Chapter 54 – product Flashcards
(36 cards)
1
Q
What are the four p’s?
A
- Product, price, place and promotion
2
Q
What will help a business to formulate a marketing strategy?
A
- A combination of all the four p’s
3
Q
Product
A
- The product aspect of the marketing mix is the most important part as with no product. There is no marketing mix.
- depending on whether it is a new product or changes made to a product, this will dictate all the other aspects of the marketing mix
4
Q
What depends on the results that the business wishes to achieve and the type of market it is in?
A
- The marketing mix chosen
Example: if the business is changing the style of its product, it will need to use the product and promotion aspects of the marketing mix - The business will also need to consider its market; if it is targeting a global market different strategies will be more appropriate than if the business is targeting a local market
5
Q
Differentiation
A
- Making the product different is important to the success of the business
- Finding a unique selling point helps the product to stand out
- Differentiation in mass marketing will help the product stand out when compared to the rest of the market
- even the best products relaunch or reposition their products
- Repositioning is aimed to increase revenues
6
Q
Types of differentiation
A
- Branding- Logo helps make a brand recognisable
- Branding- May help consumers to recognise the product
- Producing the right types of product- sought to be based on effective research (a market orientated approach is more likely to lead to a successful product0
7
Q
Unique selling point (USP)
A
- a business can increase its market group/share by finding a good or service that has a unique selling point
- USP is something that makes the business stand out against competitors
8
Q
Value analysis
A
- value an analysis looks at the nature of the product to assess its priorities
- Allow the business to focus the manufacturer mind on the main characteristics of the product
9
Q
What’s important to achieve the right balance between in value analysis?
A
- The functions of the product
- The aesthetics of the product
- The economic cost of the product
10
Q
Functions of the product
A
- the functions of the product dictates whether colour, Shape are more important than the functions
11
Q
Aesthetics of the product
A
- meta glasses need to look good as well as having the functional qualities
12
Q
Economic cost
A
- if the first two are high, then this is less important- cost significance will depend on the competitiveness of the market
13
Q
Product life cycle
A
- It shows the stages in a product life; it highlights the typical sales of a product overtime
-this is a model used to aid decision-making - The shape and the length of the product life cycle will differ from one product to another
- each stage of the product life cycle requires a different marketing mix
14
Q
What are the four stages to the product life cycle?
A
- Introduction/development stage.
- Growth stage.
- Maturity/saturation stage.
- Decline stage.
15
Q
Introduction/development stage
A
- during this stage the research and development will have been undertaken to discover what the consumer needs
- The launch of the product will take place either in one particular region of the country or nationally
- Initial sales may be slow until the consumer has tried the product and any marketing activity has had time to build interest
- there is often reluctance on behalf of consumers to try anything new or change from the brand they are used to
- It is at this stage of the life cycle that a product may fail
16
Q
At the development and introduction stages, what factors in its marketing mix for the business need to take an account of?
A
- Sufficient market research to ensure the product meets its consumers needs
- Depending on the nature of the product the pricing will include introductory offers to encourage consumers to try the product
- Occasionally research costs are very high and therefore the price of the product will initially be high until sales increase
- The advertising will be informative to increase consumer awareness
- Distribution Channels will be low though increasing sales outlets will be a priority
17
Q
Growth stage
A
- Once consumers are fully aware of the new product sales are likely to grow more quickly
- Word of mouth and continued promotion may enhance sales still further
- If products can reach this stage and achieve growth, the product is more likely to be a success
- The rate of growth in sales will depend upon the nature of the product and the amount of alternatives (competition) in the market
18
Q
Growth stage (marketing mix)
A
- motifications may be made after initial feedback from market research
- if in a competitive market pricing will have to reflect the market price unless a highly distinctive edge allows for a premium price
- Informative advertising may continue but a move to competitive and persuasive styles is likely
- Distribution is now much wider and therefore additional channels may be required
19
Q
Maturity/ saturation stage
A
-If this stage can be reached, it’s like clear that the product will be profitable
- maintaining the product in this stage of the cycle becomes the next issue
- Sales are likely to flatten out, the nature of any marketing will have changed and competition from new products becomes a concern
- saturation implies that all the consumers who wanted to purchase the product have now done so and therefore any additional sales will be difficult
- Example- Cadbury dairy milk bar
- The marketing of products in the maturity stage is concentrated on keeping sales constant and avoiding sales falling
- The promotion often reminds consumers of the existence of the product
20
Q
What ways can the business encourage consumers to continue buying product in the majority stage?
A
- they use strategies called extension strategies
21
Q
Maturity/saturation stage (marketing mix)
A
- Price reductions may be used as extension strategies
- Advertising will increase if newer products enter the market
22
Q
Decline stage
A
- sales are now falling
- Consumers may have lost interest in the product as newer and better alternatives enter the market
- In this stage a business has to decide if it wants to offer the product at heavenly discounted prices to boost sales or simply allows sales to decline
23
Q
Decline stage (marketing mix)
A
- there is little point in spending money on a product in decline
- Prices may be drastically reduced in order to sell any stock that is left
- Sales promotions may be heavily used to help sell off final stock
24
Q
Extension strategies
A
- Aim to prolong the maturity stage and not let sales decline
- modify the product example: new, extra, added teachers
- Promote more heavily
- Develop complimentary products
- Attempt to increase usage
- Find new uses for the product
25
Cash inflows and outflows
- product Life cycle does not show what is happening to the level of cash inflows and outflows
- First stage of product life cycle- negative cash flow for this product
- cost of the research and development, cost of marketing the launch and subsequent promotion means that more money is going out of the business than is coming in
26
Product positioning
- selling the right product in the right segment of the market is a decision that a business will have to take
- It’s helpful to undertake research to ascertain what other products are in the market and where each of them is positioned
- once the information has been collected It can be plotted to show the positioning.
27
What can product positioning be achieved by?
- Price in relation to that of competitors in a market
- Having beneficial quality when compared to others in the market
- Satisfying a small segment of the market
- being Something completely different
28
Product portfolio
- Businesses produce many products this is their product portfolio
- deciding what products to have in the portfolio is important
- A product positioning chart can help see where other similar products are and what gaps exist
29
Boston matrix
- this is a tool to help position products and to help decide what to produce
- The matrix considers products in terms of their market share and potential for market growth
30
What are the four categories on the Boston matrix?
1. Rising star.
2. Cashcow.
3. Problem child.
4. Dog.
31
Rising star
- High market share and potential to grow
- It’s a good category to be in but needs a lot of advertising to promote it and maintain it
- Can lead it to be a cash cow
32
Cash cow
- ensures high revenues
- Well established product
- High share of the market
- Low market growth but the product generates large amounts of cash
- Mature product that does not need heavy marketing expenditure
- Very profitable
- It is sold in large quantities allows for low unit cost and therefore high profits
- The large profit gained from cash cow products can be used to support problems child products
33
Problem child
- Low market share in a growing market
- Aim is to be a star or Cashcow
- Needs heavy investment to increase market share
- Normally a new product that is not established yet
- profile needs raising
34
Dog
- Low market share and low market
Growth
- No future
- Should be dropped by the business
35
Advantages of using the Boston matrix
- See if you have a balance portfolio
- does not need dogs but needs cash cows to convert problem child products into stars or cash cows
- Too many stars may be a drain on financial resources as they require large funds to maintain there position
36
Service marketing
- Does not have a tangible product
- Therefore customer recommendations are important
- Therefore, the product has to be of the highest quality in the service sector
