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Business Studies Theme 1 (A- Level) > 1.3 marketing mix and strategy > Flashcards

1.3 marketing mix and strategy Flashcards

1
Q

What is the marketing mix and what does it consist of

A

Considers different factors to best understand the customer

 Consists of the 4P’s :
Product
Price
Place
Promotion
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2
Q

What is considered for the design of a product

A

Aesthetics (used to describe the look, taste or feel of an item)

Function relates to whether the product does as its expected to

Economic manufacture considers the cost of manufacturing

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3
Q

What are the benefits of good design

A

Can add value
Can provide a point of differentiation
Can reduce manufacturing costs, boosting profit margins
Improves brand image and therefore brand loyalty

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4
Q

What are changes in the design mix due to social changes

A

Environmental concerns : design for waste minimisation and recycling

Ethical sourcing : where raw materials are extracted from and treatment of workers

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5
Q

What are the Advantages and Disadvantages of environmentally friendly products

A

A : Better reputation
Can charge higher prices
Attract more customers
Can use it in marketing and advertising

D : Higher cost of production

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6
Q

What is the product life cycle

A

A pattern of sales over time that products follow

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7
Q

What are the 5 phases of the product life cycle

Explain them in terms of cost, revenue and profit

A

Research and Development - High costs and no sales
Launch - High costs due to advertising and low revenue
Growth - sales begin to increase quickly, breaking even
Maturity - Growth in sales stabilises, high profits
Decline/product extension - sales fall and a business needs to decide whether to try and extend the life cycle

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8
Q

What is a product extension strategy

A

A plan to extending the life cycle of a product instead of it declining

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9
Q

What are the two ways of extending a products life cycle

A

Changes to the product (extra functions, new variants

Changes to promotion (targeting a different segment )

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10
Q

What is the Boston Matrix

A

Assesses each product within a product portfolio . They consider market share and market growth

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11
Q

What is a star

A

A product in a high growing market with a high market share

Make most of the profits for a business

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12
Q

What is a question mark

A

Has a low market share in a high growing market

Requires investment to compete

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13
Q

What is a cash cow

A

A product with a high market share in a low growing market

Generate high sales with low market expenditure

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14
Q

What is a dog (boston matrix)

A

A product with a low market share in a low growing market

Have low sales and are likely to be phased out

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15
Q

What is a marketing strategy

A

Used to describe the general approach to marketing used by a business

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16
Q

What is price skimming

What are the A and D of it

A

Where a higher price is charged for a new and unique product and then is reduced in price over time

A- Generate rapid profits
D- Image may suffer when price falls, customers can be put off by price

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17
Q

What is penetration pricing

What are the A and D of it

A

Selling at a lower price to achieve a high market share

A - Boost sales and encourages customer to develop a habit pf buying the product
D - May give a brand image of being cheap, likely to create a high price elasticity of demand

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18
Q

What is cost plus pricing , whats its formula

What are the A and D of it

A

Setting a price which covers the costs plus a % mark up to make a profit

Cost plus pricing = Unit cost + % mark up

A - Guarantees a profit on each unit sold
D- Does not take into account competitors pricing

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19
Q

What is premium pricing and give an example

A

A goods price is set at a higher price, which stays high, than competitors to give a perception of high quality

An example is designer clothing like Gucci (never have sales)

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20
Q

What is competitive pricing

A

Where prices are influenced by competitors pricing

Is usually done by businesses with no brand image, helps compete with major brands

21
Q

What is psychological pricing

A

Where prices are set at prices like £9.99 instead of £10 to make it sound cheaper for the customer

22
Q

What is price discrimination

A

Where prices are set a different prices for the same product , like plane tickets

23
Q

What are the factors which determine the most appropriate pricing strategy

A

Level of product differentiation
Price elasticity of demand - (Inelastic demand allows a firm to use any pricing strategy they wish)
Level of competition - (more competition means competitive pricing needs to be used)
Strength of brand - (strong brands have more control of pricing strategy)
Stage in the product life cycle (pricing strategy changes to try and maximise sales at each stage)
Costs and need to make a profit

24
Q

How do changes in price reflect social change

A

Online sales - consumers are more sensitive on price as its easy to compare price to competitors online

Price comparison sites- encourage firms to use competitive pricing to be best value

25
Q

Define distribution

A

Is the process of making a product or service available for the consumer

26
Q

What is the distribution channel

A

The route a product takes from producer to consumer

27
Q

What are Intermediaries

A

Are businesses between the producer and consumer in the distribution channel

28
Q

What is a zero level distribution channel

A

Has no intermediaries and involves the producer selling directly to the producer, meaning they would have to build stores or use e-commerce.
Leads to high costs, less coverage and convenience as there are no retailers, however it gives the producers total control over promotion and pricing

29
Q

What is a one level distribution

A

Has one intermediary ,who is usually the retailer, which allows the retailer to sell the product.
Less costs and higher coverage and convenience as there is a big retailer selling the product. Less control as the retailer can choose the pricing strategy and promotion , they also make their own markup.

