1.3 Marketing mix and strategy Flashcards
define design mix
the range of features that are important when designing a product
define consumer durables
goods that can be used repeatedly over a period of time
define ergonomics
the study of how ppl interact with their environment and the equipment they use
define ethical sourcing
using materials and services etc from suppliers that respect the environment, treat their workfoorce well and generally trade with integrity
define product design
the process of creating a new product or service
define recycling
making use of materials that have been discarded as waste
define resource depletion
the using up of natural resources
define waste minimisation
reducing the quantity og resources that are discarded in the production process
define above the line promotion
placing adverts using the media
define advertising
communication between a business and its customers where images are placed in the media to encourage the purchase of products
define below the line promotion
any promotion that doesn’t involve using the media
define emotional branding
the practice of using the emotions of the consumer to build a brand
define generic brands
products that only contain the name of the product category rather than the company
define manufacturer brands
brands created by the producers of goods or services
define marketing mix
the elements of a businesses marketing that are designed to meet the needs of customers
define merchandising
a promotion specifically at the point of sale of a product
define own label brands
products that are manufactured by wholesalers, retailers or other businesses
define point of sale
any point where a consumer buys a product
define promotion
an attempt to obtain and retain customers by drawing their attention to a firm or its products
define public relations
an organisations attempt to communicate with interested parties
define sales promotions
methods of promoting products in the short term to boost sales
define sponsorship
making a financial contribution to an event in return for publicity
define viral marketing
any strategy that encourages people to pass on messages to others about a business/product electronically
define competitive pricing
pricing strategies based on the prices of rivals
define cost plus pricing
adding a percentage to the costs of producing a product to get the price
define penetration pricing
setting a low price when launching a new product in order to get established in the market
define predatory pricing
setting a low price forcing rivals out of business
define pricing strategy
the pricing policies or methods used by a business when deciding what to charge for its products
define product life cycle
shows the different stages in the life of a product and the sales that can be expected at each stage
define psychological pricing
setting the price slightly below a round figure e.g. 99p instead of £1 to appear cheaper
define skimming pricing
setting a price high initially and then lowering it later
define unit costs
total costs divided by output
define agent/broker
an intermediary that brings together buyers and sellers
define breaking-bulk
dividing a large quantity of goods received from a supplier before selling them on in smaller quantities to customers
define direct selling
producers selling their products directly to customers
define distribution
the delivery of goods from the producer to the consumer
define distribution channel
the route taken by a product from the producer to the customer
define E-Commerce
the use of electronic systems to sell goods and services
define retailer
a business that buys goods from manufacturers and wholesalers, and sells them in small quantities to consumers
define wholesaler
a business that buys goods from manufacturers and sells them in smaller quantities to retailers
define boston matrix
a 2x2 matrix model that analyses a product portfolio according to the growth rate of the market and the relative market share of products within the market
define extension strategies
methods used to prolong the life of a product
define marketing strategy
a set of plains that aim to achieve a specific marketing objective
define product lines
a group of products that are very similar
define product portfolio
the collection of products a business is currently marketing
what four P’s make up the marketing mix?
Product design
Promotion
Pricing
Place - type of distribution
what does the design mix include?
Function -fit for a purpose
Aesthetics - look good
Cost - may be more concerned about cost of good quality materials or not
how can changes in social trends affect the design mix?
Aesthetics may become a priority over function and cost
consumers growing concern with overuse of resources ->minimise waste and make recyclable products
consumers want products to be ethically sourced -> to help preserve the environment e.g. use less/avoid palm oil
explain more about promotion in the marketing mix?
designed to inform/persuade consumers
objectives include increasing sales and profits & awareness of products
has to get the consumers attention so they can be informed
explain more about above the line promotion
adverts used to promote goods and also a firms public image
uses media like TV, print, radio and the internet etc
choice depends on the target customers
digital communications is cheaper e.g. social media, than traditional forms
specialist media used for niche markets
need to follor legal constraints
explain more on digital communications?
can be targeted to consumers who’ve shown interest
adverts on phones are inc important but due to large volume of ads often go ignored e.g. installing ad-blocker software
explain more of below the line promotion?
