What is Marketing Mix?

A planned mix of the controllable elemnets of a products marketing plan commonly termed as 4Ps: product, price, place, and promotion.These four elements are adjusted until the perfect combination is found, which serves the needs of the customers while generating operatingf income.

THE PRODUCT: Product includes, what value are you going to sell to the market? Define it in terms of what it does for your customer. How does it help your customer to achieve, avoid or preserve something? You must be clear about the benefit you offer and how the customer’s life or work will be improved if he or she buys what you sell.

THE PRICE: Price includes how much are going to charge for your product or service, and on what basis? How are you going to price it to sell at retail? How are you going to price it at wholesale? How are you going to charge for volume discounts? Is your price correct based on your costs and the prices of your competitors?

THE PLACE: Where are you going to sell a product at this price? Are you going to sell directly from your own company or through wholesalers, retailers, direct mail, catalogs or the Internet? 

THE PROMOTION: Promotion includes every aspect of advertising, brochures, packaging, salespeople and sales methodology. How are you going to promote, advertise and sell this product at this price at this location? What will be the process from the first contact with a prospect through to the completed sale?

Product Life Cycle and Industry Life Cycle

Similar to the human life cycle, the change in variables along the course of the product's life cycle, plays a vital role in defining the segmentation and differentiation approach. Let us understand this concept in greater depth in terms of Maggi Pasta.

 

 

PRODUCT LIFE CYCLE (PLC)

A new product passes through set of stages known as product life cycle. The time-span of a product life cycle varies from product to product. Modern product life cycles are becoming shorter as products falling in mature stages are being renewed by market segmentation and  product differentiation.

Companies always attempt to maximize the profit and revenues over the entire life cycle of a product. In order to achieving the desired level of profit, the introduction of the new product at the proper time is crucial. If new product is appealing to consumer and no stiff competition is out there, company can charge high prices and earn high profits.

CHARACTERISTICS OF PRODUCT LIFE CYCLE

• PRODUCTS HAVE LIMITED LIFE

• PRODUCT SALES PASSES THROUGH DIFFERENT STAGES, EACH POSES A DIFFERENT CHALLENGE AND OPPORTUNITY.

• PROFITS RISE AND FALL AT DIFFERENT STAGES OF LIFE CYCLE.

• PRODUCTS REQUIRE DIFFERENT STRATEGIES IN DIFFERENT LIFE CYCLES.

STAGES OF PRODUCT LIFE CYCLE

Product life cycle comprises four stages:

1. Introduction stage
2. Growth stage
3. Maturity stage
4. Decline stage

INTRODUCTION STAGE

Product is introduced in the market with the intention to build a clear identity and large scale promotion is done for creating awareness. 

Companies incur more costs in this phase and also bear additional cost for distribution. On the other hand, there are a few customers at this stage, which means low sales volume. So, during introductory stage company’s profits shows a negative figure because of huge cost but low sales volume.

At introduction stage, the company core focus is on establishing a market and raising demand for the product. So, the impact on marketing mix is as follows:

Product

Branding, Quality level and intellectual property and protections are obtained to stimulate consumers for the entire product category. Product is under more consideration, as first impression is the last impression.

Price

High pricing is used for making high profits with intention to cover initial cost in a short period and low pricing is used to penetrate and gain the market share. company choice of pricing strategy depends on their goals.

Place

Distribution at this stage is usually selective and scattered.

Promotion

At introductory stage, promotion is done with intention to build brand awareness. Samples/trials are provided that is fruitful in attracting early adopters and potential customers. Promotional programs are more essential in this phase. It is as much important as to produce the product because it positions the product.

Maggi pazzta entered the market when there was only a single leader in the pasta category, Sunfeast. Also since, the brand maggi was already established in India for years, the launch of maggi pasta was welcomed by the consumers.

GROWTH STAGE

In this stage, company’s sales and profits starts increasing and competition also begin to increase. The product becomes well recognized at this stage and some of the buyers repeat the purchase patterns. During this stage, firms focus on brand preference and gaining market share. It is market acceptance stage. But due to competition, company invest more in advertisements to convince customers so profits may decline near the end of growth stage.

Effect on 4 P’s of marketing is as under:

Product

Along with maintaining the existing quality, new features and improvements in product quality may be done. All this is done to compete and maintain the market share.

Price

Price is maintained or may increase as company gets high demand at low competition or it may be reduced to grasp more customers.

Distribution

Distribution becomes more significant with the increase demand and acceptability of product. More channels are added for intensive distribution in order to meet increasing demand. On the other hand re-sellers start getting interested in the product, so trade discounts are also minimal.

Promotion

At growth stage, promotion is increased. When acceptability of product increases, more efforts are made for brand preference and loyalty.

Maggi Pasta is in its growth stage, where it uses several promotional tools like recipe contests over internet, TVCs, and so forth.  Maggi pasta recently added two new variants to the existing ones, Tomato twist and Mushroom Penne.

