1.3 - Marketing Mix & Strategy

Question 1

What is the Product Life cycle

Answer 1

A theoretical model which describes the stages a product goes through over its life.

Question 2

What are the 5 stages of the product life cycle

Answer 2

Development 
Introduction 
Growth 
Maturity 
Decline

Question 3

Development stage -

Answer 3

High investment in product development, promotion is used to alert customers of the launch

Question 4

Introduction stage -

Answer 4

Sales are low, launch costs are high therefore negative cash flow

Question 5

Growth stage -

Answer 5

Fast growing sales, costs are reducing via economies of scale, distribution is rising and cash flow becomes positive.

Question 6

Maturity stage -

Answer 6

Slower sales growth as rivals enter market, price and profit fall to maintain competitiveness

Question 7

Decline stage -

Answer 7

Falling in sales, decline in profits and weaker cash flow, no spending on promotion and prices cut to maintain sales.

Question 8

What is an extension strategy?

Answer 8

Extending the products life cycle by: lowering prices, changing the product, develop new market segments

Question 9

What is product portfolio analysis

Answer 9

It assesses the position of each product in a firms portfolio to help determine the right marketing strategy.

Question 10

What is a portfolio

Answer 10

A collection of businesses or products that make up a business

Question 11

What is the Boston Matrix

Answer 11

It compares the market share of a firms products to the market growth.

Question 12

Question mark products -

Answer 12

These have a low market share of a rapidly growing market, have potential to grow.

Question 13

Shooting star products -

Answer 13

A high market share of a rapidly growing market. This requires high market spending

Question 14

Cash cow products -

Answer 14

High market share of a slowly growing market, maturity stage of product life cycle

Question 15

Dying dog product -

Answer 15

Low market share of a slowly growing market, no potential or at the decline stage of product life cycle.

Question 16

Function -

Answer 16

The way the product works, does it do what it’s supposed to do? Is the product reliable?

Question 17

Aesthetics -

Answer 17

How the products appeals to the customer in terms of looks, feels.

Question 18

Economic manufacture -

Answer 18

Does the design allow the product to be made and sold profitably? How much value is added during the production process.

Question 19

What is sustainability ?

Answer 19

Sourcing inputs that are not supplied by damaging the environment. E.g. Minimising waste in production, enabling recycling

Question 20

Define Brand

Answer 20

A product that is easily distinguished from other products so that it can be easily communicated and effectively marketed.

Question 21

Different types of brand (5)

Answer 21

Product 
Service 
Family 
Corporate
Own label

Question 22

Product brand -

Answer 22

Brands associated with specific products

Question 23

Service brand -

Answer 23

Brands that add perceived value to service, either delivered face to face or via online

Question 24

Family brands -

Answer 24

Brands that are assigned to more than one product. Makes different product lines easily identifiable by the consumer by grouping them under one brand name.

Question 25

Corporate brand -

Answer 25

Refers to the practice of promoting the brand name of a corporate entity, as opposed to specific products or services.

Question 26

Own label brand -

Answer 26

An example of corporate branding when retain outlets assign their corporate branding to a range of goods and services

Question 27

What is brand extension

Answer 27

Where a business uses a brand name on a new product that has some of the brands characteristics

Question 28

What is brand stretching

Answer 28

Where the brand is used for a diverse rand of products, not necessarily connected

Question 29

Main elements of the promotional mix :

Answer 29

- advertising - sales promotion - sponsorship - direct marketing

Question 30

Key factors influencing promotional decisions :

Answer 30

- stage in life cycle - nature of the product - competition - budgets - target market

Question 31

Price takers

Answer 31

They have no option but to charge the ruling price to stay in the market

Question 32

Price makers -

Answer 32

Able to fix their own price

Question 33

Price leaders -

Answer 33

Market leaders while price changes are followed by rivals

Question 34

Price followers -

Answer 34

Follow changing prices from the market leader

Question 35

What are the pricing strategies ( 4)

Answer 35

- price skimming - predatory pricing - penetration - psychological

Question 36

Price skimming -

Answer 36

Set a high price to maximise profit, used to achieve which recovery of development costs.

Question 37

Penetration pricing -

Answer 37

Offer a product at a low introductory price, can be increased once target market is reached

Question 38

Predatory pricing -

Answer 38

Pricing low enough to drive rivals out of business

Question 39

Psychological pricing -

Answer 39

Getting into the customers brain to try and attract them e.g. 99p (rather than £1)

Question 40

What is Hook and Bait

Answer 40

Selling products at a low price however vital products needed for the original product to work have high prices.

Question 41

Cost plus -

Answer 41

Calculating the production costs per unit and adding a percentage mark up that reflects the profit levels.

Question 42

What is mark up ?

Answer 42

The difference between the cost of good or service and it's selling price.

Question 43

What is a distribution channel ?

Answer 43

It moves a product through the stages from production to the final consumption.

Question 44

What is a retailer

Answer 44

It is the final step of the chain - they deal directly with the customers

Question 45

Who are wholesalers ?

Answer 45

They break bulk, buy in large quantities from the producers an break into smaller quantities to sell to the retailers.

Question 46

Direct distribution :

Answer 46

The channel where a producer and consumer deal directly with each other

Question 47

Indirect distribution ?

Answer 47

Involves the use of intermediaries between the consumer and producer.

Question 48

All the stages of distribution are : (4)

Answer 48

- producer - wholesaler - retailer - customer