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a level business > 3.4 Making marketing decisions: using the marketing mix > Flashcards

3.4 Making marketing decisions: using the marketing mix Flashcards

1
Q

What are the 7P’s of the marketing mix

A
  • product
  • place
  • price
  • promotion
  • people
  • process
  • physical environment
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2
Q

what does people. part of the 7p’s, include

A
  • customer-facing staff (customer service assistants)
  • employees involved in a transaction when a customer purchases a product or service
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3
Q

what does process. part of the 7p’s, include

A
  • the systems in place to support the transaction which the customer must deal with to complete the transaction successfully
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4
Q

what does physical environment. part of the 7p’s, include

A
  • physical premises
  • the design
  • the layout of the premises
  • condition and placement of products within a store
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5
Q

Why would a business change their marketing mix

A

Market conditions and customer tastes and preferences change

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6
Q

Factors influencing the marketing mix?

A
  • Availability
  • Product information
  • Luxury products
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7
Q

Why does availability affect the marketing mix?

A

Convenience items, such as basic groceries, need to be accessed quickly by customers so businesses may focus on marketing mix factors related to speed and availability

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8
Q

Why does product information affect the marketing mix?

A

Shopping items, such as computer tablets and clothes, may be considered for purchase by customers for a longer period so a business may focus on the customer service ‘people’ factor so that customers can access product information easily

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9
Q

Why does luxury products affect the marketing mix?

A

Speciality products, such as cars and jewellery are luxury purchases for customers. Consumers who buy luxury goods may expect sophisticated stores and customer service processes to support the transaction.
Businesses operating in luxury or speciality goods is likely to focus on processes & physical evidence, whilst making sure the other P’s are consistent with their brand

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10
Q

Stages of the product lifestyle

A
  • Research and development
  • Introduction
  • Growth
  • Maturity
  • Saturation
  • Decline
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11
Q

What is Research and Development?

A
  • before the product is made
  • investment in researching a certain area of the market and if they discover a business opportunity, they may then take the time and resources to develop a product or service that fits a gap in the market
    e.g pharmaceutical company investing into research for a drug that might cure a disease
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12
Q

What is Introduction

A
  • businesses introduces or launches the new product / service to the market
  • marketing and advertising are important because consumers need to be made aware that the product exists and what it is
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13
Q

What is growth in the product life cycle

A
  • just after introduction, the rate of growth tends to increase
  • successful products often undergo a period of growth as more and more customers discover and buy the product
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14
Q

What is maturity

A
  • the number of new customers buying the product has slowed down
  • sales are still rising, just less quickly than before
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15
Q

What is saturation

A
  • the sales have reached its peak
  • sales no longer increase but remain steady
  • all consumers who want it have brought / acquired it
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16
Q

What is decline

A
  • changes in fashion, consumer tastes/preferences, technological advances and new competition offering similar products can all mean demand is falling
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17
Q

What does the boston matrix show

A

Where to position a product to help choose its marketing mix

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18
Q

Position of a ‘dog’ on the boston matrix

A

Low market share
Low market growth
e.g DVD & CD discs

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19
Q

Position of a ‘cash cow’ on the boston matrix

A

High market share
Low market growth
e.g Apple TV products

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20
Q

Position of a ‘star’ on the boston matrix

A

High market share
High market growth
e.g new iPhones

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21
Q

Position of a ‘question mark’ on the boston matrix

A

Low market share
High market growth

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22
Q

Factors influencing decisions on the market mx

A
  • The business’ marketing objectives
  • The target market
  • The presence and size of competitors
  • The type of product
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23
Q

What are the four segments of the Boston Matrix

A
  • stars
  • question mark
  • dogs
  • cash cows
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24
Q

What internal factors influence the pricing decisions

A
  • Costs
  • The product life cycle
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25
Q

What external factors influence the pricing decisions

A
  • The nature of a product
  • The degree of competition
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26
Q

