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A LEVEL BUSINESS - ALL > 1.3 marketing mix and strategy > Flashcards

1.3 marketing mix and strategy Flashcards

1
Q

what are the three factors in the design mix?

A

-aesthetics
-function
-cost/economic manufacture

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2
Q

how can the factors affect one another?

A

-all products must have a balance of the design mix
-amending any one of these features can have a detrimental impact on the other two

eg: improving the design could reduce the functionality of the product, or improving the functionality could increase costs

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3
Q

which social trends have began to affect the design mix?

A

-designing for waste minimisation
-re-use and recycling
-ethical sourcing
-sustainability

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4
Q

importance of product in the traditional
marketing mix:

A

-products are at the heart of marketing
-the product needs to exist for the other elements of the mix to happen

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5
Q

what is a product?

A

anything that is capable of satisfying customer needs

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6
Q

the layers of a product:

A

1) inner
-core value

2) middle (actual product)
-quality
-packaging
-design
-brand name

3) outer (augmented product)
-after-sale service

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7
Q

what do aesthetics refer to in the design mix?

A

-how the product appeals to the customer in terms of how it looks
-popular way to differentiate a product

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8
Q

what does function refer to in the design mix?

A

-the way a product works & reliability
-the benefits that a product or service provides
-how well a product meets a need or solves the problem for which it was intended

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9
Q

what does cost refer to in the design mix?

A

-encapsulates the cost per unit of a product

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10
Q

common features of products that focus on function in the design mix:

A

-more predictable and stable demand
-longer product life cycles
-lower promotional costs
-build reputation for quality based on reliability
-economic manufacture through economies of scale

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11
Q

examples of products that focus on
function in the design mix:

A

-washing machines
-batteries
-staplers

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12
Q

common features of products that successfully focus on aesthetic in the design mix:

A

-high added value
-demand fuelled by customer aspiration

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13
Q

examples of products that focus on
aesthetics in the design mix:

A

-bag
-iphone

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14
Q

what is sustainability?

A

-making a product without affecting long-term supplies of materials

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15
Q

examples of increasing sustainability during production

A

-minimise waste in production
-enable recycling or re-use

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16
Q

examples of ethical sourcing

A

-fairtrade
-ethical supply chain

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17
Q

what is an ethical supply chain?
(+ implications)

A

-making sure that products are made ethically (eg: paying workers a fair wage, making sure the working practices of the suppliers are ethical, such as not using child labour)

-potential for significant damage to a business reputation if issues discovered in the supply chain

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18
Q

definition of ethical

A

morally right or morally acceptable

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19
Q

the benefits of adapting designs to changes in social trends

A

-reducing waste helps businesses cut costs
-social trends can be used as a USP
-attending to social trends means businesses are more likely to be seen as being socially responsible

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20
Q

what is promotion?

A

used to communicate with customers and push short-term sales

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21
Q

what is above the line promotion?

A

any form of advertising through the media

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22
Q

examples of above the line promotions:

A

-television
-newspapers/magazines
-radio
-cinema
-posters/billboards
-internet (websites)
-direct marketing (emails, direct post)

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23
Q

what is below the line promotion?

A

all other forms of promotion that are not advertising

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24
Q

examples of below the line promotion:

A

-sales promotions
-public relations
-direct selling/marketing
-personal selling

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25
Q

advantages of below the line promotion

A

-can offer a two-way form of communication
-can be more believable than advertising

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26
Q

influences on promotion choice

A

-the target audience
-the message
-technology
-promotion budget
-stage in the product’s life cycle
-competition

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27
Q

the target audience (promotion choice)

A

a business must choose the right method and channel to reach the right people

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28
Q

technology (promotion choice)

A

-can help a business narrow down its promotion so that it only reaches the right people

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29
Q

promotion budget (promotion choice)

A

will determine which methods are available and the geographical reach of the campaign

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30
Q

the message (promotion choice)

A

-the purpose of an advert/what it wants to get across

(sponsoring a sporting event might encourage an association with healthy living)

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31
Q

different purposes of messages that an advert can get across:

A

-inform customers
-remind customers
-persuade customers
-reassure customers

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32
Q

uses of promotion

A

-increase sales
-attract new customers & create awareness
-encourage customer loyalty
-launch a new product
-encourage brand switching

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33
Q

what are the main aims of promotion

A

-to ensure that customers are aware of the existence of products
-to persuade customers that the product is better than competing products

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34
Q

what is the promotional mix?

