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Business (year 1) > 3.4 the marketing mix > Flashcards

3.4 the marketing mix Flashcards

1
Q

what are the 7p’s

A 
Price
Product 
Place
Promotion 
People 
Physical environment 
Process
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2
Q

Price

A

Includes what is charged for different versions of the product and payment terms such as paying in installments

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3
Q

Product

A

The physical features and specifications (what it does), the design, reliability, life expectancy, guarantee that are provided and the after sales

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4
Q

Place

A

The distribution of the product, how the ownership of the products moves from the producer to the final customer - sometime this is direct other times there are many businesses in between

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5
Q

Promotion

A

the ways a business communicates about the product.

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6
Q

People

A

Those involved in the transaction, such as employees. For examples someone on the other end of the phone for an enquiry, counter workers, the mechanic who changes the tyre at the garage

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7
Q

Process

A

How a customer actually buys the product. Such as using a mobile to pay for parking or ordering shopping using a tablet or phone. Can be used to identify stress points in customer experiences - crashing website, slow queuing or unable to pay with debit or credit card

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8
Q

Physical environment

A

The actual premises of a business - layout, design, decor, cleanliness etc

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9
Q

what factors are within the promotional mix?

A 
Advertising: paid for communications
Public relations: unpaid for communications
Sales promotions. E.g special offers
Sponsorship
Branding
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10
Q

what are the stages of marketing research?

A

segmentation -> targeting -> positioning -> marketing mix

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11
Q

internal factors of the marketing mix:

A

Financial position: may affect investment in new product development or promotion
Staff/employees: changes the skills within a business
Operations: greater efficiency may enable lower prices. More innovation might lead to a wider range of products being offered
Objectives: new managers or owners may set different target such as faster growth. This will have a ripple effect on all functional areas of the business including marketing and thus the marketing mix

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12
Q

external factors to the marketing mix:

A 
Political
Economic
Social 
Technological 
Legal
Environmental
Competition
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13
Q

what are the 2 types of products

A

Consumer products: Goods bought for consumption by the general public e.g people like you and I for ourselves or a gift

Industrial products: Goods bought for use in a business process e.g a business buying machinery

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14
Q

Types of consumer product

There are subcategories that can be analysed:

A

Convenience items:
Widely distributed, such as milk and bread.
Customers will not travel far to buy these, if they are not available at one store customers will just buy another brand
Ensuring products are widely available is an important part of success for these

Shopping goods:
Customers compare features and price between options, may take time deciding
Customer may visit several different stores and compare brands (online also)
Important to show benefits compared to rivals for success

Speciality products:
Customer may have been thinking about buying these for a few months or even years i.e sports cars or rolex’s
Customers are willing to travel far to buy these products
Brand may be very important, as will the physical environment in which it is sold

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15
Q

what are the 3 components of analysis of product decisions:

A

The core benefit: What the product actually does - washing machine - cleans clothes

The tangible product: The features such as the specifications, reliability and design - washing machine - this would be shape, size, look and features such as spin speed and energy usage

The augmented product: These are the ‘extras’ such as brand name, the delivery, any guarantees and after sales service provided - washing machine - retailer may offer to take away old machine and install new one, may be a 5 year guarantee

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16
Q

what is the product life cycle? (see graph)

A 
This model plots sales overtime for a product, this can be used to determine whether certain elements of the mix need to change. 
The stages are:
-> Development 
-> Introduction 
-> Growth
-> Maturity 
-> Decline
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17
Q

Development

A

Stage when a product is being developed. There is investment into research and development, products are tested and assessed. Money is being invested but no sales occur.

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18
Q

Introduction

A

The product is launched on to the market. Sales may be lower as awareness takes time to build. High levels of investment may be needed to promote the product.

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19
Q

Growth

A

Sales begin to increase at a relatively fast rate. Customers are increasingly aware of the product and sales build. Investment is still made to keep sales growing

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20
Q

Maturity

A

The rate of growth of sales begins to slow; could be due to competitors entering the market. Important to remember that sales will be high compared to previous they are just not increasing as rapidly

21
Q

Decline

A

Sales are falling perhaps because new and better products are on the market.

22
Q

Extension strategies: How can a business extend the life of a product?

A

Increased promotional expenditure - renew interest or increase usage
Revamp the product - new packaging or flavours
Find new target markets segments - new countries or targeted a different age group
Find new usage times - cereal companies are trying to find ways for people to eat at different times of the day (cereal lunch bars)

23
Q

Will all products have the same lifecycle?

