The entrepreneur needs to take important decisions at the above stages and strategic issues in the marketing management process and transform these decisions into more tactical practices. These tactical decisions actually constitute the most visible part of the company for its target audience. The entrepreneur, who determines which market opportunities, in which market segment, and how it will be positioned, must now also design elements of the marketing mix.

Marketing mix is the marketing variables that the business uses to get the target consumer response. These variables consist of product, price, distribution and promotion components respectively. The entrepreneur should deliver the most suitable product for this target audience at the most affordable price using the most appropriate communication tools and in the most appropriate way. These four components that express the focal point of marketing activities are called marketing mix. The design of these hybrid elements in harmony with each other and with the target audience, is one of the most critical issues in terms of the success of marketing.

9.1. Product

The product constitutes the most tangible part of the value that the entrepreneur emphasizes especially in the initial stages and offers to the consumer. As described at the beginning of the chapter, it would be appropriate to remind once again that the product includes not only tangible objects but also services such as transportation, retailing and fair organizing.

When creating a marketing mix, first of all, decisions about the product subject should be made. Product-related issues in planning are handled at three levels. Figure 8.7 shows these layers. Each level helps create higher customer value. When considering the product, the entrepreneur must first determine the basic value proposition. In other words, what the customer actually buys should be clearly identified. This level, called the core product, is a description of which problem the product solves or what value it creates. For example, a consumer who buys an iPhone can actually use this product as a means of entertainment, prestige or lifestyle expression, not for communication. Therefore, the core product is related to what it means to the consumer regardless of the performance and properties of the product.

The tangible product is the features that encapsulate the core product and make it concrete. Here, the entrepreneur should determine the brand, packaging design, quality level, design features in accordance with the nature of the original product. Thus, the product will be able to have tangible properties.

The extended product consists of additional benefits and services offered with the concrete product. Features such as delivery, assembly, after-sales service, and warranty form the final layer surrounding the concrete product.

The entrepreneur has to decide on many issues regarding the product according to the strategy drawn in the previous stages.

The first of these concerns the product features. In this context, it should be decided at what quality level the product should be. The entrepreneur can decide to produce low, medium or high quality products depending on the expectation for the selected market segment. Because high quality may not always be preferred by consumers due to price. Therefore, the quality or performance level should be determined in line with consumer expectations. Apart from this, it should be determined what features the product should have and what the design features will be.

While creating product features, important decisions should be made regarding marking in parallel. Particularly, the decisions made on the brand name are the most permanent and visible to consumers. Decisions should be made about what the brand name will be and which brand strategy to follow. Especially in consumer products, the brand name can be the most valuable element of the company. If it is managed well, the brand capital of a firm can go above the physical capital of the firm. However, in some cases, companies can offer their products to the market without brands. For example, most of the products sold in the neighborhood market are offered to the market in bulk. Therefore, determining a brand name or conducting marketing activities without brands is also a strategic decision area.

Another important issue in product mix is packaging. Packaging has protection, convenience and communication functions in terms of marketing mix. Protection and convenience function means that the product is not damaged in the process from the point of production to the point of consumption and easy to transport. However, more important than these is the contribution of packaging to marketing and communication activities. Indeed, packaging is called "the salesperson of the product on the shelf". Because packaging can convey a lot of information about the quality, features and image of the product to the consumer.

9.2. Pricing

In terms of marketing mix, pricing is a critical factor that affects all revenues, success and failure situations of the business. A wrong pricing policy causes the business to lose in the short term. Therefore, it is an activity that needs to be done carefully.

In the pricing phase, a certain price level is determined for the product or product types, taking into account certain purposes. In determining the price, the marketing manager takes into account the consumer's perception of the value of the product, the cost of the product and the activities of the competitors. If the price of the product is above the value perceived by the consumer for that product, the price will be higher than necessary and it will not be possible to sell. In addition, the price should be determined at a level above the production and marketing costs of the product. Therefore, the value and costs perceived by the consumer for the product constitute the highest and lowest levels of the price. As can be seen in Figure 8.8 (Kotler and Keller 2012), the price will be at a point between these two extremes, at a level that the firm will determine by taking into account competition and other environmental factors.

