1.3 Marketing Mix + Strategy Flashcards
What is included in the marketing mix?
Product
Price
Place
Promotion
These 4 components work together to satisfy the needs and wants of a target market while achieving the company’s objectives
What is the benefit to a business of understanding and manipulating the marketing mix?
Businesses can differentiate themselves from competitors
A marketing mix is an essential tool for any company looking to maximise its marketing impact and achieve long-term success
What is the design mix?
The design mix refers to the combination of elements that make up a product’s design
These elements include:
- Function (the purpose of the product or service)
- aesthetics (how the product looks and feels)
- cost
What is the benefit of balancing the elements of the design mix?
Helps the product design to be both functional and attractive, while also being cost-effective for both the manufacturer and the consumer
What does a products function refer to?
It’s intended purpose and the specific tasks it is designed to perform
A product’s function is the most important aspect of its design because it determines how well the product will meet the needs of its intended users.
What does a products aesthetics refer to?
The product’s visual and sensory appeal, including its form, shape, colour, and texture.
Aesthetics play an important role in attracting customers, creating brand loyalty, and generating word of mouth recommendations
What does a products cost refer to?
The cost of production must be considered when designing a product, as it directly affects the price point at which it can be sold
A well designed product should balance cost and value, ensuring that customers perceive the product as valuable enough to justify its cost while still maintaining profitability for the manufacturer
What are social trends?
Changes in attitude, behaviours and lifestyle of people
Changes to any of these require companies to adapt their products to remain relevant to their customers
What are two current changes in social trends which require adaptation to the design mix?
- concerns about resource depletion
Customers are becoming increasingly aware of the need to conserve natural resources and reduce waste
The product design mix may change to reflect waste minimisation, re-use, and recycling
Companies may choose to design products that use fewer materials, are more durable, and can be easily disassembled for recycling or repair
- concerns about ethical sourcing
Ethical sourcing means that products are produced without exploitation of workers or environmental damage
Companies may change their product design mic to incorporate sustainable materials and production processes
Why is promotion an important element of the marketing mix?
Because it plays a crucial role in generating customer awareness, interest and desire for a product/service
It means a business can communicate its value proposition (a simple statement which summarises why a customer would choose your product or service. It communicates the clearest benefit that customer receive from the product)
Promotion also helps to build brand awareness and loyalty which can lead to repeat purchases and referrals
What are the different types of promotion?
Digital communications
Sponsorship
Public relations
Advertising
Direct marketing
Sales promotion
Personal selling
What are the advantages and disadvantages of advertising as a promotional strategy?
Advantages:
- can reach large audiences and increase brand awareness
- can be used to create a specific brand image or message, e.g. the advertising campaign run by compare the market
Disadvantages:
- can be expensive
- the effectiveness of advertising can be difficult to measure
- many customers tune out or ignore ads
What are the advantages and disadvantages of direct marketing as a promotional strategy
Advantages:
- businesses can target specific audiences and personalise their message to individual customers
- direct marketing is also measurable, which enables businesses to track their results and adjust their strategy accordingly
Disadvantages:
- can be intrusive as customers may perceive it as spam
- can also be costly, especially if businesses do not have an established customer database or need to purchase leads
What are the advantages and disadvantages of sales promotion as a promotional strategy?
Advantages:
- can quickly boost sales or customer engagement
- can help to clear out stock or promote a new product
- can encourage impulse purchases
- can be targeted to specific segments of customers
Disadvantages:
- can be expensive especially if the promotion requires a heavy discount
- can attract deal-seeking customers who may not be loyal to the brand
- may reduce the sales of full-priced products
What are the advantages and disadvantages of personal selling as a promotional strategy?
Advantages:
- allows businesses to build relationships with their customers and understand their specific needs
- enables businesses to provide personalised advice and guidance to customers
Disadvantages:
- can be expensive due to the cost of hiring and training sales staff
- the impact of personal selling can be limited as it is difficult to scale to large audiences
What are the advantages and disadvantages of sponsorship as a promotional strategy?
Advantages:
- can help build brand awareness and credibility
- can create emotional connections with target audiences
- can support specific business objectives, such as entering new markets or reaching new customers
Disadvantages:
- can be expensive, especially for high-profile events or properties
- may not directly drive sales
- may be subject to negative publicity if the sponsored entity experiences a scandal or controversy
E.g. in 2022 Kanye west was dropped by Adidas after his anti semitic outbursts
What are the advantages and disadvantages of public relations as a promotional strategy?
