3.3.4 Making marketing decisions: using the marketing mix

Question 1

Define what is meant by the marketing mix.

Answer 1

Those elements of a business’s approach to marketing that enable it to satisfy and delight its customers.

Question 2

Define the role of people in the marketing mix.

Answer 2

In the context of the marketing mix, this is anyone who represents the firm and comes into contact with the firm’s customers.

Question 3

Define the role of process in the marketing mix.

Answer 3

The system involved in ensuring that an efficient service is provided to prospective and actual customers.

Question 4

Define the role of physical environment in the marketing mix.

Answer 4

The nature and appeal of the physical evidence a customer will observe during a transaction, such as the company stationary and brochures, delivery lorries and staff uniforms.

Question 5

Outline finances influence on the marketing mix.

Answer 5

A businesses decision in any functional area will be influenced by its financial position.

Cash flow - if suffering from problems, it may need to reduce spending on items such as promotions.

Discounts - is the organisation large enough to acquire raw materials at a low price?

Market budget and cost of promotions - generally base promotional decisions on cost effectiveness. Often measured by CPT (cost per thousand).

Question 6

Outline technology’s influence on the marketing mix.

Answer 6

Technologically advanced products - will be more popular than customers. Direct link between advanced technology and the price that is set.

Sophistication of the organisations database - if a business has acquired information on specific customers, it is more likely to use direct mail or internet contact to attract them.

Lower costs - advancements in technology enable firms to create high-quality products at low prices (and therefore relatively low prices).

Online selling - allows for e-commerce, don’t need a traditional shop to sell products.

Social media - use to directly promote products.

Question 7

Outline market research’s influence on the marketing mix.

Answer 7

Level of competition - business needs to differentiate itself from the level of competition that the market research will reveal - for example it could reveal heavy competition.

Availability of substitutes - may reveal the existence of substitutes for the businesses product.

Consumer opinions - business must satisfy the needs of the customer, so continuous market research is required to determine what these are.

Niche or mass marketing - will guide businesses towards differentiated or undifferentiated marketing.

Market segment - some target markets may be easier to reach through certain media.

Question 8

Outline how other factors influence the marketing mix.

Answer 8

Relative power of buyers and suppliers - if a firm is in a strong position to dictate terms to its suppliers, it is more likely to be able to acquire cheap supplies.

Quality of the promotion - there is an element of chance in any promotional campaign. Some campaigns have failed because they were not cost-effective etc.

Elasticity of demand - if high price does not stop customers buying a product, even if a higher price can be charged. However, for some products, a high price will lead to a large fall in demand.

Reputation of the business - Some businesses deliberately avoid price cuts because they may adversely affect their upmarket image.

Convenience of location.

Question 9

Define industrial marketing.

Answer 9

Aka business to business.

When a firm sells its products to another business.

Question 10

Outline the main features of industrial marketing.

Answer 10

Larger transactions.
Specialist buyers and sellers. 
Quality. 
Informative advertising.
Pricing. 
Buyer-seller relationship - 
  maintain goodwill. Returns 
  and replacements etc.

Question 11

Define consumer marketing.

Answer 11

Where a firm targets individual consumers with its products.

Question 12

Define convenience products.

Answer 12

Products that are purchased frequently and with minimum thought and effort by consumers.

Question 13

Define shipping products.

Answer 13

Products that consumers want to be readily accessible, but which involve thought and planning before purchase.

Question 14

Define speciality products.

Answer 14

Products whose purchase is planned by consumers, who will seek out these products for purchase.

Question 15

Define consumer products.

Answer 15

Products that are purchased in order to directly satisfy the needs and wants of consumers.

Question 16

Outline the features of consumer marketing.

Answer 16

Consumed and purchased regularly.
Consumers purchase them by habit.
Purchased by a very large proportion of the population.
Tend to be low-price items and so businesses need to sell them in large volume to make profit.
Consumers do not tend to shop around as there is limited scope for saving money by switching brands.

