1.3 Marketing mix and strategy

Question 1

What 3 factors go into the design mix?

Answer 1

Function

Aesthetics

Cost

Question 2

What does function mean?

Answer 2

Relates to whether the item actually does what it is expected to do/the extent to which it surpasses expectations of quality of performance

Question 3

What does aesthetics mean?

Answer 3

The word used to describe the look, taste,texture or feel of an item

Question 4

What does economic manufacture mean?

Answer 4

Considers the ease and economy with which the item can actually be made on the scale required

Question 5

What are the benefits of a good design?

Answer 5

Can add value

Can provide a point of differentiation

Can reduce manufacturing costs, boosting profit margins

Improves brand image

May boost brand loyalty

Question 6

What are the changes in the design mix to reflect social trends?

Answer 6

Environmental concerns

Ethical sourcing

Question 7

What are the three environmental concerns?

Answer 7

Sustainability - using materials that will still be available in the future

Design for waste minimisation/reuse

Recycling

Question 8

What is promotion?

Answer 8

Describes methods used by the business to communicate information and persuade consumers to purchase a product

Question 9

What are types of short term promotion?

Answer 9

Buy one get one free

Seasonal price cutting promotions

Question 10

What are types of long term promotion?

Answer 10

Persuasive advertising

Public relations

Question 11

What is a brand?

Answer 11

A recognisable name or logo that helps to differentiate a product or business

Question 12

What are types of branding?

Answer 12

Individual brand (single product brands e.g penguin biscuits)

Brand family (brand name used across a range of products e.g Cadbury)

Corporate brand e.g Nestle/ Nespresso

Question 13

What are the benefits of branding?

Answer 13

Added value

Ability to charge premium prices

Reduced price elasticity of demand

Question 14

What are ways to build a brand?

Answer 14

Advertising

USP

Sponsorship

Digital media

Question 15

What is a USP?

Answer 15

A particular feature of a product or service that no rival provides

Question 16

How can you change branding/promotion to reflect social trends?

Answer 16

Viral marketing

Social media

Emotional branding

Question 17

What are types of pricing strategy’s for new products?

Answer 17

Price skimming

Penetration

Question 18

What is price skimming?

Answer 18

Involves laughing a brand new product at a high price while the product is unique

Question 19

Advantages of price skimming:

Answer 19

High prices help to create a desirable image for the product

Early adopters will pay the high price in return for exclusivity

High prices generate rapid profits helping to recover the costs of innovation quickly

Question 20

Disadvantages of price skimming:

Answer 20

Will deter some customers with price seen as a rip off

Early buyers may be frustrated once price starts to fall

Image may suffer when price begins to fall

Question 21

What is price penetration?

Answer 21

Involves launching a product at a very low price to entice customers to try it

Question 22

Advantages of price penetration:

Answer 22

Low price may encourage lower risk product sampling

Low price boosts sales volume which cuts production costs

High volumes may persuade retailers to buy the product which boosts distribution

Encourages customers to develop the habit of buying the product

Question 23

Disadvantages of price penetration:

Answer 23

Product’s image may be immediately cast as cheap

Upmarket retailers may be unwilling to stock the product

Likely to create price sensitivity among customers (higher price elasticity)

Question 24

Types of pricing strategy for existing products:

Answer 24

Cost plus

Predatory

Competitive

Psychological

Question 25

What is cost plus pricing?

Answer 25

Involves deciding price by adding a desired percentage onto total costs per unit Only appropriate when the firm is a market leader with little need to worry about competition

Question 26

Benefits of cost plus pricing:

Answer 26

This should guarantee a profit is made on each unit sold

Question 27

Drawbacks of cost plus pricing:

Answer 27

Ignoring the market may mean an unrealistic price is generated

Question 28

What is predatory pricing?

Answer 28

A strategy that sets price low enough to force a competitor out of business Appropriate when a firm is clearly more financially powerful than smaller rivals

Question 29

Benefits of predatory pricing:

Answer 29

Once a rival has been forced to close, prices can be pushed up higher increasing margins

Question 30

Drawbacks of predatory pricing:

Answer 30

If it can be proven to be specifically designed only to drive rivals out of a business, predatory pricing is illegal

Question 31

What is competitive pricing?

Answer 31

Changing a price at the market average or at a discount to the average price in the market Appropriate when a company is trying to take on more powerful rivals

Question 32

Benefits of competitive pricing:

Answer 32

This should ensure that price will not put customers off buying the product

Question 33

Drawbacks of competitive pricing:

Answer 33

Firms that use competitive pricing strategy have little control over the price they charge and thus the revenue they generate

Question 34

What is psychological pricing?

Answer 34

A tactic used to make fine-tuned decisions on the price to charge, prices are set just below major psychological levels e.g £9.99 instead of £10 Appropriate when selling impulse purchases or little treats

Question 35

Advantages of psychological pricing:

Answer 35

This can help nudge customers into making a purchase by helping them to believe they are not quite spending £10 or £1000

Question 36

Drawbacks of psychological pricing:

Answer 36

May have little effect on many planned purchases and may in fact middle annoy customers

Question 37

What factors determine the most appropriate pricing strategy for a particular situation?

Answer 37

Level of product differentiation Price elasticity of demand Level of competition Strength of brand Stage in the product life cycle Costs/need to make a profit

Question 38

How can price change to reflect social trends?

Answer 38

Online sales Price comparison sights

Question 39

What is a distribution channel?

Answer 39

The route a product takes from producer to consumer

Question 40

What is the product life cycle?

Answer 40

Introduction Growth Maturity Decline

Question 41

What is an extension strategy?

Answer 41

A medium to long term plan for extending the life cycle of a product

Question 42

Types of extension strategies:

Answer 42

Product changes e.g adding extra functions/features Promotional changes e.g Finding new uses for the product

Question 43

What are the characteristics of the Boston Matrix?

Answer 43

Star (high market growth/share, in the growth phase) Problem child (high market growth/low market share, in the introduction phase) Cash Cow (maturity stage) Dog (decline stage)

Question 44

What is a marketing strategy?

Answer 44

The term used to describe the general approach to marketing used by a business

Question 45

What are the benefits of successful mass marketing strategies?

Answer 45

High distribution levels Greater control over advertising/promotion A degree of influence over pricing within the market

Question 46

What are the benefits of successful niche marketing strategies?

Answer 46

Able to meet consumer needs more precisely Able to charge a higher price than mass market products Less direct competition

Question 47

How can businesses develop consumer loyalty?

Answer 47

Building an emotional attachment between consumers and the brand Each aspect of the marketing mix combine to create a clear image for the brand