According to Figure 8.8, it is easily seen that the entrepreneur should take into account value, competition and costs in determining this level. Therefore, there are three basic pricing methods in terms of marketing. These methods are briefly described below.

9.2.1. Value-Side Pricing

In this method, the price is determined by considering the level at which customers in the target group can accept to pay. Therefore, the reference point in this method is not the production costs, but the value perceived by the consumer regarding the product. This method is mostly applied when the product brings a significant innovation to the market or creates a significant benefit over competitors. For example, Iphone uses this pricing due to the features not in its competitors and the prestige it provides to its users in its new models released every year. Similarly, a value-oriented approach is used in menu pricing of luxury restaurants. Because in this type of restaurant, the price is not only the cost of the meal. The aforementioned price is determined by taking into account factors such as the atmosphere provided and the level of satisfaction obtained from being in this atmosphere.

9.2.2. Cost Side Pricing

In cost-side pricing, contrary to the previous method, the price level is determined by taking the production or acquisition cost of the product into account. The method is used extensively, especially in sectors where costs and competition are high. In order to pricing according to costs, it is necessary to know the fixed and variable costs that will occur in production.

Here, fixed costs refer to costs that do not change according to the amount of production. For example, no matter what quantity of production is made, labor wages, paid rental expenses etc. do not change in the short term. Variable costs are costs that vary according to the amount of production. For example, raw materials, semi-finished products and energy costs used in production will vary according to the amount of production. Therefore, costs are calculated taking into account fixed and variable costs. However, in this method, determining the level of fixed costs for one product depends on estimating the production or sales amount. Once these costs are determined, pricing can be easily made according to the method to be determined.

Cost plus pricing method is frequently used in pricing according to costs. The basic logic here is to set the list price by adding a certain profit margin on top of fixed and variable costs. For example, suppose that the sales quantity and cost structure of a shoe manufacturer is as follows;

Unit Variable Cost = 40 TL

Fixed Cost = 350.000 TL

Sales Amount = 20.000 pieces

Accordingly, the manufacturer's unit cost can be determined by the following formula;

After the unit cost is determined, the profit margin that the producer will add on this cost must be determined. In our example, if the profit margin is assumed to be 30%, the selling price will be as follows;

According to the calculation made here, if the entrepreneur sells the shoes at a price of 82.1 TL, he will make a profit of 24.6 TL. However, it would be appropriate to re-evaluate this price level determined according to the costs according to the price levels and demand structure of the competitors before it is announced. Often, the competitive dynamics of the market pull down this price set by the entrepreneur. Therefore, only in some cases, the entrepreneur may have to go below the price level obtained by the cost-plus pricing method. For this reason, when pricing, the competitive perspective should not be overlooked.

9.2.3. Competitive Pricing

In the event that the product does not differ significantly from the competitor product or there is no significant difference in terms of the consumer value created by the product, it will not be possible for the entrepreneur to exceed the price of competing products. Therefore, competitive pricing is a pricing method that takes competitive dynamics into account. As indicated in Figure 8.8, competitive price occurs at a level between the floor indicated by the costs and the ceiling indicated by the consumer value. This level varies according to the price policies of the competitors, the marketing objectives and strategies of the firm and the structure of the demand. For example, in a market where there is a very strong competitor, it is more appropriate for a company that produces similar products with a competitor to enter the market at a price below the competitor by following a follower price policy. However, for a product with superior features than the competitor's product, there will be no harm in having a higher price. Therefore, the main purpose in competitive pricing will be to determine a price level that will create a competitive advantage for the firm in the market.

On the subject of pricing, here are the basic dynamics and methods that affect pricing. There are many different pricing policies within these dynamics depending on the marketing purposes. However, for the purpose of the book, pricing methods are generally examined here.

