3.3.4 - Making marketing decisions: using the marketing mix Flashcards
(95 cards)
1
Q
Describe the characteristics of dogs
A
- low market share
- slow growing market
- negative cash flow/ results in a loss
2
Q
Describe the characteristics of cash cows
A
- money is ‘milked’ from cash cows to be invested into stars
- should only invest to support cash cows to maintain their market share
- cash cows are capable of innovating new products or processes which can become stars.
3
Q
Describe the characteristics of stars
A
- high growth market
- high market share
- money should be invested in stars so they become cash cows and generate a positive cash flow.
4
Q
Describe the characteristics of question marks.
A
- low market share
- high growth market
- Have the potential to become a star and gain a market share
- Can require lots of investment
- Require very close consideration.
5
Q
What is the marketing mix?
A
The combination of marketing choices that can be used by a business to influence consumers to buy products.
6
Q
What are the 7P’s of the marketing mix?
A
- Product
- Price
- People
- Place
- Promotion
- Process
- Physical evidence
7
Q
What some the internal factors which can influence the marketing mix?
A
- Changes in financial position (buying lower quality supplies to cut costs or increase product price).
- Changes to staff bringing about new marketing opportunities.
- Changes to operations (higher productivity or transitioning to be more capital intensive).
- Changes to objectives (changing promotional methods to target a new market segment)
8
Q
What some the external factors which can influence the marketing mix?
A
- Political and legal factors (new laws)
- Economic factors (economy growing or a recession occurs)
- Social factors (environmental concerns)
- Technological factors (growth in e-commerce)
- Competition (businesses may invest more in product innovation to establish a special selling point).
9
Q
What are consumer products?
A
Products that are purchased by individuals for use within their homes.
10
Q
What are industrial products?
A
Products that are purchased by businesses and used in the production of other products or in the running of the business.
11
Q
Give 3 examples of industrial products.
A
- Raw materials
- Machinery
- Delivery vehicles
12
Q
What are the 3 types of consumer products?
A
- Convenience products
- Shopping products
- Specialty products
13
Q
Describe the characteristic of convenience products.
A
- Bought frequently
- Little planning or shopping effort required
- Low customer involvement (customers don’t usually interact with staff)
- Low price
- Widespread distribution
- Mass market promotion.
14
Q
Describe the characteristics of shopping products.
A
- Bought less frequently
- Customers are careful on quality, price, brand and style
- Reasonably high
- Selective distribution
- Advertising by producers and other retailers.
15
Q
Describe the characteristics of specialty products.
A
- Unique characteristics or brand
- Buyers make a special effort when buying
- High price
- Exclusive distribution/ limited outlets
- Promotion is more carefully targeted
16
Q
Give two examples of convenience products.
A
- Crisps
- Toothpaste
17
Q
Give two examples of shopping products.
A
- Hoodies
- Sofa
18
Q
Give two examples of specialty products.
A
- Sportscar
- Gucci handbag
19
Q
What are the 3 types of industrial products.
A
- Materials and parts
- Capital items
- Supplies and services
20
Q
Describe the characteristics of materials and parts.
A
- Mostly sold to other industrial users
- Price and service are key issues
21
Q
Describe the characteristics of capital items.
A
- industrial products used in operations or productions
22
Q
Describe the characteristics of supplies and services
A
- Operating supplies, e.g energy, and business services, e.g security.
23
Q
What is a product portfolio analysis?
A
A technique used to identify the position of every product in a firm’s portfolio within its market and review the products they produce.
24
Q
What does it mean if companies are product orientated?
A
There is focus on the production process and the product itself.
25
What does it mean if companies are market orientated?
The business continually identifies, reviews and analyses consumers needs and wants.
26
What is the Boston Matrix?
A framework used to evaluate the strategic position of a business's product portfolio and its potential.
27
Why does a higher market share result in higher cash returns?
A business that outputs more, benefits from higher economies of scale, resulting in higher profits.
28
What is the product life cycle?