A

the specific mix of promotional methods that a business uses to pursue its marketing objectives

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35
Q

what are the main elements of the promotional mix?

A

-advertising (offline & online)
-sales promotion & merchandising
-personal selling
-PR /sponsorship
-direct marketing

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36
Q

what is advertising?

A

-paid-for communication
-many different advertising media

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37
Q

benefits of advertising

A

-wide coverage
-control of message
-repetition means that the message can be communicated effectively
-helps build brand awareness and loyalty

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38
Q

drawbacks of advertising

A

-often expensive
-impersonal
-limited ability to close a sale

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39
Q

what is personal selling?

A

sales representative meets with a potential client to persuade them to buy from the business

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40
Q

where can personal selling be done?

A

-telephone
-in retail outlets
-knocking on doors

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41
Q

which products are usually sold through personal selling?

A

highly priced, highly technical products

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42
Q

benefits of personal selling

A

-message is customised
-persuasive impact → close a sale
-potential for development of a relationship

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43
Q

drawbacks of personal selling

A

-needs staff with good interpersonal skills
-labour intensive
-limited reach

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44
Q

what is sales promotion?

A

short term incentives to boost sales

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45
Q

examples of sales promotion

A

-coupons
-competitions
-free samples
-loyalty points
-BOGOF

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46
Q

benefits of sales promotion:

A

-achieve a quick boost to sales
-encourages customers to trial a product or switch brands

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47
Q

drawbacks of sales promotion

A

-sales effect may only be short-term
-customers may expect or anticipate further promotions

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48
Q

what is PR?

A

public relations activities create goodwill toward an business or product
(good publicity & reputation)

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49
Q

PR & sponsorship

A

-when a an event, person, organisation is given is payed in return for advertising
-should benefit both sides

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50
Q

what is direct marketing?

A

promotional material directed through mail, email, social media or text

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51
Q

benefits of direct marketing

A

-can personalise the marketing message
-cost-effective if customer database is well managed
-increasing sales to existing customers
-builds customer loyalty
-re-establishes lapsed customer relationships

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52
Q

disadvantages of direct marketing:

A

-response rates vary enormously
-negative image of junk mail and email spam
-databases are expensive to maintain and keep accurate

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53
Q

what is viral marketing?

A

uses social media and online platforms to try increase brand awareness

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54
Q

what is a brand?

A

the identity of a business/product which distinguishes it from others in the market

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55
Q

what does a brand represent?

A

the characteristics and personality of a business

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56
Q

benefits of strong branding:

A

-adds value (from customer
point of view) -> charge higher prices
-demand is more price inelastic
-builds customer loyalty
-builds aspiration
-product might become the natural choice for the novice customer
-helps a business to position-itself in the market relative to other competitors

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57
Q

what are some ways to build a brand?

A

-exploiting a USP
-advertising
-sponsorship (associating characteristics and personality with the subject being sponsored)
-using social media

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58
Q

what are the types of brands?

A

-manufacturer’s brands
-own-label brands
-generic brands
-service brands
-global brands

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59
Q

definition of manufacturer’s brands
(+example)

A

use of a company name or logo to promote all the products or services offered by the company
(kellogg’s)

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60
Q

definition of own-label brands:
(+ example)

A

own brand or private label branding refers to the use of a retailer’s name to promote a specific product or service
(tesco’s finest)

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61
Q

what are generic brands?

A

products that do not have a particular brand association but simply use the name of the product
e.g. carrots

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62
Q

what are service brands?

A

brands that add perceived value to services

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63
Q

what are global brands?

