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IB business management HL (full deck) > 4.5 - The 7 Ps of the Marketing Mix > Flashcards

4.5 - The 7 Ps of the Marketing Mix Flashcards

1
Q

what is a marketing mix

A

the key decisions that a business must make to persuade customers to buy their product or service

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2
Q

what are the 7Ps

A
  • product
  • price
  • place
  • promotion
  • physical evidence
  • process
  • people
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3
Q

what is product in the 7 Ps

what are possible qualities of products

A

the actual goods and services that a business sells

they can be:
* tangible
* intangible

can be classified as:
* producer goods
* consumer goods

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4
Q

what is the product life cycle

A

a diagram which shows the life of a product and the stages that it goes through from launch do decline

based on sales revenue (y-axis) over time (x-axis)

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5
Q

what are the stages of the product life cycle

A
  1. (R&D)
  2. introduction
  3. growth
  4. maturity
  5. decline
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6
Q

briefly explain the different stages of the product life cycle

A

Introduction
* no economies of scale for this products
* low sales
* business likely to have cash flow issues

Growth
* market share increases rapidly
* more likely to generate more revenue from this product
* may earn profit

Maturity
* product reached max market share
* greatest number of sales
* likely to have economies of scale for the product
* demand likely to decrease - customers already own it

Decline
* most people own the product, no more sales
* sales revenue from this product reduced
* market share decreased

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7
Q

what are extension strategies

A

when a business employs marketing strategies to lengthen the maturity stage of the product life cycle

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8
Q

what are some possible extension strategies

A
  • new additions to the old product
  • updates
  • reduction of price
  • promotional offers
  • changing the image of the product
  • encouraging the use of the product on more occasions
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9
Q

pros/cons of extension strategies

A

pros
* process is simplistic
* could lead to increased revenue

cons
* customers may see through this technique (detrimental effect on brand image)
* may not work - then wasting money
* may reduce the funds that were saved for future projects

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10
Q

what is a brand

A

the logo, name or image that customers correlate with a product from a business - what makes it stand out from the competitors

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11
Q

what is brand awareness

A

the extent to which customers can tell a product or business apart from competition - how remembered it is

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12
Q

what is brand development

A

the growth of a brand and its identity and values - increased communicating this with consumers

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13
Q

what is brand loyalty

A

when customers continuously buy products from the same business over their competition - showing loyalty

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14
Q

what is brand value/equity

A

when individuals are willing to pay more for a branded product from a specific business in comparison to its competitors

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15
Q

pros/cons of branding

A

pros
* product differenciation - may increase profits
* emotional attatchment
* makes it easier to enter international markets
* employe motivation

cons
* may lead to a negative image of the business
* cultural and language differences may serve as a barrier
* higher marketing costs to build and maintain the brand

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16
Q

what are factors that determine the cost of products

A
  • desirability
  • the cost of production
  • the size of market share
  • brand equity
  • quality
  • type of product
  • ability for customers to pay
  • objective of the business
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17
Q

what are different pricing strategies

A
  1. cost plus pricing
  2. penetration pricing
  3. loss leader
  4. predatory pricing
  5. premium pricing
  6. dynamic pricing
  7. competitive pricing
  8. contribution pricing
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18
Q

what is cost plus pricing

A

when a business sets their price by adding an amount or percent to the cost it took to produce the product

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19
Q

pros/cons of cost plus pricing

A

pros
* guaranteed to make profits if make sales

cons
* no control over the price as it is decided by the costs
* to an extent - it ignores the consumer and market trends

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20
Q

what is penetration pricing

A

when a business sets a relatively low price when a product enters the market, for market share, then later is increased

  • good for price elastic products
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21
Q

pros/cons penetration pricing

A

pros
* allows businesses to raise the price later
* attracts individuals to become loyal to the brand
* increases sales

cons
* low profit margins to begin with
* increased price later on may be detrimental to business

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22
Q

what is loss leader

A

when a business sells a product at a very low price, possibly less than the costs to make, with the hopes that this will motivate customers to buy more of their other products

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23
Q

predatory pricing definition

A

when a business purposfully sets their price lower than that of competition to attract customers and intentionally drive them out of the market

