The Seven Ps of the Marketing Mix Details

Question 1

Stages of the product life cycle

Answer 1

-Research and development(R&D)
-Introduction
-Growth
-Maturity
-Decline

Question 2

The product life cycle is based on…

Answer 2

sales revenue(NOT TIME. there isn’t a fixed period of time for any of the stages. Whether you’re in one stage or the other depends on sales revenue)

Question 3

Features of the Research and Development(R&D) stage

Answer 3

-Covers all activities that take place before a product is released into the market
-Length of stage depends on product and industry(e.g. clothing brands have shorter R&D stages, while pharmaceutical drugs have higher ones)
-Business focuses on market research, product development and preparation of production

Question 4

Features of the introduction stage

Answer 4

-Initial sales are likely to be low but growing
-Business must focus on promotion(to make customers aware of the product), ideally using its unique selling point(USP)
-Business must carefully consider pricing strategies and the distribution channel

Question 5

Features of the growth stage

Answer 5

Incrreasing rate of product sales growth
-Business may find new target markets(to continue growth)
-Business may adapt the marketing mix(e.g. expanding distribution channels) to meet demand

Question 6

Features of the maturity stage

Answer 6

-Sales growing at a slower rate(since market may be crowded with competition)
-High profits(due to high sales revenues and lower promotional costs)
-Increased focus on building customer loyalty

Question 7

Features of the decline stage

Answer 7

-Decreasing sales/Loss of market share
-Business may reduce prices(to target cost-conscious customers)

Question 8

Reasons why products may enter the decline stage

Answer 8

-The product may have lost its unique selling point(USP) due to competition
-Technology may be outdated
-Product may no longer satisfy customers

Question 9

Products may still be profitable during the decline stage(T/F)

Answer 9

True(although sales are falling, costs may also be low too)

Question 10

When are products usually withdrawn from the market?

Answer 10

When they begin to make a loss(i.e. revenues lower than costs of production)

Question 11

Examples of extension strategies

Answer 11

-Finding a target market
-Redesign of packaging
-Updating the products
-Price reduction
-New promotional strategies

Question 12

Important aspects of branding

Answer 12

-Brand awareness
-Brand development
-Brand loyalty
-Brand value

Question 13

Rules that packaging must follow to be effective

Answer 13

-Protect the product
-Communicate information(about the product)
-Promote the product and communicate its USP
-Make the product eady to use

Question 14

Elements of the marketing mix that packaging connects to

Answer 14

Product and promotion

Question 15

Types of pricing methods

Answer 15

-Cost-plus(markup) pricing
-Penetration pricing
-Loss leader pricing
-Predatory pricing
-Premium pricing
-Dynamic pricing
-Competitive pricing
-Contribution pricing

Question 16

Penetration pricing works best for…

Answer 16

goods that will be purchased repeatedly(i.e. shampoos, magazines, cereals and other ‘fast moving consumer goods’)

Question 17

Typical conditions for loss leader pricing

Answer 17

-The business must be able to afford to set prices on a product that will result in a loss
-The business must have a variety of products

Question 18

Circumstances under which dynamic pricing can be applied:

Answer 18

-The groups of consumers(and their respective levles of wealth)
-Time(e.g. lunch time discounts, higher prices at night, etc.)
-Competitors’ prices(in different areas)
-Demand

Question 19

Benefits of cost-plus(markup) pricing

Answer 19

Simple and easy to ensure all costs are covered

Question 20

Limitations of cost-plus(markup) pricing

Answer 20

Inward facing(takes no account of the market)

Question 21

Benefits of penetration pricing

Answer 21

Market share and customer loyalty may be established quickly

Question 22

Limitations of penetration pricing

Answer 22

-Low profit margins are likely during the initial low price
-Customers may not accept the price rise

Question 23

Benefits of loss leader pricing

Answer 23

Can lead to a large boost in sales revenue

Question 24

Limitations of loss leader pricing

Answer 24

-Is only possible for multi-product retailers
-Business may just experience losses(if strategy doesn’t work)

Question 25

Benefits of predatory pricing

Answer 25

-Competition is eliminated -Higher prices and higher market share can lead to increased profits(once competition leaves the market)

Question 26

Limitations of predatory pricing

Answer 26

-Only possible for very large businesses -Impossible to maintain over a longer period of time -Illegal in many countries

Question 27

Benefits of premium pricing

Answer 27

-Potentially higher profit margins -Can lead to improved public perceptions of a company

Question 28

Limitations of premium pricing

Answer 28

Can only be applied to a target market

Question 29

Benefits of dynamic pricing

Answer 29

-Higher profit and sales -Adjusts to the competition -Flexibility -Better inventory management

Question 30

Limitations of dynamic pricing

Answer 30

-Customer dissatisfaction(leading to a loss of sales, since customers paying more may feel cheated) -Not applicable to all markets

Question 31

Benefits of competitive pricing

Answer 31

Price aligned with rivals

Question 32

Limitations of competitive pricing

Answer 32

Pricing alone is not low enough to attract customers(other methods of differentiation may be needed)

Question 33

Benefits of contribution pricing

Answer 33

-Allow flexibility in the pricing of individual products -Demand factors can be taken into consideration

Question 34

Limitations of contribution pricing

Answer 34

-Difficult to classify costs as direct or indirect

Question 35

What value must the price elasticity of demand(PED) have for the situation to be considered as price elastic demand?