A

-easily recognized and operating worldwide
-based on familiarity & availability

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64
Q

what is brand extension? (+ examples)

A

when a business uses a brand name on a new product that has some of brand’s characteristics

(eg: mars bar and mars ice cream, lucozade & lucozade sport)

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65
Q

what is brand stretching (+ examples)

A

-brand is used for a diverse range of
products, not necessarily connected

(eg: virgin)

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66
Q

three ways social trends can be used for branding

A

businesses should maximise social trends to build their brands:

-social media
-viral marketing
-emotional branding - businesses often associate their brands with things that consumers have strong emotional connections to, for example, sports teams or good causes

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67
Q

what is price?

A

the money charged for a product or service

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68
Q

stages of price setting:

A

-develop pricing objectives
-determine demand for product
-evaluate competitors’ prices
-select pricing strategy & tactics
-decide on price

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69
Q

examples of business objectives that
will influence pricing:

A

-maximise profit
-improve cash flow
-maintain/improve market share
-beat/prevent competition
-increase sales

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70
Q

factors that influence pricing

A

-amount of differentiation
-price elasticity of demand
-competition
-strength of branding
-stage in the product life cycle
-costs

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71
Q

what is cost plus pricing?
(+ formula)

A

-a business bases a price on the unit cost and then adds a percentage as a mark-up (unit cost x percentage mark-up)

72
Q

benefits of cost plus pricing

A

-easy to calculate
-price increases can be justified when costs rise
-managers can be confident each product is being sold at a profit

73
Q

drawbacks of cost plus pricing

A

-ignores price elasticity of demand
-may not take account of competition
-profit is lost if price is set below the that customers are prepared to pay
-sales are lost it price is set above the price customers are willing to pay
-business has less incentive to control costs

74
Q

what is price skimming?

A

-set a high price to maximise profit
-product is sold to different market segments at different times (top segment is skimmed off first with the highest price)

75
Q

which products do price skimming work well for?(+ examples)

A

works well for products that create excitement amongst early adopters

electronic devices

76
Q

when is price skimming best used?

A

in introduction or early growth stage of product life cycle

77
Q

what is penetration pricing?

A

-offer a product at a low introductory price
-price can be increased once target market share is reached

78
Q

aim of penetration pricing:

A

-to gain market share quickly
-to build customer usage and loyalty
-to build sales of higher-priced related items (hook & bait approach)

79
Q

examples of “hook & bait” penetration pricing

A

sell razor handles and inkjet printers at a low price to build customer usage:

sell consumable items (blades & cartridges) at a much higher price

80
Q

what is predatory pricing?

A

-the business sets a low price in order to price competitors out of the market
-the business may make a loss for a period of time until the competitor fails

81
Q

what is psychological pricing?

A

-the business bases the price below the next whole number to trick consumers into thinking the price is lower
(£9.99 psychologically appears cheaper than £10)

82
Q

what is competitor pricing?

A

-the business sets prices based on the nearest competitor
-used in very competitive markets and helps avoid price wars

83
Q

what are price wars?

A

-competitive price reductions by firms in a competitive industry
-each seeks to increase market share by price reduction but the result is destructive spiral of price reductions
-the process continues until weaker firms go out of business
-price wars might be seen as good for customers in the short run but it is harmful in the long run if competition is reduced

84
Q

what is loss leader pricing?

A

-a product is sold at a low (even loss making) price to encourage customers to buy other full price products from the business along with the loss leader product

85
Q

what are loss leaders often used by?

A

used by supermarkets to draw in customers from rival firms

86
Q

what is the aim of loss leader pricing?

A

to encourage people to buy complementary goods at full price

87
Q

what is dynamic pricing/surge pricing?

A

businesses set flexible prices for products or services based on current market demands

88
Q

example of a business that uses dynamic pricing (i use it)

A

amazon changes its prices every 10 minutes on average

89
Q

example of a business that uses surge pricing

A

-uber rates increase to ensure rellability when demand cannot be met by the number of drivers on the road.
-at times of high demand, the prices
increase to encourage more drivers to become available

90
Q

which social trends such have a significant influence on how businesses adapt their pricing over time?

A

-auction sites
-price comparison sites
-personalised pricing
-subscription pricing

91
Q

what are auction sites?

