2.2 | Making Marketing Decisions Flashcards
Give the 4 elements of the marketing mix and why it is used
- product
- place
- price
- promotion
- it is used to make decisions about the business
give 4 ways a business can build a competitive advantage using the Marketing Mix
- PRODUCT : develop a USP
- PRICE: set cheaper prices to appeal to mass markets / expensive to show quality and appeal to niche markets
- PROMOTION: making it fit with the firm’s brand image to increase customer recognition and loyalty
- PLACE: choosing to locate nearer to competitors means wide access to target market and allows for easier advertisement of the firm’s USP
define differentiation
- making your products distinct in the market by changing elements of the MM
give two ways the marketing mix can influence other elements
PLACE impacts PRICE:
- method of distribution will affect pricing as products sold online are likely to be sold cheaper due to lower fixed costs whereas a physical shop would charge higher due to additional transport and labour costs
PRODUCT impacts PROMOTION:
- if a product is of high quality , this will be emphasised in promotion to appeal to customers
- if a product is cheap, then its price will be emphasised
give the features of the design mix, define it and their use
function: what the product should do and its success
cost: how cost-effective the product is to manufacture
aesthetics: how to product appeals to customers
- used together to appeal to different target markets
define the Product Life Cycle
The time from a product first being introduced to consumers until it is removed from the market
- research and development
- introduction
- growth
- maturity
- decline
explain what happens to the product at the introduction stage and 3 key features
The product is launched:
- sales are low due to low product awareness
- profits will not be made
- advertising and promotion is integral here
give two key features of what happens to a product during the growth stage
- customers become more aware of the product and thus demand increases
- sales increase rapidly
explain what happens to the product at the maturity stage and 3 key features
- Sales reach their peak as the product becomes established.
- likely to receive repeat purchases from customers
- growth is limited as the market is now saturated
explain what happens to the product at the decline stage and 2 key features
- Sales fall during this phase as the product loses popularity due to changes in trends and technology
- customers look to alternatives and rival products
- the product is no longer profitable
explain what happens at the research and development stage
- market research is conducted to identify gaps in the market and see the need and demand for a new product
- costs are high here and the business’ expenses will mean it operates as a loss
give two things a products life cycle depends on
- how dynamic ( the rate at which the market changes) the market is
- how strong brand image is as a customer is more likely to purchase from well known brands leading to repeat purchases
what is an extension strategy
an action which a business takes to lengthen their product’s life cycle and encourage growth of sales during the stage of decline
give one reason a business would adopt an extension strategy
- developing new products is expensive and takes time
give four ways a business can extend the life cycle of its product and their impacts
- price reduction: attracts customers as a business can’t charge high prices due to the saturated market
- expanding to new markets: target different markets or expand abroad
- rebranding: adopting new packaging can appeal to new customers and stimulate interest from old customers
- increase marketing activity: new advertising campaigns can incentivise new customers and encourage repeat purchase
give the three purposes of promotion
- inform consumers of a new product or service
- persuade consumers to buy a product or service
- remind consumers about the benefits of a product or service
give 2 reasons why brand image and promotion is important and how it can be established
- increases brand awareness and recognition
- it increases revenue for the firm through first time and repeat purchases
- this can be done through effective advertising
give 3 ways a business can advertise their product and an impact of each
leaflets and flyers: cheap to produce and distribute and easy to target a certain market segment in a particular location
internet adverts: seen at anytime and by a large targeted audience however are expensive and can be blocked and/or ignored
posters and billboards: placed near a target audience for a long period of time being seen daily by lots of people however it is expensive
what is a sponsorship and give two impacts of a business using this method of promotion
- when firms provide financial support to someone in return for its business to be promoted
- it can create a high profile for a business and a good way to target a market segment
- if the person being sponsored gets bad publicity, it may impact business reputation too
what is sales promotion and give three impacts of a business using this method of promotion
- sales promotion can be done through special offers or offering product trials
- this encourages new customers to try a product boosting sales in the short term
- it can also increase sales in the long term if customers like the product and choose to continue to buy it
- customers may get used to seeing products on promotion and be disinterested especially for high income segments and luxury items
give four ways businesses can use technology for promotion and its impacts
- social media: firms can create accounts to advertise and target specific market segments
- Targeted advertising: business can track cookies to build a profile for consumer interests and then use that to target adverts for products suited to the consumer
- viral advertising: adverts on social media are largely viewed and frequently shared - appeal to mass markets
- e-news letters: businesses can send consumers promotion ad offers to reinterest consumers
define distribution channels and name 3 common channels of distribution
The different ways of moving goods from producers to customers
- producers
- retailers
- e-tailers
what is a direct channel of distribution and give two impacts on a business operating this way
A direct channel of distribution only involves the producer and the customer.
- they can communicate directly with the consumer
- it limits the amount of consumers you are able to sell directly to
what is an indirect channel of distribution and give 2 impacts of a business operating this way
when a intermediary is introduced into the distribution process through wholesalers retailers , distributors etc
- it covers large areas and allows for a business to target untapped markets
- may be hard to control all intermediaries and they may lack understanding of your consumers base
define intermediary
those who buy products in bulk from producers and sell them in smaller quantities to consumers
define retailer and give two impacts to a business in operating this way
- a business that sells goods to the public, often in a physical shop
- it allows for a firm to offer customer service and for a customer to see and feel the quality of the products
- they require premises which are expensive to run and increase costs
define e-tailer and give 2 advantages to a business in operating this way
a retailer that sells products and services to customers using an online store.
- offer a wide range of products as they are not limited to size and have access to global markets
- prices are lower due to less fixed costs thus attracting more customers
give two disadvantages to a business in operating as an e-tailer
- long delivery times and waits can deter customers
- mass competition - may lower prices or increase advertising
