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This essay looks at the main elements of both the original and the extended marketing mix. This includes an introduction to the concept of the product life cycle, new product development, pricing strategies, distribution options and the promotion mix. Finally, the essay develops marketing mixes for Deans Leisure Centre to meet the needs of different target groups.
Explain how products are developed to sustain competitive advantage.
“Sustainable competitive advantage is the focal point of a corporate strategy”. It allows the maintenance and improvement of an enterprise’s competitive position in the market. It is an advantage that enables business to survive against its competition over a long period of time. “A competitive advantage is an advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher prices” see (Appendix 1). When a firm sustains profits that exceed the average for its industry, the firm is said to possess a competitive advantage over its rivals. The goal of much of business strategy is to achieve a sustainable competitive advantage. Porter identified two basic types of competitive advantage and cost advantage. See (Appendix 2)
When an organisation introduces a product into a market they must consider: who is the product aimed at, what benefit will customers expect, how does the firm plan to position the product within the market and what differential advantage will the product offer over their competitors. Kotler suggested that a product should be viewed in three levels: Core Product, Actual Product and Augmented product. See Dean’s product levels in (Appendix 3).
However, for a product to be able to sustain competitive advantage the term New Product Development has been developed. This has been invented to check and develop the viability of a product which is new to a market. Deans think about term of new product development in order to sustain or build a competitive advantage. To do this Deans follow (NPD) processes, see (Appendix 4). Deans is the market leader in providing different products like gym, spa and hydrotherapy pool as there are no competitors in this sector. There good image makes the organisation more strong. Deans is providing good quality products with qualified staff, good atmosphere and hygienic environment. Motivation level of staff is very high which make the organisation more prosperous. They have enough resources for operating different activities of the organisation. They have created good image in customers mind another big strength and even a competitive advantage is the fact that they have a full service gym; Deans can market too many different segments that other gym cannot do. For example, Deans is open to all staffs, students and community much easier than other fitness centres because most of the people are not good financially so they can attract by their low prices with good quality gym services. They are providing high range of products comparatively with low prices.
Explain how distribution is arranged to provide customer convenience.
Distribution really plays a very important role in enhancing the convenience of the customers therefore; distribution system of a company can appear as a major competency for the company. There are four elements of marketing mix including product, price, promotion and place. The distribution comes under the place category and the companies develop proper distribution system because accessibility of the customers enhances the potential sales for a company. Two types of channel of distribution methods are available. “Indirect distribution involves distributing product by the use of an intermediary. Direct distribution involves distributing direct from a manufacturer to the consumer”.
For example, Deans already has its location so will therefore look at the need and wants of its customers in this area, with staff and students of the college. If Deans does not outsource its distribution services then customers may not willing to get them. They must distribute the product to the user at the right place at the right time. Deans consider on its overall marketing objectives to be efficient and effective.
Explain how prices are set to reflect an organisation’s objectives and market conditions.
One of the aspects in the marketing mix is pricing. This part of the 7 P’s are the one creating revenue and which is also why it is important that an organisation chooses the correct price. The price is determined by the discovery of what the customer finds reasonable and this is also why a lot of organisations chooses to do researches of the consumer’s opinions before the product goes to the markets. Pricing is difficult and must reflect supply and demand relationship. Pricing a product too high or too low could mean a loss of sales for the organisation.
Pricing is one of the most important elements of the Dean Gym marketing mix, as it is the only mix, which generates a turnover for the Deans. The gym can adopt a number of pricing strategies. The pricing strategies are based much on what objectives the company has set itself to achieve, see below:
Penetration pricing: Here the organisation sets a low price to increase sales and market share. Once market share has been captured the firm may well then increase their price
Skimming pricing: The organisation sets an initial high price and then slowly lowers the price to make the product available to a wider market. The objective is to skim profits of the market layer by layer.
Competition pricing: Setting a price in comparison with competitors. Really a firm has three options and these are to price lower, price the same or price higher.
Discount pricing: This involve offering a reduced price of certain types and groups of customers.
