1.3 Marketing mix and strategy Flashcards
What is the marketing mix
combination of factors controlled by company -> influence consumers purchase its products.
What are the three elements of the design mix
function, economic manufacture, aesthetics
What is the design mix
the three aspects of design that companies need to consider when developing a product
Definition of aesthetics
-look, taste, texture or feel of an item
Definition of function
-whether an item does what its expected to do
-extent to whoch it surpasses expectations of quality of performance
Definition of economic manufacture
-ease and economy eith which product can be made on scale required
Name 5 benefits of good design
-can add value
-can provide point of differentiation
-can reduce manufacturing costs
-improves brand image
-may boost brand loyalty
Name 2 changes in the design mix to reflect social trends
-environmental concerns
-ethical sourcing
Name 3 key environmental concerns product design has focused on
-sustainability- ensure materials are sustainably sourced
-design for waste minimisation or reuse- need design products from outset with end of lives in mind- ensure parts of product that cannot be reused-> must be thrown away _> reduced
-recycling- parts of products that cannot be reused may be able to be recycled for another use
Why has there been changes in the design mix due to ethical sourcing
due to media coverage reporting things : child labour, unethical fishing methods- which can have a bad effect on a business
Name 2 methods ofcommunictaing
-branding
-promotion
What is promotion
methods used to communicate info & persuade consumers to purchase a product
What is sustainability
making something using materials that will still be avaliable in the future
What are the 2 types of promotion
-long term methods
-short term methods
Name 2 methods of long term promotion
-persuasive advertising
-public relations
Name 2 methods of short term promotion
-buy one get one free (BOGOF)
-seasonal price-cutting promotions
Name 3 benefits if branding
-added value
-ability to charge premium prices
-reduced price elasticity of demand
What is a brand
recognisable name or logo that helps differentiate a product or business
What is an individual brand
single product brands (Penguin biscuits)
-manufacturers make no attempt push brand focusing on just single brand
What is a brand family
brand name used used across a range of related products (Cadbury)
Give 2 advantages of brand families
-strong brand family encourages sales of each product within family through association wit others
-makes it easier to get retail distribution when launching new products
What is a corporate brand
-when a company uses company name as a brand (Nestle), it can convince all products across the range share similar benefits
Name 4 ways to build a brand and how
-advertising- reinforces messages company wants to portray about brand
-Unique selling point (USP)- particular feature that no rivals provide- key stimulus that launches brand
-Sponsorship- way of brand building by association- creates attachment in consumers minds that builds brands personality
-Digital media- using social media to build relationships with consumers- e.g. google ads popping up everytime a search is made
What is a unique selling point (USP)
-a particular feature of a product or service that no rival provides
Name 3 ways branding and promotion have changed to reflect social trends
-viral marketing- nowadays social media offers a wider and faster way to spread good and bad recommendations of a product
-social media- place where businesses can display promotional messages- more people use social media today
-emotional branding- attempts to create an emotional response to the brand from customers- social media- caused new emotional levels
Name the 2 types of pricing strategy used for new products
-price skimming
-penetration pricing
What is price skimming
launching a unique, new product at a high price
What is penetration pricing
launching a new product at very low price to entice customers to try it
Name 2 advantages and disadvantages of price skimming
+high prices generate rapid profits
+high prices help create desirable image for product
-image may suffer when price begins to fall
-will deter some customer- may see product as ‘rip off’
Name 2 advantages and disadvantages of price penetration
+encourages customers to develop the habit of buying the product
+low price boosts sale volume cutting production costs
-products image may be seen as ‘cheao’
-upmarket retailers may be unwilling to stock the product