A

-ebay and gumtree allow customers to gain the best prices, but use a sense of urgency to encourage people to bid so they don’t miss out

92
Q

what are price comparison sites?

A

-sites like uswitch (energy) or trivago (hotels) make it easy for customers to compare prices and choose the best deal

93
Q

what is personalised pricing?

A

technology and online databases collect customer information and allow businesses to target them with a personal price

94
Q

what is subscription pricing?

A

a business charges customers a monthly fee to use a service (netflix)

95
Q

what is distribution?

A

how the product gets to the customer

96
Q

what is the aim of distribution?

A

to make products available in the right place at the right time in the right quantities

97
Q

what is a distribution channel?

A

the network of intermediaries involved in getting a product or service from the producer to the consumer

98
Q

what is each party in a distribution channel is called?

A

an intermediary

99
Q

main types of intermediaries in distribution channels

A

-retailer
-distributor
-wholesaler
-agent

100
Q

key facts: retailers

A

-provide customers with support from retail employees
-last stage

101
Q

advantages of retail distribution

A

-convenient & accessible for customers
-retailer chooses the final price
-after-sales support (e.g. returns)

102
Q

key facts: wholesalers

A

buy in large quantities from producers & break bulk into smaller quantities to sell to retailers

103
Q

advantages of wholesaler:

A

-reduce the producer’s transport costs (fewer journeys to the wholesaler rather than many journeys to retailers / retailers can order in smaller amounts from wholesalers)

-wholesaler makes profit by buying at a lower price from the producer and adding a profit margin onto the price paid by the retailer

104
Q

key facts: distributors

A

-sell on products and serve as a local sales point
-usually specialise in a particular industry
-offer products from many producers = greater choice

105
Q

how are distributors different from agents?

A

a distributor holds stock, an agent doesn’t

106
Q

key facts: agents

A

-does not hold stock
-tend to operate in tertiary sector (travel, insurance)
-help producers sell products to consumers and earn a commission for their sales

107
Q

what does each stage in the distribution network add ?

A

-cost or adds value
-therefore increases the price of the product

108
Q

what is a direct distribution channel?

A

channel where a producer and consumer deal with each other without an intermediary

109
Q

what is an indirect distribution channel?

A

involves the use of intermediaries between the producer and consumer

110
Q

reasons to use indirect distribution channels:

A

-customers may live too far away to be reached directly/ spread widely
-better use of resources elsewhere
-different segments of the markets can be best reached by different distribution channels

111
Q

3 factors that affect which type of distribution channel is used:

A

-choice of intermediary
-nature of the product (fragile, customised)
-size of business

112
Q

what is multi-channel distribution?

A

involves a business using more than one type of distribution channel

113
Q

benefits of multi-channel distribution

A

-allows more target market segments to be reached
-enables higher revenues - (e.g. retail outlets have no stock, but customer can buy online)

114
Q

drawbacks of multi-channel distribution

A

-potential for channel “conflict”
-can be complex to manage

115
Q

example of multi-channel distribution:
apple consumer electronic devices

A

-450+ own retail stores in over 15 countries
-online stores
-multiple retail partners

116
Q

which main 4 factors influence distribution?

A

-scope/scale
-nature of the product
-control over promotion and pricing
-expectations of customers

117
Q

how does scope affect distribution?

A

-a product sold internationally may require distribution through an extensive network of wholesalers, agents and distribution companies
-a local business may simply require one retail outlet

118
Q

how does the nature of the product affect distribution?

A

-some products are not suitable for certain channels
-eg: difficult and costly to ship delicate objects

119
Q

how does control over promotion & pricing of the product affect distribution?

A

-business may opt to use its own website or retail chain if controlling these factors is important

120
Q

how do the expectations of customers affect distribution?

A

will customers expect to access the product via multi-channels or will one suffice?

