Marketing Mix; Place

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  • Created by: Soph
  • Created on: 31-05-14 10:02

Place

Place is about availability, how to get the product to the right place for customers to make thier purchases. It includes the physical place, availability and visibility.

Choosing appropriate outlets/distributors:

  • distribution Channel-how the product passes from producer to consumer
  • Sold directly
  • Wholesaler then a retailer
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Types of Distribution Channels

Traditional

small producers may find it hard to distribute in big chains so they usually sell to wholesalers who then sell to individual shops. The profit mark up applied by the middleman adds to the final retail price, but it is unlikely that small producer would be able to afford to dseliver individually to lots of small shops.

Modern

companies that don't buy from a wholesale. Companies buy directly from producers and then organise their own distribution to their outlets. They are usually able to negotiate the highest discounts from producers as they have huge selling power.

Direct

manufacturers can edo this through mail order or websites. Usually ensures producer keeps 100% of the products selling price.

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Marketing and Competitiveness

Oligopoly

  • A market dominated by a few large suppliers. The degree of market concentration is very high i.e a large % of the market is taken up by the leading firms.

Key Features:

  • Few firms selling similar products
  • Produces brand products
  • Likely to be singnificant entry barriers
  • Interdependence between competing firms. Business have to take into account likely reactions of rivals to any change in price and output
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Importance of price and non price competition

firms can compete for market share and the demand from consumers in lots of wats. Price competition can involve discounting the price of a product to increase demand.

Non price competition focuses on other strategies; mass media advertising and marketing:

  • Store loyalty cards
  • Banking and other financial services
  • Home delivery systems
  • Financial incentives to shop at off peak times

Price leadership- when one firms has a dominant position in the market the oligopoly may experience price leadership. The firms with lower market shares may simply follow the priciing changes prompted by the dominant firms.

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Monopoly

When one sinlge company owns all or nearly all of the market for a given type of porduct or service

Characteristics:

  • Only one single seller
  • Many buyers
  • Enjoys profits
  • Seller controls the prices in that particular product or service
  • The product does not ave close substitutes

Advs:

  • Economies of scales
  • Profits used for research and development
  • Price discrimination whoch benefits the economically weaker sections of the society and maximisres profits
  • Can afford to invest in latest technology
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Monopoly Disadvantages

  • Poor level of service
  • Consumers may be charged high prices for low quality goods
  • Lack of competition may lead to low quality and out dated goods and services
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Making Operational Decisions

Capacity:

  • Maximum output that a business can produce in a given period
  • Measured in units
  • Can change depending on factors such as labour , seasonal demand
  • Capacity utilisation- the % of total capacity that is being cahieved in a given period
  • actual level of output/ maximum possible) x100
  • Often used as a measure of priductive efficiency
  • Average production costs tent to fall as output rises

How to produce 100%

  • Tends to be short term
  • increase workforce hours
  • Extra staff
  • Subcontract production activities
  • Reduce time spent maintaining product equipment
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Problems with full capacity

  • Negative effect on quality
  • Rushed/less time for quality control
  • Employees suffer
  • Loss of sales
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Operational Targets

  • Cost and volume

A business needs to ensure that operations are cost effective

The business with the lowest unit cost-cost incurred by a company to produce, store and sell one unit of a particular product- is in a strong position to compete; offer lowest prices, higher profit margin.

Total production costs/ specific period/total output

  • Quality

Defelct rates, reliability, customer satisfaction, loyalty, efficient delivery

  • Efficiency and flexibility

How effectively the assets of the business are being utilised, how responsive in unexpected changes, unit costs, labour productivity, output per period

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Operational Targets 2

Environmental:

  • USe of energy efficiency
  • Proportion of production of packaging materials that are recylced
  • Sustainable resources

Internal influences:

  • Corporate objectives
  • Finance
  • HR
  • Marketing issues

External influences:

  • Economic/environment
  • competitor efficiency
  • Technological changes
  • legal changes
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Developing Effective Operations: Quality

Quality; the features of a product that allows it to satisfy customers

Tangible measures of quality:

  • Appearance, reliability, durability, functions
  • After sales service
  • Repair and maintenance needs

Intagible:

  • Image and brands
  • Rep
  • Exclusiveness

Quality system; the approach used by an organisation to achieve quality. Most QS can be classified as either quality control or assurances.

