4.5 The Four P's Flashcards
What is an “extension strategy”?
“Extend the life of the product before it goes into decline”
What are the 5 stages in a product lifecycle?
- Development
- Introduction
- Growth
- Maturity
- Decline
What is the “Boston Matrix”?
The Boston Consulting Group (BCG) matrix is a tool to help companies with multiple products decide their marketing strategies. Products are placed onto the matrix depending on two variables: market share and market growth.
What does the Boston matrix look like?
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What are “Stars” in the Boston matrix?
Products in markets experiencing high growth rates or increasing share of the market
–> Potential for high revenue growth
What are “Cash Cows” in the Boston matrix?
- High market share
- Low growth markets (Maturity stage of PLC)
- Low cost support
- High cash revenue
What are “Problem Child/ ?” in the Boston matrix?
- Products having a low market share in a high growth market
- Needs money spent to develop them
- May produce negative cash flow
–> (Potential for the future?)
What are “Dogs” in the Boston matrix?
- Products in a low growth market
- Have low or declining market share (decline stage of PLC)
- Associated with negative cash flow
- May require large sums of money to support
- Surpluses should be reinvested into star products
Why is branding important?
- clearly delivers a message
- emotionally connects your target prospects with your product
- motivates the buyer to buy
- creates user loyalty
- confirms your credibility
What are some types of branding?
- Family Branding (eg. Unilever)
- Individual Branding (eg. Duracell, Dove..)
- Company Branding (eg. Disney)
- Own-Label Branding (eg. supermarkets)
- Manufacturer’s brands (eg. Coca Cola)
What are the 6 pricing strategies?
- Competition based pricing
- Promotional pricing
- Cost-Plus pricing
- Psychological pricing
- Penetration pricing
- Skimming pricing
What is “Competition based pricing”?
Base their prices on their competitors.
What is “Promotional pricing”?
This is a lower price for a short period of time to boost sales or reduce stock
What is “Cost-Plus pricing”?
Also called “mark-up pricing”. Includes both fixed and variable costs to determine average costs. Predetermined profit (amount of percentage) is the mark up added to the average cost.
What is “Psychological pricing”?
“setting prices that take into account of customers’ perception of value of that product”
This is pricing just below the whole number
EG. $9.99
What is “Penetration pricing”?
Lower price for a new product enabling them to establish market share
This price will increase over time though.
(ONLY applicable to NEW firms!)
What is “Skimming pricing”?
The opposite of “penetration pricing”
These are very innovative, high quality, products.
The price decreases over time.
EG. game consoles like playstations
What is “price discrimination”?
“occurs when a business sells the same product to different consumers at different prices”
What is “price leadership”?
The setting of prices by a dominant firm, which is followed by others in the same market.
What is “predatory pricing”?
Reducing price with the purpose of removing competition.
AKA. Destroyer price
What are the three channels of distribution?
- Zero level –> No one between producer and consumer (eg. buying directly from a business’ website)
- One level –> One intermediary
- Two level –> Two intermediaries
Why do some firms use wholesalers?
- carry the storage costs
- breaking bulk
- lower transaction costs
- handle distribution
What is “above the line” promotion?
- Use of mass media to promote to a wide audience rather than a specific market
–> Radio, tv, billboards, newspapers
What is “above the line” promotion?
Use of mass media to promote to a wide audience rather than a specific market
–> Radio, tv, billboards, newspapers
What is “below the line” promotion?
Promotion not carried out on mass media:
E.g. loyalty cards and direct marketing
What is “online marketing”?
Refers to advertising and marketing activities that use the internet, email and mobile communications to encourage direct sales via e-commerce
What is “viral marketing”?
The use of social media sites or text messages to increase brand awareness or sell products
What is “Guerilla marketing”?
An unconventional way of performing marketing activities on a very low budget
Why would firms use advertising?
- Increase sales by raising consumer awareness of a new product
- Remind consumers of an existing product and its distinctive qualities
- Encourage increased purchases by existing consumers or attract new consumers
- Demonstrate the superior specification or qualities of a product compared to those of competitors - often used when the product has been updated or adapted in some way
- Create or reinforce the brand image or ‘personality’ of the product
- Correct misleading reports about the product or the business and reassure consumers after a ‘scare’ or an accident involving the product
- Develop or adapt the public image of the business
- Encourage retailers to stock and actively promote products to the final consumer