Name the 4 types of pricing strategy used for existing products
-cost-plus
-predatory
-competitive
-psychological
What is cost-plus pricing
deciding price by adding desired percentage onto total costs per unit
Name an advantage and disadvantage of cost-plus pricing
+guarantees a profit is made on each unit sold
-ignoring market may mean an unrealistic price is generated
When do firms with existing products use cost-plus pricing
when firm is a market leader with no need to worry about competition
What is predatory pricing
strategy that sets price low enough to force competitor out of business- local basis- where competitiors are smaller, local firms
Name an advantage and disadvantage of predatory pricing
+once rival has been forced to close prices can be pushed up higher- increasing margins
-if product proven to be specifically designed to drive rivals out of business- its illegal
When do companies with existing products use predatory pricing
when firm is more financially powerful than smaller rivals
What is competitive pricing
charging price at market average or at discount to average price in market
Name an advantage and disadvantage of competitive pricing
+ensures price doesnt put off customers buying the product
-firms have little control over price they charge and so revenue generated
When do firms use competitive pricing
when company is trying to take on more powerful rivals
What is psychological pricing
tactic used to make fine-tuned descisions on price to charge- e.g. prives set at £9.99 instead £10
Name an advantage and disadvantage of psychological pricing
+can help customers into making a purchase by helping them believe they aren’t spending quite £10
-little effect on planned purchases, might annoy customers
When do firms use psychological pricing
when selling impulse purchases or little treats
Name factors that determine the most appropriate pricing startegy and how
-level of product differentiation- highly differentiated products- more control over pricing
-price elasticity of demand- inelastic demand- firms can adjust prices how they want- elastic demand- firm must reduce prices to boost demand
-level of competition- higher level of competition, the less scope firm has moving away from competitive strategy
-strength of brand- strong brand differentiate products,- so have more control over pricing
-stage in product life cycle- introduction phase- key pricing decision, pricing changes when product grows
-costs and need to make profit- pricing below unit costs leads to loss, price sjould be above costs to make profit
How do changes in pricing reflect social trends
online sales- pricing online differs to shop -> consumers easily compare prices
-pricing levels lower online- no fixed costs
-price comparison sites- encourage firms to price competitively so their products show up on these sites,
Name the 3 distribution channels
-producer -> wholesaler -> retailer -> consumer
-producer -> retailer -> consumer
-producer -> consumer
Describe the following distrubution channel:
producer -> wholesaler -> retailer -> consumer
-contains 2 intermediary levels
-wholesaler buys in bulk & sells to retailer in smaller quantities
-
Describe the following distrubution channel:
producer -> retailer -> consumer
contains one intermdiary
-retailer sells products -> consumer on ur behalf
-increases coverage for products
-but could lose control
Describe the following distribution channel:
producer -> consumer
-direct marketing channel
-manufacturer sells directly to the consumer
What is the product life cycle
pattern of sales over time that most products tend to follow
Name the 4 phases of the product life cycle following a products launch
-introduction- (sales low)
-growth- (sales begin to rise)
-maturity - (growth in sales slow)
-decline - (sales fall)
Name 3 issues with the product life cycle model
-decline is not inevitable
-hard to know where a product is in its life cycle
-shape and duration of life cycle varies from product to product
What is an extension strategy
medium to long-term plan for extending life cycle of a product
Name 3 ways you can change a product nearing the end of its maturity stage that can lead to successful extension strategies
-launch slightly different variants of product
-add extra functions/ features
-change ingredients/ materials
Name 3 ways you can change the promotion of a product that can lead to successful extension strategies
-targeting different market segment
-finding new uses for product
-increasing use of product
What is the product portfolio
the range of items sold by a business.