MATURITY STAGE

At maturity stage, brand awareness is strong and sale continues to grow but at a declining rate in comparison to the past. At this stage, there are more competitors for the same products. Companies tend to defend the market share and attempt to extend their product life cycle, rather than make profits, by offering sales promotions to encourage retailer to give more shelf space to the product than that of competitors. At this stage, loyal customers are a key ingredient in the recipe for a winning hand.

Marketing mix decisions include:

Product

At maturity stage, companies add features and modify the product in order to compete in market and differentiate the product from competition. At this stage, it is the best way to get dominance over competitors and increase market share.

Price

Because of intense competition, at maturity stage, price is reduced in order to compete. It attracts the price conscious segment and retains the customers.

Distribution

New channels are added to face intense competition and incentives are offered to retailers to get shelf preference over competitors.

Promotion

Promotion is done in order to create product differentiation and loyalty. Incentives are also offered to attract more customers.

Maggi is yet to hit its maturity stage where the sales would become constant. For now maggi sales are increasing in a subtle way and thus it is time for maggi pasta to hit this stage.

DECLINE STAGE

Decline in sales, change in trends and unfavorable economic conditions are important factors of the decline stage. At this stage, market becomes saturated and sales declines. This may be due to technical obsolescence or change in customer's taste and preferences.

At decline stage company has three options:

1. Maintain the product, Reduce cost and find new uses of the product.
2. Harvest the product by reducing marketing cost and continue offering the product to loyal niche until zero profit.
3. Discontinue the product when there’s no profit or in the case of availability of  a possible successor or selling out to competitors who want to keep the product.

Maggi pasta has not hit the declining stage and it will not be hitting the stage any sooner because of the less direct competition in the category. Sunfeast and Pasta are the only ready to eat pasta makers in India for now.

LIMITATIONS OF PRODUCT LIFE CYCLE (PLC)

Product life cycle is criticized that it has no empirical support and it is not fruitful in special cases. Different products have different properties so their life cycle also vary. It shows that product life cycle is not best tool to predict the sales. Sometimes, managerial decisions affect the life of products in this case Product Life Cycle is not playing any role. product life cycle is very fruitful for larger firms and corporations but it is not hundred percent accurate tool to predict the life cycle and sales of products in all the situations.

Industry Life Cycle (ILC)

Industry Life cycle is essentially a larger variant of the Product life cycle where the development of the industry (encompassing all kinds of brands and product offerings under the umbrella of the same industry) is traced through stages of Growth, maturity and decline. It is not directly applicable in the case of Maggi Pazzta but according to the larger operating math,  the ready to eat segment in the instant food industry as a whole can both be classified under the growth stage of the ILC.

An important integrated concept that needs to be understood is the marketing mix as it is THE COMPLETE product of a marketing process and is tailor-made in keeping with the phases in the Human Life Cycle, PLC, BLC and ILC.

Competition

Competition refers to an entity that produces similar products or services as yours and thus have the potential of hapmering your cutomer base. Competition may include direct or indirect competition. 

Direct competition refers to the same kind of products or services offered by different sellers. Whereas Indirect competition refers to the different kinds of products or services that satisfy the same requirement.

Competition analysis

ROLE OF COMPETITION ANALYSIS

• To help management understand their competitive advantages/disadvantages relative to competitors by generating understanding of competitors’ past, present (and most importantly) future strategies

• To provide an informed basis to develop strategies to achieve competitive advantage in the future

• To help forecast the returns that may be made from future investments (e.g. how will competitors respond to a new product or pricing strategy?)


Competitors of Maggi

Maggi pazzta is a new category added to the brand maggi. Maggi pazzta, faces direct competition from Sunfeast Pasta, which offers a wide variety of pasta and indirect competition from ready to eat snacks like Top Ramen, Wai Wai, Yipee Noodles, Ching's Noodles. It may also face indirect competition from category of soups like Knor, Ching's and so on.

Does 'maggi pasta' face a competition with 'maggi noodles'?

Maggi noodles has established a market for its own. It is a brand which has carved a major share of the market. Maggi pazzta does not face competition from maggi noodles because Maggi Pazzta has a customer base, which are loyal to brand maggi but have a taste for pasta.

Buying Decision Process

This section discusses the steps involved in the decision making process by the consumer in terms of what to buy and why to buy a specific brand out of the range of varieties available, among the different brands which promise to deliver and provide for a specific bundle of utility and value as perceived by the consumer. This process becomes a crucial for the value vs cost math.

Stages of buying decision process:

Problem Recognition - This stage refers to recognizing a need or a want that has to be satisfied. The need in the case of Maggi Pazzta would be defined as 'hunger'. Need being intrinsic in quality is broader. The need is directed into the desire for a specific kind of potential utility bundle, i.e. Maggi Pazzta in this case, which can be cooked in 5 minutes.

Information search - This stage refers to the part of the decision process where in the consumer searches information from different sources about the product he needs to buy. A successful information search leaves a buyer with possible alternatives. The information about Maggi Pazzta is not very readily available to the consumer, unless he looks for somethimg which could be cooked instantly or he/she has a specific craving for eating pasta. For FMCG products, generally, advertisement proves most crucial in terms of building the brand presence in the market. The most direct impact of a well crafted advertisement campaign results in brand recognition and consolidation of position.

