3.3.4

Question 1

what is the marketing mix (7Ps)

Answer 1

collection of factors that a business must consider when marketing its products in order to meet the needs of its customers.

Question 2

integrated marketing mix

Answer 2

In order to be successful these seven factors must complement each other if the marketing mix is going to be successful.

Question 3

7Ps

Answer 3

product
price
place
process
physical environment
people
promotion

Question 4

product

Answer 4

everything that the customer buys - brand, features and benefits of a good or service

Question 5

price

Answer 5

set to match the expectations of customers and the features of the product

Question 6

place

Answer 6

using the right channels to get the product to the customer

Question 7

process

Answer 7

making the transaction convenient, efficient and effective for the customer

Question 8

physical environment

Answer 8

matching the physical environment in which the transaction takes place to the product and brand

Question 9

people

Answer 9

adding to the product by using the right people in the transaction

Question 10

promotion

Answer 10

communicating the product offer, creating an awareness and desire to buy

Question 11

convenience products

Answer 11

bought on impulse
not brand loyal
consumers are sensitive
to price changes
products must be widely
available

Question 12

shopping products

Answer 12

consumers will ‘shop around’
consumers take their time and will compare product features
brand and price become
more important in the
purchasing decision
available
consumers are susceptible to promotion techniques

Question 13

speciality products

Answer 13

high levels of engagement
consumers take a long time to process information and make a decision
people involved in the transaction are very important
physical environment is very important
consumers are willing to travel far

Question 14

core benefits of a product

Answer 14

this is what the product actually does and how well it does it. How well does the product do its function?

Question 15

the actual product

Answer 15

this includes all of the product features.
The details and benefits that add value. This might include features to improve quality, convenience, efficiency, style and reliability.

Question 16

the augmented product

Answer 16

this includes everything the business builds around the product. Service, advice, after-sales care and features to build loyalty and a long-term relationship with the brand.

Question 17

when developing products a business must consider the ‘whole product’ along with what other 3 factors

Answer 17

cost
function
design
balance between the 3

Question 18

Influencing any one of these features can have a detrimental impact

Answer 18

on the other 2
e.g. improving the design could reduce the functionality of the product or improving the functionality could increase costs

Question 19

what is product portfolio analysis

Answer 19

analyse and track the development of multiple products over time taking into account a number of factors such as growth, sales and market conditions.

Question 20

stages of product life cycle

Answer 20

introduction
growth
maturity
saturation
decline

Question 21

axis of product life cycle

Answer 21

y = sales
x = time

Question 22

introduction stage

Answer 22

Price may be low to initial sales. Heavy promotion to create awareness. Low number of product variations launched.

Question 23

growth stage

Answer 23

Price may increase with popularity. New varieties and distribution methods introduced. Business must keep up with demand growth.

Question 24

maturity stage

Answer 24

Consider cutting price to maintain demand, promotion slows as customers are aware of product, introduction of new customers slows down - focus instead on retention and repeat purchase.

Question 25

saturation stage

Answer 25

The market is 'full' - all potential customers have the product and there are other better / cheaper alternatives. Price may be cut to maintain competitiveness.

Question 26

decline stage

Answer 26

Further price cuts to maintain demand. Variety of products streamlined to the most popular. Business may consider discontinuing product if replacement can be introduced. An extension strategy may be used to re-launch the product to boost new growth.

Question 27

advantages of product portfolio analysis

Answer 27

Useful analysis tool for a business with a wide product range. Useful for making decisions about where funds should be allocated. Can be used to predict future sales and therefore plan production/distribution

Question 28

disadvantages of product portfolio analysis

Answer 28

Products and markets are complicated and do not necessarily follow a pattern. Does not provide clear solutions for a business. As with all models, PPA simplifies what can be a complex issue.

Question 29

high growth rate and high market share

Answer 29

stars

Question 30

low growth rate and high market share

Answer 30

cash cows

Question 31

low market share and high growth rate

Answer 31

question marks

Question 32

low growth rate low market share

Answer 32

dogs

Question 33

what are stars

Answer 33

Possibly a leading brand in the market. Distribution must be effective to ensure product availability

Question 34

what are question marks

Answer 34

Fast growing market but not yet an established product. Normally requires heavy investment to develop and ensure success. Usually lots of competition from rival brands.

