4.5 - Marketing Mix Flashcards
What is marketing mix?
A set of decisions which need to be made by managers. 4p marketing for goods and 7ps for services.
What are the two types of products?
Tangible and intagible
What are some other types of products?
producer products(for producers) and consumer products(for consumers)
What are types of consumer goods?
FMCGs(fast moving consumer goods), perishables, durables and speciality goods
What are FMCGs?
Products which do not have an expiration date but wear out quickly so conusmers buy them again and again. E.g - toilet paper/toothbrush
What are perishables?
Goods that perish very quick. E.g - food
What are durables?
Products that can last a long time. E.g - electronic devices
What are speciality goods?
Goods with unique characteristics and are distributed through limited distribution channels. E.g - designer clothes
What is product life cycle?
stages a product goes through from launch to decline.
What are the stages of product life cycle?
- R&D(research and development)
- Launch(introduction)
- Growth
- Maturity(saturation)
- Decline
What is R&D?
research and development stage. Protoype - initial version of a product from which later versions are developed.
What is the relation between R&D and investment, profits and cash flow?
It has a high reliance on investment, no profits and cash outflows only.
What is launch?
Stage of the product life cycle when the product becomes available for purchasing.
What is the relation between launch and investment, profits and cash flow?
There is still a high reliance on investment, no profits, negative cash flow but improving
What is growth?
Stage of the product life cycle where sales are growing at a relatively fast rate. Comapanies can use economies of scale and competition intensifies.
What is the relation between growth and investment, profits and cash flow?
Investment still high, but profits and cash flow become low positive
What is maturity?
The stage where the sales reach their peak. Competition stabalises and managers try to target new segments.
What is the relation between maturity and investments, profits and cash flow?
Investment is spread across promotional(remind people) and extension strategies, profits are high and cash flow is positive
What is decline?
The stage when sales fall after reaching the peak. New products are launched when old products reached decline.
What is the relation between decline and investments, profits and cash flow?
No or little investment and costs, positive but failing profit and cash flow.
What are extension strategies?
Organisations action plan to avoid decline and prolong maturity.
What is brand?
A combination of name, symbol and other characteristics that is associated with a certain business/product
What is branding?
The process of adding a set of characteristics to a business/product that adds value and differentiates
What is brand awareness?
The extent to which people are able to recognize a brand.
What is brand development?
A strategy that aims at strengthening the brand and improving its awareness
What is brand loyalty?
Customers dedication to make repeat purchases of the same brand.
What is brand value?
Premium that customers are willing to pay above the actual value of the product.
When is brand awareness important in the PLC?
Very important at the launch stage of the product life cycle.
How is brand development related to the PLC?
It acts as an extension strategy(prolongs maturity)
How can brand loyalty be improved?
by WOM and brand ambassadors
What is the issue with brand value?
It acts as an entry barrier.
What are the advantages of branding?
- Legal protection
- Differentiation strategy
- Adds value
- Increases profit margins
- Customer loyalty
What are the disadvantages of branding?
- Time consuming
- Expensive
- Good brand ≠ good product
- Customers overpaying for “feel good” factor
What is price?
The amount of money required or given in payment for something.
What are the pricing strategies?
- Cost-plus
- Penetration
- Loss leader
- Predatory
- Premium
What is cost plus pricing?
Average cost+ markup
markup ≠ profit margin
markup = direct costs + %
What are the advantages and disadvantages of cost plus pricing?
Costs are covered but disregards competitors prices
What is penetration pricing?
Setting low prices to penetrate the market and attract more customers
What are the advantages and disadvantages of penetration pricing?
- Potential to increase sales and increase brand awareness
- Profitability(cheap, low quality) and brand value are at risk
What is loss leader pricing?
Selling some products at a loss in order to attract more customers in order to buy more products.
What are the advantages and disadvantages of loss leader pricing?
- Attracts potential customers, works well for FMCGs causes brand switching
- Works only if customers purchase other products- otherwise loss
What is predatory pricing?
Temporary measure to squeeze cometitors out of the market. Customers may benefit from predatory pricing in the short term but in the long term it might result in a monopoly
What are the advantages and disadvantages of predatory pricing?
- Increased market share and a high entry barrier
- Not sustainable in the long term or unethical/illegal
What is premium pricing?
Setting a high price for premium high quality goods.
What are the advantages and disadvantages of premium pricing?
High profit margins and increased brand value but sales volume is low. Also inapplicable to certain products.
