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1.3 MARKETING MIX AND STRATEGY Flashcards

1
Q

1.3.1 - PRODUCT/SERVICE DESIGN
What is a product?

A

Refers to the goods and services a firm provides
A product will be made of core features and functions, as well as additional aspects that can affect consumer behaviour - brands and/or guarantee

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2
Q

1.3.1 - PRODUCT/SERVICE DESIGN
What is a product portfolio?

A

A business will normally sell a range of products (goods and services)

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3
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A
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4
Q

1.3.1 - PRODUCT/SERVICE DESIGN
What is the design mix?

A

Refers to the three fundemental elements of product or service design that must be taken into account during the research and development stage

  • Asthetic
  • Function
  • Cost
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5
Q

1.3.1 - PRODUCT/SERVICE DESIGN
What is function in the design mix?

A

The product/service has to be able to fulfill the primary purpose for which the consumer purchased
It must be “Fit for purpose”
There will be additional features that add value

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6
Q

1.3.1 - PRODUCT/SERVICE DESIGN
What is aesthetics in the design mix?

A

Aesthetics refers to the look and feel of the product and how our senses repond to the product

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7
Q

1.3.1 - PRODUCT/SERVICE DESIGN
What is cost in the design mix?

A

Business must provide a good or service within a budget
This needs to be at a cost point that will still allow a business to make a profit
But must also offer good value

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8
Q

1.3.1 - PRODUCT/SERVICE DESIGN
What is design priorities?

A

The three factors should always be of equal importance
However, each business or brand will have different design priorities

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9
Q

1.3.1 - PRODUCT/SERVICE DESIGN
What are renewable and non-renewable resources?

A

Renewable = can be replenished
Non-renewable = ones that are in finite supply and will therefore run out

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10
Q

1.3.1 - PRODUCT/SERVICE DESIGN
What happens to the changes in the design mix?

A

Changes are made to the design mix to reflect on social trends:

  • designing for waste minimisation, re-use and recycling
    e.g. changes to packaging, refill packs, recycleable packaging
  • ethical sourcing
  • Buying materials from suppliers that are behaving in a morally correct manner
  • Having an ethical procurement policy that believes in behaving in a morally correct manner towards suppliers
    e.g. fair trade, sustainable resources
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11
Q

1.3.2 - Branding and promotion
What is promotion?

A

Promotion refers to the activities a business uses that are designed to communicate with the market, thereby increasing visibility and sales of a product
Firms use different promotional strategies to make their products more widely known to other businesses and the general public

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12
Q

1.3.2 - Branding and promotion
What is the elements of the promotional mix?

A

Branding
Public relations
Advertising
Direct selling
Sales promotion

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13
Q

1.3.2 - Branding and promotion
How does promotion help within a business?

A

Informs and persuades customers about the product in order to sell that product
Promotion is designed to create Awareness, Interest, Desire and Attention ( AIDA )

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14
Q

1.3.2 - Branding and promotion
What is the promotional mix?

A

The combination of promotional activities that a firm uses in order to create consumer awareness and generate sales
A firm will look at its promotional mix in order to increase the sale of its products

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15
Q

1.3.2 - Branding and promotion
What is promotion decisions?

A

These are influenced by a number of factors including :
- Market segmentation and positioning
- Internal constraints e.g. the size of the promotional budget
- External influences e.g competitors

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16
Q

1.3.2 - Branding and promotion
How does PR relate to promotional methods?

A

Public relations (PR)
PR involves communicating with the media such as newspapers, TV, and radio in ordr to get favourable publicity for the organisation

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17
Q

1.3.2 - Branding and promotion
How does merchandising relate to promotional methods?

A

Merchandising is the way a firm promotes its products at Point of Sale
- Coupon methods - BOG OFF ( Buy 1 get 1 free )

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18
Q

1.3.2 - Branding and promotion
What is “above the line”?

A

Advertising occurs when firms pay for the promotion of their product through the main media such as television, radio and the press

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19
Q

1.3.2 - Branding and promotion
How does “above-the-line” promotion relate to the promotional method?

A

There are three categories:
Informative advertising : Creating awareness and giving information
Persuasive advertising : Putting pressure on consumers to buy a product - often appealing to emotions
Reassuring advertising : Aimed at existing customers - offering comfort and encouraging repeat purchases

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20
Q

1.3.2 - Branding and promotion
How does sponsership relate to promotional methods?

A

Positive association of the products with a celebrity or a sport
Difficult to tell what imapct this has on brand loyalty or sales

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21
Q

1.3.2 - Branding and promotion
How does branding relate to promotional methods?

A

Can add value to a product allowing firms to charge higher prices
A promotiona method that involves the creation of an identity for the business that distinguishes that firms and its products from other firms

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22
Q

1.3.2 - Branding and promotion
What are the types of branding?

A

Brand recognition comes in many forms including colour, logo, straple, line, shape
Branding gives a unique recognisable characteristic to a product or coperate image
Coperate branding - attaches a perception and promise to the goods and service associated with the brand

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23
Q

1.3.2 - Branding and promotion
What are the benefits of strong branding?

