The marketing mix Flashcards
(36 cards)
Define a product portfolio
The product portfolio is the mix of products the business produces and sells. Having a product portfolio makes a great deal of sense in a number of ways.
Functions of a product portfolio
- spreads fixed costs
- allows for greater economies of scale
- allows the targeting of wider markets
- reduces risk
- smooths out overall sales
- creates opportunities for growth.
Ways to market a business
- Businesses can find out their customers’ requirements and make sure that their products meet them.
- They could assess whether the
layout/presentation of the business is attractive enough. - Review the product range – is it appropriate? Are they targeting the right market?
- Review the pricing, e.g. in comparison with the competition.
- Review the way the business promotes their products. Alternative promotional offers.
- Find out about competition again via market research and try to match what they are doing.
- Consider the location – is it suitable – for the business/customer?
Explain Unique Selling Point
Something that differentiates the product from its rivals.
* May help a business to gain a competitive advantage over its rivals.
* Can help to justify why a premium price may be being charged.
* Likely to attract more customers
Explain the marketing mix
The combination of product, price, place and promotion for any business venture.
Firms modify each element
in the marketing mix to establish an overall brand image and unique selling point that makes their products stand out from the competition.
Market research findings are important in developing the overall marketing mix for a given product. By identifying specific customer needs, a business can adjust the features, appearance, price and distribution method for a target market segment.
Purposes of packaging
- Design – Packaging should be eye catching. It should help the consumer distinguish them from other products. Should be consistent with the brand image. Colour may be important.
- Convenience – Consumers must be able to open the products easily in order to access the contents. Must not be too bulky as this will add to distribution costs and may deter customers.
- Protection – The contents must be well protected and not easily damaged as this will be a problem
for both distributors and customers. This will also be costly for a business and may lose customers if the products are poorly protected. Storage. Needs
to maintain freshness. - Information – Customers now require to be fully informed about the ingredients used in their
products that they purchase. This is also required by law and all legislation must be complied with.
The sources of raw materials are increasingly important for ethical customers. - Environmental factors – More consumers are becoming environmentally aware and
recyclable materials are used when possible. Also manufacturers are increasingly coming under
pressure to reduce waste in relation to packaging. - Cost of materials to make the packaging, e.g. comparing cardboard and plastics
Explain product differentiation
Making your products different
from the competition is important.
This separates your brand from
competitor brands. Products might
be very similar in the way that they
are made or how they are used but may be perceived quite differently by consumers
Product differentiation helps
create customer loyalty and gives
a business more control over the
pricing strategies used.
How can products be differentiated from competitors
- methods of promotion – creating a personality for the product
- packaging – eco-packaging
- form – making your products
look different from the competition - the provision of add-ons – Kia
cars have a seven-year warranty - quality and reliability – these
are features which can be emphasised (for example, BMW
and Rolls-Royce cars).
Arguments in favour of quality products
- For some businesses, the concept of quality is central to the image of that business – for example, Apple; they are at the expensive end of the market and therefore cannot allow their reputation to be damaged by either poor quality or poor quality service.
- Some businesses aim to be the very best in the industry – therefore providing a quality product will be integral to that.
- Customers will not repeat purchase if the quality is poor – lost revenue in the longer run – word of mouth.
- Retails will not stock a business’ products if they cannot be relied upon, as their own reputation will be damaged
However point for quality products
- The price for its products must be set at the right level. Too cheap and it will not fit in with the image of the business. Too expensive and they may lose some customers.
- The place where the products are sold/displayed is important – a wide geographical spread is important in order to allow people to access the products.
- The promotion of its products and service is also important in maintaining the right image as well as informing the customers of the products existence. Well-designed website and impressive brochures.
Define branding
It is a name, term, sign, symbol or design that identifies a seller’s products and differentiates
them from competitors’ products
Why Increasing brand awareness is important
☑ To create brand loyalty -important as it encourages repeat purchasing by loyal customers and will increase market share.
☑ To differentiate the product - important to be able to clearly distinguish the product in a market where products can be fairly similar.
☑ To gain flexibility when making pricing decisions – important as prices can be raised without significant loss in revenue.
☑ To help recognition – important as this might mean that customers trust a product that they instantly recognise and are therefore more willing to buy it.
☑ To develop a brand image – important because if customers
have a strong desire to be associated with the brand, then
they are likely to pay significant price premiums in order to
get the brand of their choice.
☑ Customers tend to trust the product and may purchase other
products that are associated with the brand.
☑ Gives a business a clear and easily recognisable identity,
which will help to differentiate products from those of
competitors.
☑ Retailers will be more willing to stock and sell the branded
products.
☑ Competitors have to discount heavily to attract customers
away from their preferred brand.
☑ Might damage the business’ reputation if a new product is
not successful.
Disadvantages of increasing brand awareness
☒ High cost of advertising – brands must constantly be kept in the consumer’s eye.
☒ Loss of brand value for one product can affect a whole range
of similarly branded products.
☒ Brands invite competition – often from copycat manufacturers.
☒ High cost of research and development in ensuring that the brand continues to develop and lead the market.
Define a marketing plan
A marketing plan is a detailed
statement of how the company’s marketing strategy will be put into action.
Advantages of a marketing plan
☑ the plan forces a business to think about the future
☑ it will improve co-ordination, takes a holistic view of a business marketing activities and helps to ensure that all departments work together
☑ it will help ensure that the business achieves its objectives
☑ employees will be more informed and perhaps better motivated
☑ a marketing plan should make banks feel more confident about offering loans to a firm.
Disadvantages of a marketing plan
☒ the plan itself is costly and timeconsuming to devise
☒ if the plan is not well drawn-up or includes too much information, it may do more harm than good as it fails to help the business achieve its objectives
☒ a bad plan can de-motivate employees who have no faith in it
☒ businesses are often organised into departments and the success of the marketing plan will depend upon each being prepared to put aside their own goals to satisfy consumers’ needs
Define the product life cycle
Product life cycle has to do with the life of a product in the market with respect to sales. Products pass through these stages at different speeds – some products do not make it past the early stages and fail!
Development - Intro - Growth - Maturity/Saturition -Decline
Explain the development stage
During the development stage, there is substantial negative cash flow caused by spending on R&D,
market research, product design and preparing for production.
Explain the introduction stage
The product is launched onto the market but sales are usually slow – a good deal needs to be spent
for promotion in order to boost sales.
Explain the growth stage
As sales increase, the business will hope to earn enough money to pay back their initial investments.
Explain the maturity and saturation stage
Sales increasing/revenue increasing – cash can be reaped from sales once they have
stabilised during the maturity stage. As the product enters the saturation phase there is slower rate of growth – competition may be entering the market.
Explain the decline stage
Sales of the product begin to fall – decisions have to be made as to whether to support the product or
remove it from the market.
Reasons for changes in product life cycle
- Fall in demand for products – people are buying alternatives.
- Same quantity of goods sold – at lower price so value fallen.
- Goods available from alternative suppliers – supermarkets etc. – internet.
- Recession – loss of jobs – fall in purchasing power – all goods fallen in demand.
- Technological change – e.g. downloading.
- Products already owned – don’t need any more.
- Products last longer – don’t need to buy them as so often
Define extension strategies
A medium-/long-term plan for
lengthening the life cycle of a product or brand, or to generate more sales. Likely to be implemented during the maturity or decline stages.
