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Edexcel GCSE Business > Making Marketing Decisions > Flashcards

Making Marketing Decisions Flashcards

1
Q

Marketing mix

A

Product, price, promotion, place

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2
Q

Design mix - elements

A

Function I
Aesthetics
Cost

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3
Q

Factors to consider - product

A

Manufacturers design product or service that meets needs and wants of target market
Retailers decide what product to sell
Over time product may need updating
Business chooses produce in line with its image

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4
Q

When deciding which product to develop, 4 factors are considered

A

Has gap in market been identified?
Launching a new inventions or idea
Does existing product have declining sales?
New fashions and changing customer needs

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5
Q

Design mix

A

Balances 3 aspects of aesthetics, function and cost when designing new products

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6
Q

Function

A

What product or service is meant todo

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7
Q

Aesthetics

A

How a product looks and feels

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8
Q

Cost

A

Amount of money spent on producing/ supplying service

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9
Q

Features of products that emphasise aesthetics in design mix

A

High added value
Demand fuelled aspirations
Shorter product life cycle
Attracts imitation
Need for greater promotional support

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10
Q

Features of products that emphasise function in design mix

A

Demand stable and predictable
Longer product life cycles
lower promotional costs
Reputation for quality based on reliability
Economic to manufacture; low average costs based on high production rates
reputation for quality based on reliability

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11
Q

Features of products that emphasise cost in design mix

A

Will focus on costs & aim to operate efficiently

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12
Q

Product life cycle

A

Illustrates stages of products life

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13
Q

Product life cycle stages

A

Introduction
Growth
Maturity
Deline

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14
Q

Product life cycle - introduction stage

A

Costs high
Low level of sales
Negative cash flow
Small scale distribution
High promotional spending
High price (price skimming) or low price ( price penetration )

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15
Q

Product life cycle - growth stage

A

Expanding market
Fast growing sales
Product becomes known
Cash flow may become positive
Market grows, profits rise
Wider distributions
Advertising

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16
Q

Product life cycle - maturity stage

A

Slower sales - rivals enter market = intense competition + fight for more market share
High profits for those w/ high market share
Cash flow strongly positive
Weaker competitors leave market
Advertising is persuasive
Promotion focused on differentiation
Attract new users, target new segments, develop new uses

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17
Q

Product life cycle - decline stage

A

Falling sales
Market saturation and/or
Decline in profits & weaker cash flows
More competitors leave market
Products withdrawn from production
Kemaning products sold at. reduced prize

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18
Q

Reasons why products enter decline stage

A

Tech advances
Changes in consumes tastes and behaviour
Increased competition
Failure to innovate & develop product

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19
Q

Key uses of product life cycle model

A

Forecast future sales trends
Helps correctly position product & successfully target right market
Help analyse & manage product portfolio

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20
Q

Extension strategies definition

A

Businesses use these to prolong life of product

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21
Q

Extension strategies

A

Advertising
Price reduction
Adding value
Explore new or different markets
New packaging

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22
Q

Product differentiation

A

Offering something different from competition

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23
Q

Importance to a business of differentiating, a product/service

A

unique selling point
allows businesses to charge higher price and create customer loyalty
Enables business to develop distinctive brand where customers will return to make repeat purchases

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24
Q

Major influences that will affect the price

A

market segments
Marketing objectives
Technology
Competitors
Costs
Products

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25
Q

when pricing a product, a business should consider what

A

how much it cost to make
The availability of the product or service – how many it can make and sell
How much customer is willing to pay?
Price competitors are charging
Quality of product or service

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26
Q

Why is price important?

A

Directly affect revenue
must be consistent with other elements of marketing mix.
Making the wrong decision could have serious effect on sales and cash flow.

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27
Q

Cost based pricing

A

involves business calculating the cost of making the product or service.
Business adds a markup percentage to the cost price to ensure a profit

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28
Q

cost plus pricing formula

A

Price= unit cost+ (mark up X unit cost)

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29
Q

Advantages of cost-based pricing

A

Ensure selling at profit as production costs already factored
Easy 2 calculate

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30
Q

Disadvantages of cost -based pricing

A

High cost = high selling price
Doesn’t consider price customers willing to pay

31
Q

Competition based pricing

A

When business charges similar price to competing businesses

32
Q

Advantages of competition based pricing

A

Business won’t lose customers to competition.based price alone

33
Q

Disadvantages of competition based pricing

A

It business undercut competitors too much, risk making a loss

34
Q

Penetration pricing

A

Setting initially low price then graduates
Increases it over time

35
Q

advantages of penetration pricing

A

Low initial price attract customers.
Customer remain loyal, even when price raised.

36
Q

Disadvantage of penetration pricing

A

Low price equals low profit.
No guarantee customers will buy when it is more expensive.