121
Q

how recent social trends have affected distribution

A

-there’s a growth in direct ordering of products through the internet,
manufacturers use courier businesses to deliver their products directly to customers
-increase in providers selling services via websites and apps (deliveroo, uber)

122
Q

examples of a service that has moved to being distributed online

A

newspaper publishers traditionally would sold physical papers, now they sell news as a service online

123
Q

the value of digital marketing and e-commerce:

A

-allows small businesses to target a global market
-lets businesses gather customer info easily
-opportunities for personalisation & involving customers in the design of products
-targeting specific segments is easy
-builds relationships through a more personal service by tracking buying habits

124
Q

the benefits of online distribution
for businesses:

A

-e-tailers don’t have to meet the costs of operating retail stores.
-lower start-up costs make it easier for small businesses to launch
-transactions can take place in a secure online environment
-businesses can take sales 24/7
-businesses can offer goods to a much wider market

125
Q

benefits of online distribution for customers

A

-customers can shop 24/7
-comparison between brands is much easier
-usually a wider choice available
-customers can see reviews & then make an informed choice

126
Q

what is a product life cycle?

A

a theoretical model which describes the stages a product goes through over its life

127
Q

key uses of the product life cycle model

A

-forecast future sales trends
-help analyse & manage the product portfolio

128
Q

what are the stages in a product life cycle?

A

-development
-introduction
-growth
-maturity
-saturation
-decline

129
Q

key facts about the development stage:

A

-often complex
-absorbs significant resources
-may not be successful
-may involves a long lead time before sales are achieved
-cost of development rises as it approaches launch
-market research often done to reduce the risk of product failure

130
Q

why are new products scrapped before launch?

A

-inadequate demand
-competitor action
-production problem
-high costs
-does not fit in the firm’s product range
-life cycle expected to be too short

131
Q

key facts about the introduction stage:

A

-a new product is launched on the market
-low sales
-low capacity utilisation
-usually negative cash flow
-heavy promotion to increase awareness

132
Q

strategies at the introduction stage

A

-high promotional spending
-skimming or penetration pricing
-limited, focused distribution

133
Q

key facts about the growth stage:

A

-arrival of competitors due to market growth & rise in profits
-fast growing sales
-rise in capacity utilisation
-cash flow may become positive
-unit costs fall with economies of scale
-price may increase with popularity

134
Q

strategies in the growth stage

A

-advertising to promote brand awareness
-intensive distribution
-improve the product - new features, more options

135
Q

key facts about the maturity stage:

A

-promotion slows as customers are aware of product
-introduction of new customers slows
down
-focus on retention and repeat purchase
-high capacity utilisation
-high profits for those with high market share
-cash flow should be strongly positive

136
Q

strategies for mature products

A

-promotion focuses on differentiation
-intensive distribution
-enter new segments
-repositioning (change the image of product to target a new or wider market)

137
Q

key facts about saturation stage:

A

-the market is full
-all potential customers have the product and there are other better/cheaper alternatives

138
Q

strategies in saturation stage

A

prices may be cut to maintain competitiveness

139
Q

key facts about decline stage

A

-falling sales
-decline in profits
-decline in capacity utilisation

140
Q

reasons why products enter the decline stage:

A

-technological advance
-changes in consumer tastes
-increased competition
-failure to innovate and develop the product

141
Q

strategies in decline stage

A

-price cutting to maintain competitiveness
-promotion to retain loyal customers
-an extension strategy may be used

142
Q

examples of extension strategies:

A

-lower price
-change promotion (e.g. new promotional message)
-change product - re-styling and product improvement
-look for alternative distribution channels
-find new uses for the product

143
Q

weaknesses of the product life cycle model

A

-shape and duration of the cycle varies from product to product
-it is difficult to recognise exactly where a product is in its life cycle
-length cannot be reliably predicted
-decline isn’t inevitable

144
Q

what is a product portfolio analysis (PPA)?

A

-assesses the position of each product or brand in a firm’s portfolio to help choose
the right marketing strategy

145
Q

what is the boston matrix?

A

-boston consulting group developed this as a tool of portfolio analysis
-it can be applied to the portfolio of products produced by a firm or the portfolio of businesses owned by a firm

-firms analyse their portfolio and categorise products as: question marks, stars, cash cows, dogs)

146
Q

what portfolio should businesses aim for (the boston matrix)?

