1.3 Marketing Mix and Strategy

Question 1

Explain the design mix/ its 3 elements?

Answer 1

Aesthetics- design, style, appearance, making the product desirable
Function- how well a product meets a need for which it was intended
Cost- production costs, specifically cost per unit
Adapting any of these features can impact the other 2 eg. Reducing costs could effect the function or design

Question 2

Explain how businesses can design products that are sustainable with limited impact on the environment to meet social trends and be more successful by addressing issues of resource depletion?

Answer 2

Design products for waste minimisation 
Design products for re-use
Design products to be recycled 
Produce products made from recycled materials 
Source products ethically

Question 3

What are 4 benefits of adapting designs to changes in social trends?

Answer 3

Reducing waste helps businesses cut costs
Reflecting social trends through product design means they are more likely to sell large quantities
Social trends can be used as a USP to differentiate goods
Businesses are more likely to be seen as being socially responsible

Question 4

What is promotion?

Answer 4

A key method a business uses to communicate with its customers and potential customers to create awareness, understanding and a desire for the product

Question 5

Explain above the line promotion with examples?

Answer 5

Any form of advertising through the media eg:
TV
Radio
Posters
Billboards 
Internet/ websites 
Direct marketing/emails/direct post
Cinema 
Newspaper/magazine

Question 6

Explain below the line promotion with examples?

Answer 6

All other forms of promotion that are not advertising eg:
Sales promotion- free gifts, money off, loyalty cards
Public relations- press conference, sponsorship
Merchandising/packaging
Direct selling/personal selling
Exhibitions/trade fairs

Question 7

What are 4 influences on promotion?

Answer 7

1) promotion budget- determines which methods are available and the geographical reach of the campaign
2) the message- public apology posted on company’s website, sneak peak of a product line on twitter, sponsoring a sporting event to associate with healthy living
3) technology- help narrow down promotion so it only reaches the right people eg.subscription services help target customers with personal messages/relevant info
4) the target audience- choosing the right method and channel to reach the right people

Question 8

The message- what are 4 purposes of an advert?

Answer 8

Inform customers
Remind customers
Persuade customers
Reassure customers

Question 9

What is a brand?

Answer 9

A logo, slogan, image that represents the characteristics and personality of a business

Question 10

A well knows brand gives consumers more trust, what are 4 ways to build a brand?

Answer 10

Exploiting a USP
Advertising
Sponsorship
Social media

Question 11

What is the importance of building a strong brand?

Answer 11

Adds value to the product
Allows a premium price to be charged
Builds trust
Product might become the more natural choice for the novice customer
Helps a business to position itself in the market relative to other competitors
Makes a product recognisable
Brands can be traded

Question 12

What are the 3 types of brands?

Answer 12

Manufacturers- eg.Kellogg’s corn flakes
Own label brands- associated with a retailer eg. Sainsbury’s crisps
Generic brands- don’t have a particular brand association but simply use the name of a product eg. Carrots

Question 13

Explain social trends in relation to building a brand?

Answer 13

Social media- attracting followers to social media sites is a key focus of marketing spending for many businesses
Viral marketing- the growth of social media and the sharing of images and videos is a huge opportunity for businesses to build brand awareness
Emotional branding- associate the brand with things that consumers have strong emotional connections to eg. Sport team, good causes

Question 14

What are 6 influences on price?

Answer 14

1) Product life cycle- what stage is the product in
2) Competition- level of competition/price set by the market
3) PED- potential for a price change
4) Costs- what profit margin is the business hoping to achieve
5) Other elements of the marketing mix- other P’s must complement one another
6) Branding- the perceptions customers have of the brand and how much value they place on it

Question 15

Explain all 7 pricing strategies?

Answer 15

1) dynamic pricing- for products where price can fluctuate with demand
2) penetration pricing- new product attempting to enter the market, initial price low then over time increase as demand/reputation grows
3) price skimming- go in high then skim price, good for established brands/ technology market where anticipation for a new product is high
4) predatory pricing- destroyer pricing, set the price so low it prices competitors out the market, may make a loss for period of time until competitor fails
5) competitive pricing- sets the price based on the nearest competitor, very competitive market helps avoid price wars
6) psychological pricing- tricks the consumer into thinking the price is lower, price is placed below the next whole number
7) cost plus pricing- unit cost then add a percentage markup, considers the profit margin the business is willing to accept

Question 16

How to calculate a mark up?

Answer 16

Unit cost x percentage mark up

Question 17

Explain PLC in relation to pricing?

Answer 17

May adjust pricing strategy according to stage product is in eg.penetration at introduction

Question 18

Explain value for money in relation to pricing?

Answer 18

Business can’t make a profit unless they consider costs alongside pricing
Customers are more concerned with value for money
Business must understand the value customers place on their product and not simply the costs of production
Business can charge a higher price if it has a USP/ or is different/innovative compared to competitors
Customers value the USP and are willing to pay more

Question 19

A business must monitor the market and be ready to adapt, explain 4 ways in which a business can adapt price to reflect social trends?

Answer 19

1) personalised pricing- technology and online databases collect customer information and allow businesses to target them with a personal price
2) subscription pricing- business charges customers a monthly fee to use a service, suitable for online services eg. Film rental sites
3) price comparison sites- makes it easier for customers to compare prices and choose the best deal, businesses have to remain competitive in a dynamic market
4) auction sites- customers can gain the best prices but through a sense of urgency, encourages people to bid so they don’t miss out many businesses use these sites for selling alongside their own e-commerce sites

Question 20

Explain the 4 parties in the distribution network?