A theoretical model which describes the stages a product goes through.
29
What is beneficial about the product life cycle?
It can be used to predict a likely shape of sales growth for a typical product.
30
Describe the characteristics of the development stage of the product life cycle.
- the product is designed and test-marketed to assess the potential sales and profitability of the product.
- large, negative cash flow
- Absorbs lots of resources
- Market research is conducted (high costs)
31
Describe the characteristics of the introduction stage of the product life cycle.
- Product is launched onto the market
- Sales are low (unprofitable)
- Unit costs are very high
- Negative cash flow
- Low capacity utilisation
- Heavy promotion required to grow product awareness.
32
What is an extension strategy?
A method used to delay the decline stage of the lifecycle and produce extra sales and revenue.
33
What are some examples of extension strategies?
- changing the appearance and packaging of the product
- finding new uses for the product
- finding new markets for the product
- enticing customers to use the product more frequently
- altering the resources used in the product.
34
What is the main benefit of new product development?
Businesses extend their product portfolio so can meet a wider range of customer needs or aim newer products at a different target market.
35
What is promotion?
The process of businesses making customers aware of the product, how it will satisfy their needs and persuades them to buy it or keep on buying it.
36
What are the 7 influences on new product development?
1. Legal constraints
2. Available finance and resources
3. Technology
4. Development costs
5. Competition
6. Market constraints
7. Risk taking skills of managers and owners.
37
What is a brand?
A promise to deliver certain benefits and services that distinguishes a product or business from competitors in the market.
38
Why is it advantageous for businesses to build up brand loyalty?
Strong brands are able to charge high prices for products which results in a high profit margin being generated. Also, brand loyalty provides a strong basis for the business to launch new products.
39
What are the benefits of packaging?
- It allows consumers to distinguish between different products
- It protects the product during transportation
- Can contain competitions and prizes to promote sales
40
What does it mean if a brand is strong?
- Demand is likely to be more price inelastic
- Customers may become brand ambassadors and promote it to others by word of mouth
- Customers may be open to purchasing more products under the same brand name
- Difficult for other brands to gain a market share in the market.
41
What is Above-the-line promotion?
The use of advertising to reach a mass audience.
42
What are some examples of Above-the-line promotion?
- Advertising
- Sponsorship
43
What is Below-the-line promotion?
The use of a range of promotional methods over which the business has more control and which can bring targeted at specific groups of customers.
44
What are sales promotions?
45
What is direct selling?
46
What is merchandising?
47
What is advertising?
48
What is public relations?
49
What is branding?
50
What is sponsorship?
51
What are trade fairs?
52
What is viral marketing?
53
What is social media?
54
What are the six components of the promotional mix?
- The promotional budget
- The other elements of the marketing mix
- The message
- Technology
- Target market
- Competitors
55
What is informative promotion?
A type of promotion used when launching a new product which uses information to educate the market with the aim to solve a problem in a consumers life.
56
What is persuasive promotion?
A type of promotion used to change a buyers attitude towards a product/brand to convince them to buy it.
57
What is the difference between branding and merchandising?
Branding is the image of a business/ the perception people establish of a business whereas merchandising is the use of the physical branding.
58
Give 2 examples of Below the Line promotion?
- Public relations
- Direct selling
59
Give 3 examples of Above the Line promotion?
- Branding
- Sponsorship
- Advertising
60
What should the price of a product reflect?
The perceived value to customers considering what other competitors in the market are charging.
61
What are the two pricing strategies for new products?
1. Price skimming
2. Penetration pricing
62
What is price skimming?
A strategy in which a high price is set to yield a high profit margin upon initially entering the market, this price is later lowered.
63
What is the main benefit of price skimming?
It can help to pay off development costs.
64
What market conditions are required for price skimming to work?
- The product need to have a high quality and brand image
- There must be enough customers willing to pay a high price
- Competitors must be deterred from entering the market with a similar product and undercutting the business.
65
What is penetration pricing?