w/o the use of media
offer sales promotions like BOGOF, aiming to raise awareness/inc sales
manufacturers aim sales promotion at retailers to encourage higher levels of stock
-customers have become more aware and may wait before buying non neccesities
increases sales but reduces profits made on each sale
explain more on direct marketing
includes mailshots
promotional items sent in post
customer usually hasn’t asked for them
if can keep info on customers -> data base can target their marketing
-often waste of money as it gets thrown away
explain more on personal selling
personal communication between a salesperson and a customer
involves sales assistants, phone salespeople etc
-salary and cost of sales assistants etc can be expensive and personal selling has a limited reach
why is event sponsorship used as promotion?
makes more customers aware of its firm and products
although is expensive and inc costs
explain more on public relations
involves liasing w the media, by doing tv interviews and organising product launches, conferences and other special events
raise awareness and create a good public image
-difficult to control what media reports about -> can create negative image
explain what manufacturer / corporate branding is/does?
corporate branding is how a business presents itself
within CB may be seperate products brands aimed at diff groups of consumers
e.g. kelloggs has a recognisable red font used for its name, consumers trust products w this logo will have good quality
explain what product branding is/does?
the specific individual products a corporate brand makes
-these will have own logo and slohan but also have the corporate branding included in its packaging
-usually have expensive marketing and higher retailer price -> willing to pay more for trusted product as appeals to sense of wellbeing
explain what own branding is/does?
brands that are inhouse to a supermarket or retailer
not likely to have large budgets for branding -> no distinctive slogan/ logo => cheaper to produce but can’t charge higher prices
ad to customer is they get a product cheaper than if they bought branded -> perceived as low quality?
what is rebranding?
a marketing strategy that can involve a change to the design, promotion, pricing or distribution of an existing brand
why would a business rebrand?
to aim it at a different market
to try overcome competition from another business
create a new identity when brand name is no longer suitable
what are the benefits of strong branding?
the added value -> makes PED less elastic
consumer perceives the product to be a higher quality or more desirable -> pay a premium price
creates a barrier so harder for newcomers to enter the market
how can a business build a brand?
base it around the products USP -> help product differentiation
creating a strong image of the brand -> if perceived as superior than others
advertising to promote and maintain customer awareness of a brand -> persuade customers its unique
sponsorship
how can social media be used to communicate with consumers?
using viral marketing involving platforms like youtube etc -> share news and updates -> spreads awareness of of brand -> spread rapidly
-low cost technique, as doesn’t use traditional techniques
-but may have a loss of control of this message -> damage reputation
how can emotional branding help engage consumers?
engage customers through matching the branding of a product to the lifestyle, values or aspirations of consumers to trigger an emotional response so they buy
-> to be successful must understand the values and purchasing behaviour of consumers and how they change overtime
what are some factors which influence pricing strategies?
4ps in marketing mix
price of product which would cover costs and still make a profit
if its acceptable to customers - depends on how price sensitive target market is
the PED depending on availability of subs, etc
stage of life cycle product is in
level of competition
if has a strong USP
explain what is meant by price skimming?
when new products are sold at high prices when they first reach the market
pay more due to scarcity value and high prices boosts image
-dropped considerably when product has been on the market for a year
-can be long term to keep brands more exclusive but potential customers may be put off by the initial high prices and those who bought it at launch will be annoyed when they drop
explain more about penetration pricing
launching a product at a low price in order to attract customers and gain market share, effective in price sensitive markets
best for businesses which benefit from lower costs when manufacturing larger quantities
can be used as an extension strategy, target more budget conscious market segments
what is a problem with penetration pricing?|
customers may expect low price to continue so may lose customers when prices raise & damage brand image
whats the formula for cost plus pricing?
price = unit cost +(unit cost/100 x mark up)
how can changes in social trends affect pricing strategies?
comparison sites -> shop around, high power-> saves time & effort
consequence for retailers is = need for effective info systems so aware of prices competitors are charging -> price competitive
increasing in use of online retailers -> more need to be price competitive -> compete with other aspects of final pricing like free delivery
what do wholesalers do?
buy goods from manufacturers in bulk and sell them in smaller quantities to retailers - ‘breaking bulk’
make distribution simple and can store more goods than a retailer
what are the three different channels of distribution?
direct -> two stage = Manufacturer -> Consumer
indirect -> three stage = Manufacturer -> Retailer -> consumer
indirect -> four stage = Manufacturer -> Wholesaler -> Retailer -> consumer (most traditional used for groceries, can inc cost to customer)
why and who uses multi channel distribution?