Variable pricing: An organisation can very price by customer types, level and quality of service, times and days, seasons and so on.
Cost-plus pricing: Here the firm add a percentage to costs as profit margin to come to their final pricing decisions.
Convincing consumers to try a new product or service is one of the biggest challenges small businesses face. Marketing can be especially difficult for membership like gyms because consumers may be wary of committing to a recurring fee. Dean Gym use pricing tactic to help build a base of customers. As there are such competitors of Deans gym which could compete with the quality of gym produced at Deans, therefore the pricing strategy adopted by Dean’s gym is discount pricing. Dean uses free trials because some people simply will not spend money on a gym membership unless they can try it out first, which is why they give two months free membership and it can give customers the opportunity to see if a facility suits their needs. They offering low introductory rates because it is another tactic that Dean Gym can use to attract new customers. For example, Dean has monthly membership, where members pay monthly straight out of their bank account and with no contract. They also has annual advance, with this option customers pay for their membership for the year up front, but they will give them two months free. Deans offer 10% discounts for families and children. Families and children often go to the gym together, which can make gym membership a group decision.
However, pricing strategies can improve Deans customer loyalty and ultimately lead to better membership numbers.
Illustrate how promotional activity is integrated to achieve marketing objectives.
These activities are performed in order to awake and aware the consumers about the product. Promotion being a feature of marketing mix consists of communication among the consumer and supplier of that product. Promotional activities are important factor because it tells the consumer about the product from different regions and it becomes difficult in selling a product if they are not being anticipated in the market through different promotional activities. The promotional mix consists:
Advertising: Presentation of the product which is wanted to be promoted- this can be done by for example bill boards, banners or posters. The advantages are: advertising can inform people about different products and services, their utilities, cost and other requirements. The disadvantage is cost because advertising is more expansive.
Personal Selling: This can be done by a company by training their sales team to know all need to know about the product so it can be sold by a presentation. Personal selling is one of the ways to keep good customers relationships, but this method is expensive.
Sales promotion: Here it is communicated in a time limited way to increase consumer demand by for example contests, samples or trade shows. The advantage is that sales promotion can help companies to provide right information to customers, also it encourage repeat purchases and customer loyalty, but the advantages are that it increase price sensitivity and it is generally for a short duration
Public relations: This can be paid or non paid stimulations of a product. This can be a product represented in for example magazines, TV or radio etc. PR is inexpensiveness of the cost, but it is hard to predict about the responses and it increase the risk.
Direct marketing: This aspect is a way to reach the consumers directly, such as fliers or street advertising. It allow to target specific customer and it can be measureable, but it is hard to get as immediate of an impact when using direct marketing and it can be quite expansive.
For example, for the promotion Deans adopt advertisement, public relations and internet marketing.
Analyse the additional elements of the extended marketing mix
Marketing mix has three additional elements: People, Process and Physical Evidence
People: This refers to the people who are in direct contact with the customer such as staff. One of the crucial parts in selling a product is the staff and its service as lot of people rely on a good service before buying a product. The employees should have the appropriate interpersonal skills, attitude and knowledge of the product. Some companies make sure to train their staff to ensure the service the customer is seeking for- this can be done by guidelines of selling or training schools in selling. For example, the employees in Dean Gym have a standard uniform and Dean specially focuses on friendly and prompt service to its customers from their employees. The employees are part time workers and full time workers.
Process: This concerns the process of delivering a service. It is crucial that the company delivers as easy as possible and completing a sale without any unnecessary steps. Dean has a number of processes involved in making marketing effective in organisation e.g. processes for handling customer complaints, processes for identifying customer needs and requirements, processes for handling equipments.
Physical evidence: This part of the mix is an essential part where consumers will base their decisions based on the service which is partly visible. This could be a member’s card, a friendly environment. Dean gym focuses on clean and hygienic interiors of its outlets and at the same time the interiors are attractive and the gym maintains a proper etiquette at its joints. The design, furnishing, layout and decoration of the gym chain as well as the appearance and attitudes of its employees will influence customer perceptions of the service quality and experiences.