Advantages:
- can enhance a business’s reputation and credibility
- this can lead to increased customer loyalty and sales
- can be cost-effective when compared to advertising or personal selling
Disadvantages:
- public relations can be time-consuming and is difficult to measure the direct impact of PR activities on profits of a profits
What are the advantages and disadvantages of digital communications as a promotional strategy?
Advantages:
- can be highly targeted to specific customer segments
- can provide real-time engagement and feedback from customers
Disadvantages:
- can be easily ignored or filtered out by customers
- may require significant investment in technology or data infrastructure
- may be subject to data privacy regulations or security breaches
- may not be effective for reaching older or less digitally-savvy customer segments
What is branding?
The process of creating a unique and identifiable name, design, symbol, or other feature that differentiates a product or company from its competitors
What is branding important to a business?
- establishes recognition and identity
- builds trust and credibility
- differentiates a business from its competitors
- creates an emotional connections with customers which helps to generate repeat purchases
- supports marketing and advertising efforts
What are the 3 types of branding?
Product branding
Own brand product
Manufacturer branding
What is manufacturer branding and what are the advantages and disadvantages?
Manufacturer branding is the use of a company name of logo to promote all the products or services offered by the company. E.g. Nike or apple
Advantages:
- creates strong brand recognition and reputation for the company, which can increase customer loyalty and trust
- allows the company to leverage its existing reputation and customer base to introduce new product more easily
- helps build economies of scale by promoting multiple products under one brand, which can reduce marketing costs and increase profitability
Disadvantages:
- if a company’s reputation is damaged by a product, it can have a negative impact on all the products offered under that brand
- If the company faces intense competition in one market (e.g. smartphones), it may affect the sales of all the products offered across other markets (e.g .laptops and desktops)
What is product branding and what are the advantages and disadvantages?
Product branding is the use of a unique name, design, or symbol to promote a specific product e.g. Kitkat, Coca-cola
Advantages:
- Creates a distinct identity for the product, which can help to differentiate it from competitors and increase brand loyalty
- Allows the company to market different products to different segments of the market, e.g. Coco Cola and Coke Zero
- Can help to build customer loyalty and trust by associating the product with a specific quality and benefits, e.g. Dyson Vacuum Cleaners
Disadvantages:
- The cost of creating and promoting a new brand for each product can be expensive
- Introducing new products under different brands is difficult as the business must build a new brand for each product from scratch
- Different products within the brand may have different levels of quality, which can affect customer satisfaction
What is own brand branding and what are the advantages and disadvantages?
Own brand refers to the use of a retailer’s name to promote a specific product or service e.g. ASDA chocolate or Tesco finest range
Advantages:
- It can help retailers differentiate themselves from their competitors by offering unique products
- It allows retailers to offer products at a lower cost than branded products, which can help to increase sales and profitability
- It can help to build customer loyalty by offering exclusive products that are not available elsewhere
Disadvantages:
- Own brand products may have a lower perceived quality than branded products which can affect customer loyalty and trust
What are the benefits of branding?
Adds values by creating a perception of quality, reliability and trust
Ability to charge premium prices as customers may be willing to pay more for a product that is associated with a well-established brand
Reduced price elasticity of demand because customers who are loyal to a brand are more likely to continue purchasing the product even if the price increases
What are the ways to build a brand?
- by developing USPs
- through advertising
- through sponsorship
- through the use of social media
What is a USP?
The features that make a product/service stand out from its competitors
Brands can build their reputation by emphasising these unique qualities in their marketing efforts
E.g. apple known for its innovative and sleek design
What is advertising as a way of building a brand?
Brands can create compelling ads that resonate with their target audience, raise brand awareness, and communicate their value proposition
With the right advertising strategy, brands create a strong emotional connection with their audience and inspire brand loyalty
E.g. coca-cola has successfully built its brand through advertising
What is sponsorship as a way of building a brand ?
Partnering with events, organisations, or individuals can help brands gain exposure and build their reputation by aligning themselves with positive associations or values
E.g. Nike sponsoring many high-profile athletes and sports events such as the olympics
What is social media as a way of building a brand?
With the right social media strategy, brands can build a loyal following and create a community around their brand
E.g. glossier has a strong presence of platforms like instagram and it engages with its audience and shares user-generated content
What is viral marketing?
