1.3 Marketing Mix and Strategy Flashcards

Question

What is Competitive pricing? Tell me a Benefit, Drawback and when this strategy is appropriate ?

Answer 1

- pricing strategies based on the prices changed by rivals benefit Should ensure that price will not put customers off buying the product Drawback Firms that use CPSA have little control over the price they charge and thus the revenue they generate Appropriate when a company is trying to take on more powerful rivals

Answer 2

- setting a price slightly below a round figure - £9.99 vs £10 benefit can help nudge customers into making a purchase by helping them to believe they are not quite spending £10 Drawback it may have little effect on many planned purchases and may in fact annoy consumers Appropriate when selling impulse purchases or little treats

Answer 3

- amount of USP/Differentiation --> highly differentiated products will have more control over pricing potentially allowing them to use cost-plus pricing - PED --> Inelastic demand means that firms can adjust prices however they wish without impacting demand. Firms selling Price ELASTIC products will always face pressure to reduce prices to boost demand which could force them into a competitive pricing strategy - Amount of competition - the higher the level of competition the less scope for the firm to move away from a purely competitive strategy - Strength of brand - strong brands differentiate products reducing their PED -Costs and the need to make a profit - business has to consider its cost when deciding the price as pricing below costs = Loss making - Stage in the product life cycle - key decsiion to be made at introduction of a a new product - penetration or price skimming

Answer 4

Online Sales - Dynamic pricing - used to maximise revenue, but can change e.g. last minute offers - Auction sites - Personalized pricing - Subscription pricing Price Comparison Sites -encourage firms to price competitively so their products show up as best value on these sites

Answer 5

The movement of goods and services from the source through a distribution channel, right up to the final customer, consumer, or user, and the movement of payment in the opposite direction, right up to the original producer or supplier.

Answer 6

The route a product takes from producer to consumer = DISTRIBUTION CHANNEL A distribution channel is a chain of businesses or intermediaries through which a good or service passes until it reaches the end consumer. It can include wholesalers, retailers, distributors and even the internet itself.

Answer 7

- Consumers - retailer--> consumers - Wholesalers --> retailers--> consumers - agents/brokers --> wholesaler--> retailers --> consumers

Answer 8

the businesses between the producer and the consumer in a distribution channel such as retailers who acts as a mediator on a link between parties (customers/consumers) to a business deal, investment decision or negotiation - links between producers and consumers

Answer 9

-Selling directly to consumers E.g. buying a Dell PC on line Dell are manufacturer and you go direct t their website to buy a Dell PC - no retailer

Answer 10

- main benefits is saves intermediary costs | - you can reach those who dont want to go to shops, but people dont like a lot of directing selling

Answer 11

- The internet - Direct mailing - a lot of financial service do - Door-to-door selling e.g. energy suppliers - Mail order catalogues e.g. Next - Direct response adverts - adverts in newspapers people respond to e.g. plumber - Shopping parties e.g. Avon - Telephone shopping - legal service e.g. PPI

Answer 12

- retailers buy goods and sell to customers - they buy in bulk from manufacturers/ wholesalers and sell in small amounts this is known as bulk breaking - They sell in convenient locations for customers, where there is parking and they try to add value

Answer 13

- Independents - Super markets - Online stores - Kiosk/street vendor - Department stores - Multiples - Superstores - Market traders

Answer 14

-a business that buys goods from manufacturers and sells them in smaller quantities to retailers Wholesalers add a mark up when they sell to retail store

Answer 15

an intermediary that brings together buyers and sellers

Answer 16

the nature of the product: - most services are sold directly to the customer e.g. hairdresser - fast moving consumer goods cannot be sold be sold from a manufacturer e.g. chocolate - high quality products e.g. perfume chose their outlets to maintain their image - product which need explanation or demonstration sold by specialist - Cost --> often go with the cheapest and most direct route - The market, producers selling to mass markets will likely use intermediaries, where builders will call the customer directly - Control, some businesses want complete control over the whole process

Answer 17

- growth of online shopping - larger shopping mall/center - selling using call centres to sell products e.g. finance - supermarkets extending their product range and opening hours - Growth of TV shopping channels - Flourishing charity shops on high street

