Marketing and the Marketing Mix
Domain 6: Marketing and the Marketing Mix. Tests the marketing concept, segmentation and positioning, and the ability to apply the 4Ps (7Ps for services) with correct calculations.
Core concepts
Marketing identifies and satisfies customer needs profitably; it is broader than selling or advertising. Segment the market (geographic, demographic, psychographic, behavioural), target chosen segments and position the offer with a clear unique selling proposition. The mix: Product (features, quality, branding, packaging, product life cycle), Price, Place (direct, retailer, wholesaler, agent, online), Promotion (advertising, sales promotion, personal selling, publicity, direct marketing). Services add People, Process and Physical evidence.
Worked example
A cellphone-accessory seller has unit costs of N$12 materials, N$3 labour and N$3 overhead, giving N$18. To earn a 40% margin on the selling price: price = 18 / (1 - 0.40) = N$30. To apply a 40% mark-up on cost instead: 18 x 1.40 = N$25.20, which yields only a 28.6% margin (7.20 / 25.20). Reasoning: a margin is a percentage of price, a mark-up is a percentage of cost, and choosing the wrong one quietly destroys profit.
Traps
- Confusing margin with mark-up, as in the example above.
- Treating marketing as advertising only, ignoring product, price and place.
- Using penetration pricing without checking that contribution still covers fixed costs.
- Ignoring the decline stage of the product life cycle and holding obsolete stock.
- Positioning to 'everyone', which appeals to nobody.