A

added value
Ability to charge at premium prices

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24
Q

1.3.2 - Branding and promotion
What is brand loyalty?

A

This exists when customers keep returning to but a recognised brand
Branding is a promotional method that involves the creation of an identity for a business that distinguishes it and its products from competitors.

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1.3.2 - Branding and promotion How can you build a brand?
Differentiation Logo Ingredients/ Raw materials Product features Advertising Life style/ aspiration
26
1.3.2 - Branding and promotion How does emotional branding link to social trends?
Building a brand that will directly tap in to the consmer, feelings, personal psychological needs and aspirations Present a feeling of belong and sucess Sell status or lifesyle choice
27
1.3.2 - Branding and promotion How does social media link to social trends?
The use of virtual communities to communicate with actual and potential customers
28
1.3.2 - Branding and promotion How does viral marketing link to social trends?
Use of social media to encourage the spread of promotional activities Increase brand awareness
29
1.3.3 Pricing Strategies What is pricing?
Is the process by which a business sets the selling price of its products or services
30
1.3.3 Pricing Strategies What are the pricing tactics?
There are pricing strategies used for new brands, new products LIKE: price skimming and price penetration
31
1.3.3 Pricing Strategies What is price skimming?
Used when a product is new and has little or no competition Price is set at a high level intially and then lowered over time to sustain sales Customers who are "early adopter" and are interested will pay the high price
32
1.3.3 Pricing Strategies What is price pentration?
This is a pricing strategy that is used when launching a new product onto a market where there are similar products The price is intially set lower to gain market share, and then once the product is established, the price can be increased
33
1.3.3 Pricing Strategies What is cost plus?
Involves calculating total production costs, and then adding a % mark-up, almost guarantees making a profit CALCULATE COST PLUS = UNIT COST + (% MARK UP)
34
1.3.3 Pricing Strategies What is competitive pricing?
The price is set at the market level or at a discount to the market This happens in a highly competitive market, or in markets where one brand dominates
35
1.3.3 Pricing Strategies What is predatory pricing?
An agressive pricing strategy used where the price is set low enough to drive a rival or rivals out of the business Eliminating comeptitors means that over time a business can set prices much higher Can be illegal - competition rules / price wars
36
1.3.3 Pricing Strategies What is psychological pricing?
Produces and retailers believe that consumers have psychological price barriers that are hard to cross without losing sales
37
1.3.3 Pricing Strategies What affects pricing strategies?
Product differentiation Strength of the brand Amount of competition Price elasticity of demand Stage in the product life cylce Costs and the need to make a profit
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1.3.3 Pricing Strategies How do social trends effect pricing?
Online sales Price comparison website
39
1.3.3 Pricing Strategies How do changes in pricing reflect social trends?
Onlines sales have led to the frequent use of dynamic pricing -Pricing change frequently and quickly in response to changes in demand -At times of peak demand prices will increase -Dynamic pricing is made possible by technology that tracks demand and levels of interest Price comparison website -Easier for customers to compare prices thereby forcing businesses to be more competitive due to the ease with customers
40
1.3.4 Distibution What is distibution?
Place is the term given to distribution Distribution is the process of getting the firm's product to the market Distribution channels are the routes to market that a product takes from producers to the final customer
41
1.3.4 Distibution What is short distribution channel?
This is where the producer sells either directly to the customer or through a retailer Producer --> Consumer OR Producer --> Retailer --> Consumer
42
1.3.4 Distibution What is a long distribution channel?
This is where there are more than one intermediary (middle person) between the producer and the customer Producer --> Wholesaler --> Retailer --> Consumer
43
1.3.4 Distibution What is a multi distribution channel?
This is where a firm chooses to use a combination of methods
44
1.3.4 Distibution What is a wholesaler?
A wholesaler buys in bulks from a producer and sells in smaller quanties to the retailer
45
1.3.4 Distibution How does the type of product influence the decion of distribution?
The characteristics of the product need to be taken into account
46
1.3.4 Distibution How does the market influence the decion of distribution?
Customers being targeted can access the product
47
1.3.4 Distibution How does the quantity and frequency influence the decion of distribution?
If only a few low cost items are neong delivered it would not be cost effective to send them hundreds of miles
48
1.3.4 Distibution How does the geographical location influence the decion of distribution?
how far is the target market from the firm
49
1.3.4 Distibution How does the cost influence the decion of distribution?
An expensive distribution method will reduce the contribution being made to a firm's profit
50
1.3.4 Distibution How does the degree of control influence the decion of distribution?
May want to protect their brand by limiting the spread of the product and keeping tight control of where it is available and at what price
51
1.3.4 Distibution Why does a longer distribution channel means a higher price?
Because each stage needs transport, storage, advertising and insurance Each re-seller will want to make a profit so the price is marked up Some firms have cut out some of the resellers to be more competitive by reducing the price to consumers
52
1.3.5 Marketing strategy What is the product life cycle?
This is a model technique used to track the stages a product goes through during its life It tracks slaes over time from the development stage of a prouct through launch and until it is removed from the market Although a product life cyle relates to just one product business will want to have products at different stages
