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Business (Tina) > 4.5 - The 7 Ps + BCG Matrix > Flashcards

4.5 - The 7 Ps + BCG Matrix Flashcards

1
Q

Marketing Mix

A

The key decisions that a firm takes in order to persuade consumers to buy their good or service

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2
Q

What are the 7 Ps?

A
  1. Product
  2. Price
  3. Promotion
  4. Place
  5. People
  6. Processes
  7. Physical Evidence
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3
Q

Product (Definition)

A
  • Goods and services that businesses sell

Products can be:

  • Tangible (goods) vs intangible (services)
    Goods = pencils; services = haircut, education
  • Consumer goods (bought by consumers) vs producer goods (bought by businesses)
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4
Q

Product Life Cycle

A
  • The stages that a product goes through
  • In terms of sales revenue
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5
Q

Stages of a Product Life Cycle

A
  1. Introduction/Launch
  2. Growth
  3. Maturity
  4. Decline

Possible Additional Step
0. Research and Development

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6
Q

Introduction/Launch (PLC)

A
  • When the good/service first hit the market
  • When the business sells the product for the first time
  • High costs - lots of promotion needed
  • No Economies of scale in production
  • Low sales - cash flow problems
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7
Q

Growth (PLC)

A
  • Increasing revenue as shops willing to stock the product
  • Customers are starting to buy the product more and more
  • Profits can start to be made
  • Still spend money on promotion
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8
Q

Maturity (PLC)

A
  • High, but flat, sales and market share
  • More Economies of Scale so profits are made
  • No longer grow or grow slower
  • Most consumers already own the product
  • Saturation - competition enters the market
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9
Q

Decline (PLC)

A
  • Sales and profits fall
  • Business can try to extend the maturity stage
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10
Q

What is a brand?

A
  • Logo, Name, Image that differentiates one producer from another
  • Creates a perception in the minds of consumers
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11
Q

Brand Awareness

A

Extent to which a product is recognized and remembered by customers

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12
Q

Brand Development

A

The process of building a brand identity in order to maximize sales and profits

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12
Q

Brand Loyalty

A

Faithfulness of customers to a brand as shown by repeat purchases

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13
Q

Brand value/equity

A

When customers are willing to pay a premium for a brand above a non-branded product

  • E.g. non-branded trainers = $30
  • Branded trainers = $90
  • Brand value = $60
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14
Q

Advantages of Branding

A
  • Instant recognition and product differentiation (USP)
  • Brand loyalty and brand value
  • Emotional attachment
  • Employee motivation
  • Easier to enter international markets
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15
Q

Disadvantages of Branding

A
  • Bad news may affect the whole brand even if the products are the same
  • If one of the products goes bad, it can affect other products
  • Marketing cost to build and maintain the brand
  • Cultural and language differences - increase in costs for market development
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16
Q

Extension strategies

A

Marketing strategies that lengthen the maturity stage of the Product Life Cycle and prevent a decline in sales

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17
Q

Pros of using extension strategies

A
  • Should be guaranteed increased revenue in the future - e.g. new Star Wars movies
  • No need to create a whole new product - lower costs
  • Relatively simple - change packaging, new name, etc…
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18
Q

Cons of using extension strategies

A
  • Costs involved - e.g. designing new product design
  • Consumers may see through the strategy - may be seen as brand without new ideas
  • Taking money away from developing new product
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19
Q

List all 9 Pricing Methods

A
  1. Cost-plus pricing
  2. Penetration pricing
  3. Loss leader
  4. Prederatory pricing
  5. Premium pricing
  6. Dynamic pricing
  7. Competitive pricing
  8. Contribution pricing
  9. Price elasticity of demand
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20
Q

Cost plus pricing

A

Adding a fixed mark-up profit to the unit cost of the product

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21
Q

Penetration pricing

A

When entering a new market, setting a relatively low price for the product in order to gain market share

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22
Q

Loss Leader

A

Product sold at a very low price, often below cost price, with the intention of making profits on other products

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23
Q

Predatory pricing

A

Setting prices lower than the competition with the intention of driving them out of the market

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24
Q

Premium pricing

A

Setting a high price in order to show that the product is high quality or luxury

25
Q

Dynamic pricing

A
  • When a business changes prices according to time and the level of demand
  • Prices go up and down depending to time of the year or week
26
Q

Competitive Pricing

A

Setting the price at a similar level to other products in the market

27
Q

Contribution pricing

A
  • Ensuring that the price charged > variable cost of production
  • Contribution per unit = Price - Variable cost
28
Q

Price Elasticity of Demand

A

PED shows how sales will change with a change in price

Elastic PED (PED > 1)

  • A change in price will lead to a proportionally larger change in sales

Inelastic PED (PED < 1)

  • A change in price will lead to a proportionally smaller change in sales
29
Q

Promotion

A

Communicating with current and potential customers about their product in order to raise sales

30
Q

Objectives of Promotion

A

To inform - Tell customers about the product
To persuade - Get them to buy it
To remind customers - Get them to continue buying it

31
Q

Above the line

A

Promotion directly paid for by the company to communicate with consumers through mass media. These promotion activities are targeted to everyone.

  • TV/Radio adverts
  • Newspapers/Magazine adverts
  • Billboards
  • Online ads
32
Q

Below the line

A

Promotion activities that are generally targeted towards a specific market share or group of people. These are not directly paid for by the business, and no money is paid to advertising agencies.