9.3. Distribution

Distribution, the third of the marketing mix elements, includes the activities related to the delivery of the products to the buyer. Therefore, how the products that are produced or to be traded are delivered to the targeted customer base are considered within the scope of distribution activities. Although the cost of the decisions to be made in this context varies depending on the type of product, it can be very high. For example, when a product is planned to be delivered to the consumer through a two-tier channel as a wholesaler and a retailer, channel margins and logistics costs may exceed production costs. Therefore, distribution-related activities should also be planned meticulously. In this planning, the distribution channel should be designed first.

In channel design, the number of layers between the producer and the consumer and how many different channels will be used to reach the consumer are determined. Zero-tier channel involves activities performed without any intermediaries between the producer and the consumer. An example would be a company that directly markets its products to consumers through its website. Increasingly widespread electronic commerce activities popularized zero-tier channels. In e-commerce, the company does not need to create an additional channel and bear the costs associated with it, as it promotes and sells its products through its website. Thus, market entry costs are reduced.

In one-tier channel design, an intermediary is used between the firm and the consumer. Often times, retailers see this function. In this way, the company can offer its products to the appreciation of large masses in a short time. Similarly, in the two-tier channel, two intermediaries are used between the firm and the consumer, such as wholesaler and retailer. Enterprises operating mostly in large geographic regions prefer two-tier channel design.

After determining the number of tiers in accordance with the number of geographical regions to be operated, it is necessary to decide on which wholesaler, dealer and retailers the product should be distributed.

After determining the number of layers, the company has to make some decisions in terms of the distribution channel strategy. In these decisions that determine the intensity of the product to be offered to the market, the business can distribute its product in intensive, selective or featured ways.

In intensive distribution, the main target is to have the product at as many sales points as possible. This policy is preferred especially for frequently consumed products such as food products. Since the product will be offered for sale at many retail points, multiple wholesalers, dealers and retail chains are included in the system. Although the sales volume is high, it is the strategy with the highest distribution costs.

Preferential distribution is a policy for the sale of the product by a limited number of wholesalers or retailers in a limited region. It is widely used in the marketing of products that do not need to be present at every point, such as cameras, watches and air conditioners. Here, this policy is less costly than the other, as the business will contact fewer intermediaries.

In the special distribution policy, the manufacturer offers its product to the market with a single agent. Thus, the manufacturer tries to increase the motivation of his broker in selling the product by creating an advantage that can create a monopoly. For example, Pupa is the official dealer of Apple products in Turkey and delivers the products purchased from the company under advantageous conditions to consumers through the retail system. Therefore, in the specific distribution policy, the company transfers its activities related to the sales and distribution of the product with a single and strong channel partner.

 

• These studies, of course, constitute a series of activities that require very detailed planning. Issues such as determining the number of tiers and negotiating with intermediary institutions to be included in these tiers, arranging contracts, organization of the vehicles and systems to be used in distribution, establishment of warehouses in certain regions if necessary are handled within the scope of distribution mix.

9.4. Promotion

Promotion, which is the last element of the marketing mix, consists of persuasive communication activities for the acceptance of the product by the target audience. Therefore, promotional activities are concerned with planning methods and strategies that include all communication elements between the business and potential customers, even the society. The main purpose of these activities is to inform and remind the consumers about the product and the business, and to convince the consumers to purchase by explaining the benefits of the product. There are four main activities within the scope of promotion. These are;

• Advertisement
• Sales Development
• Personal Selling
• Public relations

9.4.1. Advertisment

It is the most well-known element of karma among promotional activities. They are non-face-to-face information transfer activities regarding the product in return for a certain price. Here, some information about the product is transferred to the target audience in a planned and systematic manner, and it is aimed that these people be aware of the product, have information about the product, and more importantly, to convince them to purchase the product. Today, these activities planned and implemented by professional people provide the promotion of the product to large masses.

In terms of the promotion mix, advertising constitutes an important budget item according to the chosen medium and strategy. However, through advertising, the entrepreneur will be able to introduce himself to large masses as well as gain advantages such as positive images and facilitating sales activities due to increasing awareness in the minds of consumers.

