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Business > 1.3 - Marketing mix and strategy > Flashcards

1.3 - Marketing mix and strategy Flashcards

1
Q

What factors is the traditional design mix composed of?

A
  • function - the way a product works
  • aesthetics - how the product appeals to the customer in terms of how it looks, feels etc
  • economic manufacture - the capability of a product to be produced at a cost that allows profits to be made
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2
Q

How may the design mix change to reflect social trends?

A
  • sustainability
  • waste minimisation
  • ethical sourcing
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3
Q

What is sustainability?

A

a businesses strategy to ensure natural resources are not being used quicker than their rate of replenishment.

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4
Q

How can a business be sustainable?

A
  • minimise waste in production
  • enable recycling or reuse e.g. changes to packaging, recycled materials as raw materials.
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5
Q

What are some environmental issues that a business may have to consider during product design?

A
  • use of raw materials, water and other inputs
  • energy use and its impact on climate change
  • waste and pollution produced
  • impact on employees and local, wider and international community
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6
Q

What are some examples of ethical sourcing?

A
  • fair trade - trading partnership that contributes to sustainable trading development
  • ethical supply chain - how products are made is a key issue for recent customers
  • organic products
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7
Q

What is the promotional mix?

A

a combination of promotional activities that a business uses to generate sales.

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8
Q

What is above-the-line promotion?

A

indirect promoting, through the mass media, in order to reach a wide audience. e.g. tv , prints, ambient, digital and audio

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9
Q

What is informative advertising?

A

adverts designed to increase customer awareness for products and may give clear information about features of a product.

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10
Q

What is persuasive advertising?

A

adverts designed to put pressure on consumers, often to buy their product rather than competitors

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11
Q

What is reassuring advertising?

A

adverts aimed at existing customers, designed to be comforting and suggest that customers were ‘right’ to buy from that firm and that they should continue to do so

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12
Q

What are some advantages of advertising?

A
  • generates wide coverage
  • repetition means the message can be communicated effectively
  • effective for building brand awareness and loyalty
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13
Q

What are the disadvantages of advertising?

A
  • often expensive, especially in mass markets
  • sometimes only one way communication - no feedback
  • doesn’t guarantee sales as it may be ineffective
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14
Q

What is below-the-line promotion?

A

refers to any form of promotion that does not involve advertising in the mass media. It is usually more direct. e.g. sales promotion, personal selling, public relations and direct marketing.

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15
Q

What is promotion?

A

a component of the marketing mix that informs and persuades customers about the product as a way to gain awareness, interest, desire and action (AIDA)

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16
Q

What is sales promotion?

A

short-term incentives designed to stimulate sales. e.g. coupons, discounts, competitions, incentives, free samples and BOGOF

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17
Q

What are the benefits and drawbacks of sales promotion?

A
  • achieves quick boost to sales
  • encourages customers to trial a product or switch brands
    BUT
  • sales effect may only be short-term
  • may damage brand image
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18
Q

What is personal selling?

A

promotion on a person-to-person basis, using two-way communication. E.g. f2f selling, video/ web conferencing

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19
Q

What are some benefits of personal selling?

A
  • high customer attention
  • message is customised
  • persuasive impact
  • generates customer loyalty
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20
Q

What are some disadvantages of personal selling?

A
  • high cost
  • labour intensive
  • can only reach a limited number of customers
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21
Q

What are public relations?

A

activities that create goodwill toward customers and aims to achieve favourable publicity. E.g. press release, exhibitions, promotional stunts and sponsorships

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22
Q

What are some benefits of public relations?

A
  • connects with the target audience
  • attracts investors
  • builds brand image
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23
Q

What are some drawbacks of public relations?

A
  • difficult to measure success
  • no guaranteed results
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24
Q

What is direct marketing?

A

sending of promotional material to customers via email, social media or phone

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25
Q

What are the benefits of direct marketing?

A
  • can personalise the marketing message
  • easy to test different marketing messages
  • cost effective if customer database is well managed.
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26
Q

What are the drawbacks of direct marketing?

A
  • response rates vary enormously
  • negative image of junk mail and email spam
  • databases expensive to maintain and keep accurate
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27
Q

What is branding?

A

a way that a business distinguishes itself from competing business e.g. via a name, sign, symbol or logo

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28
Q

What are manufacturer brands?

A

brands created by the producers of goods or services and the good or service bear the producers name. e.g. Kellogg’s. the manufacturer will decide on all 4 P’s

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29
Q

What are own label brands?

A

products which are manufactured for wholesalers or retailers by other businesses but wholesalers sell the products under their own name - reduces costs

30
Q

What are generic brands?

A

products that only contain the name of the actual product category or company name. e.g. foil, carrots

31
Q

What are coporate brands?

A

When a business is associated with giving unique recognisable characteristics to a product or corporate image e.g. Toblerone’s unique shape

32
Q

What is brand stretching?

A

where a brand is used for a diverse range of products, not necessarily connected. e.g. virgin

33
Q

What are the benefits of effective branding?

A
  • adds significant value
  • able to charge higher prices and price is inelastic
  • builds customer loyalty
34
Q

What are some ways to build a brand?

A
  • USP
  • Advertising
  • Sponsorship
  • Use of social media
35
Q

What are changes in promotion and branding to reflect social trends?

A
  • Viral marketing - customers may use social media to promote a business
  • Social media - allows businesses to communicate with potential customers
  • Emotional branding - building a brand that will directly tap into the customers feelings
36
Q

What is price?

