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Unit 5 Flashcards

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1
Q

Marketing Mix

A

The key decisions a business make in order to persuade customers to buy their goods or service

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2
Q

What does Product Life Cycle represent?
Draw the Product life Cycle

A

The stages that a product goes through, in terms of sales revenue

y-axis : Sales
x-axis : Time

Introduction :
Growth
Maturity
Decline

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3
Q

What is a Brand

A

Logo, name, image that differentiates one producer from another
Creates a perception in the mind of customers

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4
Q

Brand Awareness

A

Extent to which a product is recognized and remembered by customers

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5
Q

Brand Development

A

The process of building a brand identity in order to maximize sales and profits

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6
Q

Brand Loyalty

A

The extent to which customers repeat purchases from a brand

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7
Q

Brand Value/Equity

A

When customers are willing to pay a premium price for a brand above a non-branded product

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8
Q

Advantages of branding

A
  • Instant recognition
  • Product Differentiation (USP)
  • Brand Loyalty and Brand Value
  • Employee motivation
  • Easier to enter international markets
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9
Q

Disadvantages of branding

A
  • Bad news affect the whole brand
  • Marketing costs to build and maintain the brand
  • Cultural and language differences contributing to marketing costs
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10
Q

What is Extension Strategies? Examples?

A

Marketing strategies that lengthen the maturity stage of the Product Life Cycle and prevent a decline in sales

  • New version of the product
  • Adding features
  • Redesign
  • Reduce price on older models
  • New packaging
  • Entering a new market
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11
Q

Pros of Extension Startegies

A
  • Increases revenue
  • No need to create a whole new product
  • Relatively simple - change packaging, new name etc.
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12
Q

Cons of Extension Strategies

A
  • Costs involved - e.g. designing new product design
  • Consumers may see through the strategy
  • Taking money away from developing new products
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13
Q

The relationship between the product life cycle, investment, profit, and cash flow

A
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14
Q

Cost-plus pricing?
Pro and Cons?

A

Adding a fixed mark-up for profit to the unit of cost of a product

Pro: Guaranteed profit as price changes with cost
Con: Ignores the market

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15
Q

Penetration Pricing? When is it suitable and Con?

A

When a business enters a new market, setting a relatively low price for the product in order to gain market share

Suitable when the product is price elastic - When a product is elastic, a change in price quickly results in a change in the quantity demanded
- The low price will attract proportionately more demand

Con: Low profit margins at the beginning

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16
Q

Loss leader pricing

A

Product sold at a very low price below cost price, with the intention of making profits on other products

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17
Q

Predatory pricing

A

Setting prices lower than the competition with the intention of driving them out of the market
Then can raise the price when competition has left increasing monopoly power
Illegal in many countries, but difficult to prove

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18
Q

Premium pricing ? Pro and Con?

A

Setting a high price to show that the product is high quality or luxury
Consumers can buy a product to show their success, wealth, etc

Pro: High profit margins
Con: Fewer customer and requires an exclusive image

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19
Q

Dynamic pricing

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A

When a business changes prices according to time and the level of demand

20
Q

Competitive pricing? Pro and Con?

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A

Setting a price at a similar level to other products in the market
Pro: easy to set the price (no market research needed)
Pro: Customers will see your prices as comparable and fair
Con: Doesn’t Account for Costs- you follow other but you might have higher costs, therefore you will have lower profit margin

21
Q

Contribution pricing

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A

Ensuring that the price charged is higher than the variable cost of production

Contribution per unit = price - variable cost
Then this ‘profit’ (CPU) can be used to pay towards the fixed costs

22
Q

Price elasticity of demand

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A

It shows how sales will change with a change in price

Elastic PED
- Price change will lead to a proportionately larger change in sales
- So a decrease in price will lead to higher revenue

Inelastic PED
- A change in price will lead to a proportionately smaller change in sales
- So an increase in price will lead to higher revenue

23
Q

Promotion

Study These Flashcards
A

Communicating with current and potential customers about their product in order to raise sales

24
Q

Above the line promotion

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A

Promotion directly paid for by the company to communicate with consumers through mass media
- TV/radio adverts
- Newspapers/magazine adverts
- Billboards
- Online ads

