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IB Business HL > 4.5 The seven Ps of the marketing mix > Flashcards

4.5 The seven Ps of the marketing mix Flashcards

(44 cards)

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1
Q

What is a product

A

any good or service that serves to satisfy the needs and wants of customers

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2
Q

What is a consumer product?

A

Are purchased by private individuals for their personal use

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3
Q

What is a producer product?

A

Producer products or industrial goods are purchased by businesses to use in the production process

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4
Q

What is the product life cycle?

A

shows the different stages that a product is likely to go though from its initial design and launch to its decline

R&D
Launch
Introduction
Growth
Maturity
Decline

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5
Q

What are the features of the Research and Development stage of the product life cycle?

A
  • Companies invest a lot of money into developing a new idea into a product
  • No sales revenue (product is not yet available for sale)
  • High costs for research and development
  • Prototypes are used, as well as test markets
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6
Q

What are the features of the Launch stage of the product life cycle?

A
  • Products are introduced to the market
  • Sales slowly increase
  • Extensive promotion
  • Products not profitable at this stage (high expenses and low sales)
  • A company will want to move to the growth stage as quickly as possible to become a market leader
  • Buyers in this stage are called Innovators
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7
Q

What are the features of the Growth stage of the product life cycle?

A
  • Rapid increase in sales due to greater consumer awareness
  • More channels of distribution
  • Strong profits
  • More competitors
  • Product differentiation strategies used
  • Buyers in this stage are called Early adopters
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8
Q

What are the features of the Maturity stage of the product life cycle?

A
  • Sales increasing (slower rate)
  • Economies of scale are possible
  • Heavy promotion takes place to differentiate brands
  • Product lines extended
  • Unsuccessful competitors drop from the market
  • Buyers at this stage are known as the Majority
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9
Q

What are the features of the Decline stage of the product life cycle?

A
  • Sales and profits fall
  • Demand is low (changing fashion and tastes, new replacement models)
  • Promotional spending falls or stops
  • Buyers in this stage are known as Laggards
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10
Q

What investments expenditures are used in each stage of the PLC

A
  • Research and development: Basic and applied research
  • Launch: Promotion, Capital investment
  • Growth: Promotion,
    Product improvement, Capacity expansion
  • Maturity: Extension strategies
    Decline: Divestment
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11
Q

How much profit does each stage get?

A
  • Research and development: No profit
  • Launch: Little profit, if any
  • Growth: Profit is achieved, once R&D and launch costs recovered
  • Maturity: Maximum profit
  • Decline: profit disappears as processes are reduced and sales decrease + Product termination costs
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12
Q

What is the cash flow for each stage?

A
  • Research and development: Highly negative
  • Launch: Negative
  • Growth: Turns positive
  • Maturity: Positive
  • Decline: Positive but falling
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13
Q

How do companies extend the maturity stage of the PLC (extension strategies)

A

Price reductions
Redesigning
Repackaging
New markets
New promotional activities

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14
Q

What is a brand?

A

A brand refers to a name or trademark that is identifiable with a business or product
May be a: sign, symbol, color scheme, font, design

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15
Q

What is brand awareness?

A

Measures the extent to which potential customers or the public, recognizes a particular brand
Can benefit the business by bringing: Higher sales revenues, Competitive advantages, Repeat purchases

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16
Q

What is brand development?

A

The marketing process of improving and enlarging the brand name
- Successful brand development helps to extend the PLC

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17
Q

What is brand loyalty?

A

Occurs when customers buy the same brand time and time again. They have a preference over any other brands
The opposite is brand switching where customers turn to alternative brands
Benefits: Maintains market share, Ability to set premium pricing

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18
Q

What is Brand value?

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A

Refers to the premium that customers are willing to pay for a brand name over and above the value of the product itself
Benefits of having a strong brand value: Higher market share, Higher barriers to entry, Premium process

19
Q

What are the advantages of branding?

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A
  • Acting as a legal instrument
  • Risk reduction
  • Image enhancement
  • Earning higher revenues
  • Premium price setting ability
  • Recognition and loyalty
  • Distribution benefits
20
Q

What does price depend on?

