Marketing Flashcards
(74 cards)
Name the Marketing Mix (7ps)
Product Place Process Price Promotion People Physical Evidence
What is needed on a Product Life Cycle Graph
Axis (Sales y axis and Time x axis) Research and Development Introduction Growth Maturity Saturation Decline Title SEE PAGE 1 OF NOTES FOR GRAPH
What is Research and Development?
When market research is conducted and prototypes are produced.
During this stage there are no sales, costs are high and no profits.
Research and development stages
Come up with an idea for a new product. Conduct market research. produce a business plan. Produce a prototype. Launch in a small area - Test Marketing. Receive feedback from customers.
Introduction
When a product is LAUNCHED onto the market.
The product is advertised heavily.
Customers are learning of the product.
Low sales high costs and or no profit.
Recovery of R&D ( Research and Development) costs occur at this stage.
Growth
Sales RISE Rapidly.
Customers are more aware of the product.
Profits rise at this stage.
Maturity
Sales peak as the product is well known in the market.
Heavy competition in the market.
Extension Strategies are often used.
Highest profits are achieved.
Saturation
Supply of Product is higher than the demand.
Customers who want the product have it.
Competitors start to fail and drop out of the market.
Prices and Profits fall.
Decline
Sales fall as new/better alternatives are now available.
Customers tastes have changed and no longer want the product.
Sales and prices fall until the product is with drawn from the market.
Profits and losses are made.
Extension Strategies Example
Product
- change the name/brand name
Example - Opal fruits to starburst or cadbury’s caramel to diary milk with caramel.
Product Line extension
Example - Coca Cola
Change/alter the packaging - for example - iron Bru.
improved quality of features - e.g. washing up liquid/ Washing powder.
Change the shape, size or features e.g Apple
Change the use of the product e.g. Lucozade.
Price
Reduce or increase the price.
For example Barr drinks
Place
Change where the product is sold.
For example - online or through a wholesaler
Product Portfolio/Mix/Range
When a business sells more than one product or service.
How do they sell more than one product or service? (Product Portfolio)
Have a range of products or a good mix of products.
Product range should all be at different stages of the product life cycle.
Advantages of having a Product Portfolio.
To reduce the risk of failure.
To assist financing the Launch of new Products.
To cater for different market segments.
To increase sales and profits.
To improve the reputation of the business.
To cope with seasonal fluctuations.
Disadvantages of having a Product Portfolio.
If one product receives bad reputation then the whole image of the range is tarnished.
Reduced opportunity to gain economies of scale.
Cost of Purchasing different machinery.
Training staff to produce different products.
R&D costs will be high for a range of products.
Sales promotions and advertising costs will all be high.
Boston Matrix.
SEE PAGE 6 OF NOTES FOR DIAGRAM.
The Boston Matrix is used to help a business decide on the range of products which it offers.
It can help a business decide when new products need to be introduced or withdrawn from the market.
Boston Matrix/Box Elements
Star
- High Market share/High Market growth - growth stage
- A business will strive to have as many of these as possible.
Cash Cow
-High Market share/Low Market growth - maturity stage
Example a Mars Bar to Mars.
-Will often finance the development and introduction of new products.
Problem Child
High Market growth/Low Market share - introduction stage.
-An expensive product to promote.
-Does not generate much income as R&D costs have not been covered yet.
-Promotion comes from the finance generated from the Cash Cows.
Dog
Low market share/low market growth - Decline Stage
-A product with no future.
-Perhaps a saturation or decline product.
Cost Plus
When a Percentage of profit is added to the cost of purchasing a product.
Justification - simple to work out proceed as the same percentage is added to all products.
Penetration.
When a business Charged a low price when a product is first introduced onto the market.
Development - once customer loyalty is established the price is increased.
Justification - To increase awareness of a product or to increase sales.
Disadvantage - some customers will stop buying the product when the price rises.
Destroyer Pricing
When a large Plc deliberately sell their products at a price much lower than competitors.
Development - prices are then increased higher than the original price.
Justification - Competitors are forced out of the market (Competition is destroyed) as they cannot compete.
Disadvantage - Customers are faced with price rises and limited choice of company.
Promotional pricing
When a business reduce the price of its product for a short period of time.
Justification - helps the business reduce stock levels at the end of a season.
Disadvantage - customers often wait to purchase products at times of discounts.
Loss Leaders Pricing
When a business deliberately sells a product at a loss.
Development - Highly advertised to give the impression that all products are inexpensive.
Justification - most customers would buy other products whilst in the store resulting in a profit being made from the customers whole purchase.
Justification - gives the impression that all products are inexpensive.
Disadvantages - some customers will only purchase the discounted products.
Psychological
When a business sells its products at a price ending with 99p.
Justification - To give the illusion that prices are cheaper than
they actually are.