A strategy where businesses use online platforms to promote their products by creating content at specific times, which can easily be shared and commented on
E.g. during the COVID-19 pandemic, coca-cola and McDonald’s ran campaigns that emphasised community, which aligned with the public’s need for social support
How is social media used in branding?
As social media platforms evolve, businesses must also adapt their social media strategies to keep up with the latest trends
E.g. instagram has been a popular platform for businesses to promote their products through influencer partnerships
What is emotional branding?
A strategy where companies build strong emotional connections with their customers by appealing to their values, beliefs, and emotions
E.g. brands like Patagonia have built their entire brand identity around their commitments to environmental and social causes, which resonates with customers who prioritise these values
What are the different types of pricing strategy?
Cost plus
Price skimming
Psychological
Predatory
Competitive
Penetration
What is cost plus?
Where the business calculates the cost of production and then adds a markup to determine the final price
The markup covers the cost of production plus the business’s desired profit margin
Commonly used by manufacturers that produce standardised goods e.g. washing machines
What is the formula to calculate the cost-plus price?
Unit cost + (mark up percentage x unit cost)
What is price skimming?
Where the businesses sees a high initial price for a new product/service
This is effective when an established brand is introducing a new product and there is a high demand for it, e.g. successive models of Apple’s MacBook Air
The high price helps the business recover its development and marketing costs quickly
The business will then gradually lower the price to ensure sales continue
What is penetration pricing?
Where the business sets a low initial price for a new product/service
This is effective when a business wants to quickly capture market share and attract price-sensitive customers, e.g. many new perfumes launch using penetration pricing
Once they have enough customers, the business will start to raise the price
What is predatory pricing?
Where the business sets prices so low that it drives its competitors out of the market
This strategy is illegal in many countries as it is considered anti-competitive and harms customers by reducing choice in the market
What is competitive pricing?
Where the business sets its prices based on its competitors’ prices
This is effective when a business is in a highly competitive market and wants to maintain its market share
The business must continually monitor its competitors’ prices and adjust its prices accordingly to remain competitive
What is psychological pricing?
Talk into account customer’s emotions, beliefs, and attitudes towards the product/service
E.g. a business may set its prices at £9.99 instead of £10 as customers perceive the former as a better value
What are the factors to consider when choosing a pricing strategy?
The number of USPs the business has as with many USPs this creates a high level of differentiation meaning the business can charge higher prices
The price elasticity of demand e.g. if a business is in a highly competitive market with many substitutes, lowering prices will increase revenue
The level of competition
The strength of the brand
The stage the product is in the product lifecycle e.g. in introduction stage prices set lower to attract customers, in growth stage prices can increase as demand increase and in maturity prices may need to be lowered again
The costs and the need to make profit
What is the benefit of online sales for customers?
Convenience
24/7 accessibility
What is one way pricing has changes to reflect online sales?
Through the use of dynamic pricing
This is where retailers can adjust prices in real-time based on factors such as demand and competition
Prices are higher when supply is lower and prices are lower when supply is higher
Retailers may also offer different prices for online purchases compared to in-store purchases to incentivise customers to shop online, which may mean the retailer requires fewer physical stores
As This will reduce the retailer’s costs
Why have retailers had to adjust their pricing strategies due to price comparison sites?
To remain competitive in an online marketplace
Pricing has changed to reflect the rise in price comparison through the use of price-matching policies
Retailers now offer to match the prices of their competitors to prevent customers from switching to a competitor with a lower price
Retailers may also use pricing algorithms to monitor the prices of their competitors and adjust their prices automatically
What is a distribution channel?
The various ways through which goods/services move from the manufacturer to the end customer
What are the types of distribution channels?
Four stage distribution
Three stage distribution
Two stage distribution
What is four stage distribution?
A channel that consists of four stages:
- producer
- wholesaler
- retailer
- consumer
This channel is commonly used for products such as groceries, clothing, and electronics
E.g. the coca-cola company produces the soft drink and then sells it to a wholesaler, who in turn sells it to the retailer
The retailer then sells it to the end customer
What is 3 stage distribution?
The three stage distribution channel eliminates the wholesaler stage, with the producer selling directly to the retailer
This channel is often used for products with high demand or where the cost of distribution is high
Often used for products with high profit margins, where the manufacturer can afford to sell directly to the retailer and still make a profit
Eg Toshiba produces laptops and sells them directly to retailers like Currys, who then sell them to the end customer
What is 2 stage distribution?