Answer 18

often called e-commerce there are two types: - Business to consumer (B2C) --> businesses selling goods and services direct to consumers, must e-tailing often delivered to home, but more click and collect -can be done - Business to Business (B2B) --> business selling to other businesses online

Answer 19

- its cheaper as online retailed have lower costs - Can shop 24/7 - Generally a large choice - You can shop anywhere

Answer 20

- e-tailers have less costs than operating stores - lower start up cost (both fixed and variable) - Lower costs when processing transaction - Less paper needed, for invoices/receipts - B2C can offer goods to wider market - You can serve customers 24/7 - You have more choice where to locate your business

Answer 21

- lots of competition - lack of human contact - could be technical issues - could be security risks e.g. hacking - customer can't physically see products before - Poor after sales service - Exclusion of so customers without access or credit card - People aren't always available for the delivery so not always convenient

Answer 22

- more developed countries have moved towards services than products (tertiary from primary sectors) - music and DVD's are now streamed - Newspapers are not in demand as much, more online subscription based

Answer 23

- Development - Introduction - Growth - Maturity - Saturation - Decline

Answer 24

``` Product = is going through Research and Development and most products fail at this stage, businesses are often reluctant to take risks Costs = are high as all money is being spent on R & D Sales = NO SALES Promotion = alerting of customers of the proposed launch ```

Answer 25

``` Product = is launched but basic Costs = are high - sales relatively low but launch costs are high and overheads spread over few units Sales = Low Promotion = raising awareness Price = depends on pricing approach = skimming or penetration ```

Answer 26

- sales begin to grow rapidly - new customers buy the product and there are repeat purchases - Unit costs may fall as production increases - the product then become profitable --> competitors may see this and launch their own versions --> can lead to a slowdown of the rise of sales ``` Product = maybe modified based on customer feedback Costs = falling as overheads spread over more units Sales = Increasing Promotion = building loyalty Price = depends on demand conditions and strategy ```

Answer 27

- growth of sales may start to level - product has become more established and has a stable market share at this point - more firms enter --> market becomes saturated --> some businesses will be force out as firms compete for consumers - Extension strategies are used to extend he life of the product ``` Product = depends - may focus on core products and remove poor sellers Costs = falling as sales are still growing Sales = Growth is slowing Promotion = focus on highlighting the differences with competitors products Price = may have to drop to maintain competitiveness ```

Answer 28

- sales will eventually decline - this is due to changing consumer tastes new technology or the introduction of new products the products ill lose its appeal to customers - product will either be withdrawn or sold to another business - little is spent on promotion and other costs

Answer 29

- a way to pre-long the life of a business and product - product development is a large cost and extension strategies are a great way to generate cash ``` Product = focus on most profitable items Costs = low as development costs have been covered and promotional costs are being cut Sales = Falling Promotion = probably no spending Price = likely to discount to maintain sales ```

Answer 30

- Product adjustments | - Promotion

Answer 31

try to prolong the life of a product by freshening it up - updating is a common approach for technical and consumer durables - Making improvements e.g. extra memory - Extend product range e.g. new flavours, shapes etc - Changing the packaging

Answer 32

- leaving the product unchanging but investing in promotional campaigns - find new uses for a product - find new markets / segments for their product (regional or national) - Investment in a sizable advertising campaign - Encourage more frequent use of the product

Answer 33

- made up of product line - a group of products that are similar - make sure products are launched in intervals so they don't overlap and is never a gap in the market Remember UNLIEVER example - they sell the products by their name not Unilever brand and the Marketing Managers are constantly monitor and kill off products that are draining resou5rces which could be better used elsewhere

Answer 34

- Product Portfolio Matrix developed by the Boston Consulting Group and used by businesses to manage their brands successfully - a Way of categories the stage of the life cycle a product is at categories according to two criteria --> Market Growth Relative Market Share - As well as help the business manage there product portfolio

Answer 35

-Hard to tell what stage of the life cycle it is at, also there is no standard lifetime for a product

