4.5 4 P's of Marketing Flashcards
Product Life Cycle
shows the different stages that a product goes through from its development to its decline
What is the research and development stage of the PLC?
investigating, developing, and designing a product before it is launched
What is the introduction/ launch stage of the PLC?
the product is introduced to the market and requires promotion to make customers aware
What is the growth stage of the PLC?
sales revenue increases and as the product becomes more known the firm gains market share
What is the maturity stage of the PLC?
sales revenue peaks as growth slows. due to minimal growth and competitors entering the market, the firm has to consider extension strategies
What is the decline stage of the PLC?
sales continually decline until it is withdrawn due to changing tastes, obsolescence, and technological advances
Extension Strategies
marketing approaches used to prolong the product life cycle in the maturity stage/ as it enters the decline
What are the extension strategies?
- Price reduction - to encourage purchases
- Redesigning - to add value/ enhance the product (special features/ limited editions)
- Repackaging - more attractive
- New markets
- Product differentiation - adding a unique element to have the product stand out from competitors
Product Portfolio
A business sells a variety of products
Boston Consulting Group (BCG) Matrix
draw the matrix
What is the star in the BCG Matrix?
- high market growth rate + high market share
- at the growth stage of the PLC
- invest into these to turn into cash cows
What is the question mark in the BCG Matrix?
- high market growth rate + low market share
- at the launch stage of the PLC
- yet to become profitable but need investment to become stars
What is the cash cow mark in the BCG Matrix?
- low market growth rate + high market share
- at the maturity stage of the PLC
- most profitable of their product portfolio
What is the dog in the BCG Matrix?
- low market growth rate + low market share
- at the decline stage of the PLC
- poor cash flow
- must decide whether to invest in extending the life or withdrawal
Branding
a marketing technique used to give a product or business a unique name or identity
What are the aspects of branding?
Awareness, Development, Loyalty, and Value
Brand awareness
how well people know about, recognize and remember a particular brand (allows businesses to attract new customers leading to more sales)
Brand development
communicating the value of a brand and what the brand stands for to strengthen the name and image (it shapes peoples perception of a brand leading to more loyalty)
Brand loyalty
retaining customers so that they repeatedly buy from the same brand irrespective of price or convenience
Brand value
the premium that customers are willing to pay for a brand name above the value of the product itself
What are the pricing strategies?
- Cost-plus pricing
- Penetration pricing
- Price skimming
- Psychological pricing
- Loss leader
- Price discrimination
- Price leadership
- Predatory pricing
Cost-plus pricing
a pricing strategy that involves adding a percentage/ predetermined amount of profit to the cost per unit of output
Penetration pricing
a pricing strategy that involves setting low prices to gain entry into a market. Once the product has established market share, prices can be raised
Price skimming
a pricing strategy that involves initially setting high prices for a limited period of time in order to gain short term profit and then gradually reducing it
Psychological pricing
a pricing strategy that involves rounding down numbers to make prices seem lower to buyers
Loss Leader
a pricing strategy that involves setting the price of a product below its production cost to entice customers to buy their other products with high profits in addition to the loss leader product
Price Discrimination
a pricing strategy that involves charging different prices to different groups of customers for the same product
Price Leadership
a pricing strategy that involves market leaders setting a price for its products and other firms in the market set the same prices
Predatory pricing
a pricing strategy that involves setting temporarily low prices to force small competitors out of the market
Above the line promotion
mass media that is used to promote brands to a wider audience, not specific to individual consumers (however it is often very costly)
Below the line promotion
non-mass media that is used to promote brands which is personal and targeted to specific individual consumers
Promotional mix
the combination and balance of below and above-the-line promotion
Viral Marketing
a promotional strategy that uses social networks to generate online word-of-mouth marketing to raise product and brand awareness
Social Media Marketing
a promotional strategy where businesses use social media to directly promote their products to a broad audience through one-way communication
Social Networking
a promotional strategy that uses online platforms to encourage people to share their opinions, ideas, and feedback in order to maintain two-way communication between the business and customers
Guerilla Marketing
a low-cost, unconventional marketing strategy that is innovative, has a significant promotional effect and leaves a lasting impression on the general public
Place
the ways in which products move from producer to consumer (distribution channels)
Intermediaries
a middleman / third party who takes products from producers and sells them to consumers
Retailers
large stores that stock the goods for consumers to purchase that are well-placed to reach consumers and help with promotion
Wholesalers
firms that purchase large quantities of products from a manufacturer and then distribute the bulk purchases to retailers
Agents
negotiators with knowledge of specialized industries who sell goods to consumers
Importance of branding
- encourages customer loyalty
- distinguishes it from other rival products
- price advantages (since brands have a perceived value they are able to charge high prices)
Importance of packaging
- functionality (physical protection)
- helps customers to identify and recognize a product (unique designs can attract the attention of buyers)