Question 35

what are dogs

Answer 35

Invest to revitalise or discontinue the product.

Question 36

what are cash cows

Answer 36

Successful products in mature markets. Cash cows generate high revenue for a business that can be invested in other areas. Relatively little promotion is required.

Question 37

what does price determine

Answer 37

demand for a product contribution of a product and the overall profit margin of the business

Question 38

what influences price

Answer 38

costs - profit margin to be achieved PED - potential for a business to change price competition - level of competition and price set by the market product life cycle - stage of life cycle product is in branding - perceptions customers have of the brand and how much value they place on it other elements of marketing mix - 7Ps must complement each other

Question 39

what is price skimming

Answer 39

used to capitalise on 'first movers' (people who are willing to pay a premium price to be the first to own the product) initial price is high so the profit in the market is 'skimmed' suitable for established brands where anticipation for a new product is high particularly effective in tech markets then eventually lower the price

Question 40

what is dynamic pricing

Answer 40

applied to products where price can fluctuate with the level of demand, such as hotel rooms.

Question 41

what is penetration pricing

Answer 41

applied to a new product attempting to enter the market. Initial price is low in order to penetrate the market by undercutting competitors. Over time price may increase as demand grows and reputation/popularity builds.

Question 42

why is promotion important

Answer 42

key method a business will use to communicate with its customers and potential customers. Successful promotion will create awareness, understanding, and a desire for the product.

Question 43

what influences promotion

Answer 43

promotion budget message technology competition target audience

Question 44

target audience

Answer 44

choosing the right method and channel to reach the right people. For example, placing an advert in a magazine for a product that matches the demographic of the readership, such as an advert for a new face cream in a fashion magazine aimed at older women.

Question 45

promotion budget

Answer 45

the promotion budget will determine which methods are available and the geographical reach of the campaign.

Question 46

the message

Answer 46

a public apology might be posted on a company's website, but a sneak peek at a new product line might be shared via Twitter. Sponsoring a sporting event might encourage an association with healthy living.

Question 47

technology

Answer 47

can help a business narrow down its promotion so that it only reaches the right people. Subscription services also allow a business to target customers with personal messages and relevant information.

Question 48

competition

Answer 48

a business may use similar channels to its competitors in order to challenge their message or use strategies that allow it to stand out and be unique

Question 49

factors important when choosing right medium for advertising

Answer 49

focus and reach

Question 50

promotion methods

Answer 50

Advertising - above-the-line (mass media) and below-the-line (small and focused promotion) techniques. Direct marketing - direct communication with the customer, often personal. Sales promotions - special offers to encourage sales. Sponsorship - paid association with a business or product. Social media - promotion through networks such as Facebook and Twitter. Public relations - media attention generated through a third party, such as a review from a blogger.

Question 51

importance of branding - strong brand

Answer 51

adds value to the product allows a premium price to be charged builds trust makes a product recognisable product might become the natural choice for the novice customer helps a business to position itself in the market relative to other competitors brands can be traded

Question 52

what is distribution

Answer 52

refers to how the product gets to the customer. Many products use multichannel methods to reach the customer. The key is to make distribution easy and convenient for the customer in order to maximise sales.

Question 53

what influences distribution

Answer 53

control over promotion and pricing expectations of customers nature of the product scope/scale

Question 54

Control over promotion and pricing

Answer 54

a business may opt to use its own website or retail chain if controlling these factors is important.

Question 55

expectations of customers

Answer 55

will customers expect to access the product via multi-channels or will one suffice?

Question 56

nature of the product

Answer 56

some products are not suitable for certain channels. For example, it can be difficult and costly to ship plants, flowers and other delicate objects.

Question 57

scope/scale

Answer 57

a product sold internationally may require distribution through an extensive network of wholesalers, agents and distribution companies. By contrast a local business may simply require one retail outlet.

Question 58

many modern products use what

Answer 58

multiple channels, such as direct, click and collect and in-store purchasing.

Question 59

Each stage in the distribution network adds

Answer 59

to the cost and / or adds value, therefore increasing the price of the product.

Question 60

value of digital marketing and e-commerce

Answer 60

allow small businesses to target a global market builds relationships through a more personal service by tracking buying habits targeting specific segments is much easier - even on an individual basis allows businesses to gather customer information easily opportunities for personalisation and involving customers in the design of products