1.3- Marketing Mix And Strategy Flashcards
What is the definition of service design?
The combination of factors needed in designing a product. Aesthetics, Function, Cost (design mix)
What are the 3 factors in design mix?
Aesthetics, function and cost
What does bespoke design mean?
Bespoke design means; custom made, custom built, tailor made to the consumer
What is meant by standard design?
Standard design are products or services that are sold as standard, the customer cannot add any extra features or benefits
What is meant by efficiencies?
Efficiencies in production can be achieved by changing the types of materials used or by updating the technology used in production
What is meant by promotion?
The use of marketing tools to bring a product or service to the attention of potential buyers
What are the types of promotion?
- Personal selling
- Direct marketing
- Above-the-line marketing
- Below-the-line marketing
- Public Relations (PR)
- Sponsorship
What is meant by personal selling?
The use of salespeople to give a personal experience when the customer is buying a product
What is meant by direct marketing?
Highly focused targeted marketing usually tailored to the consumer
What is meant by above the line advertising (ATL)?
Above-the-line (ATL) marketing involves mass media methods for targeting larger and more general customers
• Radio
• TV
• Cinema
• Print adverts e.g. in newspapers and major magazines
• Outside adverts e.g. billboards
What are advantages of using above-the-line (ATL) promotion?
• ATL is tailored to reach a mass audience
• Advert communication is repeated so the message is clear e.g. “simples” and “go compare”
• Great for building brand awareness
What are some disadvantages of using above-the-line (ATL) promotion?
• Disadvantages are that this is a very expensive method and it is difficult to measure clear results from campaigns
• Very expensive e.g. A radio ad on a national station can cost about £10,000 for a week
What is meant by below the line advertising (BTL)?
Below-the-line (BTL) marketing is the same as direct marketing for reaching smaller but more targeted audiences. The main methods include:
• Public relations e.g. Ryanair PR stunts
• Search engines
• Events e.g. restaurant launch • Social media marketing
What are advantages of using below-the-line (BTL) promotion?
• Easy to measure if the campaign has reached an audience e.g. through number of website visits, conversion rates, click through rates
• Easy and inexpensive to use social media to increase brand awareness
• BTL is more targeted to specific niche segments rather than aiming at the whole mass market
What are the disadvantages of using below-the-line (BTL) promotion?
• Extensive training on working social media and IT may be needed for marketing staff
• Deeper understanding of customer or buyer behaviour is required e.g. what do they read, what websites do they visit
• Targeting diverse cultures with the same theme is difficult
What is meant by public relations?
Public relations is also known as PR. PR aims to build a relationship between the business and the public, to create a favourable corporate image
What are examples of sales promotion?
- BOGOFF
- Price discounts
- Money off coupons
- Samples / giveaways
- Special events
- Point of sale
What are examples of digital communications?
- Online adverts
- Mobile communications
- “Advergaming”
- Social media
- Consumer generated content
- Viral strategies
What is meant by branding?
A brand is a characteristic name or symbol that distinguishes one product from another supplier
What is meant by product branding?
A product branding strategy will aim to show the customer the features and benefits of a product which will differentiate it from other similar products in the marketplace
What are the advantages of using product branding?
Branded products can command higher prices that non-branded
Businesses therefore can expect higher profits from branded cash cows
Good branding differentiates the product and creates customer loyalty
What are some disadvantages to using product branding?
Product branding may require a high investment
Product branding may take many years to build up
Limited flexibility when the product tries to develop new lines in the range beyond what they are known for
What are some advantages for own brand products to the business?
Boosts customer loyalty to the supermarket
Competes with manufacturers brands
Fills gaps left by the company
What are disadvantages to a business with own brand products?
Store brands are a mixed bag and can be made by numerous companies under the supermarket’s name, so ketchup might be great but cornflakes might taste like carpet tiles
What is meant by rebranding?
Rebranding is a marketing strategy in which a new:
• Name
• Symbol
• Term
• Design
• Or combination of the above
Will be developed for an established brand with the intention of developing a new differentiated identity in the minds of consumers, investors and / or competitors
What are the benefits of strong branding?
Added value
Ability to charge premium prices
Reduced PED
What is a USP and what does it stand for?
USP stands for unique selling point, these are the small details that makes one product or business different from another
What are ways to build a brand?
USP’s / Differentiation
Advertising
Sponsorship
Social media
What are changes in branding and promotion to reflect social trends?
Viral marketing
Social media
Emotional branding
What is meant by pricing?
The process of pricing is the choice of pricing strategy that a business makes when setting prices for their products or services
What factors will influence the pricing strategy?
The product or service itself
Competitors in the market e.g. Heinz ketchup
The aims and objectives of the business
What are the types of pricing strategy?
- cost plus
- price skimming
- penetration
- predatory
- competitive
- psychological
What is meant by a cost plus pricing?
A cost-plus pricing strategy seeks to set a price for a product or service which covers the costs AND provides a good profit margin for the business
What are the benefits for cost plus pricing?
Protects the profit margins of the business
Easiest method of pricing to apply
Easy to estimate profit levels
What are the disadvantages to cost plus pricing?
This method of pricing does not take into account the prices of the competition
What is meant by skimming pricing?
A skimming price strategy is used when launching a new product. The price is set high to start, this will create high profits and may be used to pay back high Research and Development (R&D) costs. As competitors eventually enter the market the price is then reduced
What are the advantages of using skimming pricing?