53
1.3.5 Marketing strategy What is the product portfolio analysis?
Product portfolio analysis looks at the range of products and brands that a firm has under its control A business product range is caused its product portfolio This type of analysis can help a firm identify when every single one of its products its positioned in the market
54
1.3.5 Marketing strategy What is the research and developement stage in the product life cycle?
First stage of the product life cyle, where a product is designed and market research is analysed to produce a product which will satisfy customer needs Costs will be very high There will be no revenue as the product is not available to the public yet Business may experience cash flow problems
55
1.3.5 Marketing strategy What is the introduction stage in the product life cycle?
Impact on finance: - Customer awareness is low, business will have to work hard to promote the product - Sales will be low - Costs will be high - Finance will be severly impacted Pricing strategies: - May use price skimming to quickly recover their research & development costs - Costs will be higher than revenue
56
1.3.5 Marketing strategy What is the growth stage of the product life cycle?
Growth phase products are enjoying rapid growth in sales and profits Customers are aware of the product and demand is high With advertise the product to take advantage of the high demand Impact on Finance: Income is increased but costs are beginning to reduce Finance should becoming healthier although costs are still likely to higher than revenue
57
1.3.5 Marketing strategy What is maturity in the product life cycle?
Product is at its peak, competing with similar products Because there are many similar products on the market a business may need to consider reducing its prices to remain competitive Impact on Finance: Sales are at their highest and soon will begin to fall Revenue will be high and costs will be lower
58
1.3.5 Marketing strategy What is decline in the product life cycle?
Limited in production, profits + sales have fallen maybe withdrawn from sale, may decide to heavily discount to get any last sales before the product becomes obsolete Impact on Finance: Costs increase then revenue
59
1.3.5 Marketing strategy What is extension strategies?
A business can try to extend the life of a product to sales continue for longer The most popular ways: - Updating packaging - Advertising - Price reduction - Changing target market
60
1.3.5 Marketing strategy What is the Boston Matrix?
Helps to analyse their portfolio of business and brands Owing a product portfolio poses a problem for a business. It must decide how to allocate investment
61
1.3.5 Marketing strategy How is cash cow related to Boston Matrix?
High market share in a low growth Established products Wants as many cash cow as possible With low market growth, less likely to be less competition from new firms entering the market, therefore firms can spend less money on advertising
62
1.3.5 Marketing strategy How is rising stars related to Boston Matrix?
- High market share in ahigh growth market - Enjoy increasing sales revenue - Cash flow can be negative at first - Often funded by cash cows - Heavy promotional spending + increasing capital investment - Fierce competition between these firms, the market is growing and other firms are producing similar products
63
1.3.5 Marketing strategy How is problem children related to Boston Matrix?
- Low market share in a high growth market - Can be successful if there is enough demand, however some products are unsuccessful and the firm will have to decide whether to pursue or discontinue - Will require a lot of attention
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1.3.5 Marketing strategy How is dog related to Boston Matrix?
- Low market share in a low growth market - Unlikely to be kept on by a company - Little growth + little market share the company might see scope for future profit - Can be still profitable and doesn't mean the company will discontinue it
65
1.3.5 Marketing strategy What are the benefits of the Boston Mix?
- Allows to analyse its products portfolio - Can analyse the individual performance of products - Can look at specific products that may be underperforming
66
1.3.5 Marketing strategy What are the limitations of the Boston Matrix?
- A business needs to be careful placing individual products into the market
67
1.3.5 Marketing strategy What is a niche market?
Niche marketing is when a firm targets a small subsection or previsiously unexploited gap in the market - May give a business first mover advantage and allow them to charge a premium price
68
1.3.5 Marketing strategy What is a mass market?
Mass marketing is when a firm targets the whole of a market rather than a particular segment - Mass marketing can give a business a high volume of sales but often at a low price
69
1.3.5 Marketing strategy What are industrial markets?
Where a business are selling to other businesses; business to business (B2B) - The technical specification of the product and service provided by as sales person or account manager is likely to be more important than the the brand
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1.3.5 Marketing strategy What is consumer market?
Consumer market are where businesses are selling to the public, business to consumer (B2C) - The product and the price may be seen as of equal importance to the promotion but more important than place
71
1.3.5 Marketing strategy The difference between the B2B and B2B
B2B: - Based on relationship with business buyers - Often small & focused market - More complex & longer buying process - Educational element to promotion B2C: - Products more important than relationships - Usually larger market - Less sophisticated buyers - Brands very important - Single step buying process; often short
72
1.3.5 Marketing strategy What is consumer behaviour?
Businesses want to understand consumer behaviour in order to know how to build customer loyalty
73
1.3.5 Marketing strategy How can you recieve consumer behaviour through customer service?
- Extremely important - Staff must be trianed, motivated
74
1.3.5 Marketing strategy How can you recieve consumer behaviour through loyalty schemes?
- Reward cards - Savers schemas

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