A strategy where low prices are set to break into a market or to achieve a sudden increase in market share. Then, the price can be increased when customers become loyal to the brand.
66
What are the benefits of penetration pricing?
- Businesses gain a market share quickly
- Businesses build customer loyalty
- Increase in sales of higher-priced items in a businesses product portfolio.
67
What are the disadvantages of penetration pricing?
- Customers may expect permanent low prices
- May only attract customers looking for a bargain
- Likely to result in retaliation from other competitors who will try to maintain their market share.
68
What market conditions are required for penetration pricing to work?
- Demand in the market must be price elastic
- Increases in sales and market share need to generate lower unit costs (economies of scale)
- Prices need to be kept low to prevent competitors using the same strategy.
69
What are the two pricing strategies for existing products?
1. Price leaders
2. Price takers
70
What does it mean if a business is a price leader?
The business dominates a market and can set a price that all other businesses in the market must follow.
71
Describe 3 characteristics of a price leader.
- Strong brand image
- Minimal product differentiation
- High market share.
72
What does it mean if a business is a price taker?
The business has no option but to charge the market price for their products
73
Describe the main characteristic of a price taker.
They try to establish product differentiation through different elements of the marketing mix
74
What are pricing tactics?
The pricing of a product designed to achieve a particular business objective.
75
What are the two types of pricing tactics?
1. Loss leaders
2. Psychological pricing
76
What is a loss leader?
A product which is sold at a loss to attract customers to buy other full price products sold by the business.
77
What is price leadership?
A strategy where a large company sets a market price that smaller firms tend to follow.
77
What is psychological pricing?
Where a business charges 99p instead of £1 as it gives the impression of being a lot cheaper.
77
What is predatory pricing?
A strategy where a business sets very low prices in order to drive other businesses out of the market.
78
What are the 7 main influences on pricing decisions?
1. The unit cost
2. Competitors in the market
3. Business objectives
4. Price elasticity of demand
5. The rest of the marketing mix
6. The target market
7. The market
79
What do managers need to consider when making distribution decisions?
1. The degree of coverage (local or international markets?)
2. The cost of different strategies
3. The nature of the product (e.g low value or high value)
4. The degree of control a business wants over the way its products are priced and promoted
5. How customers expect to access the product and what technology allows a business to deliver.
80
What is multi-channel distribution?
A marketing strategy that offers your customers a choice of ways to buy products.
81
What is the main aim of multi-channel distribution?
To maximise revenue and brand loyalty.
82
What are channels of distribution?
The intermediaries that a business chooses to use to transport its product and make it available to consumers.
83
Give 2 examples of intermediaries.
- Wholesalers
- Retailers
84
What is a direct distribution channel?
Where the manufacturer sells directly to customers.
85
What are the advantages of direct selling?
- Manufacturers have full control and flexibility over the sale of products or services
- Manufacturers do not have to share any cuts of revenue with intermediaries.
86
What are the disadvantages of direct selling?
- Lower total sales volume
- Manufacturer is required to pay for postage and packaging
- High advertising costs required to promote products.
87
What is a retail distribution channel?
Manufacturers sell their products on to large retailers where they are sold to customers.
88
What are the advantages of selling via a retailer?
- More convenient for customers so more likely to sell more
- Reduced delivery costs
- Lower costs required to promote and advertise products.
89
What are the disadvantages of selling via a retailer?
- Less profit gained per unit
90
What is a wholesale distribution channel?
A wholesaler buys large quantities of manufacturer goods then breaks into the bulk to supply retailers with smaller quantities, from which customers purchase products.
91
What are the advantages of a wholesale distribution channel?
- Guaranteed high sales volume
- Allows more target market segments to be reached
- Increased customer convenience.
92
What are the disadvantages of a wholesaler distribution channel?
- Manufacturer loses control over decisions about their products
- Poor brand image can be gained if intermediaries act unethically
- Manufacturers revenue is cut (shared with intermediaries)
93