30
Q

What is two level distribution

A

Has two intermediaries, usually a wholesaler and a retailer, where the wholesaler buys the products in bulk and sells to retailers in smaller quantities.
Leads to cheap costs, it maximises coverage and convenience as a number of retailers would be selling the product. There would be no control and retailers as well as wholesalers can add their own markup.

31
Q

What does a business have to take into account when deciding place strategy

A

Cost - Costs of selling to consumers
Convenience- How easy it is for customers to buy the product
Coverage - where the consumer can buy the product
Control - how much control they have over the product(pricing and promotion)

32
Q

What are the factors to take into account when choosing the distribution channel

A 
Nature of the product - (a big bulky product would not suit a two level channel) 
The market (what competitors use)
The business (whats the objectives, how much control do they want)
Legal issues (limitations on sale)
33
Q

Define promotion

A

Describes methods used by the business to communicate information and persuade consumers to purchase a product.

34
Q

What are the two types of promotion

A

Long term methods (boost sales in the long term) - e.g. persuasive advertising and public relations

Short term methods (boost sales in the short term) - e.g. Buy one get one free and seasonal price- cutting promotion

35
Q

What are the types of branding

A

Individual brand : single product brands who do not use brand extension or stretching

Brand family : brand with a range of related products, encourages sales

Corporate brand :where a brand has a range of diverse products

36
Q

What are the ways to build a brand

A

Advertising : reinforces the brand image
USP : differentiates product from competitors
Sponsorship : Brand building by association to try and shape brand image
Digital media: builds relationship with customer

37
Q

What are the changes in promotion to reflect social trends

A

Viral marketing - online offers a faster and wider way to spread peoples thoughts on a product
Social media - a place where a business can spread their promotional message
Emotional branding - where the business trys to create an emotional response from consumers to the brand

38
Q

What are the forms of promotion

A

Personal selling - direct communication to achieve sales, high costs
Advertising - a way of mass communication with customers
Sales promotion - aggressive methods to achieve sales. E.g. BOGOF
Publicity - makes consumers aware of the product
Packaging - Differentiates a product and try’s to create an image
Couponing - encourages consumers to make repeat purchases

39
Q

What does promotion type depend on

A 
Stage in the product life cycle 
Nature of the product
Competition
Marketing budget
Marketing strategy
Target market
40
Q

What are the two M’s in advertising

A

The message - the image that a business is trying to portray to the customer about the product
The medium - how a business advertises its products. This could be through TV, Radio or social media

41
Q

Define Marketing strategy

A

Is the general approach to marketing used by a business

42
Q

What is a mass marketing strategy

A

Where a business decides to sell its product to most of the consumers in the market

43
Q

What are the benefits and drawbacks of mass market strategies

A 
B
Higher revenue
Control over advertising and promotion 
High distribution levels 
Economies of scale
Brand awareness

D
Higher fixed costs
High level of competition
Harder to charge higher prices

44
Q

What are niche market strategies

A

Where a business decides to sell its product to a segmented part of a large market

45
Q

What are the benefits and drawbacks of niche market strategies

A

B
Less competition
Can charge higher prices
Barriers of entry are less (as there are high unit costs)

D
Less scope for growth
Lower profits
Vulnerable to a fall in demand (as there are less customers)

46
Q

What are business to consumer (B2C) strategies

A

Is the process of selling a product directly to consumers, who are the end users of the product

The key is to keep revisiting the marketing mix and to develop customer loyalty

47
Q

What are business to business (B2B) strategies

A

The process of involving an intermediary into the selling of a product, to try and develop customer loyalty through selling in bulk.

48
Q

Why do businesses focus on developing customer loyalty

A

Is about ensuring the marketing mix is right to create a clear image for the product
The main aim is to create an emotional attachment between consumers and the brand.

Business Studies Theme 1 (A- Level) (7 decks)

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