25
Below the line promotion
Promotion activities that are generally targeted towards a specific market share or group of people. These are not directly paid for by the business No money is pad to advertising agencies - Price promotion - ex. Buy one get one free, prizes - Loyalty cards - Free samples - Direct selling - ex. Door to door - Sponsoring events/teams
26
Through the line promotion
A promotional strategy that combines above the line and below the line strategies - Ex. TV ads alongside a customer loyalty program - Ex. online ads alongside in-store sales promotions
27
Pros of Above the line
- Can reach a wide and diverse audience - Audio/visual stimulus - Can tell a story
28
Pros of Below the line
- Relatively cheaper - Targeted at specific customers
29
Social media as a promotional tool
The use of social media platforms to connect with the target audience - Ex. Instagram, TikTok, Linkedln
30
Pros of using social media as a promotional tool
- Can reach large audiences, especially in younger generation - Can target you audience - Can measure success → ex. Click through rate - Do this quickly
31
Cons of using social media as a promotional tool
- Cost involved in hiring people to manage the online presence - No control over the online reaction - Security issue
32
Place
The process of how a product gets form the manufacturer to the final consumers
33
Direct selling (zero- level distribution channel)
Manufacturer selling to consumers without any intermediaries - Ex. Amazon, plane tickets - Ex. door to door, telephone, mail order, farmers’ markets
34
Pros of direct-selling
- Higher profits margins - no intermediaries to pay - Direct contact with the customer - More control - over pricing, promotion, etc
35
Cons of direct selling
- Less exposure fort he product to consumers - Have to handle storage and distribution - Not specialized in selling
36
Single intermediary distribution channel (one-level)
Selling to consumers via one intermediary (retailer, agent, or distributor)
37
Pros of using one intermediary distribution channel
- Reach wider range of customers - Consumers can see and feel the product - Retailer takes care of storage and distribution
38
Cons of using one intermediary distribution channel
- Retailer will take some of the profit - Lose control of marketing mix - ex. Price, promotion - Product likely to be displayed next to competitors
39
Two intermediary distribution channel (two-level distribution channel)
Manufacturer selling to consumers via 2 intermediaries - Usually a wholesaler and a retailer Wholesalers buy in bulk from manufacturers and then sell smaller amounts to retailers
40
Pros of using a wholesaler
- Wholesaler takes care of storage and distribution - Wider geographical range
41
Cons of using a wholesaler
- Another intermediary to take profit - Even less control over the marketing mix
42
People
How employees (staff and managers interact with consumers) Ex. - Customer interactions - After-sales service - Use of social media - If the product is a service → ex. Education, hotels, airplanes - Cultural variations
43
Processes
The way in which the good or service is actually delivered to the consumers Ex. Payment methods Waiting times Website Online delivery
44
Physical evidence
Tangible aspects of the business when a consumer buys/consumes the good or service The senses: see, smell, hear, feel, taste
45
BM Toolkit 4 → BCG Matrix (AO4) - Draw - What does it represent? - Components
Product portfolio = the different products that a business has Analyzes a firm’s product portfolio in terms of - Market share (high/low) → measured relative to competitors - Market growth (high/low) → high market growth is usually >10% Question marks (problem child) - High market growth - Low market share - Product life cycle = introduction - High promotion costs to establish brand and not all will succeed - Negative cash flow Star - High market growth - High market share - Product life cycle = growth - High promotion costs as the market is growing - If you don't promote other businesses will overtake you - Maybe positive cash flow/profit Cash Cow - Low market growth - High market share - Product life cycle = maturity - Some, but less promotion costs - Maintaining brand - Positive cash flow and profit Dog - Low market growth - Low market share - Product life cycle = decline - Probably needs to be replaced
46
Advantages of using BCG Matrix and its Limitations
Adv: Can help a business manage its product portfolio over time But... - Is limited by only having 2 axes - market growth and share - Only uses high/low - what about medium market share/growth - Dogs may be profitable
47
Some strategies for managing the product portfolio using BCG Matrix
Building question marks - More promotions - Help them gain market share and become stars Holding stars - Help maintain the position - When the market growth slows they become cash cow Milking cash cows - Reduce spending on cash cows and milk the cash - Spend it on the question marks and stars Stop the production of dogs

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