A

NO - Fad products (in fashion for a short time, movies in cinema)
products that come back into fashion

seasonal products will all have different looking life cycle

Remember there are no numbers on the diagrams, therefore the time on the cycle can be over 1 year or 30 years

24
Q

look at different product life cycle graphs:

A

-> growth (line increases) decline (line decreases)
-> wobbly line (seasonal
etc etc

25
Q

What is a product portfolio and product portfolio analysis

A

product portfolio: the collection of products that a firm produces

THEREFORE

product portfolio analysis: is the process of a firm analysing their current products in order to decide how to manage them.
- The Boston matrix is a way of conducting portfolio analysis - it measures products in terms of their market share and the relative growth of the market

26
Q

what is market size?

A

The volume of sales in a market and the value of these sales tell us the market size

27
Q

what is market share? formula:

A

The percentage of sales a business has compared to the whole market

businesses sales/market size x 100 = Market share

28
Q

what is market growth? formula:

A

This is how much the market size has increased from one year to the next (how much has the sales value gone up)

New sales value - Old sales value X 100 = Market growth
Old sales value

29
Q

What is the Boston Matrix?

A

A way for a company to analyse their product portfolio. The Boston Matrix looks at products in terms of the market share a product has and the growth of the market a product is in.

There are 4 categories in the boston matrix:
Cash Cows
Dog
Question Marks
Stars
30
Q

Cash Cow

A

High market share
Low market growth
The market is usually as big as it is going to get
Well known and shops usually want to stock them, as customers will purchase in large quantities
Promotion is cheap as they are well known

Why is it important to have a Cash Cow?
The business can gather high revenue from these products with very little promotional expense, this can be used to reinvest in other products that need developing

31
Q

Dogs

A

Low market share
Low market growth
These products are not much use to a business

What should the business do with these types of products?
The business should invest to redesign the product or let them decline and eventually remove them
Draining resources

32
Q

QUESTION MARKS aka problem child

A

Small market share of a fast growing market
These products could turn out to be very successful and the market is attractive
However, businesses cannot be certain they will be successful

Business will need to spend a lot of money promoting and developing these products to protect and grow them

33
Q

Star

A

Big market share, fast growing market
Doing very well in an attractive market

Businesses needs to keep developing these products to try and turn them into a cash cow, being a star is rarely a long term fix because of the need to keep investing in promotion and distribution of these products to keep their market position.

34
Q

What do you think a business wants their product portfolio to look like? (with regards to Cash cows, dogs, stars and question marks)

A

The Boston matrix helps manager to to categorize their products and decide what to do next
If all the products are cash cows managers may worry about future success as growth in these markets is so slow. Therefore they may look to invest and create some stars or question marks using the funds from the cash cows
If all the products were dogs managers would be concerned for the future of the business and drastic changes would be needed

35
Q

developing new products:

A

Involves investment to modify an existing product or replace it with a new one, this could take several months or several years.

But……
Not all products make it to production. They may prove to not be viable in terms of producing it and making a profit or because of technical problems along the way

Therefore:
When considering to invest in a new product managers will consider the likely time it will take to recover the initial spending and the rate of return.

36
Q

what are pricing decisions?

A 
When developing and selling a product a business must decide what appropriate price is for the product. This can be influenced by many factors:
Costs
Price elasticity of demand
Positioning of the product 
Other elements of the marketing mix
Competitiveness of the environment 
Stage of the product life cycle
37
Q

what are some price strategies?

A 
Price skimming
Penetration pricing
Competitive pricing
Loss leader pricing
Cost plus pricing
Dynamic pricing
38
Q

Price skimming

A

Setting a high price for a product when it first enters the market, then lowering the price to a more competitive level over time.

39
Q

Penetration pricing

A

Entering the market at a low price to gain sales (market share), then increasing prices to a more competitive level over time.

40
Q

Competitve pricing

A

Setting the price based on what competitors are charging.

41
Q

Loss leader pricing

A

Making a loss on a product in the hope that customers will buy other items from the business. (printer-> ink)

42
Q

Cost plus pricing

A

Totalling the costs of producing the good and adding a % on top. For example - hair brush costs £1 to make. The business wants to make 30% profit. They sell at £1.30

43
Q

Dynamic pricing

A

Prices are changed rapidly in response to changing demand

44
Q

factors influencing promotion?

A

The target audience
The promotional budget
The message
Technology

45
Q

what is distribution?

A

how businesses get the product to the customer (supply chain for milk for example)

46
Q

what are Intermediaries?

A

how many people are between the business and the consumer

47
Q

Factors influencing distribution:

A 
The degree of coverage
The costs involved 
The nature of the product 
Amount of control a business wants
What customers expect of the product 
Technology available
48
Q

The importance of an integrated marketing mix - i.e, it depends factors!

A 
The position in the product life cycle
The Boston Matrix
The type of product
The marketing objectives 
The target market 
Levels of competition
Positioning

Business (year 1) (25 decks)

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