Why does costs affect pricing decisions

A
  • businesses usually aim to make a profit
  • their price and costs determine how much profit the business will make. Businesses cannot afford to set a price lower than their costs forever
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27
Q

Why does the product life cycle affect pricing decisions

A
  • position determines whether a high or low price will be charged
  • when a new product is launched, businesses may charger higher prices to take advantage of exclusivity
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28
Q

Why does the nature of the product affect pricing decisions

A
  • luxury good or not
  • whether the product is hard to differentiate from competitors
29
Q

Why does degree of competition affect the pricing decisions

A
  • more competition = more options for customers
  • when customers have lots of options for similar products, businesses must compete to attract customers using a lower price
30
Q

What is price skimming

A

Relatively high initial price that gradually lowers over time

31
Q

When is price skimming often used

A

before a business faces competition in the market, once competition arrives, there will be a downward pressure on the price to fall

32
Q

Why is price skimming used

A

To maximise revenue: consumers who buy early are willing to pay a higher price but it can still attract other customers who can pay a lower price later on in the product’s life cycle

33
Q

Advantage of price skimming

A

Covers fixed costs (R&D)
- helps to recover the costs of R&D, which can be expensive or technology products

34
Q

Disadvantage of price skimming

A

Slower unit sales growth
- slows down the growth, can give competitors more time to launch a competing product / service
- does not maximise the number of sales at the start so competitors can get more of a chance to enter the market

35
Q

What is price penetration

A

Where a business tries to increase market share by offering a low initial price that increases over time
- loss leader work in a similar way

36
Q

Advantage of price penetration

A

Increase market share
- a business can attract customers from established competitors

37
Q

Disadvantage of price penetration

A

Lower short term profits
- can lead to lower average profits than would be earned with a higher price
- HOWEVER, market share may be more important for the long-term profitability of a business

38
Q

What are loss leaders

A

Products or services that are sold by a business at a price where the business makes a loss (average revenue < average costs)
- attract new customers or sell to existing customers, in the hope that they make extra purchases

39
Q

What is cost-plus pricing

A

Business charges the customer based on what it costs to produce the product/service
- work out the cost to produce on average, then add a “mark-up” on top of this cost to ensure they make a profit

40
Q

What is competitive pricing

A

Business sets prices for its products and services based on what other business in the market are charging
- used when products are similar

41
Q

What are promotional methods

A

Different methods used to inform consumers about their products & services in order to persuade consumers to buy them

42
Q

What are different types of promotional methods

A
  • Public relations
  • Product placements
  • Sponsorship
  • Advertising
  • Sales promotion
  • Social media
43
Q

Types of advertising platforms

A
  • Newspapers
  • Magazines
  • Television
  • Internet
  • Billboards
  • Social media
    The platform that the business uses depends on the target market in order to have the maximum impact
44
Q

What does public relations aim to do

A
  • Maintain a good public image by:
  • managing the spread of information by keeping it as positive as possible and reaches the largest possible audience
45
Q

Examples of PR

A

Newspaper editorials:
people in the business manage the business’ relationships with different newspapers, sending them articles to publish about the business
They do not pay the newspaper unlike for advertising

46
Q

Types of sales promotion

A
  • Discount coupons
  • Free gifts
  • Point of sale displays
  • Value for money offers (buy 1 get 1 free)
  • Samples
  • Competitions
47
Q

Factors influencing the promotional mix

A
  • Target market
  • Competitor actions
  • Finance available
  • The nature of the market
  • The nature of product / service
48
Q

Why does target market affect the promotional mix

A
  • different types of people use different platforms more often
  • a business wants to promote its product to its potential customers
49
Q

Why does competitor actions affect the promotional mix

A

They want to reach consumers using the same channel as rivals

50
Q

Why does finance available affect the promotional mix

A
  • some businesses will have more finance available to spend on promotions
  • some promotional methods are more expensive than others (TV advertising)
51
Q