when businesses sell through more than one method and gives flexibility to customers
used by supermarkets and fashion retailers w high street stores -> added costs
stores who only sell online have cheaper costs but have problems developing brand loyalty
what does online distribution provide to businesses?
means firms can provide services instead of products
its the streaming or downloading of media content
customers purchase the right to download
the media content instead of buy a good
direct & immediate, cost saving for the business
price is cheaper for customers
what is an advantage of using online distributors?
more environmentally friendly
relatively easy to set up and can be run from anywhere with internet connection
can respond to consumers needs quickly & business will have more working capital
what’s a disadvantage of online distribution?
online distribution requires a different set of skills so staff may need further training in IT skills
why is online distribution becoming more popular?
as it is easy and cheap, to stay competitive for businesses, growth in third party service providers like spotify
changes in social trends like using NETFLIX instead of TV
what does the product life cycle show?
the sales of a product over time
valuable for planning marketing strategies and has implications for cash flow
marketing decisions will be made based on where a product is in its life cycle
what are the five stages of the product life cycle?
Development
Introduction
Growth
Maturity
Decline
what occurs in the development stage?
high R&D costs
market research
high costs as no sales yet
development has a high failure rate -> not enough demand
what occurs in the introduction stage?
launch of product
heavy promotion to build sales
initial price may be high to cover promotional costs or penetration pricing
comp may be limited as may release an innovative product
sales increase but has to pay for high fixed costs of development before making a profit
what occurs in the growth stage?
sales grow fast, new customers and repeat customers
competitors may be attracted to the market, promotion shows differences from comp products
product is improved or developed
rising sales encourage more outlets to stock the product
what occurs in the maturity stage?
sales reach a peak and profitability increases as fixed costs have been paid for
at saturation, sales may begin to drop
fierce competition
what occurs in the decline stage?
doesn’t appeal to customers so fall in sales and profits decrease
only stay profitable if promotional costs are reduced
product may be withdrawn or sold to another business
what do extension strategies do?
keep a product going for longer by increasing sales for a short time period
examples are product development and promotion
PD -improving and redesigning a product
or a change in the way the business promote its products
what does a mixed product portfolio provide a business with?
variety of customers to target
its the combination of all the product lines together
aim to have a variety of products at each stage in the life cycle
explain more about the boston matrix?
compares market growth with market share
all new products = ? as have small market share and high MG
valuable way of showing where a business’ products are positioned in the market
market decisions will depend on the products positions in the matrix
-can’t predict what will happen to a product -> limit
what do ? require?
heavy marketing due to high market growth and low market share
brand building
have high costs due to R&D
what do cash cows require?
Have high market share & low market growth
in maturity phase
costs are low
bring in sales revenue
what do stars require?
have high market growth and high market share
in their profitable growth phase - most potential
future cash cows
lots spent on promotion due to competition
inc in capacity to meet demand
what do dogs require?
have low MS and low MG
if still profitable business will harvest profit short term
no longer profitable -> remove off market
often in negative cash flow
what is a mass marketing appeal used for?
appeal to a wide audience
important that advertising clearly shows the USP
need to promote in certain ways to stay competitive: expensive AD. CAMPAIGNS, Sponsorship, promotional activities and customer loyalty cards
what does a niche marketing strategy need to do?
focus on a specific market segment
more emphasis on differentiation
more specialised and requires effective market research into customers values
need more cost-effective methods of raising awareness
concentrate on building a reputation & establishing customer loyalty
use price skimming if highly specialised product
what is business to business marketing?
the sale of ones businesses product to another business
what is business to customer marketing?
the sale of a businesses product to a consumer
what does B2B marketing focus on?
being more informative than B2C needs to be
what will B2B customers be interested in?
quality of a product
concerned with any cost savings or potential revenue
whats important in B2B marketing?
understand the clients needs so more specialised
volume of sales may be very large -> high stakes as each successful contract can be very profitable
what is customer loyalty important for?
repeated purchases
built through good before and after sales-> good relationships w customers
how can loyalty cards and saver schemes promote customer loyalty?
LC - tie a customer to a particular retailer/provider -> useful in markets w substitutes or where products are bought regularly
SS- when customers can collect points based on what they spend is successful in supermarkets as it promotes customers to only shop at one market and get discounts as a result e.g. tesco clubcard