What is the Boston Matrix
diagram -> bussinesses analyse product portfolio/ product mix
Name the 2 variables considered on the Boston Matrix
-market share
-market growth
Name the 4 quadrants found in a Boston Matrix diagram
-problem child
-cash cow
-rising star
-dog
What are problem child products
have low market share in fast growing markets
-may be successful in future
What are rising star products
have high market share in a fast growing market
What are cash cow products
products in stable markets that hold a high market share
-generate high sales with low marketing expenditure
-generate significant profit that business can help to further develop products in portfolio
What are dog products
products that have:
-low market growth –> low sales
-low market share
-unattractive
What are business to consumer (B2C) strategies
-keep good brand image for product is vital
-revisit marketing mix ensure meeting customer wants and needs
-ensure of customer loyalty
Definition of business to consumer
process of business selling products and services directly to consumers
-traditionally- manufacturers sold products to retailers with physical locations
-nowadays- online retailers- manufacturers sell goods online- e.g. company like Amazon
Benefits of business to business (B2B) model compared to business to consumer (B2C)
-B2B more profitable- purchasing/ selling in bulk- gaining profit on every item you sell
whereas B2C- only sell at market price
-customers may want discounted items
-deeper customer relationship between a B2B buyer and seller- leads to customer loyalty due to friendly service- more sales- increased profit
Benefits of business to consumer (B2C) model
-stringer customer loyalty
-no need for fixed costs- online payments
Definition of business to business
-transaction between one business and another (wholesaler and retailer)
Benefits of business to consumer (B2C) model compared to business to business (B2B) model
-reach of a B2C product can be much higher than a B2B product- more sales- more profitable
why is B2B better than B2C
-sell in bulk- gain profit on every item sold
-B2C- sell at market price- may want discounts
-better relationship w customers- customer loyalty- more sales- profit
What are intermediaries
businesses between producer & consumer in distrution channel
Name 3 issues that are likely to determine the success of a new product
-understanding needs & wants of market
-creativity which solutions to problems can be found
-finding & committing resources needed for products success (money, ppl)
Name 5 step by step activities involved in new product development
-research & development
-product design
-packaging design
-advertising
-pricing
What is a marketing strategy
general approach to marketing used by a business
Name 3 ways marketinf stratgeies are likely to be successful
-strategy is about the future- predict future market conditions- ensure & ensure plan is devised for this
-strategy much be achieveable- plans must address real conditions operating in market
-strategy is company specific- usually only 1 space for 1 business following particular strategy -> e.g 1 firm would focus on being cheapest
What is a mass market strategy
when a business chooses to sell standard product to almost all consumers in market
Benefits of successful mass market dtrategy
-high distribution levels
-greater control over advertising & promotion
-degree of influence over pricing within the market
Benfits of sucessful niche market strategy
-able to meet consumer needs more precisely
-able to charge higher price than mass market products
-less direct competition
What is a niche market strategy
when business sells specialised product to smaller subsections of the market
What is direct distrubution
channel where producer & consumer deal directly with each other
-no intermediary
What is indirect distrubution
involves use of intermediaries between producer & consumer
Give 2 retailer examples
-department stores- debenhams
-multiples- sainsburys, next
Name 3 factors to consider when deciding your distribution channel
-nature of product -> perishable?, desired image?
-the market -> overseas competition
-the business -> size, objectives, control wanted
What is multi-channel distrubution
involves a business using more than 1 type of ditruution channel
What is multi-channel distrubution
involves a business using more than 1 type of distribution channel
What is the importance of the Function of the product?
A product must be fit for purpose
Products should easy and convenient to use
if a business can design a product of service with superior functionality could be its USP
What is the importance of Aesthetics of a product?
Products and services should provide a sensory stimulation in addition to performing a function
size, shape , appearance, sell or taste etc
sometimes use more expensive material for looks
someone may buy luxury cars for aesthetics
What is the importance of the Cost of a product?
designers will need to select materials and processes that minimize costs
Explain the change to the design mix in terms of social trends
People have become increasingly aware about the effect their lifestyles have on the environment
Businesses have also responded to pressure from the government, media and consumer groups by taking into account environmental issues in the design of their product
Design for waste minimization –> last longer, smaller and lighter, recyclable products, less packaging
-Some industries are more difficult to change e.g. fashion changes every season
What is informative advertising?
adverts are designed to increase consumer awareness of products, give information about the features of a product
What is persuasive advertising?
Some advertising is designed to put pressure on consumers to buy a product.
Persuasive advertisements often try to convince consumers to buy a particular brand rather than that of a competitors