Why does the nature of the market affect the promotional mix

A

As the market matures, the rate of growth changes:
- market growing slowly: advertising may be less important
- market growing rapidly: businesses will be battling for market share and are willing to spend more on advertising as it will affect sales by a larger amount

52
Q

Why does the nature of the product/service affect the promotional mix

A
  • A technical product (laptop) may want to give consumers more information about their product
  • A simple product (orange juice) may not need to give info
53
Q

Reasons for promotion

A
  • To inform/remind customers about the product
  • To persuade customer to buy the product
  • To create or change the image of the product / service (celeb sponsorship can give the product a fun, luxury or innovative image)
  • To create or increase sales
54
Q

What are the different types of distribution channels

A

1) Retailer - consumer
2) Manufacturer - Retailer - Customer
3) Manufacturer - Wholesaler - Retailer - Customer

55
Q

What do wholesaler do

A

Sell products in bulk to a network of retailers

56
Q

Advantage of wholesalers

A
  • have a large network of buyers
    businesses reach a lot of customers quickly
57
Q

Disadvantages of wholesalers

A
  • Less interaction with customers (worse customer service)
  • Wholesalers and retailers take a cut of the profit, customers are likely to pay higher prices - less competitive on price
58
Q

Features involved in Manufacturer - Retailer - Customers

A
  • Higher margins or lower price (bypassing wholesalers makes it likely that customers will pay lower prices because the business is “cutting out the middle man)
  • Hard to contact retailers (hard for businesses, especially start ups, to get retailers to stock their products)
  • Control over shops (producer / manufacturer can have complete control over which shops customers can buy their products from)
  • Higher logistics costs (may increase a business’ delivery and logistics costs if they have to deliver all the products to a retailer themselves)
59
Q

Features involved in Direct - Consumer

A
  • Nobody else takes a cut (lets a business charger the lowest price possible to the consumer because there are no organisations in the middle who take a cut of the profit. The business can charge the same price and have a higher margin)
  • Hard to reach customers (a business will have to invest time and money into setting up new stores or their own website)
  • E-commerce (easier to reach more consumers directly, lots of businesses don’t need to set up physical stores)
60
Q

What is E-commerce

A

The purchase that takes place electronically on the internet

61
Q

What is M-commerce

A

Buying goods online using a mobile phone

62
Q

Benefits of E-commerce and M-commerce

A
  • Reach more customers
  • Sell direct to consumer (B2C)
  • Cheaper to set up a business
63
Q

Why is reaching more customers a benefit of using e-commerce and m-commerce

A
  • can reach international markets without setting up stores or overseas subsidiaries
  • small businesses in particular rarely have the finance needed to set up shops internationally. Before e-commerce, expanding was harder for small businesses
64
Q

Why is selling directly to consumer a benefit of using e-commerce and m-commerce

A
  • No middlemen take a cut, the business can offer a lower price to the customer
  • Lower average costs, usually lower prices
  • Helps to remain competitive
65
Q

Why is cheaper to set up a business a benefit of using e-commerce and m-commerce

A
  • Don’t have to invest lots of money in opening stores and hiring people to work in-store
66
Q

Drawbacks of E-commerce and M-commerce

A
  • Selling online can create problems
  • Investment needed
  • Increased competition
67
Q

Why is selling online a drawback of E-commerce and M-commerce

A

Some goods are harder to judge from a computer / mobile phone. Consumers may want to see a product in person before buying it.

68
Q

Why is the investment needed a drawback of E-commerce and M-commerce

A
  • Businesses must invest in specialists who can build websites
  • Large businesses who sell a large volume of products may have to invest in warehouses and fulfilment centres
69
Q

Why is increased competition a drawback of E-commerce and M-commerce

A
  • E-commerce allows a business to easily reach wider markets, UK businesses face more competition. Foreign businesses can compete in the UK more easily
  • Increased competition can have a negative impact on profits

a level business (43 decks)

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