Evaluation of Alternatives - In this stage the consumer evaluates the alternatives he has come across in the prior stage. The communication process in terms of advertisements and other sources needs to perform a differentiating function for the brand operating in that product segment. When a person wants to eat something instantly and craving for food, he might take into consideration sunfeast pasta or noodles from ching's, wai wai, and yipee.

Purchase decision - This is a crucial stage where in the consumer decides on a alternative and proceeds further about when to buy and the mode of purchase. In the ready to eat market, let us assume that the customer shows preference towards Maggi Pazzta to continue further. This decision, however, has a second layering where in the customer would need to decide what kind of pasta or noodles or soup he/she requires from among the range products (discussed in a previous post) being offered under the ready to eat market.

Purchase - This stage refers to the actual purchase made by the consumer depending on the mode, payment conditions and the product availability. After the decision, the purchase transaction is effected. In terms of the Indian customer study, most purchases of the nature are made in cash. However, the availability of Pazzta in supermarket stores where customers buy in bulk and pay in cash or credit have changed this situation slightly. However, in everyday store terms, the transaction in terms of cash would continue to hold.

Post-Purchase Behaviour - This stage will decide if the consumer will purchase the same product again or if he/she is satisfied with the applications of the product in relation to his needs. Maggi attempts to engage its customers through online campaigns and promotions. Also, Maggi maintains active digital promotion and media promotion policies to  engage its customers.  The consciousness and comfort associated with the brand name of Britannia helps in getting repeat sales. Dependability is the key and who can provide the same in a better fashion than one of the most prominent food product companies in the market. Thus, the position of Maggi Pazzta is pretty stable in this regard.

CUSTOMER DECISION MAKING

Question 1: Who all buy Maggi Pazzta?

Answer: School and college students, Parents, Office goers, Small cafeterias and canteens.

Question 2: What problem will this product solve?

Answer: a) Satisfies hunger with taste.

             b) Saves preparation time (Ready to eat).

Question 3: Which attributes of Maggi Pazzta are important and why?

Answer: a) Availability of flavors, as it satisfies people seeking different flavors of pasta.

             b) Preparation time- 5 minutes, saves actual cooking time for pasta.

Question 4: If the buying decision is taken for the first time, how will you go about it. If the decision is made for the fourth or fifth time, how will you go about it?

Answer: First time, buying decision involves making a decision between the companies offering pasta, that is, Sunfeast and Maggi. After deciding on Maggi pasta, the next decision involves choosing among the 4 available variants.

By the fourth or fifth time, i would have tasted all the available varieties and would stick to the flavor that i like the most. The buying decision will be simple compared to the first time, as i will be sure about the product that i buy.

Question 5: What is the deliberation(thinking) in the mind at the time of buying the product?

Answer: a) The deliberation is to satisfy my hunger with my favourite food, pasta.

             b) To not cook food and thus stick to ready to eat pasta.     

                                                      Maggi Pazzta

Nutri-licious PAZZTA as we call it. It is an offering to delight one's sense and makes one fall in Love!

It is available in saucy, lip-smacking flavours and shapes - Masala Penne, Cheese Macaroni, Mushroom Penne & Tomato Twist.

This NUTRI-LICIOUS product is made from 100% SUJI and is also a source of protein & fibre. What’s more, it’s a quick cook pasta that can be conveniently prepared in just 5 minutes!

Introduction

Twenty-five years after it brought Maggi instant noodles to India, Nestle has extended the brand to ready-to-eat pasta. It has come out with Maggi Nutri-licious (nutritious and delicious) Pazzta. Initially it offered only two flavors:Cheese Macroni and Masal Penne. But now the product is available in 4 variants: Masala Penne, Cheese Macaroni, Mushroom Penne & Tomato Twist. Ready-to-eat pasta is a nascent category in the country. The only national brand is ITC’s Sunfeast. So, Nestle has a more or less open field ahead of it. 

Customer Value

Customer perceived value:  In simple terms, it refers to the customer's opinion of a product's value to him or her. It may have little or nothing to do with the product's market price, and depends on the product's ability to satisfy his or her needs or requirements.

The value addition is made by the association of dependability and reliability (in terms of quality and brand image) with Maggi products. Similar value is attached to maggi pazzta.

Also, being an FMCG segment product, the prominent share in the estimation of customer value for Maggi Pazzta is marked by the direct benefits offered by the product with negligible emphasis on the service benefits. The service part is essentially attached to the expectation of quality and ensuring of regular availability at accessible retail outlets and Kirana Stores.

Essential values added by Maggi Pazzta is as follows:

Value to consumers

• Available in 4 variants: Masala Penne, Cheese Macaroni, Mushroom Penne & Tomato Twist.
• Made of suji not white flour thus nutritious.

Value to customers

• Preparation time 5 minutes.
• Maggi being a trusted brand provides quality.
• Easy availability.

Marketing Definitions

                      What is Marketing?

Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large (Approved July 2013, by American Marketing Association).

Marketing can also be defined as a societal process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with each others.