Answer 36

- Cash Cow - Rising star - Question Marks / Problem Childs /Wildcats - Dog

Answer 37

- high market growth and relatively high market share - They are valuable to a business and are very profitable - But business needs to invest in the product to cope with the growing market e.g. new promotion to fend off competition - Cash flow nearly 0 as profits are high but so are investments HOLDING - spending enough money to maintain market share

Answer 38

- Products in stable markets that hold a high market share so can generate high sales with low marketing expenditure - Likely to generate significant profits that the business scan use to develop other products - e.g. rising stars MILKING - take profits but don't spend heavily on it

Answer 39

- problem children or wildcats - relatively low market share in a fast-growing market - problem for business --> unclear what should be done with these products - If a product is performing weakly it is unlikely to be profitable --> but as it is in a fast-growing market --> potential to turn into a star - Net Cash flow zero or negative - investment needed to cope expanding sales in a fast-growing market BUILD - try and boost sales of products with a bright future

Answer 40

- These are products with a relatively low market share in a market with low growth - Dogs have poor prospects for future sales and profits - they may generate some positive net cash flow because they will need little investment but may earn some profits - But if they make little or no profit, net cash flow may be zero or even negative DIVEST - get rid of products

Answer 41

- Businesses must ensure that their product portfolios do not contain too many items within each category - they dont wants lots of Dogs, and also avoid having too many stars and problem childs - Costs for development and promotion of new products drain on resources --> need to be balanced with 'Cash Cows' ( as they have already recovered the promotional costs) - However a business does not want too many Cash cows as Stars and Questions marks have the potential to become cash cows too

Answer 42

Products in different Categories may require different approaches: - Stars --> great future potential, business needs to build the brand of these products so sales increase and competition is fought successfully - Cash Cows --> Milked for cash, used to develop other products - Question Marks -->can either build the brand hoping it turns into a star, or harvest the product by raising and cutting promotion so that profits are increased, or divest itself of the product, by withdrawal or selling it as no profit is being made - Dogs --> may be divested if they are not making a profit or in some cases harvested

Answer 43

a term used to describe the general approach to marketing used by business a set of plans that aim to achieve a specific objective - e.g. a local car rental company might aim to become the market leader in the region, its strategy to achieve this objective might be to: - improve the quality of customer service by delivering cars to people's homes - contact all previous customers offering then a half-price deal

Answer 44

-Product --> there will be many product trying to grab customer attention, most are close substitutes for each other. most successful businesses usually differentiate their product, developing a USP helps a business stands out

Answer 45

- Price --> the price charged in a mass market is usually the same, businesses fear a price war with competitors because they usually reduce revenue even competitors - Price leadership is common in the mass markets where the dominant business, perhaps the one with the lowest unit costs, sets the price and everyone follows

Answer 46

- in an absence of price competition, firms will look to non-price competition --> invest heavily in advertising and promotion as it is an important part in the marketing mix

Answer 47

- businesses will often use multiple channels to distribute their goods. - business targeting consumers --> use supermarkets, wholesalers, independents and any other outlets. - Some manufacturers pay supermarkets to display their goods in prominent places e.g. at eye level to attract more customers - The internet has also allowed small businesses in a remote areas can distribute products to individual customers anywhere in the world

Answer 48

- in a niche market product is likely to have quite significant differences from its rivals - in Niche markets products will be designed carefully in order to meet the very specific needs of the customer group - Product will be a key element in the marketing mix

Answer 49

- Businesses selling in niche markets have more flexibility in their pricing - There is less competition in niche markets so higher prices can be charged without losing significant market share to rivals - Also, customers may be prepared to pay higher prices if their specific needs are being met effectively

Answer 50

- In Niche markets promotion and advertising will tend to be more targeted. - Since niche markets are smaller there is less need to use national media when advertising - businesses need to identify their customer profile very accurately to ensure that advertising and promotion expenditure is not wasted - Adverts are likely to be placed in specialised publications

Answer 51

- Businesses selling in to a Niche Markets are often more selective when choosing distribution channels - They are more likely to use exclusive distributors or to handle distribution privately - they will use the internet if it is practical