The two stage distribution channel eliminates both the wholesaler and retailer stages, with the manufacturer selling directly to the end consumer.
This channel is commonly used for products that are sold online or through direct sales channels
E.g. RyanAir sells its service (passenger tickets) directly to the end customer on their website
What have changes in distribution been impacted by?
Social trends such as the growth of e-commerce and the shift from product-based businesses to service-based businesses
By understanding these trends, businesses can adjust their distribution strategies to better meet the needs of their customers and stay competitive in the marketplace
What is the growth of e commerce?
E commerce is online distribution, it can become increasingly popular due to the convenience and accessibility it offers to consumers
Many businesses now use drop-shipping, which allows them to sell products without holding stock
Once the business has sold the products, they are shipped directly from the producer to the customer
This reduces the cost and complexity of distribution, making it easier for businesses to sell online
E.g. Amazon, they provide businesses with the infrastructure and online marketplace which allows them to reach a wider audience and increase sales without having to invest in their distribution infrastructure
Many businesses now generate the bulk of their sales selling on Amazon
What is the shift from product-based businesses to service-based businesses?
Consumers increasingly value experiences over material possessions and this shift has impacted distribution, as the delivery of services is often quite different from the delivery of physical products
Distribution for service-based businesses may involve delivering services to customers directly, such as through a mobile app or website
This requires a different set of distribution capabilities than traditional product-based distribution
E.g. Uber delivers a taxi service through a mobile app
The distribution involves matching drivers with customers in real-time
The service is distributed directly to the end consumer without the need for wholesalers or retailers
With no need for wholesalers or retailers, business costs reduce and profitability may increase
What is the product lifecycle?
The different stages a product goes through from its conception to its eventual decline in sales
How many stages are there typically in the product lifecycle?
5
Development
Introduction
Growth
Maturity
Decline
What happens in the development stage of the product lifecycle and what are the implications of this?
The focus is on designing and developing the product
The business usually incurs high costs for research and development, market research, and product testing
Cash flow is usually negative during this stage, as the company is investing heavily in the product without generating any revenue
The marketing strategy during this stage is focused on creating awareness and generating interest in the product
What happens in the introduction stage of the product lifecycle and what are the implications of this?
The stage begins when the product is launched
Characterised by slow sales growth as the product is still new and unknown to most consumers
Cash flow is usually negative as the business usually incurs high costs for promotion, advertising and distribution
Marketing efforts are focused on creating awareness and generating interest in the product
What happens during the growth stage of the product lifecycle and what are the implications of this?
The product enters this stage when sales begin to increase rapidly
The business focus shifts to building market share and increasing production to meet the growing demand
Cash flow usually turns positive during this stage as sales revenue increases and costs are spread out over a larger volume of production
The marketing strategy is to differentiate the product from its competitors and build brand loyalty
What happens during the maturity stage of the product lifecycle and what are the implications of this?
Characterised by slowing sales growth as the product reaches its peak in terms of market penetration
Cash flow is usually positive during this stage as sales revenue continues to come in and costs are reduced through economies of scale and efficient production processes
The marketing strategy aims to maintain market share and increase profitability by cutting costs and finding new markets
What happens during the decline phase of the product lifecycle and what are the implications of this?
Starts when sales begin to decline as the product becomes obsolete or is replaced by newer products
The business focus shifts to managing the product’s decline and reducing costs
Cash flow usually turns negative as sales revenue declines and costs associated with the product’s decline increase
The marketing strategy may involve discontinuing the product, reducing its price to clear inventory, or finding new uses for the product
What are the 2 types of product extension strategies?
Product-related extension strategies
Promotion-related extension strategies
By making product and promotion-related changes businesses can continue to appeal to customers and extend the life of their products
What does product related extension strategies involve and what are the 3 methods?
Involves changing or modifying the product to make it more appealing to customers and extend its life cycle and can be achieved in one of three ways:
Product improvements e.g. Samsung releases new versions of its galaxy smartphone every year with upgraded features and improvements to the previous model
Line extensions e.g. Coca-Cola introduced Diet Coke and Coke Zero as line extensions of its original Coca-Cola
Repositioning e.g. when IBM’s personal computer division started losing market share to other brands, it repositioned its products as high-end business machines and focused on the enterprise market
What does promotion-related extension strategies involve and what are the 3 methods?