Answer 20

1) agent/brokers- link buyers and sellers together, have specialist knowledge and will often given both parties advice, commonly used in exporting
2) retailers- provide customers with a specialist service and give them the opportunity to browse, enjoy the shopping experience, get advice and support from employees
3) wholesalers- take bulk quantities from manufacturers and distribute them across a network of retailers, they store, break down bulk and offer a distribution service for manufacturers
4) direct selling- main route to direct sell is through online sales and e-commerce sites as well as telephone, door to door sales and online shopping channels

Question 21

Explain a distribution channel?

Answer 21

Producer to agent to wholesaler to retailer to consumer

Question 22

What are 4 influences on distribution?

Answer 22

1)Scope/scale- product sold internationally may require distribution though an extensive network of wholesalers, agents and distribution companies whereas local business any require just one retail outlet
2)Nature of the product- suitability? Eg. Difficult/costly to ship plants/delicate objects
3)Control over promotion and pricing- it it’s important to control these a business may sell using its own website/retail chain
Expectations of customers- will they expect to access the product via multi channels or will one suffice

Question 23

Explain the social trends in distribution?

Answer 23

Growth in direct ordering through the internet with many manufacturers using courier businesses to deliver their products directly to customers
Big increase in service providers selling on demand services via websites and smartphone apps

Question 24

Explain the value of digital marketing and e-commerce?

Answer 24

Allows small businesses to target a global market
Builds relationships through a more personal service by tracking buying habits
Targeting specific segments is much easier
Opportunities for personalities and involving customers in the design of products
Allows businesses to gather customer information easily

Question 25

What are the benefits of online distribution for businesses?

Answer 25

No costs of operating retail stores
Lower start up costs makes it easier for small businesses to launch
Transactions can take place in a secure online environment
24/7 sales
Offer goods to a much wider market

Question 26

What are the benefits of online distribution for customers?

Answer 26

Lower prices passed on from lower costs
Shop 24/7
Price comparison between brands is much easier
Wider choice
Can see reviews before making an informed choice

Question 27

What are the 6 stages of the product life cycle?

Answer 27

1) Introduction- low prices to initiate sales, heavy promo to create awareness
2) Growth- price may rise with popularity
3) Maturity- may cut price to maintain demand, promotion slows as customers are aware of the product, focus on retention and repeat purchase
4) Saturation- market is full all potential customers have the product, there are better/cheaper alternatives, may cut price to maintain competitiveness
5) Decline- further price cuts to maintain demand, may discontinue product if replacement can be introduced
6) Extension strategy- uses to relaunch the product to boost new growth

Question 28

What is the product portfolio analysis?

Answer 28

Used to analyse and track the development of multiple products over time taking into account a number of factors such as growth, sales, and market conditions
There’s the PLC and the Boston matrix

Question 29

Evaluate the PPA?

Answer 29

+ useful analysis tool for a business with a wide product range
+ useful for making decisions about where funds should be allocated
+ can be used to predict future sales and thus plan production/distribution
- products/markets are complicated, thus don’t necessarily follow patterns
- doesn’t provide clear solutions for a business
- it simplifies what can be a complex issue

Question 30

Boston matrix- describe star products?

Answer 30

Possibly a leading brand in the market
Distribution must be effective to ensure product availability
High market share
High market growth

Question 31

Boston matrix- describe question mark products?

Answer 31

Fast growing market but not yet an established product
Heavy investment to develop and ensure success
Lots of competition from rival brands
Low market share
High market growth

Question 32

Boston matrix- describe cash cow products?

Answer 32

Successful products in mature markets
Generate high revenue that can be invested elsewhere in the business 
Little promotion 
High market share
Low market growth

Question 33

Boston matrix- describe dog products?

Answer 33

Invest to revitalise or discontinue the product or discontinue it
Low market share
Low market growth

Question 34

Explain what is meant by a marketing strategy?

Answer 34

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

Question 35

Explain how the 4p’s can be adapted for mass markets?

Answer 35

Product- very generic so need to find a way to differentiate
Price- competitive pricing and managing costs are key to success as many products will have similar price
Promotion- heavy advertising/promotion needed to build brand image through media with a wide reach
Place- multiple channels used; wholesale, retail outlets, internet

Question 36

Explain how the 4p’s can be adapted for niche markets?

Answer 36

Product- significant differences, important go communicate these differences and the benefits they bring
Price- more flexibility to offer a premium price due to unique value they add
Promotion- targeted using specialist media/direct methods
Place- sell direct or use a small number of carefully selected channels

Question 37

Explain inbound and outbound marketing strategies for B2C and B2B?
Hybrid strategies involve a combination of both

Answer 37

Inbound- any technique that attracts potential customers to a website when they are looking for a particular service of product. Takes months to start generating a real interest
Outbound- strategies that involve pushing a message out to customers. More short term

Question 38

It is often easier to keep customers and encourage them to repeat purchase than it is to attract new customers. Explain how to develop customer loyalty?

Answer 38

Excellent customer service
Preferential treatment for returning customers
Good communications, keeping customers informed of new products and developments
Customer incentives eg.reward schemes, money off vouchers

Question 39

Explain how marketing differs from B2B and B2C?

Answer 39

B2B requires more information and detail on how a product/device could reduce costs or increase productivity
B2C involves more emotive techniques to attract customers