In the decision of the entrepreneur about advertising, the area covered by the target audience, the type of the product, competitor activities and marketing purposes are influential. For example, advertising becomes an important and helpful tool for an entrepreneur who wants to reach large masses in a short time or has just entered the market to transfer himself to the target audience. However, an entrepreneur who produces products for a small number of companies will not have to advertise.

Organizing an advertising campaign is a serious decision that can be expensive. Therefore, an entrepreneur who decides to advertise should determine the purpose, budget, media channels and message of the advertising campaign to be organized.

In terms of purposes, the advertising campaign has three different functions: informing, reminding and persuading. For example, an entrepreneur who enters the market for the first time with a new brand and product must first give information about his product / brand, convey the value he creates and the benefits for the consumer, briefly inform the consumers. This purpose turns into a reminder in the next step. Here, different points and advantages from competitors are reminded to the target audience. Finally, advertisements are made for persuasion-related purposes. As a result, the consumer will be able to meet the same need with many competing products or brands. Therefore, it would be useful to have a convincing communication about why he should use this product.

After the purpose is determined, the advertising budget must be determined. In this regard, the entrepreneur should determine the budget to spend on other promotion tools such as sales development, public relations and personal sales. The budget decision is the main determinant of how and where to advertise. For example, television advertising is a medium that is costly but enables reaching a large number of consumers in a short time. In addition, there are channels such as radio, newspaper, magazine and the Internet. At this point, the entrepreneur should decide in which media he will advertise in accordance with his budget.

Message design, in other words, the subject of how and which subjects will be emphasized in the ad content requires both creativity and planning. Here, message planning with the help of professionals is especially recommended for new entrepreneurs.

9.4.2. Sales Development

Sales development are activities that aim to increase the sales of the product in a short time. These activities are often referred to as promotion among the public. Sales enhancement or promotion activities are used by most businesses because of their direct sales enhancing effect, unlike other promotional activities. For example, gifts for special occasions, campaigns, giveaways, competitions are applications that aim to get direct response to the product.

Business can provide the following advantages with sales development applications (Stanton vd, 1991);

• Raising awareness of the target audience about the brand
• Creating brand loyalty through repeat sales
• Convincing customers of rival brands
• Increasing sales by increasing the stocks of distribution channel members
• Reducing stocks
• Eliminate seasonal sales imbalances
• Increasing customer satisfaction

Sales enhancement activities used due to the above advantages can be designed for the end consumer or intermediaries. Sales development activities organized for consumers include sample product distribution, coupons, competitions and sweepstakes. In the sales development activities organized for the consumer, the purposes should be determined very well. Sample product distribution can be very useful when trying to change the brand used by the consumer. Especially entrepreneurs planning to enter the market frequently use sample products or sales promotion materials for promotion and awareness raising purposes.

Sales development activities for intermediaries are carried out to increase the sales support of intermediary businesses such as wholesalers, dealers, retailers, and more to stock the product. For example, giving the broker free product when it reaches a certain sales volume or sending the broker on vacation abroad will encourage them to sell the product. This can help the business increase its sales in a short time.

Care should be taken in using a wide variety of sales development tools. Frequent discounts, campaigns and events will make buyers habitual, so costs will increase, not sales. For this reason, these applications should be made between certain periods for the purpose and the balance between the costs they create and the expected benefit should be maintained continuously.

9.4.3. Personal Selling

Personal selling activities have a special importance in promotion activities. As a result, the primary purpose of all business activities is to ensure that the products and services presented are used and consumed by the target audience. Therefore, sales activities constitute the top priority task area of the enterprise. Of course, not all sales activities carried out by the enterprise are carried out through personal sales. Some businesses can receive their orders via the Internet. However, many businesses other than this realize some or all of their sales through personal sales activities. Therefore, these activities should be planned well.