37
Q

Price skimming

A

when business at high price, initially then reduces it over time

38
Q

Advantage of price skimming

A

hi initial price can make product/service more desirable and therefore enable business to maximise profit

39
Q

disadvantage of price skimming

A

High price may deter potential customers
By the time, the product comes down in price, there may be something new or more attractive on the market

40
Q

premium pricing

A

strategy business uses when they always keep the price is high

41
Q

advantage of premium pricing

A

exclusive nature of product makes it more desirable, meaning a high profit margin can be put on the product

42
Q

Disadvantage of premium pricing

A

income falls customers may look for cheap substitutes

43
Q

Predatory pricing

A

aggressive pricing, strategy
Prices that set so low competitors will not be able to compete

44
Q

Advantages of predatory pricing

A

if successful, a business can eliminate competition.
Business will be losing money and may jeopardise their own future success.

45
Q

psychological pricing

A

 Used to lead customers to believe they’re getting the best deal for money.
Most common example, round down the price by 1p

46
Q

influences on pricing

A

Technology.
Competition.
Market segments.
The product life-cycle.
state of the economy
legislation in the market

47
Q

influence on pricing – technology

A

Flexible pricing
Product purchases.
Price comparison websites.
New technology enables a business to sell a premium price. However, as soon as a new technologies introduced, the price must be reduced.

48
Q

influence on pricing – competition

A

Competition could:
Release new product.
Improve on existing product.
Improve at customer service.
Reduce its price.
Have a sale.

49
Q

Influence on pricing – market segments

A

some companies were target different customers with different
Mass and niche markets

50
Q

Promotion

A

main aim of mission is to ensure customers are aware of existence and potential benefit of product
promotion used to persuade customers that product is better than competing products and to remind customers about why they may want to buy it

51
Q

Typical methods of promotion

A

Sales promotion
Branding
Sponsorship.
Advertising.

52
Q

Methods of sales promotion

A

Special offers
Products trials
Additional products (BOGOF)
Loyalty cards

53
Q

methods of advertising

A

Print media?
TV and radio?
Billboards and signs.
Social media.
Online advertising
E – newsletters.

54
Q

Key factors influencing promotional decisions

A

stage in the product life-cycle.
Nature of the product.
Competition.
Market objectives and budget.
Target market

55
Q

sales promotion and special offers

A

Tactical point of sale, material or other incentives designed to stimulate purchases.
E.g. competitions, demonstrations products, trials, loyalty points.
Special offers such as free gifts ,point of sale displays, buy one get one free ,price reductions ,coupons

56
Q

benefits of sales promotions

A

Quick boost sales
encourages customers to try a product or switch brands

57
Q

disadvantages of sales promotion

A

sales effect may only be short time
customers may come to expect, or anticipate further promotions
May damage brand image

58
Q

Product trials

A

Free samples encourage customers to try product and encourage them to buy product in the future
However, costs of producing samples may not be covered

59
Q

Advertising

A

Any method of promotion that is paid for
Aims to reach target market through different media

60
Q

Benefit of advertising

A

Wide coverage
Control of message
Repetition
Means message can be communicated effectively
Effective for building brand awareness and loyalty

61
Q

Drawbacks of advertising

A

Often expensive
Impersonal
One way communication
Limited ability to close a sale

62
Q

Advantages of advertising as a method of promotion

A

wide coverage
control of message being promoted
segmentation possible through choice of media used
repetition means that the message can be communicated effectively
Can be used to build brand loyalty

63
Q

Disadvantages of adverts using as a method of promotion

A

expensice
impersonal and not accurate at aiming at customers so high wastage
one-way communication and no guarantee message is being received
East to get lost in competing adverts

64
Q

brand

A

product with unique character

65
Q

advantages of having a strong brand

A

inspires customer loyalty, leads to repeat sales and word-of-mouth recommendation
can charge higher prices, especially if brand is market leader

66
Q

sales promotion

A

process of persuading a potential customer to buy the product.

67
Q

place

A

how a business gets its products to the customers

68
Q

Objective of distribution

A

to make products available in the right place at the right time in the right quantities

69
Q

Distribution channels include:

A

retailers
wholesales
Distributors / sales agents
Direct

70
Q

definition of distribution channel

A

all the organisations through which a product must pass between its point of production and consumption

71
Q

advantage of wholesalers

A

break the bulk
efficient distribution logistics
costs may be lower

72
Q

disadvantages of wholesalers

A

costs are increased due the wholesaler’s “middle-man” profits
customers may expect choice
Producers may not have sufficient resource or expertise to sell direct

73
Q

advantages of selling direct

A

no need to share profit margins
producer has complete control over sales process
products not sold alongside those of competitors

Edexcel GCSE Business (9 decks)

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