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24
Q

pros/cons

A

pros
* gives an advantage in comparison to other businesses
* higher market share
* difficult to prove that it was done

cons
* illegal in many countries

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25
what is premium pricing
when a business charges more for a product to create an image of luxury in the eyes of the consumers
26
pros/cons of premium pricing
pros * higher profit margins cons * business likely to have fewer customers - requires a strong brand image
27
dynamic pricing definition
when the business changes pricing depending on the time and level of demand
28
pros/cons of dynamic pricing
pros * matches trends - exploit times of high demand cons * may require a lot of consistent research
29
competitive pricing definition
when a business sets their pricing similar to those of competition
30
competitive pricing pros
pros * easier for business to set the price
31
contribution pricing definition
ensuring the price charged is higher than variable costs - contributes to CPU - the rest of the profit goes towards fixed costs CPU formula: revenue per unit - variable cost per unit
32
what is price elasticity of demand
it determines how much sales will change with a change of price of a product, with all other factors remain the same
33
price elasticity demand (PED) formula
% change in quantity demanded / % change in price
34
what do different PED (price elasticity demand) formulas show?
PED>1 * elastic * as price goes down, sales go up * as price goes up, sales go down PED<1 * inelastic * as price goes up, sales will not go down
35
what is promotion
when a business communicates with current and potential customers about their products in attempt to generate more sales
36
what are some objectives of promotion
* to inform * to persuade * to remind
37
what are the different types of promotion
* above the line promotion * below the line promotion * through the line promotion
38
what is above the line promotion
promotion directly paid for by the business through the mass media eg. through television ads or billboards
39
what is below the line promotion
promotion that is targeted to a specific audience and does not require a payment from the business eg. price promotion, loyalty card, free samples
40
pros of above the line promotion
* larger audience * can include audio and visual elements * easier to build the brand image
41
pros of below the line promotion
* pay less money that above the line * can target and focus on a specific audience - loyalty * more efficient
42
what is through the line promotion
promotion where elements of above the line and below the line promotion are combined
43
what is social media marketing
when a business promotes their product through means of social media - to connect with their target audience
44
pros/cons of social media marketing
pros * can reach a wider audience * can reach younger generation * easy to set up cons * may cost time and money - mainting the image online * may not reach the right audience - may not work * limited control over online reaction * security issues
45
what is place - the 7 Ps
the process of how a product goes from a manufacturer to the final consumers * outlines the forms of distribution
46
what are the different forms of distribution (Place from the 7Ps)
* direct distribution * retailers * wholesalers
47
what is direct distribution
when a business sells their product directly to the consumer - without the help of any intermediaries
48
pros/cons of direct distribution
pros * higher profit margins * direct contact with the customer * business has more control over the price cons * may have less knowledge in selling and promoting product efficiency * storage and distribution costs
49
what is selling through retailers
when a business sells their product through one intermediary - a retailer * one level distribution channel
50
pros/cons of selling through a retailer
pros * they have knowledge of how to sell * retailers may have higher number of customers * no storage and distribution costs cons * less control over pricing, location within shop etc. * retailer may take some profits
51
what is selling through a wholesaler
when a wholesaler buys bulk from a manufacturer and then sells them in smaller portions to retailers * two level distribution channel
52
pros/cons of selling through wholesalers
pros * they may have a wider customer base * no storage and distribution costs * very easy for businesses to grow their target base cons * dont control where items go * dont control pricing * dont control where items are placed * wholesalers and retailers may take some profits
53
what are some trends in terms of distribution channels
* the more intermediaries, the less the profit margin * the more the intermediaries, the greater the number of customers the product is exposed to * the more intermediaries, the less control a business has over pricing and placement within stores * the more intermediaries, the less a business has to pay for storage etc.
54
what should be considered when choosing the right form of distribution for a business
* cost * control over the marketing mix * importance of profit * target audience * market segmentation
55
what is people (in terms of the 7Ps)
the ways in which employees interact with customers
56
what does people (7 Ps) entail
business culture eg. in the supermarket do they pack your bag? do they come up and speak to you?
57
what is processes (7Ps)
the form in which the product is delivered to the customer
58
examples of processes (7Ps)
* payment methods * waiting times * website
59
what is physical evidence (7Ps)
the experience when buying a product or service, the tangible aspects of a business, this includes the senses
60

IB business management HL (full deck) (29 decks)

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