9.3 Marketing Mix: The four P's

Cost Plus Pricing

A pricing strategy where a company will add a percentage to the total costs incurred for a product (production, design, distribution, etc.) in order to turn a healthy profit

Demand Price

A pricing strategy where a company will set the price based on the demand for the product [eg. gaming consoles: start high then gradually drop to skim off each market segment]

Competitor-based pricing

A pricing strategy where a product is positioned in the market based on the price of similar products. The company will position the product by pricing it lower, similar or higher than similar products, depending on relative quality

Product

In marketing terms, the product is informed by a number of variables; primarily analysis of the market, as well as of the competition

Product Standardisation

The process of setting uniform characteristics for a particular product, system or service

Marketing Mix

Four factors identified through market research that provide the designer with an accurate brief of market requirements. The 4 Ps: Product; Place; Price; and Promotion.

Penetration pricing

Sets a relatively low price to help establish a new product in an industry [eg. iMusic/Spotify: first 6 months free.... then you pay $$$]

Promotion

The ways that can be used to communicate information about a product or system to consumers and other interested parties [eg. advertising, publicity, personal selling, etc.]

Place

This refers to how the product reaches the customer. Place is not bounded by a physical retail store but can be a virtual platform for transfer of goods

Price

This refers to the amount of money paid by a customer to purchase a product or service [this includes ALL associated pricing strategies]

Psychological Pricing

Where a product is priced to give the impression that it is paying less. For example, pricing at $1.99 instead of $2

Product line pricing

Where the different products from the same product range are positioned at different price points [eg. iPhone: more memory, more $$$]

Trigger Products

attract consumers on their own merit for the function and performance necessary to carry out the basic tasks most consumers require [eg. Kitchen Aid, PS4]

Incremental Products

available to engage consumers in purchasing add-ons [eg. Kitchen Aid bolt-ons & PS4 VR rig]