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Benefits OF QS

  • Impact on sales volumes
  • Creating a USP
  • Impact on selling price
  • Pricing flexibility
  • Cost reduction
  • Firms reputation

Issues involved:

  • Cost
  • Training
  • Disruption to production

Quality contrtol is a system that uses inspection as a way of findinf any faults in the goods or services being provided.

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Benefits of QC

  • Inspection at the end of the process can prevent a defective product reaching the customer
  • More secure system than one that trust each individual
  • May detect common problems thorughout so mistakes can be put right more efficiently

Problems:

  • Giving workers the responbibility for their own work helps to increase the interest, variety and responsibility within a job helpes motivate
  • Employing  an inspection team is an expense that could be views as unnecessary
  • By placing responsibility on the inspector does not encourage individuals to imprive the wuality of their output.
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QA

  • Aims to improve quality by organising every process to get the product right first time
  • Ownership of the product or service rests with the wroker rather than with independent inspector
  • Herzberg aruges that there are positive effects on motivation because of this sense of ownership and recognition
  • Costs are reduces less waste

Systems:

  • TQM, a cultre of quality that involves all employees of a firm
  • KAizen; a policy of implementing small, incremental changes in order to achieve better quality
  • Quality standards; a set of criteria for quality established by an orgasnisation
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Customer Service

The provision of service to customers before during and after purchase to the standard that meets customer expectations. Customer service covers all the activity that affects a customers experiences.

Examples:

  • Impressions created by manner of staff
  • Customers needs and wants met

Benefits:

  • customer loyalty and repeat sales
  • Good image
  • Competitive advantage
  • Creates a usp
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Methods

Customer satisfaction survey

Tracking survey, customer surveys that are carried out with the same group over time to see how they are improving.

Focus groups: a group of customers will be asked about their views and experiences

Instant custoemr feedback using the internet

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Working with suppliers

A person or business that serves as a asource for goods and serivce

Suppliers need to:

  • Deliver on time
  • Quality supplies ]
  • Good prices
  • Relaible

An effective supplier would:

  • Provide high quality supplies
  • Provides relaible delivery
  • be flexible
  • value for money
  • have good communication links
  • Financially secure
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WWS 2

Benefits of good suppliers:

  • Improved communication
  • More consistent quality
  • Fewer production delays
  • increased efficiency
  • Better customer service

Choosing effective suppliers:

  • Price, payment terms
  • Flexibility and credit
  • Quality relaibility capacity.

Serivce level of agreement:

  • Delivery timetable, standards, quality
  • payment terms
  • termination of contract, cources of supplies, dispute settlements
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Technology

Computer aided manufacturing; involves using robots in the production line. In addition, it involves using computers in a variety of maunfacturing taskbeyond the use of robots, such as stock control and ordering stock.

Benefits of using robots in production:

computer integrated maunfacturing; is the use of computers to coordinate every aspect of production, from product design through stock control to production scheduling and control.

Computer aided design; enables designers and draughtsmen to store, recirieve and modify their work using mutil dimensional images/ Theres is no need to produce an expensive prototype, which reduces time and costs. Product quality can be improved. automated stock contol- This involves using technology in the procedures for stock ordering, delivery and handling to increase efficiency and ensure that customer demand is met cost effectively.

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Benefits/competitive advantages

  • Improved efficiency, reduced unit cost
  • Less storage costs as supplies are deliverd JIT
  • Delivery times are increased
  • Increase customer satisfaction
  • Increased product range
  • Social responsibility

Technology in services, benefits:

  • reduced running costs, e.g. technology replaces labour so reduces labour costs
  • Improve productibity therefore lower unit costs
  • Improved competitiveness
  • Improves quality
  • Easier to update product design
  • Reduced wastage
  • Montioring stock easier
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Cost of technology.

  • Purchasing the equipment
  • Installation
  • Tarining staff
  • Maintenance
  • Replacement/upgrading
  • Legislation e.g. noise levels

Social costs:

  • job losses
  • Demotivation of workers
  • Loss of traditional skills
  • information overload
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