Marketing Mix and Strategy 1.3 Flashcards
(93 cards)
1
Q
What are the 3 elements of the design mix?
A
- Function
- Economic manufacture
- Aesthetics
2
Q
What is function as part of the design mix?
A
- Way a product works
- Do what it needs to?
- Reliable?
3
Q
What is economic manufacture as part of the design mix?
A
- Made + sold profitably?
- Value added?
4
Q
What is aesthetics as part of the design mix?
A
- Appeals to customers
- Based on subjective judgement of customers
- Differentiation
5
Q
How does the design mix change to reflect social trends?
A
- Sustainability-> making product without affecting long term supplies of inputs
- Ethical supply chains
- Minimise waste-> lean production + recycling
6
Q
What is the benefit of effective branding?
A
- Adds significant value
- Able to charge higher prices
- Builds customer loyalty
7
Q
What are the different types of brands?
A
- Product brands
- Service brands
- Umbrella brands
- Corporate brands
- Own label
- Global brand
8
Q
What is the main aim of promotion?
A
- Ensure that customers are aware of the existence + positioning of products
- Persuade customers that product is better than competition
9
Q
What is the promotional mix?
A
Promotional methods that businesses use to pursue its marketing objectives
10
Q
What are the main elements of the promotional mix?
A
- Advertising
- Sales promotion + merch
- Personal selling
- PR
- Direct marketing
11
Q
What is advertising?
A
- Paid for communication
12
Q
What are the benefits of advertising?
A
- Wide coverage
- Control of message
- Repetition means message communicated effectively
- Builds brand awareness + loyalty
13
Q
What are the drawbacks of advertising?
A
- Expensive
- Methods impersonal
- One way communication
- Lacks flexibility
- Limited ability to close sale
14
Q
What is personal selling?
A
- Promotion on a person to person basis
- 2 way communication
- Meeting with customer to close sale
15
Q
What are the benefits of personal selling?
A
- High customer attention
- Message customised
- Interactive
- Persuasive impact
- Adaptable
16
Q
What are the drawbacks of personal selling?
A
- High cost
- Labour intensive
- Expensive
- Only reach limited number of customers
17
Q
What is a sales promotion?
A
- Tactical point of sale material designed to stimulate purchase
18
Q
What are the benefits of a sales promotion?
A
- Effective at achieving quick boost in sales
- Encourages customers to trial product
19
Q
What are the drawbacks of a sales promotion?
A
- Sales effect short term
- Customers may come to expect further promotions
- Damage brand image
20
Q
What is PR and what do they do?
A
Personal relations create goodwill towards a business
Aim:
- Build image + reputation
- Communicate
Activities:
- Promote products
- Enhance awareness
- Project business image
- Obtain product reviews
21
Q
What is direct marketing?
A
Sending of promotional material directed through mail…
- Allows business to get response from targeted customers
- Business focus on marketing objectives
22
Q
What is price?
A
The money charged for a product/ service
23
Q
What are financial objectives?
A
- Maximise profit
- Achieve target level of profits
- Achieve target rate of return
- Maximise sales revenue
- Improve cash flow
24
Q
What are marketing objectives?
A
- Maintain/ improve market share
- Prevent competition
- Increase sales
- Build brand
25
What are pricing methods?
Methods used to calculate the actual price set
26
What are pricing tactics?
Adopted in the short run to suit particular situations
Limited impact beyond product itself
27
What are pricing strategies?
Adopted over the medium to long term to achieve marketing objectives
28
What is price skimming?
Setting a high price to maximise profit
29
How does price skimming work?
Top segment skimmed off 1st with highest price then decreases
30
What is penetration pricing?
Offer a product at a low introductory price
31
What does penetration pricing aim to do?
- Gain market share quickly
- Build customer usage + loyalty
- Build sales of higher priced related items
32
What are the advantages of price skimming?
1. Increase profits (higher price)
2. Business recovers development costs quickly
3. Better cash flow
4. Build perception of high quality
33
What are the disadvantages of price skimming?
1. Could end up with extra inventory
2. View pricing strategy as unethical
3. Difficult to enter market already crowded with competitors
34
What are the advantages of price penetration?
1. Market share increase
2. Brand loyalty
3. Economies of scale
4. Positive brand reputation
5. Rapid adoption
35
What are the disadvantages of price penetration?
1. Sacrifice short term profits
2. Perceived as bad quality
3. Competitors also lower prices
4. Hard to rise price after
5. Lower profit margins
36
What does a business need to do if it wants to operate profitably?
Its pricing needs to take some account of the costs of production/ operation
37
What is the calculation for selling price if a business bases its prices on costs?
Cost + mark-up
38
What are the benefits of basing price on costs?
1. Easy to calculate
2. Price increase justified when cost rises
3. Managers confident each product is sold at profit
39
What are the drawbacks of basing price on costs?
1. Ignored price elasticity of demand
2. Not take account of competition
3. Profit lost if price set below amount customers prepared to pay
4. Sales lost if price set above amount customers prepare to pay
40
What are price wars?
Competitive price reductions by firms as part of the day-to-day competitive rivalry in the market
41
What is psychological pricing?
Changing at a price that ends in 99p to deceive people into believing that the product is cheaper that it is
42
What is a benefit and drawback of psychological pricing?
+ Nudge customers to purchase
- Not affect planned purchase
43
What is a loss leader?