A

a balanced portfolio with some products in each category

147
Q

the product life cycle vs the boston matrix

A

PLCY:
concerned with individual products & sales over time

BMX:
concerned with the firm’s portfolio of products, focuses on cash flow from products

148
Q

what is on the X and Y axis of the boston matrix?

A

X = relative market share (cash generation)

Y = market growth rate (cash usage)

149
Q

question mark products: facts

A

-low market share in fast growing market
-cash flow is negative
-have potential but the future is uncertain
-could become either a star or a dog

150
Q

strategy for question marks

A

-invest to increase market share
-invest in promotion and other aspects of marketing
-heavy investment to develop and ensure success

151
Q

star products: facts

A

-high share of a rapidly growing market
-position of leadership
• Require high marketing spending
-net cash inflow is neutral or at best modestly positive

152
Q

strategy for star products

A

-distribution must be effective to ensure product availability
-build sales and/or market share
-spend to keep competitors at bay

153
Q

cash cow products: facts

A

-high/dominant share of a slowly growing market
-mature stage
-little potential for growth
-large positive cash inflow

154
Q

strategies for cash cow products

A

-defend market share
-reduce investment to maximise short term cash flow and profits
-use profits from cash cows to invest in new products
-little promotion is required

155
Q

dog products: facts

A

-products that have failed/are in the decline phase of their life cycle
-low share of a slowly growing market
-no potential

156
Q

strategies for dog products:

A

-phase out or sell off (divest)
-not worth investing in

157
Q

strengths of the boston matrix:

A

-a useful tool for analysing product portfolio decisions
-useful for making decisions about where funds should be allocated

158
Q

weaknesses of the boston matrix:

A

-products and markets are complicated and do not necessarily follow a pattern.
-soes not provide clear solutions for a -simplifies what can be a complex issue
-has little or no predictive value

159
Q

what is a marketing strategy?

A

a set of plans that aim to achieve a specific marketing objective

160
Q

examples of marketing objectives

A

-becoming market leader
-building customer loyalty
-improving brand recognition
-increasing market share

161
Q

a description of product in a mass market (marketing mix)

A

-product is generic
-business must differentiate

162
Q

a description of price in a mass market (marketing mix)

A

-competitor pricing and managing costs are key to success as many products will have a similar price

163
Q

a description of promotion in a mass market (marketing mix)

A

-heavy advertising and promotion are used to build brand image through media with a wide reach

164
Q

a description of place in a mass market (marketing mix)

A

-multiple channels will be used to distribute and sell goods
-wholesale, retail outlets and the internet

165
Q

a description of product in a niche market (marketing mix)

A

-differences in the product will be quite significant
-it is important for the business to communicate these differences and the benefits they bring

166
Q

a description of price in a niche market (marketing mix)

A

niche markets have more flexibility to offer premium pricing strategies due to the unique value they can add

167
Q

a description of promotion in a niche market (marketing mix)

A

promotion is targeted using specialist media and direct methods

168
Q

a description of place in a niche market (marketing mix)

A

-more likely to sell direct to customers or use a small number of carefully selected channels

169
Q

why does marketing differ between B2C and B2B?

A

-B2B marketing will require more information and detail on how a product/service could reduce costs or increase productivity

-B2C marketing will involve emotive techniques to attract customers

170
Q

which marketing strategies do B2Cs and B2Bs use?

A

-outbound
-inbound
-hybrid

171
Q

what is outbound marketing?

A

-includes any strategy that involves pushing a message out to customers
-can include above-the-line and below-the-line methods

172
Q

what is inbound marketing?

A

-any technique that attracts potential customers to a website when they are looking for a particular service or product
-eg: blogging, social media and search engine optimisation

173
Q

what are hybrid strategies?

A

involve a combo of inbound & outbound:

-outbound strategies are more short term
-inbound strategies take around six months to start generating real interest

174
Q

its often easier to ______ than it is to attract new customers (customer loyalty)

A

keep customers and encourage them to repeat purchase

175
Q

4 ways to develop customer loyalty:

A

1) good communication - keeping customers informed of new products and developments

2) customer incentives

3) excellent customer service

4) preferential treatment for returning customers

A LEVEL BUSINESS - ALL (8 decks)

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