3.3.4 Marketing mix Flashcards
Tradition Four P’s
-Product
-Price
-Place (distribution channel)
-Promotion
Extra 3
-People
-Process
-Physical environment
Marketing mix
The combination of elements used by a business to enable it to meet the needs and expectations of customers
Product
-Consumer products
-Convenience products
-Shopping products
-Speciality products
Boston Matrix
-A model which helps businesses analyse their portfolio of businesses and brands. The Boston Matrix is a popular tool used in marketing and business strategy
Price
What a customer has to give up in order to acquire a product or service
Pricing methods
The method used to calculate the actual price set
Pricing strategy
Adopted over the medium to long term to achieve marketing objectives
Pricing tactics
Adopted in the short term to suit particular situations
Financial objectives that affect pricing
-Increase cash flow
-Increase profit
Marketing objectives that affect pricing
-Increase advertisement
-Increase brand awareness
-Sales volume+value
Cost based pricing
Setting a price based on how much it cost to make
Cost based pricing benefits
-Covers all costs
-Easy to calculate
-Price increase can be justified when costs rise
Cost based pricing drawbacks
-Keep costs low=price low
-Costs too high=price high
(BOTH DEPEND ON P.E.D!!!)
Price skimming
-A firm charges a high initial price and then gradually lowers the price
-Works well for products that create excitement amongst ‘early adopted’
-Best used in introduction or early growth stage of product life cycle
-Electronic items provide many great examples
Price skimming will only work if…
…product is in demand
…luxury
…innovation
…high price = high quality
…strong brand image
Penetration pricing
-Offer a product at a low introductory price
-Aim is to encourage and persuade customers to pay for the product
-Become willing to pay for it
-Prices can be increased once target market share is reached
Dynamic pricing
-Pricing strategy in which businesses set flexible prices for products or services based on current marketing demands
Promotion
-Advertising
-Ways to bring customers in
-Publicity
-Informing, influencing and persuading
-Communicating about a product or service
Why use promotion?
-Brand image
-Increase awareness
-Customer loyalty
Different ways of promotion
Advertising- paid for communication
Sales promotion- short term incentive to increase sales
Personal selling- promotion on a person to person basis
Public relations- help to achieve favourable pricing
Direct marketing- promotional material through text, mail, email or phone calls
Value of brands
-Brand image
-Recognise the product from another
-Logo/slogan (if effectively marketed)
Benefits of brands
-Increase customer loyalty
-Stand out
-Charge higher prices
Place
To make products available in the right place at the right time in the right quantities
Distribution channel
Moves a product through the stages from production to final consumption
Retailers
-Focused on customer markets
-Final step in the chain
-Deals directly with the customer
Advantages of retailers
-Quick service
-Offer choice
-Buy specific amount (not bulk buying)
-Easy to access
-Hold stock
Wholesalers
-Buy in large quantities
-Break into smaller quantities to sell to retailers
-Make money by buying at a low price from producer and adding a profit margin
Advantages of wholesales
-Retailers can order in small amounts
-Reduce the producers transport costs
Economics of sale
-Output increases, cost per unit decreases
Distributor
-Specialises in one particular industry (building supplies, electrical components, industrial clothing)
Agent
-Specialist type of distributor
-Does not hold stock
-Tend to operate in tertiary sector (service)
-Earn commission based on sales achieved