A

The money charged for a product or service

37
Q

What is cost plus pricing?

A

the cost to produce the products are worked out then money is added on top either by:
- adding a profit margin
- add a % mark-up on top of production costs

38
Q

What are the benefits of cost plus pricing?

A
  • easy to calculate
  • price increases are justified when costs increase
  • each product is sold at a profit
39
Q

What is competitive pricing?

A

when products or services are priced in line with competitors.

40
Q

What is a price leader?

A

Firms that dominate the market with an existing product set the price and other firms in the market follow suit.

41
Q

What is a price taker?

A

Smaller firms in the market who set their prices based on the market price.

42
Q

What is price skimming/ creaming pricing?

A

A product is priced high to begin with as it has a desirability factor that will mean customers will want it when it is new, and then the price is dropped afterwards

43
Q

What are the advantages of price skimming?

A
  • help establish the product as a must have item
  • early adopters are willing to pay high prices
  • high prices = covers investment costs
44
Q

What are the disadvantages of price skimming?

A
  • customers may feel they are being ripped off
  • customers who bought the product at a high price may be annoyed when price is decreased
45
Q

What is price penetration?

A

setting prices really low on a product to encourage sales and persuade customers to buy it and then gradually increased.

46
Q

What are the advantages of price penetration?

A
  • low price = may attract high sales vol making it harder for competitors
  • high sales vol = cut in production per unit as producer can buy in bulk and get purchasing costs down.
  • creates customer loyalty
47
Q

What are the disadvantages of price penetration?

A
  • products may appear cheap which can affect the brand image
  • may be hard to gain distribution in some markets due to mass-market pricing
  • pricing on the basis of value for money can make customers and competitors price sensitive
48
Q

What is predatory pricing?

A

when a dominant firm incurs losses by decreasing the price of a product with the intention to remove rivals and deter potential competition

49
Q

How may a business use predatory pricing?

A

Businesses may hold off the threat of a new entrant by lowering their prices so competitors cannot make a profit

50
Q

What is psychological pricing?

A

pricing a product at, for example, £1.99 instead of £2 to appear cheaper

51
Q

What does place in the marketing mix define?

A
  • physical location where the product is available
  • the distribution channel it has travelled through to go to the manufacturer to the customer.
52
Q

What is direct selling?

A

This is when the product is sold directly from the manufacturer to the customer.
E.g. door to door selling, direct mail, internet

53
Q

What is a retailer?

A

A business that buy good from manufacturers and wholesalers and sells them in small quantities to consumers.

54
Q

What is a wholesaler?

A

A business that buys goods from manufacturers and sells them in smaller quantities to retailers.

55
Q

What is an agent/broker?

A

An intermediary that brings together buyers and sellers.

56
Q

How may the type of product affect distribution decisions?

A
  • the characteristics of the product need to be taken into account
  • e.g. high quality exclusive designers may carefully chose retailers to maintain their desired image.
57
Q

How may the market affect distribution decisions?

A
  • producers selling to mass markets are likely to use intermediaries
  • businesses targeting smaller markets are more likely to target customers directly.
  • producers selling overseas are likely to use agents as they know the market better.
58
Q

How may cost affect distribution decisions?

A
  • firms must ensure that the method of distribution is cost effective
  • businesses will often chose the cheapest distribution channel
  • they often prefer more direct channels as intermediaries shave to take a share of the profit
59
Q

How may the degree of control affect distribution decisions?

A
  • businesses may want to protect their brand by limiting the spread of the product
  • will also keep tight control of where it is available and its price
60
Q

What are the benefits of online distribution?

A
  • small set up costs
  • greater geographically dispersed market
  • niche products can reach a wider audience
61
Q

What are the drawbacks of online distribution?

A
  • increasing competition
  • lack of human contact
  • can be technical problems
  • cant inspect goods before purchasing
  • can be hard to identify scams
62
Q

What is multichannel distribution?

A

involves a business using more than one type of distribution channel

63
Q

What are the advantages of multichannel distribution?

A
  • more target market segments can be reached
  • higher revenues
64
Q

What are the drawbacks of multichannel distribution?

A
  • potential for channel conflict
  • can be complex to manage
  • pricing strategy may become confused in the eyes of the customer
65
Q

What is the product life cycle?

A

The stages a product endures from the time of which is first launched to the market until it is withdrawn from the market or given an extension

66
Q

What are the 5 stages of the product life cycle?

A
  • development - not on the market yet, time for research, no sales
  • launch - product is launched to the market, high advertising costs
  • growth - sales begin to rise, high advertising costs, profit can be made if costs have been recouped
  • maturity - sales are at their peak, advertising can be reduced
  • decline - sales begin to fall, extension strategies may be introduced
67
Q

What are extension strategies?

A

Methods in which a business extends a products life cycle when sales begin to fall

68
Q

What are some examples of extension strategies?

A
  • change product - new and improved versions of the product are released
  • change price - price can be lowered
  • change place - new distribution channels or products can be sold in different countries
  • change promotion - different advertising or sales promotion techniques
69
Q

What are some weaknesses of the product life cycle model?

A
  • the shape and duration of the cycle varies depending on the product
  • difficult to know exactly where a product is in its life cycle
  • length cannot be reliably predicted
70
Q

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

A
  • differentiation and USP - businesses can charge higher prices if it has a USP or is sufficiently differentiated from its rivals
  • price elasticity of demand - e.g. if a product is price inelastic there will be scope for price increases
  • strength of the brand - the stronger the brand, the more the business can charge.

Business (9 decks)

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