Product prominently displayed + advertised and price set below the normal price (+ even below cost to seller)
44
What is the aim of loss leaders?
Encourage people to buy complementary goods at full price
45
What is dynamic pricing?
Businesses set flexible prices for products/ services based on current market demands
46
What is predatory pricing?
Set prices low enough to force a competitor out of business
47
What is a benefit and drawback of predatory pricing?
+ Rival forced to close meaning prices can then increase
- Illegal (proven to be designed to push others out of market)
48
What is competitive pricing?
Charging a price at the market average/ at a discount to the average price in the market
49
What is a benefit and drawback of competitive pricing?
+ Prices won't put customers off
- No control over pricing
50
What are the main factors influencing pricing?
1. Costs
2. Elasticity of demand
3. Product life cycle
4. Market share
5. Marketing objectives
6. Positioning
7. Competitors
51
What is a price taker?
Business has no option but to charge the ruling market price
52
What is a price maker?
Business is bale to set its own price without worrying about rivals
53
What is a price leader?
Market leader whose price changes are followed by rivals
54
What is a price follower?
Follow the price-changing lead of the market leader
55
What changes in pricing happens to reflect social trends?
1. Online sales (lower prices due to lower cost)
2. Price comparison websites
56
What is distribution?
The ways in which a product reaches the end consumer
57
What does a distribution channel do?
Moves a product through the stages from production to final consumption
58
What purposes do distribution channels serve as?
- Provide link between producer + consumer
- Gather market info
- Physical distribution
- Financing
- Share risk taking
59
What are the 4 types of distribution channels?
1. Retailers
2. Wholesalers
3. Distributors
4. Agents
60
What are retailers?
Final step in the chain (deals directly with consumer markets
61
How does the distribution channel work to the retailer?
Producer -> retailer -> customer
62
What are the advantages of having effective retail distribution?
1. Convenient for customers
2. Retailers choose final place
3. Retailer handles financial transaction
4. Retailer holds stock
63
Why do wholesalers 'bulk buy'?
Buy in large quantities from producers then break into small quantities to sell to retailers
64
What are the advantages of buying from wholesalers?
1. Reduces producers transport costs
2. Retailers order small amounts of what they need
65
How does the distribution channel work for wholesalers?
Producer -> wholesaler -> retailer -> customer
66
How do wholesalers make money?
Buying at a lower price from the producer + adding profit margin onto price paid by retailer
67
What do distributors do?
Sell on products and serve as a local sales point
68
How does the distribution channel work for distributors?
Producer -> distributor -> customer
69
What are agents?
Specialist type of distributor that don't hold stock
70
What to agents normally earn?
Commission based on sales achieved
71
How does the distribution channel work for agents?
Producer -> agent -> customer
72
What decisions need to be made to choose the most effective distribution channel?
- Channel length
- Choice of intermediary
- One/ several channels
- How to move goods through channel
- Control over channel
73
What is direct distribution?
A producer + consumer deal directly with each other without the involvement of an intermediary
74
What is indirect distribution?
Involves the use of intermediaries between producer + consumer
75
What are multichannel distributions?
Business using more than 1 type of distribution channel
76
What are the benefits of multichannel distribution?
1. Allow more target market segments to be reached
2. Customers increasingly expect products to be available via 1+ channel
3. Enable higher rev.
77
What are the drawbacks of multichannel distribution?
1. Potential for channel conflict
2. Complex to manage
3. Danger than pricing strategy becomes confused
78
What is a product?
Anything that is capable of satisfying customer wants + needs
79
What are the 5 stages of the product life cycle?
1. Development
2. Introduction
3. Growth
4. Maturity
5. Decline
80
What are key points of the development stage of the product life cycle?
- Time consuming
- Expensive
- High failure rate
- Test launches?
81
What are key points of the introduction stage of the product life cycle?
- New product launched
- Low levels of sales
- Low capacity utilisation + high unit costs
- Negative CF
- Heavy promotion
82
What are key points of the growth stage of the product life cycle?
- Fast growing sales
- CF may be +
- Attract new competitors (market grows + profit rise)
83
What are key points of the maturity stage of the product life cycle?
- Slower sales growth
- High profit + market share
- Strongly positive CF
- Weaker competitors leave market
- Price + profit falls
84
What are key points of the decline stage of the product life cycle?
- Falling sales
- Decline in profit + weaker CF
- Decline in capacity utilisation
85
What are some ways you could extend the product life cycle?
- Lower prices
- Changing promotion
- Look for dif. distribution channels
- Develop new market segment
- Find new use for product
- Reposition product
86
What are some criticisms of the product life cycle model?
- Shape + duration of cycle varies for dif. products
- Difficult to recognise where product is
- Length not reliably predicted
- Decline not inevitable
87
What does a product portfolio analysis assess?
Position of each product/ brand in a firm's portfolio to help determine the right marketing strategy for each
88
What does the Boston Matrix do?
Categorises products into 1 of 4 different areas based on market share and market growth
89
What are the 4 categories of the Boston Matrix?
1. Star
2. Cash cow
3. Question mark
4. Dogs
90
What are stars?
- High growth products competing in markets where they are strong compared with competition
- Need heavy investment to sustain growth
91
What are cash cows?
- Low growth products with a high market share
- Mature, successful product with little need for investment
92
What are question marks?
- Low market share operating in high growth markets
- Have potential but need investment
93
What are dogs?
- Low market share in low growth market
- Generate enough cash to break even but not work investing in