Impulse buy, placed near the tills in shops, are often examples of convenience products.

Question 17

Features of shopping products.

Answer 17

Consumed and purchased quite often, but less regularly than convenience products as a rule.
Because consumers plan their purchases they do not need to be displayed so prominently in stores and are likely to be available in fewer stores

Consumers may purchase them because of augmented qualities, beyond (such as feeling prestige from buying a fashionable brand).

for sellers there is more scope for higher prices and greater added value than convenience products.

Question 18

Outline the features of a speciality product.

Answer 18

These products will often have unique characteristics.

Consumers are much more selective and there is greater emphasis on image and brand when making purchasing decisions.

People may travel some distance to purchase speciality products.

Price is not a key consideration in the decision to purchase and so high profit margins can be gained.

Question 19

What does product design mean?

Answer 19

Deciding on the makeup of a product so that it works well, has an attractive design and can be produced economically.

Question 20

What are the two types of products?

Answer 20

Tangible (goods).

Intangible (services).

Question 21

Outline the key features that make a successful product.

Answer 21

Reliability.

Functions and compatibility
with other devices.

Size and weight.

Fashion.

Aesthetic qualities.

Durability.

Value for money.

Convenience of use.

Financial viability.

Legal requirements - designs to ensure safe use.

Its effect on the organisations reputation.

Whether the business can produce it without difficulty.

Question 22

Define the Boston Matrix.

Answer 22

A tool of product portfolio analysis that classifies products according to the market share of the product and the rate of growth of the market in which the product is sold.

Question 23

Define a product portfolio.

Answer 23

The range of products or brands provided by a business.

Question 24

Describe the product portfolio of a multi-product firm.

Answer 24

The product portfolio covers a wide range of products. If one product has low sales, it may be supported by the other, more successful products.

Question 25

How often should a product portfolio analysis be performed? Why?

Answer 25

Regularly. This is the study of the range of products with a view to deciding whether new products should be added to the portfolio and whether any existing products should no longer be provided.

Question 26

Define the purpose of the Boston Matrix.

Answer 26

To help an organisation recognise the situation of its products in the market.

Question 27

Outline the categories in the Boston Matrix.

Answer 27

Stars : High market share and growth.

Dogs: Low market share and growth.

Problem children: Low market share and growth.

Cash cows: High market share and low growth.

Question 28

Outline a star in the Boston Matrix.

Answer 28

High percentage market share and high growth market.
Competitors will be encouraged to focus on this market - need a great deal of promotional spending and may involve the business in capital expenditure (increase capacity). May cause cashflow problems.

Question 29

Outline a cash cow in the Boston Matrix.

Answer 29

High percentage market share in a low growth market. Often exist in established markets that have reached maturity. Low growth rates discourage competition from entering the market - less can be spent on promotion. Ideal for companies seeking high profits, can not stand alone in the product portfolio, will want to develop new products in order to enter high growing markets.

Question 30

Outline problem children in the Boston Matrix.

Answer 30

Low percentage market share in a high-growth market.

Competing in a competitive market, but as the market is growing there is scope for future sales increases, even if the product does not increase in market share.

Tend to need a large amount of market research and promotion in order to succeed however, if successful, they can become either cash cows or stars.

Question 31

Outline Dogs in the Boston Matrix.

Answer 31

Low percentage market share in a low-growth market.
Offer little scope for profit making.
In a recession, these products are likely to we withdrawn if they become unprofitable.

Question 32

What would the ideal product portfolio be?

Answer 32

A balance between cash cows and stars.

Question 33

Outline the factors that aren’t considered in the Boston Matrix, but should be examined.

Answer 33

Exact meanings of ‘high’ and ‘low’ market shares - varies depending on the firm.

Exact meanings of ‘high’ and ‘low’ market growth - varies depending on the firm.

Size of the market.

Definition of the market.

How profitable is the product?

Consumer opinions and loyalty.