  • Price promotion - e.g. buy 2 get 1 free, prizes
  • Loyalty cards
  • Free samples
  • Direct selling - e.g. door to door
33
Q

Through the line

A

A promotional strategy that combines above the line and below the line strategies.

E.g. a TV ad alongside a customer loyalty program
E.g. Online ads alongside in store sales promotions

34
Q

Social Media Marketing

A

The use of social media platforms to connect with the target audience.
E.g. Instagram, TikTok, LinkedIn

35
Q

Pros of TV/online ad

A
  • Can reach a wide and diverse audience
  • Audio/visual stimulus
  • Can tell a story
36
Q

Pros of loyalty card

A
  • Relatively cheaper
  • Targeted at specific customers
  • Can track behavior and target personalized ads
37
Q

Pros of Social Media Marketing

A
  • Reach large audiences, especially younger generations
  • Can target your audience
  • Can measure success - E.g. Click through rate (CTR)
38
Q

Cons of Social Media Marketing

A
  • Cost involved in hiring people to manage the online presence
  • No control over the online reaction
  • Security issue
39
Q

Place

A

The process of how a product gets from the manufacturer to the final consumers

40
Q

Distribution Channel

A

Chain or intermediaries a product passes through from the producer to final customer

  • Direct selling
  • Selling through retailers
  • Selling through wholesalers
41
Q

Direct selling

A

Manufacturers selling to consumers without any intermediaries.

E.g. Amazon, plane tickets
E.g. Door to door, telephone, mail order, farmers markets

42
Q

Pros of Direct Selling

A
  • Higher profit margins - no intermediaries to pay
  • Direct contact with the customers
  • More control - over pricing, promotion, etc…
43
Q

Cons of Direct Selling

A
  • Less exposure for the product to consumers
  • Have to handle storage and distribution
  • Not specialized in selling
44
Q

Single Intermediary Channel (One-level)
(Selling through retailers)

A

Selling to consumers via one intermediary (retailer, agent or distributor)
E.g. supermarket, bookstore, real estate agent

45
Q

Pros of Single Intermediary Channel

A
  • Reach a wider range of customers
  • Consumers can see and feel the product
  • Retailer takes care of storage and distribution
46
Q

Cons of Single Intermediary Channel

A
  • Retailers will take some of the profit
  • Lose control of Marketing Mix - e.g. price, promotion
  • Product likely to be displayed next to competitors
47
Q

Two Intermediary Channel (Two-level distribution channel)

A
  • Manufacturer selling to consumers via two intermediaries
  • Usually a wholesaler and a retailer
  • Wholesalers buy in bulk from manufacturers and then sell smaller amounts to retailers
48
Q

Pros of Two Intermediary Channel

A
  • Wholesaler takes care of storage and distribution
  • Wider geographical reach
49
Q

Cons of Two Intermediary Channel

A
  • Another intermediary to take profit
  • Even less control over the marketing mix
50
Q

Factors to consider in determining method distribution channel

A

Cost

  • Is the product margin high enough to allow intermediaries?

Control over the brand

  • Does the business need to control price, promotion methods, etc…

Where are the customers

  • If there are a large nimber of consumers spread out over the country, a wholesaler may be appropriate

Mass market vs niche market

  • If the product is mass market, then direct selling is not likely be possible
51
Q

People

A

How employees (staff and managers) interact with consumers

E.g.

  • Customer interactions
  • After-sales service
  • Use of social media
  • If the product is a service

Cultural Variations:

  • Packing bag in supermarkets
  • Do staff approach customers
52
Q

Processes

A

The way in which the good or service is actually delivered to the consumers

Examples:

Payment methods

  • E.g. cashless, debit card

Waiting times

  • E.g. McDonalds, Pizza delivery

Website
Online delivery

53
Q

Physical Evidence

A
  • Tangible aspects of the business when a consumer buys the good or service
  • The senses - see, smell, hear, feel, taste

E.g.

  • The smell of fresh bread in a bakery/supermarket
  • Music they play
  • Cleanliness of a hotel room
  • IB school - classroom, projectors, sports fields, the smell of burgers on game day
54
Q

What is BCG Matrix?

A
  • A tool that helps businesses analyze and make their product portfolio
  • Analyze product portfolio in terms of
  • Market share (high/low)
  • Market growth (high/low)
55
Q

Question Marks (Problem Child)

A
  • High market growth
  • Low market share - E.g. Lamborghini Lanzador
  • Product Life Cycle = Introduction
  • High promotion costs to establish brand and not all will succeed
  • Negative cash flow
56
Q

Star (BCG Matrix)

A
  • High market growth
  • High market share - E.g. Teslas
  • Product Life Cycle = Growth
  • High promotion costs as the market is growing
  • If you don’t promote other business will overtake you
  • Maybe positive cash flow/profit
57
Q

Cash Cow

A
  • Low market growth
  • High market share - E.g. BMW 3 Series
  • Product Life Cycle = Maturity
  • Some, but less, promotion costs
  • Maintaining brand
  • Positive cash profit
58
Q

Dog (BCG Matrix)

A
  • Low market growth
  • Low market share
  • Product Life Cycle = Decline
  • Probably needs to be replaced
59
Q

The relationship between PLC, investment, profit, and cashflow

A

Business (Tina) (8 decks)

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