2.4 The Marketing Mix Flashcards
(33 cards)
Explain two benefits of branding
- increased customer loyalty as they can identify you
- brand recognition and credibility
Name the five sections of the product life cycle
- development
- introduction
- growth
- maturity
- decline
Identify two ways to extend the life cycle of a product (extension strategy)
- price reductions on that product
-redesigning the product based on what the consumers like
What is price skimming?
When a company initially sets a high price for a new product, then gradually lowers it over time.
What are two benefits of price skimming?
-helps regenerate research+ development costs
- large amount of revenue made in introduction
What are two disadvantages of price skimming?
-no competitive advantage if too high
-can be seen as exploiting customers
What is cost- plus pricing?
Working out how much it costs to make a product and adding a percentage on to guarantee profit.
What are two benefits of cost- plus pricing?
-ensures all costs are covered
-Business makes profit on every product sold
What are two drawbacks of cost- plus pricing?
- customers won’t purchase if percentage is too high
-No competitive advantage if too high, (consumers will go to competitors instead.)
What is competitor pricing?
Setting your price based on competitor pricing
List two benefits of competitor pricing
-Helps with customer retention
-consumers choice on what store to go to
List two drawbacks of competitor pricing
-Price war
-Due to consumer choice location becomes an important factor
What is promotional pricing?
When a business offers sales/offers/discounts
List two advantages of promotional pricing
– Encourages customers to buy a new products
– Helps get rid of out of season stock
List two disadvantages of promotional pricing
– can only use for a short period of time
– Profit per product is lower
What is penetration pricing?
Price starts low and increases overtime
What are two advantages of penetration pricing
– Encourages customers to buy a new product
– Generates a good brand reputation
What are two drawbacks of penetration pricing
– Customers retention long-term may decrease
– Early sales may or may not make enough profit
Producer -> consumer
List two benefits and two drawbacks
Benefits:
-small business
-easy distribution
Drawbacks:
-storage
-delivery
Producer -> Retailer (shop) -> consumer
List a benefit and a drawback
Benefit:
-better brand reputation
Drawback:
-money isn’t received instantly
Producer-> wholesalers-> retailer-> consumer
List two benefits
Benefits:
-usually for LTD’s/ PLC’s
-Great for bulk buying/ bulk storage
What is digital distribution?
Selling/ delivering material online (e.g. books, music, banking)
What are two advantages of digital distribution?
-sales 24/7
-reaches larger market
What are two drawbacks of digital distribution?
-reduces face to face sales
-technology failure