A high starting price can establish an upmarket image
For innovative products it can be a great way to harvest high profits from early buyers who want the latest gadget / item / product and are prepared to pay a premium
What are the disadvantages of skimming pricing?
Cheaper imitations of the product may appear on the market too soon and take sales away from the product
Risky strategy as customers may be put off from buying due to the high price
What is meant competitive pricing?
Some products or services are priced in line with competitors
What are advantages of competitive pricing?
Useful in a market where one brand is dominant, the other brands would need to discount and offer lower prices encourage customers to buy
What are the disadvantages of competitive pricing?
Pricing at the competitive rate may not cover all the costs of some smaller businesses which can’t get the same economies of scale as the larger ones
What is meant by penetration pricing?
This means setting prices really low on a new product to encourage sales and to persuade customers to try the product. Then when they like the product and have to keep buying it the business raises the price
What are the advantages of penetration pricing?
Works best with new products being launched to encourage consumers to try the product
What are the disadvantages of penetration pricing?
Consumers may have bought anyway, even without the low start price
Expensive as it eats into profits by reducing sales revenue
What is meant by predatory pricing?
In oligopolies existing businesses may hold off the threat of a new entrant to the market by lowering their prices so that any competitor cannot make a profit. This is when aggressive price cutting is used to deter competitors or push them out of the market.
What are the advantages of predatory pricing?
The intention with predatory pricing is to drive competitors out of the market place or set a barrier to entry to discourage new entrants to the market
What are the disadvantages of predatory pricing?
Depends on the price elasticity of the product, if it is low then a lower price won’t make much difference to customer demand
What is meant by psychological pricing?
This means pricing a product at £1.99 rather than £2.00 to appear cheaper
What is the advantages of psychological pricing?
Ideal for products which want to project a premium image, the price might be part of the appeal
What are the disadvantages of psychological pricing?
Psychological pricing strategy can be high risk, if comparable products are available for a lower price consumers could be tempted away
What are the factors that determine a pricing strategy?
- number of USPs/amount of differentiation
- price elasticity of demand
- level of competition in the business environment
- strength of brand
- stage in the product life cycle
- costs and the need to make a profit
What is meant by distribution?
Distribution is the process of getting the right product or service to the consumer in the right place
What is the 4 stage distribution?
1) Manufacturer
2) Wholesaler
3) Retailer
4) Consumer
What is the 3 stage distribution?
1) Manufacturer
2) Retailer
3) Consumer
What is 2 stage distribution?
1) Manufacturer
2) Consumer
What are changes in distribution to reflect social trends?
Online distribution
Changing from product to service
Choice of distribution channel
What is meant by marketing?
The management process of identifying, anticipating and satisfying consumer demands for profit
What is meant by marketing strategy?
The methods used by a business to achieve their marketing objectives
What are the five stages of product life cycle?
Development
Introduction
Growth
Maturity
Decline
What happens in product development?
This is the first stage of the product lifecycle where a product is designed and market research is analysed to produce a product which will satisfy customer needs.
Cash flow is tight.
All capital will be an investment
What is meant by the introduction phase in the product life cycle?
The introduction phase will involve high costs in research and development and the product may have been test marketed before launching, so profits may be negative
Sales will be low as customers may not yet be aware of the products
Advertisement will be informative
What is meant by the growth phase of the product life cycle?
Growth phase products are enjoying rapid growth in sales and profits. At this stage the customers are aware of the product and demand is high. Advertisement may be used to take advantage of high demand.
What is meant by the maturity phase of the product life cycle?
Maturity phase products face intense competition now all the producers have joined the market. Market is starting to be saturated – everyone has bought the product who is likely to buy.
Sales are high but profit starts to fall
Products have to be discounted to keep sales high
What is meant by the decline phase of the product life cycle?
Decline phase products may be limited in production. At this stage profits and sales have fallen and the product may be withdrawn from sale. The business may decide to heavily discount to get any last sales before the product becomes obsolete
What are the product lifecycle extension strategies?
- updating packaging
- adding more or different features
- changing target market
- advertising
- price reduction
What is meant by product portfolio?
A product portfolio is the collection of all the products and services offered by a company
What is meant by the Boston matrix?
The Boston matrix is a marketing planning tool which helps managers to plan for a balanced product portfolio. It looks at the market share and market growth to determine whether a product is a star, cash cow, question mark or dog.
What is meant by a star product (Boston Matrix)?
High market share
High market growth
What is meant by a question mark product (Boston Matrix)?
Low market share
High market growth
What is meant by a cash cow product (Boston Matrix)?
High market share
Low market growth
What is meant by a dog product (Boston Matrix)?
Low market share
Low market growth
What are the uses of the Boston Matrix?
The Boston matrix is a good starting point when reviewing an existing product line to decide future strategy and budgets
What are the limitations of the Boston Matrix?
Products may not be low or high market share they could be medium
High market share does not always lead to high profits, there are high costs also involved with high market share
Many people argue this matrix is too simple
What is B2B marketing?
B2B stands for Business to Business marketing. Many businesses just deal with other businesses rather than consumers. For example a school or college will have a paper supplier so they can keep giving you handouts and you can print your work out.
What is B2C marketing?
B2C means business to consumer. They are not looking to build up long term relationships with the supplier, maybe a one off purchase like a sofa
What is customer loyalty?
Customer loyalty is creating a product or service that ensures repeat purchases
What is customer service?
The assistance and advice provided by a company to those people who buy or use its products or services