The main focus of good salespeople is not to get customers to order, but to help customers buy by understanding their customers' needs and showing the advantages and disadvantages of products. In this way, customer satisfaction created by helping customers is the basis of long-term relationships and repeat sales.

The personal salespeople owned by the company fulfill many functions in addition to selling. For example, a qualified salesperson should be aware that he also represents his business. Here, the only duty of the salesperson is not to sell, but to show the products and benefits of the company comparatively. In an active sales process, the salesperson finds potential customers within the target audience, transfers information to them about the product and the company, negotiates price when necessary, helps on technical issues, makes sales and monitors customer satisfaction after sales.

Therefore, the salesperson's only duty is not to sell. In most business practices, when a lot of pressure is put on the salespeople in this regard, the salespeople do not care about all these activities except sales, which can create a customer group that is not satisfied and runs away from the company. The qualification of the salesperson needed in terms of personal sales varies according to the sector, business model or marketing purposes. In general, sales tasks are divided into three groups as order delivery, order taking and support services. For example, a salesperson working in a textile business has a duty to inform and sell products to customers who come to the store. The duty of a salesperson working in a restaurant that takes orders by phone is to deliver the order to its place. According to the type of these tasks, the features that should be found in the salesperson differ.

The task of taking orders is more extensive than others. A salesperson who fulfills this task has important duties such as finding a potential customer, carrying out sales presentation, taking orders and following up. They have a very important place in the total success of the business. The main duties of the supporting salesperson are to support the sales activities of the enterprise. Here, salespeople try to strengthen their sales, not sell. For example, salespeople working in the pharmaceutical industry visit doctors to provide information about the drugs they represent and help doctors prescribe them. Here, it is aimed to support the sales, not a sales activity. In such sales tasks called missionary sales, the salesperson visits existing and potential customers and gives information about the company and its products.

Customer representatives, on the other hand, perform activities related to sales and after-sales services. In a market oriented company, customer representatives try to solve the problems faced by the customers face to face or by means of telephone and Internet. Those who work in this role are important in that they are the face of the company that opens to the outside. Fulfilling these tasks properly increases customer satisfaction and makes it easier to take the next order.

Regardless of the task, the company's sales personnel are very important in terms of both achieving sales targets and improving the corporate reputation of the enterprise. For this reason, it is necessary to be careful in the selection and assignment of salespeople and carefully plan the applications that will keep the motivation of the salespeople.

9.4.4. Public relations

It is an important issue to create positive impressions in the public opinion regarding business activities or to prevent negative impressions that may arise. For this reason, it is necessary for businesses to direct their interaction with the public in line with a certain image, to determine the necessary communication strategies by monitoring the public attitudes towards the business, and to create positive impressions by using appropriate tools. In this respect, Public Relations (PR) can be defined as promotional activities that create a positive image in favor of the product or the business that markets it (Shimp, 2000). For example, publishing news in newspapers and magazines about the firm's new product is a typical public relations activity. Similarly, following up customer complaints and news about the business in the public and taking necessary measures are also considered within the scope of public relations activities. Therefore, public relations consists of activities aimed at developing positive relations with various public opinion groups, creating a good business image, and taking active measures against adverse events in order to create positive impressions. The main duties of the public relations activities carried out for this purpose are as follows:

• Advising and advising individuals and groups
• To follow the news about the business and its products and to analyze them
• Making publications about the institution and preparing content that will direct the broadcasts
• Organizing activities to create and improve corporate image
• Creating public opinion
• Increasing the visibility of the business
• Creating a positive agenda about the business

The tasks summarized above have become more important and visible, especially with the widespread use of the Internet. Especially through the effective use of media tools, the company can get the opportunity to promote to large masses without the need for expensive tools such as advertising. For example, when Apple promotes a mobile phone of a new product, news about the product is made in all newspapers and magazines, and people frequently talk about this development on social media. Due to this successful public relations activity, the company can introduce its product to large masses and create positive impressions without making too much advertising investment. For this reason, the effective use of public relations activities both facilitates the achievement of marketing goals and increases the reputation of the enterprise over the public.