Plan marketing mixes for two different segments in consumer markets.
Deans is focusing on target market; when it markets a product it mainly consider on demographic and physiographic segmentations; where demographic segment before it markets it identify the consumer groups in: age, sex, education, race, and occupation, and in physiographic it divides the market into different levels as: Lower class, middle class, and upper class to identify their customers, Where Deans has planned to market a new product for a different segmentation so it needs to identify the consumers. After the segmentation Deans consider on the marketing mix it’s also called as the 4ps.
Deans gym 4P’s:
Product: Deans gym offers a variety of fitness equipment for both strength training and cardio. The gym has a state of the art fitness suite equipped with the latest Technogym Visio Web cardiovascular equipment. This allows customer to browse the web, watch television, read articles or update social network account whilst working out. If you prefer a group exercise programme timetable is available. See (Appendix 5)
Price: Deans offer two different price sections for the gym, one for students and staff of the college at a reduced rate but with limited hours, these hours are designed to work around students’ courses and another that student/staff of the college can use over more hours and use more of the facilities. The gym then offers a scheme to the public of Bronze/Silver/Gold/Platinum. See membership options and price list in (Appendix 6)
Place: Deans Sport and leisure is located at Knights Building, Lincoln College. This is a prime location for Lincoln college students and staffs to be target as an expansion of their current market share as it is within the college. See (Appendix 7)
Promotion: Deans is currently using public relations and internet marketing, where they advertise through radio, magazine, news paper, and social network like Facebook, Tweeter, and their official website.
Deans spa 4P’s:
Product: Deans Spa is part of membership, where they offer spa pool with loungers, sauna, steam room, tropical shower, ice shower, foot spa. Additional packages include: Spa packages, dermalogica facials, massage, body treatments, hands and feet, salon. See (Appendix 8)
Price: Deans offer three different price sections for the spa: senior spa therapist, spa therapist and student therapist. See (Appendix 9)
Place: Deans spa is located at Deans Building, Lincoln College. Same as Deans gym students and staffs are their target market.
Promotion: same as the gym, Deans spa also use radio, magazine, news paper, and social network and their official website to advertise their products.
Illustrate differences in marketing products and services to businesses rather than consumers
There are some characteristics to a service such as: lack of ownership, tangibility, intangibility and inseparability. Each of these needs to be taken into account when marketing a service.
Customers cannot own and store a service like they can store a product. Services are used for a period of time. For example Deans gym have membership option where customers pay for option to use monthly and annually. A product is something which is tangible where as a service is intangible. A product is much easier than the service because after marketing and selling a product there is something tangible to be seen by the customer for his/her satisfaction but in services he/she cannot because its intangible.
For example, Deans gym provides a variety of products all related to the health, well being, and self-esteem of its members. Their tangible products include personal weight control, weight room, cardio, tanning, personal training, and a variety of drinks, supplements, and health items that all may be purchased at the Gym, but their intangible product is their services. Services cannot be separated from service providers. A product can be taken away from the producer but a service cannot be taken away as it involves the service provider. For example Deans provide group exercise such as strength training, cardio and dancing classes.
On other hand, the marketer needs to analyse the major demand of customers in a specific market in order to find out a product that can respond the market demand. Firstly, marketers have to improve products to meet customer’s demand as much as possible. Secondly, the price is an important factor in product marketing because of the price must be set to match with the purchasing power of a target group. Thirdly, the place of product marketing refers to distribution channels to deliver and sell the product to customers. Lastly, the marketer also needs to create the promotion on the product in order to persuade customers and motivate the sale in a short term.
For a company to be able to implement their marketing concept successfully the marketing mix is essential. After applying the three additional P’s it has enables the present service standard to be reached. This way a company will reach a bigger customer satisfaction as they reach their customers better in what they want and need to the easiest way for them to purchase the product. It is important when going into a different market that the company’s marketing focuses on all of the different aspects in the tools of the marketing umbrella.
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