Answer 35

PED > 1

Question 36

What value must the price elasticity of demand(PED) have for the situation to be considered as price inelastic demand?

Answer 36

0 < PED < 1

Question 37

What value must the price elasticity of demand(PED) have for the situation to be considered as unitary elastic demand?

Answer 37

PED = 1

Question 38

PED Classifications

Answer 38

-Price elastic demand -Price inelastic demand -Unitary elastic demand

Question 39

Factors that determine the PED for a product

Answer 39

-Number and proximity of substitute goods available -Time period

Question 40

Types of promotion

Answer 40

-Above the line promotion(ATL) -Below the line promotion(BTL) -Through the line promotion(TTL)

Question 41

Methods of above the line(ATL) promotion

Answer 41

-Television advertising -Newspaper advertising -Magazine advertising -Radio advertising -Outdoor advertising(e.g. billboards, bus sides)

Question 42

Methods of below the line(BTL) promotion

Answer 42

-Direct marketing -Sales promotion -Loyalty cards/Loyalty programs -After-sales service -Public relations(e.g. supporting charitable causes) -Merchandising -Exhibitions and trade fairs

Question 43

Examples of sales promotion

Answer 43

-"Buy one get one free" -Free samples -Point-of-sale display -Half-price offers -20% off

Question 44

Methods of through the line(TTL) promotion

Answer 44

-DIgital marketing -360-degree marketing

Question 45

Benefits of through the line(TTL) promotion

Answer 45

-It allows businesses to reacch as broad or defined an audience as they want -It allows businesses to customise the message according to the profile of their target market -It makes it possible to incrrease brand exposure, and, at the same time, generate sales

Question 46

Ways that businesses use social media to promote their products

Answer 46

-Paid advertisements -Content generated by users(e.g. comments) -Direct messages -Influencers

Question 47

Advantages of using social media for promotion

Answer 47

-Differentiation at low cost -More knowledge about customers -Improvement of customer service -Easy way to measure the performance of businesses

Question 48

Disadvantages of using social media for promotion

Answer 48

-Social media must be part of a broad promotional strategy -Social media production has marketing costs(e.g. hiring social media specialists)

Question 49

Types of intermediaries

Answer 49

-Wholesalers -Retailers -Agents/brokers

Question 50

Features of wholesalers

Answer 50

-Purchase large quantities of stock from producers and store it -Sell stock to retailers(or sometimes, customers9 afterwards -Act as a central delivery and collection point -Reduces the amount of deliveries needed from producers to retailers -Break-bulk

Question 51

Examples of retailers

Answer 51

-Convenience stores -Supermarkets -Online retailers -Department stores -Vending machines -High street shops and chain stores

Question 52

Difference between an agent and a retailer

Answer 52

The agent does not own the product that it is selling. Instead, the agent promotes the product and charges a commission

Question 53

Examples of agents

Answer 53

-Price comparison websites -Travel agents -Estate agents -eBay -International distributors

Question 54

Factors that determine the exact combination of intermediariees used

Answer 54

-Product type -The size of the distributor -Cost -Control -Legal factors

Question 55

Types of distribution

Answer 55

-Direct distribution -Indirect distribution

Question 56

Benefits of direct distribution

Answer 56

-Eliminates intermediary expenses -Increases direct contact with customers(gives the producer a chance to carry out market research) -Provides control(i.e. the producer can take decisions over the marketing mix of the product)

Question 57

Limitations of direct distribution

Answer 57

-Reduces distribution options -Increases internal workload -Raises costs

Question 58

Benefits of the producer → retailer → consumer distribution channel

Answer 58

Easy distribution of the product(i.e. the producer can deliver its products to more places)

Question 59

Limitations of the producer → retailer → consumer distribution channel

Answer 59

-Intermediary keeps some profit -Loss of control over the products(i.e. producers lose control over the marketing mix of the products)

Question 60

Benefits of the producer → wholesaler → retailer → consumer distribution channel

Answer 60

-Reduces advertising and storage costs(due to the wholesaler) -Gives producers the possibility of entering new markets(which would be harder to access otherwise)

Question 61

Limitations of the producer → wholesaler → retailer → consumer distribution channel

Answer 61

-Another intermediary keeps some profit -Loss of control

Question 62

Benefits of using agents/brokers

Answer 62

-Opportunities for new markets(since agents have specific knowledge of the legal aspects of each country, which is needed to introduce the new products successfully) -Potentially increased sales

Question 63

Limitations of using agents/brokers

Answer 63

-A commission must be paid(so reduced profits for the producer) -Loss of control

Question 64

Elements of process(as a part of the marketing mix)

Answer 64

-Placing and paying for orders -Delivery systems -Customer feedback -After-sales service

Question 65

Factors which affect the marketing mix of a particular product

Answer 65

-Whether or not a business is providig a good or a service -The type of business organisation and the resources available for creating and implementing a specific marketing mix -The characteristics of the market in which the business operates and the possibilities for it to grow and increase revenue -The characteristics of the target market -The legal and cultural aspects of the country in which the business is located

Question 66

How the product life cycle can be linked to the Boston Consulting Group(BCG) matrix

Answer 66

-Problem children(question marks) → introduction stage -Stars → growth stage -Cash cows → maturity stage -Dogs → decline stage

Question 67

The links between the BCG matrix categories and the product life cycle are not absolute(T/F)

Answer 67

True

Question 68

In which stage of the product life cycle do businesses tend to put their highest investments into a product?

Answer 68

Research and Development(R&D) stage