Involves changing the marketing and promotion of the product to extend its life cycle and could include one or more of the following changes:
Changes to advertising e.g Kellogg’s continues to recreate adverts for its Corn Flakes cereal which has been around since 1906
Price promotions e.g. Cyber Monday occurs on the first Monday after Thanksgiving in the USA and electronic firms discount prices significantly to boost sales of their products
Sales promotions e.g. many coffee shops offer a loyalty program where customers can earn a free drink for every six consumed
What is the Boston matrix and what does it do?
The Boston Matrix is a tool used by businesses to analyse their product portfolio and make strategic decisions about each product
The matrix classifies products into four categories based on their market share and the market growth rate
Cash Cow
Problem Child/Question Mark
Star
Dog
What is a cash cow?
Cash cows are products with a high market share in a mature market (the entire market is no longer growing)
They generate significant positive cash flow but have low growth potential
The business invests minimal resources in cash cows as they are seen as stable sources of income
Marketing efforts focus on maintaining their market share and profitability
Cash cows are valuable assets and can be used to fund the development of new products
What are ?s
question mark products have a low market share in a high-growth market
These products have the potential to become stars if the company invests in their development
There is often a negative cash flow as businesses usually invest in problem child products to increase their market share and turn them into stars
If the investment does not result in growing the business may discontinue the product
Marketing efforts focus on increasing their market share and brand recognition
What are star products?
Star products have a high market share in a high-growth market
The company typically invests in stars to maintain or increase their market share
They generate significant positive cash flow and have the potential for continued growth
Marketing efforts focus on building brand recognition, increasing market share, and maintaining profitability
Stars are valuable assets and the business should focus on maximising their potential
What are dog products?
Dog products have a low market share in a low-growth market
They generate little revenue for the company and have no growth potential
Businesses often move away (divest) from these to focus on more profitable products
Marketing efforts for dog products are minimal or zero
What are mass markets and what marketing strategies are used?
Mass markets are characterised by large numbers of customers who have similar needs and wants e.g. retail clothing
Mass markets focus on building brand awareness and appealing to a broad audience
Advertising campaigns are usually designed to reach as many people as possible and use mass media such as TV, radio, and print ads
The messages are often simple and the goal is to create a strong brand identity that resonates with a large segment of the population
What are niche markets and what marketing strategies are used?
Niche markets are characterised by smaller groups of customers with specific needs and want. e.g organic food stores, luxury car dealerships
Marketing strategies focus on targeting a specific segment of the population and building relationships with them
Advertising campaigns are usually more targeted and may use social media to reach potential customers
The messages are often more detailed and often include technical information that is relevant to the specific needs of the target market
What are business to business markets and what marketing strategies are used?
B2B marketing focuses on selling products to other businesses e.g. software companies selling to other businesses; manufacturers selling parts to other manufacturers
In B2B marketing, the emphasis is on building relationships with other businesses and demonstrating how your product can help them be more successful
Advertising campaigns may include case studies that demonstrate the value of your product/service
The messages are often more technical and may focus on features and benefits that are relevant to other businesses
What are business to consumer markets and what marketing strategies are used?
B2C marketing focuses on selling products/services directly to consumers e.g clothing retailers
In B2C marketing the emphasis is on building brand loyalty and creating a positive customer experience
Advertising campaigns may include social media ads or influencer marketing campaigns that appeal to the emotions of consumers
The messages are often more emotional and may focus on the lifestyle benefits of using the product/service
What are the 3 commonly used methods of building customer loyalty?
Customer service
Offering loyalty cards
Saver schemes
Why is customer service used?
Because When customers have a positive customer service experience, they are more likely to return and recommend the business to others
E.g. Zappos is an online retailer that is well known for its exceptional customer service
They offer free shipping and returns
Their customer service representatives are available 24/7
Why are loyalty cards used?
Because loyalty cards are A popular way for businesses to encourage repeat customers
These cards typically offer rewards or discounts for frequent purchases
E.g.
Sephora has a loyalty program called “Beauty Insider.”
Members earn points for every purchase they make
They can redeem those points for beauty products or experiences
Why are saver schemes used?
These schemes typically offer discounts or special pricing for customers who save money with them
This helps customers gradually save up some money that can be used at periods when food bills are usually higher e.g Christmas
E.g.
Sainsbury’s offers a Christmas saving scheme
Their discounts are then usually between 2% and 6%
