3.3 Marketing mix Flashcards
What are the costs of developing a new product?
-Market research to identify customer needs
-Development of a new product
What are the benefits of new product development?
-Charge higher prices
-Increase potential sales
-May achieve growth and economies of scale
What is ‘brand image’?
general impression of a product held by consumers
What are the purposes of ‘brand image’?
-Consumers recognise their product more easily
-Product can be charged higher than less well-known brands
What are the roles of packaging?
-Protect product
-Give information about product
-To help consumers recognise product
-To keep product fresh
What is the ‘product life cycle’?
the cycle which every product goes through from introduction to withdrawal or eventual demise
What are ‘extension strategies’?
marketing activities to extend the maturity stage of a product
Examples of ‘extension strategies’?
Finding new markets for product
Finding new uses for product
Adapting product or packaging to improve its appeal to consumers
Increased advertising and other promotional activities
What are the different types of pricing?
price skimming
penetration pricing
competitive pricing
cost-plus pricing
promotional pricing
What is ‘price skimming’?
Setting a high price for a new product that is unique or very different from any other product on the market
Advantages + disadvantages of price skimming
ads:
Profit earned is very high
Helps to recover research and development costs
disads:
Laws may have been placed to stop this
Backfire if competitors produce similar products at a lower price
What is ‘penetration pricing’?
Setting a low price to attract customers to buy a new product
Advantages + disadvantages of penetration pricing
ads:
Attracts customers more quickly
Can increase market share quickly
disads:
Cannot recover development costs quickly
Possible loss of revenue due to lower prices
What is ‘competitive pricing’?
Setting a price similar to that of competitor’s products which are already established in the market
Advantages + disadvantages of ‘competitive pricing’?
ads:
Business can compete on other things e.g. service
disads:
Still need to find ways of competing in order to attract sales
What is ‘cost-plus pricing’?
Setting price by adding a fixed amount to the cost of making or buying the product
Advantages + disadvantages of ‘cost-plus pricing’?
ads:
Quick + easy to work out price
Makes sure that price covers all costs
disads:
Price might be set higher than competitors/ more than customers are willing to pay, → reduces sales and profits
What is ‘promotional pricing’?
Setting price of a small number of products at below cost to attract customers into outlet in hope that they will buy other products priced to earn a profit
What is ‘price elasticity of demand’?
Measures by how much demand for a product changes when there is a change in price
What is ‘price inelastic demand’?
Change in demand less than proportionate to change in price
What is ‘price elastic demand’?
Change in demand is more than proportionate to change in price
What is a ‘channel of distribution’?
a chain of businesses or intermediaries through which a good or service passes until it reaches the end consumer
Name the advantages + disadvantages of ‘Producer → Consumer’
ads:
- All of profit is earned by producer
- Producer controls all parts of the marketing mix
- Quickest method
disads:
- Consumers are not always able to see or try product before they buy it
- Delivery costs may be high
- All storage costs must be paid for by producer
- All promotional activities must be carried out and financed by producer
Name the advantages + disadvantages of ‘Producer → Retailer → Consumer’
ads:
- Consumers can see and try product before buying it
- Cost of holding inventories of product Is paid by retailer
- Retailer will pay for advertising + other promotional activities
- Retailers are more conveniently located for consumers
disads:
- Retailer takes some of the profit away from the producer
- Producers lose some control of marketing mix
- Producer must pay for delivery costs to retailers
- Retailers usually sell competitors’ products as well
Name the advantages + disadvantages of ‘Producer → Wholesaler → retailer → Consumer’
ads:
- Wholesaler buys in bulk from the producer
- Wholesalers will advertise
- Wholesalers pay for transport costs + storage costs
disads:
- more profit is taken away from the producer
- Producer loses even more control of the marketing mix
Name the advantages + disadvantages of ‘Producer → Agent → Wholesaler → Retailer → Consumer’
ads:
- The agent has specialist knowledge of the market
disads:
- Another middleman is added so even more profit is taken away from the producer
What is ‘promotion’?
Marketing activities used to communicate with customers and potential customers to inform and persuade them to buy a business’s products
What are the purposes of promotion?
Attract attention of consumers by making them aware of the product
Persuading consumers to buy to product
What are the methods of promotion?
advertising
sales promotion
sponsorship
Below the line promotion
What is ‘sales promotion’?
Incentives used to encourage short-term increases in sales or repeat purchases
What is ‘below-the-line promotion’?
Promotion that is not paid for, uses incentives to encourage consumers to buy.
What is ‘personal selling’?
Sales staff communicate directly with consumer to achieve a sale and form a long-term relationship between firm + consumer
What is ‘direct mail’?
Also known as mail shots, printed materials which are sent directly to addresses of customers
What is ‘sponsorship’?
Payment by a business to have its name or products associated with a particular event
What is ‘marketing budget’?
the amount of money made available by a business for its marketing activities during a particular period of time
What is ‘e-commerce’?
Use of internet and other technologies used by businesses to the market and sell goods and services to customers.
What are the opportunities of e-commerce to businesses?
Increased market
Reduced costs
Better information
