The Four P’s of Marketing

As per your request I have drafted this memo to share my thoughts regarding the marketing mix – product, pricing, promotion and placement – based upon the results of the preliminary market research. I will discuss my strategy regarding the marketing mix in relation to our target markets, as well as the impact the different target markets may have on the proposed strategies. To help the clarity of my strategy I will briefly define the four P’s of the marketing mix.

The Four P’s

The four P’s of the marketing mix are categories that most marketing decisions fall under and include a vast array of subcategories to further define and refine the marketing strategy. The first component is the Product. This refers to the product or service offered by the company and its core and added values (Carrol, 2008). The importance her lies with ensuring the product or service meets the consumer needs. Additional elements of the product category include various product lines, packaging and branding (Cannon, McCarthy & Perreault, 2008).

Price, the second component of the marketing mix, refers to the how much we will charge for our product. This involves several possible pricing strategies and is often determined, or at least highly influenced, by the market (Carrol, 2008). Pricing strategies include cost-plus, value-based, competitive, penetration, going rate, skimming, discount, loss-leader and psychological (NetMBA.com, 2008). It important to offer the “right” price, otherwise it will not move no matter how great it is.

The Place component of the four P’s is most related to distribution of the product. Obviously the product needs to get where it going in order to be sold. In the case of web based sales this component is often one of the most pertinent. In the fast paced internet sales world it is important for the product to ship and be received as fast as possible to keep customers happy and loyal (Carrol, 2008). In addition to shipping this covers other distribution concerns such as selection and management of various channels, store locations and market exposure (Cannon, McCarthy & Perreault, 2008).

Promotion of the product comes along usually at the end of the marketing mix simply because it is a good idea to have a good mind of the other three components prior to selling it to the consumer and to your distributors. This involves the promotional strategy, advertising, sales, and publicity (NetMBA.com, 2008).

Pricing Strategy

Pricing strategy is complex and must consider multiple variables. The pricing objective guides the pricing strategy. In our case I feel focusing our pricing objective on maximizing profits versus market share and sales volume (Cannon, McCarthy & Perreault, 2008). This does not mean we must set our prices extremely high to do so. A lower, competitive price will likely increase our sales volume and cause our profits to increase.

We of course need to set a price that is above our cost yet not so high that consumers would not be willing to pay for it. Based upon the various demographic, behavioralistic and geographic segments identified within our target markets, we know that we are looking to appease young and middle aged adults from lower middle class income levels and up. We have also determined that we are likely to increase outside sales by as much as 50%, giving us an opportunity to have a slightly narrowing profit margin and still turn a considerable profit due to volume (CTU Online, 2008). Our pricing options are somewhat less controllable than they could be simply because we have our current prices of the products already sold locally to contend with and the fact that we are not developing pricing for a brand new product, simply a new market. This limits our options somewhat. If we start with prices lower than our local offers, we can upset current customers and discourage them from buying in our store, too high and potential customers may not bite.

I feel a combination of introductory pricing; skimming, channel pricing and volume dealing, if properly combined will help us achieve our objective of maximizing profits. We know that direct competition for many of our products will be virtually non-existent for sometime due to the recent patent approval for our coatings. This will allow us to skim the market by setting pricing at a point that will allow us to maximize profits while still being able to sell to our markets. Since we are selling confections and treats skimming the market will not cause an astronomical price tag, but as a gourmet product the difference of a few percentages can greatly affect our profits when volume is taken into consideration. Initially, we should consider introductory pricing to speed up our market penetration and get potential customers to try the products (Cannon, McCarthy & Perreault, 2008).

When dealing with distributors we should consider channel pricing. This involves setting the pricing low enough for our distributors to be able to cover their cost and still turn an attractive profit. Offering volume discounts, both to direct customers, businesses and distributors I feel will also add incentive for greater volume and in turn, higher profits (Cannon, McCarthy & Perreault, 2008).

Distribution Strategy

The strategy for distribution is much less involved than pricing. One thing that I would like to focus on is setting up incentives for online purchasing by offering same day and next day shipping, depending upon the time the orders are placed. If a customer or vendor places an order by 2:30 pm that day we should be able to have their orders filled and shipped that day to shorten the time between purchase and gratification. This will mean we will need to ramp up manufacturing to attempt to meet the needs of predicted sales so we can have the inventory to ship immediately yet not so much inventory that our storage costs increase or the product loses freshness. By improving the manufacturing and shipping time our suppliers will be able to stock fresher inventory and get our goods to consumers faster as well.

Promotional Strategy

Since we have worked out the product, pricing and distribution concerns we will now want to focus on selling our product. I’d like to think the product is so good that it will sell itself and in some ways, as our brand loyalty has increased, word of mouth makes this true. However, I have developed a few ideas for promotion to help speed things along. Much of this will of course depend upon the promotions budget. No matter the budget, we will need to consider our various target markets for this. Demographics split our group by age and income levels but we will also want to consider the buying behavior of our target markets and the geographical targets. We have a large percentage of people enquiring about the Amish products we have. This inspires me to offer value packages featuring our Amish products with free gift opportunities at certain levels. The free gifts could be a small sampler of various non-Amish products to raise their exposure in that market.

In the various target markets I am suggesting sending representatives or recruiting distributors to vend at the local farmers markets. Statistics show “the number of farmers markets in the United States has grown approximately 154 percent over the last 12 years” and sales generated at these markets are estimated to exceed 1 billion dollars (US Dept of Agriculture, 2008). Additionally these markets cater to people of all demographics. Initially we could send our own people to set up shop and have them sell the business opportunity of becoming an IPT distributor as well as selling the product and increasing brand recognition.

Our future contract with FTD Floral will allow other promotional opportunities. Assuming we get the contract we can offer small sampler packs at no cost (simply cover shipping and handling) to FTD customers for a short promotional period. We would offer a handful of different samplers that would lead the FTD customer to our site to choose which they wanted. Upon reaching our site other promotional offers would be offered to purchase our products at a discount, thus un-invasively leading FTD customers to our site and exposing them to many other unique gift ideas. Another possible contract to seek out is with NetFlix. What goes better with a good movie than popcorn?

This concludes a brief yet detailed account of my many ideas for this company and its bright future. If you have any other questions please let me know. What time is it? It’s Popcorn Time.

AG

References:

Cannon, J.P., McCarthy J., Perreault W. (2008). Essentials of Marketing…(11^th ed.). NY, NY. McGraw Hill Irwin

Carrol, Nora. (2008). Chat Archive: Market Research. Retrieved October 29, 2008 from https://campus.ctuonline.edu/classroom/CommonGround.aspx?Class=218677&tid;=50

CTU Online. (2008). Phase 3 Course Materials. Retrieved October 29, 2008 from https://campus.ctuonline.edu/classroom/MultimediaCourseMaterials.aspx?Class=218677&tid;=50

NetMBA.com (2008). The Marketing Mix. Retrieved October 29, 2008 from http://www.netmba.com/marketing/mix/

US Department of Agriculture. (2008). USDA Secretary Shafer Celebrate the Benefits of Farmers Markets. Retrieved October 29, 2008 from http://westernfarmpress.com/news/farmers-markets-0806/