Study These Flashcards
A

Demand, Rivalry, Aims, Supply, Time, Image, and Cost of production (DRASTIC)

21
Q

What is cost-plus pricing

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A

This pricing strategy involves working out the average cost per unit of a product and then adding a percentage mark-up
Simplistic and easy to calculate however does not consider the needs of customers
Worked example:
Cost of making a cup of coffee: 1€
Target profit margin: 200%
200% of 1€=2€
Selling price= cost + profit margin
Selling price= 1 + 2 =3€

22
Q

What is Penetration pricing?

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A

When products are initially sold at a low price to try to break into the market and quickly gain market share
Once the firm has enough market share, it can raise its prices

For new firms

23
Q

What is Loss leader pricing?

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A

Involves selling a product at or below its cost value

24
Q

What is Loss leader pricing used for

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A

Tempt customers into the store to buy the more profitable products at the same time
Recoup the loss by selling complementary products

25
What is Predatory pricing?
Predatory pricing involves temporarily reducing prices with the intention of forcing a competitor out of a market Used when an existing firm is threatened with new competition Price wars often ensue in a "race to the bottom"
26
What is premium pricing?
When the price of a good or service is set significantly higher than similar competing products This is usually because the product is of higher quality or is sufficiently unique enough to justify premium price
27
What is promotion?
Promotion is the methods of communicating messages to the market with the intention of selling a firms goods
28
What are the 3 key objectives of Promotion?
- Inform: to alert the market about a firms products, especially new or updated products in order to influence its purchasing decisions - Persuade: to encourage customers to; make a purchase, switch from a rival brand - Remind: to retain customer awareness of, and interest in, a product
29
What are the three methods of promotion?
Above the line (ATL), Below the line (BTL) and Through the line (TTL)
30
What is above the line promotion?
Any form of paid-for (you pay fees for how much it costs to broadcast your advertisement) promotional method through independent mass media sources (large scale businesses)
31
What is below the line promotion?
Uses of non-mass media promotional activities (non-paid, flyers, brochures, etc.), allowing the business to have direct control (small scale businesses)
32
What is through the line promotion?
Involves both ATL and BTL methods in an integrating marketing approach (government initiated)
33
What are the aspects of designing an effective promotional mix?
Attention, Interest, Desire and Action
34
What are the main types of above the line promotion
Television advertising, Radio advertising, Cinema advertising, Newspaper advertising, Magazines, Outdoor advertising
35
What are the types of Below the line promotion?
Direct marketing, Personal selling, Point of sales promotion, Publicity and public relations, Trade shows, Sponsorship, word-of-mouth and packaging
36
What is Publicity?
- The process of promoting a business and its product by getting media coverage without directly paying for it - Celebrities are often given free products from businesses in the hope they will be photographed using them publicly
37
What is Public relations?
- Refers to marketing activities aimed at establishing and protecting the desired image of an organisation. - Goal of PR is to get the media to report events in a positive way from the point of view of the business Examples - Product launch parties - Press conferences - Radio, podcasts and interviews on news and talk shows - Book signings - Making prominent donations
38
What are channels of distribution?
Refers to the means used by firms to ensure customers gain access to their products This is done by either selling directly to customers or by using intermediates Intermediates are firms or agents who act as a middle-person between producer and consumers
39
What are the different levels of distribution
Zero-level (e.g. farmers market) One-level Two-level
40
What are some examples of retailers?
- Independent retailers: Sole traders such as hair salons - Chain stores: H&M, The Body Shop - Supermarkets - Hypermarkets: Costco, Walmart - Department stores
41
What are specialty channels of distribution?
Any indirect way to distribute products that does not involve retailers avoiding the use of intermediaries
42
What are the benefits of specialty channels of distribution?
- Increased profits (as firms do not have to share profit margins with intermediaries) - Greater control of distribution - Growing demand for the convenience of e-commerce - Can reach consumers who cannot access retail outlets
43
What are processes of services?
Processes is the way in which a service is provided or deliveries Can include: - Payment method - Waiting time - Customer services - After sales care - Delivery processes
44
What does Physical evidence refer to?
- Physical evidence refers to the tangible aspects of a service - Physical evidence strategies will depend on the service that is being provided

IB Business HL (15 decks)

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