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Business Theme 1 > 1.3 Marketing mix and strategy > Flashcards

1.3 Marketing mix and strategy Flashcards

1
Q

What 3 factors go into the design mix?

A

Function

Aesthetics

Cost

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2
Q

What does function mean?

A

Relates to whether the item actually does what it is expected to do/the extent to which it surpasses expectations of quality of performance

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3
Q

What does aesthetics mean?

A

The word used to describe the look, taste,texture or feel of an item

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4
Q

What does economic manufacture mean?

A

Considers the ease and economy with which the item can actually be made on the scale required

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5
Q

What are the benefits of a good design?

A

Can add value

Can provide a point of differentiation

Can reduce manufacturing costs, boosting profit margins

Improves brand image

May boost brand loyalty

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6
Q

What are the changes in the design mix to reflect social trends?

A

Environmental concerns

Ethical sourcing

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7
Q

What are the three environmental concerns?

A

Sustainability - using materials that will still be available in the future

Design for waste minimisation/reuse

Recycling

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8
Q

What is promotion?

A

Describes methods used by the business to communicate information and persuade consumers to purchase a product

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9
Q

What are types of short term promotion?

A

Buy one get one free

Seasonal price cutting promotions

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10
Q

What are types of long term promotion?

A

Persuasive advertising

Public relations

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11
Q

What is a brand?

A

A recognisable name or logo that helps to differentiate a product or business

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12
Q

What are types of branding?

A

Individual brand (single product brands e.g penguin biscuits)

Brand family (brand name used across a range of products e.g Cadbury)

Corporate brand e.g Nestle/ Nespresso

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13
Q

What are the benefits of branding?

A

Added value

Ability to charge premium prices

Reduced price elasticity of demand

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14
Q

What are ways to build a brand?

A

Advertising

USP

Sponsorship

Digital media

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15
Q

What is a USP?

A

A particular feature of a product or service that no rival provides

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16
Q

How can you change branding/promotion to reflect social trends?

A

Viral marketing

Social media

Emotional branding

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17
Q

What are types of pricing strategy’s for new products?

A

Price skimming

Penetration

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18
Q

What is price skimming?

A

Involves laughing a brand new product at a high price while the product is unique

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19
Q

Advantages of price skimming:

A

High prices help to create a desirable image for the product

Early adopters will pay the high price in return for exclusivity

High prices generate rapid profits helping to recover the costs of innovation quickly

20
Q

Disadvantages of price skimming:

A

Will deter some customers with price seen as a rip off

Early buyers may be frustrated once price starts to fall

Image may suffer when price begins to fall

21
Q

What is price penetration?

A

Involves launching a product at a very low price to entice customers to try it

22
Q

Advantages of price penetration:

A

Low price may encourage lower risk product sampling

Low price boosts sales volume which cuts production costs

High volumes may persuade retailers to buy the product which boosts distribution

Encourages customers to develop the habit of buying the product

23
Q

Disadvantages of price penetration:

A

Product’s image may be immediately cast as cheap

Upmarket retailers may be unwilling to stock the product

Likely to create price sensitivity among customers (higher price elasticity)

24
Q

Types of pricing strategy for existing products:

A

Cost plus

Predatory

Competitive

Psychological

25
Q

What is cost plus pricing?

A

Involves deciding price by adding a desired percentage onto total costs per unit

Only appropriate when the firm is a market leader with little need to worry about competition

26
Q

Benefits of cost plus pricing:

A

This should guarantee a profit is made on each unit sold

27
Q

Drawbacks of cost plus pricing:

A

Ignoring the market may mean an unrealistic price is generated

28
Q

What is predatory pricing?

A

A strategy that sets price low enough to force a competitor out of business

Appropriate when a firm is clearly more financially powerful than smaller rivals

29
Q

Benefits of predatory pricing:

A

Once a rival has been forced to close, prices can be pushed up higher increasing margins

30
Q

Drawbacks of predatory pricing:

A

If it can be proven to be specifically designed only to drive rivals out of a business, predatory pricing is illegal

31
Q

What is competitive pricing?

A

Changing a price at the market average or at a discount to the average price in the market

Appropriate when a company is trying to take on more powerful rivals

32
Q

Benefits of competitive pricing:

A

This should ensure that price will not put customers off buying the product

33
Q

Drawbacks of competitive pricing:

A

Firms that use competitive pricing strategy have little control over the price they charge and thus the revenue they generate

34
Q

What is psychological pricing?

A

A tactic used to make fine-tuned decisions on the price to charge, prices are set just below major psychological levels e.g £9.99 instead of £10

Appropriate when selling impulse purchases or little treats

35
Q

Advantages of psychological pricing:

A

This can help nudge customers into making a purchase by helping them to believe they are not quite spending £10 or £1000

36
Q

Drawbacks of psychological pricing:

A

May have little effect on many planned purchases and may in fact middle annoy customers

37
Q

What factors determine the most appropriate pricing strategy for a particular situation?

A

Level of product differentiation

Price elasticity of demand

Level of competition

Strength of brand

Stage in the product life cycle

Costs/need to make a profit

38
Q

How can price change to reflect social trends?

A

Online sales

Price comparison sights

39
Q

What is a distribution channel?

A

The route a product takes from producer to consumer

40
Q

What is the product life cycle?

A

Introduction

Growth

Maturity

Decline

41
Q

What is an extension strategy?

A

A medium to long term plan for extending the life cycle of a product

42
Q

Types of extension strategies:

A

Product changes e.g adding extra functions/features

Promotional changes e.g Finding new uses for the product

43
Q

What are the characteristics of the Boston Matrix?

A

Star (high market growth/share, in the growth phase)

Problem child (high market growth/low market share, in the introduction phase)

Cash Cow (maturity stage)

Dog (decline stage)

44
Q

What is a marketing strategy?

A

The term used to describe the general approach to marketing used by a business

45
Q

What are the benefits of successful mass marketing strategies?

A

High distribution levels

Greater control over advertising/promotion

A degree of influence over pricing within the market

46
Q

What are the benefits of successful niche marketing strategies?

A

Able to meet consumer needs more precisely

Able to charge a higher price than mass market products

Less direct competition

47
Q

How can businesses develop consumer loyalty?

A

Building an emotional attachment between consumers and the brand

Each aspect of the marketing mix combine to create a clear image for the brand

Business Theme 1 (5 decks)

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