyer about the product and motivates them to purchase it. This includes not only advertising and public relations, but also includes sales promotion and personal selling.

Coffee Bistro

For a coffee bistro, this may include print ads in a local magazine, spots on local TV and radio, ads on social media, and search engines. It may also include pitches to local news outlets or even having a booth at a local farmer’s market.

Place: Place is the means of getting the product to the consumer. This may include a traditional brick and mortar retail store, or it could be a website from which visitors can download or stream media. Place may be your own home, where electricity, water, and gas are delivered through wires and pipes. Place can also be a combination, such as purchasing a good online and having it mailed to your home.

Coffee Bistro

At a coffee bistro, place obviously includes the bistro, but may also include grocery stores, kiosks, or online sales.

Marketing Mix Tutorial


The following tutorial is a scenario-based exercise that will help you refine your skills at creating a marketing plan for a business that wants to develop a new product.

Marketing Mash Up

Evaluating the 4 Ps: In this tutorial, you’ll play the role of assistant marketing manager for a small photography studio. You’ll have the opportunity to evaluate the marketing mix, make the call between two different marketing plans, and explain your reasoning in this week’s discussion.

Evaluating the 4 Ps Transcript:

Thank you for joining me this morning. Catherine wants us to design a marketing program for our new premiere portrait service. Our client base has been growing over the past few years, and it includes quite a few prosperous professionals whose children are getting married and having children of their own.

Historically, these clients have appreciated our high-quality portraits. However, competition is increasing and she wants to move into a higher value ad market. I have been considering the market mix for this service and I’d like your help in making the decisions. I know you’re new, but does this product appeal to you?

Yes, of course. But do you realize I am new to all of this? The reason I wanted you to get involved in this is that I know you’re taking a marketing class, and I wanted to get your fresh input into this decision. Let’s get together after lunch and I’ll bring you up to date on what my thoughts are for product, price, promotion, and place.

This will give you a little time to review the four Ps before getting started. I am glad I kept all of my marketing notes. See you after lunch. Hey Connie, hope you had a good lunch. I wanted to meet with you in the production area to show you a couple of product prototypes so we can get right to work discussing the marketing mix.

One of the ideas comes from Catherine and the other idea is the work of her husband Joe, who you know is also our accountant. At the end of our discussion, I want you to make a choice as to which product we are going to proceed with. Is this okay with you?

You want me to make the decision? Good, I’m glad you’re willing to help. Come with me over to our layout table so I can show you the two prototypes. Here are the two product ideas we are considering. Our budget won’t allow us to pursue both ideas, so you’ll have to make a choice.

The large portrait on the left framed in gold leaf is Catherine’s version of the new premiere portrait service, and she would like to sell one portrait per month. The smaller unframed portrait on the right is her husband Joe’s version of the new premiere portrait service, and Joe believes we can sell 20 of these portraits each month.

Our job is to design the marketing mix for each product and choose one approach. I have put together two tables listing the marketing mix elements appropriate to each product. You’re here to review the two options and make a choice. Once you’ve made a choice, I’ll give you my feedback.

Your professor’s a good friend of mine, so you may see a discussion in class about this. Do you feel like you’re ready to review the two options and make a decision?

I reviewed my notes in the marketing mix, and I think I can make an appropriate decision.

Come with me to my office. Marketing mix plans are sitting on my desk. Here’s the marketing mix I propose to support Catherine’s idea of the product. Look it over. And when you’re done, I’ll give you the other proposal. I have a good understanding of the Catherine option.

Here’s the marketing mix I proposed to support Joe’s idea to the product. Look it over. When you’re done, I’ll give you an opportunity to make the decision. Thanks for helping me out. I know Catherine’s product looks attractive, but Joe’s idea may produce more revenue. It’s $120,000 versus Joe’s $190,000.

Keep in mind, we won’t have to purchase any new equipment under Joe’s proposal. Of course, Catherine’s proposal will help build our brand, which is very good in our town. It’s a tough choice and I’m glad you get to make it. Which option do you think we should pursue?

I have to say, you’ve made a wise choice. Catherine is a fine artist in great demand. Her portrait service offers customers an adorable product that benefits from direct selling method, and the intangible premiere portrait service really needs this special marketing, such as gallery viewings and wine and cheese parties.

The premiere portrait is a specialty item with a high price and requires individual selling in a direct sales environment, one that’s designed for a unique, one of a kind presentation like the kind offered in our gallery setting. The quality of the ink and paper, the fine art framing, and the archival glass all support the uniqueness of the portrait.

Shipping the product in a protective wooden crate reinforces the value proposition, as well as the intangible warranty guarantee. The premiere portrait service will further Catherine’s already strong brand and offer a new product to her loyal customer base. Well, you’ve made a wise choice here. Technically, Catherine is a very good photographer, but her ability with Corel still needs to be developed.

Catherine’s strong suit is in her technical proficiency with Photoshop CS4 and she produces stunning portraits using the artistic tools available in the software. Our normal portrait sells for $450, so we’ll be increasing our marginal revenue by $395 per portrait without increasing our costs.

Producing the number of portraits wanted by the customer does reduce the specialty appeal, but the customer will be able to share the moment with more relatives and friends, and this should increase word-of-mouth marketing for the premiere portrait service. Selling the product unframed enables the customer to complete the creative process by selecting the frame themselves, and it gives them a deeper sense of ownership.

Our logo is on every product, and the quality of the portrait can be seen through the cellophane wrap. Discounting will entice more sales, and financing gives us the opportunity to increase our gross margin. There is a very large markup on the product, so we will not have to borrow money to do our financing, and it is an intangible that customers will like.

The premiere portrait service will maintain Catherine’s strong brand for technically superior portraits and help us expand our customer base.


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