Answer 52

- this involves directing marketing materials at potential customers whether they are expecting it ore not - this could include direct mail, emails, telemarketing, sponsorship, or targeted adverts

Answer 53

- people are increasingly ignoring adverts, so they may go unnoticed - people commonly object cold calling and mailing lists - can be seen as intrusive - persistence in directly targeting consumers can damage a brand's reputation - Significantly more expensive than inbound strategies

Answer 54

This invokes attracting potential customer to websites when they care looking for suppliers or solution to to problems - this can be done through blogging, social media marketing, search engine optimisation, free e-book, video marketing and targeted email marketing

Answer 55

- It requires a lot of effort and resources - It is difficult to turn visits to a website into sales - It can be hard to keep these methods up to date with dynamic trends

Answer 56

- This involves combining both outbound and inbound marketing strategies - It is common for these methods to take at least six months to generate results - because of this, businesses will often employ outbound methods to use in the short-term to get quicker results - Once hybrid methods begin to take effect, less successful outbound marketing can be dropped - This will help to reduce costs and create sustainable growth in marketing shares

Answer 57

- communication - Customer service - Customer incentives - Personalisation - Preferential treatment

Answer 58

- this may involve using advertising campaigns to inform customers about new products, - Some businesses may use reassuring adverts to help convince customers that they have made the right choice about their prurchase - Communication is also made via newsletters and e-mails, the key to developing customer loyalty is to make a bond with your customers

Answer 59

- Customers are more likely to return to a business if they receive high-quality customer service - This can be improved by both dealing with matter importantly as well as positive after sales service - Employees who deal with customers must be professional and have the correct

Answer 60

- Many businesses reward their customers if they keep returning - for example, supermarkets have introduced loyalty cards to encourage people to keep returning to the same provider in order to accumulate enough points to gain rewards in the future

Answer 61

- Some businesses try to deal with customers on a personal level - Some firms will send customers cards or emails on their birthday, and address then by name when sending out the monthly newsletter to them

Answer 62

- Many people like the idea of receiving preferential treatment from a business - for example, some nightclubs offer VIP areas reserved exclusively for selected customers - The principle behind this is that if people receive 'special' treatment, they are more likely to return for more from the business in the future

Answer 63

All are equally important For many firms one aspect might take priority over the other 2 BUT some companies - e.g. BMW tries to strike a fine balance between all 3

Answer 64

``` Can add value Can provide a point of differentiation Can reduce manufacturing costs, boosting profit margins Improves brand image May boost brand loyalty ```

Answer 65

Sustainability Waste Minimisation Recycling

Answer 66

designers have been encouraged to ensure that components or ingredients used in the products come from ethical sources wherever possible

Answer 67

Traditional - Manufacturer to wholesaler to retailer to consumer Direct to retailer - Kelloggs to Sainsburys to consumer Be your own retailer - Apple product in Apple store to consumer Direct on line - Dell On line retailer - Small producer of goods sells them on ebay to consumer

Answer 68

``` R&D Market research Product design Product engineering Packaging design Advertising Pricing Branding ```

Answer 69

Strategy is about the future Strategy must be achievable Strategy is company specific

Answer 70

High distribution levels Greater control over advertising and promotion a degree of influence over pricing in the market

Answer 71

able to meet consumer needs more precisely Able to charge a higher price than mass market products Les direct competition

Answer 72

B2C - establish a strong image - branding - mass distribution = customer loyalty B2B - tailoring to customer - personal service - reliability = customer loyalty

Answer 73

really successful marketing builds a king of emotional attachment between consumers and the brand e.g. Apple electronics, Cadburys Dairy Milk

Answer 74

It's a key form of product differentiation

Answer 75

Individual product - Marmite Family / Range of products - Cadbury Whole business - Nestle

Answer 76

Advertising A USP sponsorship use of digital media

Answer 77

Consumers want to be able to buy the product where they want to buy it

Answer 78

Introduction Growth Maturity Decline

1.3 Marketing Mix and Strategy Flashcards

(102 cards)