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Unit 4: Marketing > 4.5 The seven Ps of the marketing mix > Flashcards

4.5 The seven Ps of the marketing mix Flashcards

1
Q

Marketing mix

A

the key elements of a marketing strategy that ensure the successful marketing of a product

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2
Q

Product

A

any good or service that is offered to the market with the aim of satisfying consumer needs or wants

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3
Q

Product life cycle

A

the course a product passes through from its development to its decline in the market

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4
Q

Product stage 1: Development

A
  1. generating ideas (brainstorming)
  2. screening ideas (which ideas leave)
  3. creating a prototype (1st trial form)
  4. carrying out test marketing
  5. commercialization (full launch after success)
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5
Q

Product stage 2: Introduction

A

launch stage of the product into the market, sales are low because most consumers are not yet aware of the product’s existence. to increase awareness of the product, informative advertising can be used, as well as price skimming or penetration

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6
Q

Product stage 3: Growth

A

once the product has been well received by the market, sales volumes start to increase significantly. initially low prices can be increased, products that started with high prices can also be reduced

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7
Q

Product stage 4: Maturity

A

sales continue to rise, but slowly. product is well established, stable significant market share and positive cash flow. sales revenue its at its peak, profit is high, but little growh. promotional pricing strategy used to keep competitors at a bay

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8
Q

Product stage 5: Saturation

A

many competitors have entered the market and saturated it, sales are at their highest point and begin to fall, cash flow is still positive, some businesses forced out of the market as a result of the stiff competition, prices will have to be reduced by promotion

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9
Q

Product stage 6: Decline

A

steady drop in sales and decreased profits, cash flow begins to fall but is still positive, product lost its appeal to consumers because of new models, if sales fall too low the product is slowly withdrawn from the market, promotional activities are kept at minimum, prices reduced to sell off all stock

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10
Q

Extension strategies

A

plans by firms to stop sales from falling by lenghening the products life cycle

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11
Q

Extension strategies methods

A
  1. selling existing products in new markets
  2. finding new uses for the product
  3. changing the products design/appearance
  4. targeting different market segments
  5. developing new promotional strategies
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12
Q

Product portfolio

A

all products or services provided by an organization

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13
Q

Product portfolio analysis (Boston Consulting Group/Boston Matrix)

A

process of evaluating these products, growth-share matrix: stars, question marks, cash cows and dogs

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14
Q

Stars

A

high market growth, high market share
- need high levels of investment to sustain rapid growth
- eventually turn into cash cows

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15
Q

Cash cows

A

low market growth, high market share
-well-established products in a mature market and businesses will invest less to hold on to their market share
- generare reasonable cash
- strong precense
- can charge slightly higher prices

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16
Q

Question marks

A

high market growth, low market share
- concern for the large amount of money needed to increase their share in the market
- high market growth means that the product is in a competitive maret
- needs a strong marketing strategy
- need to think which of these they want to develop into stars

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17
Q

Dogs

A

low market hsare, low market growth
- operate in markets that are declining
- little income
- poor future prospects
- may need to be replaced

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18
Q

BCG matrix strategies

A
  1. Holding strategy
  2. Building strategy
  3. Harvesting strategy
  4. Divesting strategy
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19
Q

Holding strategy

A

focused on products with high market shar to ensure they maintain their position, some investment will be needed

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20
Q

Building strategy

A

turning question marks into stars, investing money from cash cows

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21
Q

Harvesting strategy

A

milking the benefits of products with a positive cash flow, these products provide the necessary finance for other products

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22
Q

Divesting strategy

A

poor performing dogs are sold off, resources are freed up from this will need to be used effectively to boost the performance of the other products

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23
Q

Limitations of the BCG matrix

A
  1. focuses on the current market position of the firms product, no information from the future planning
  2. time consuming and complex to classify products
  3. high market shares doesnt necessarily equate to high profits (promotion)
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24
Q

Brand

A

A name, symbol, sign or design that differentiates a firms product from those of its competitors

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25
Q

Branding

A

the process of disinguishing one firms product from another

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26
Q

Aspects of branding

A
  1. brand awareness (ability of consumers to recognize it)
  2. brand development (improve and strenghten its image)
  3. brand loyalty (consumers become committed, willing to make repeated buys)
  4. brand value (worth in reputation, income and market value)
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27
Q

Price

A

what consumers pay to acquire a product

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28
Q

Cost-plus pricing (mark-up pricing)

A

adding a mark-up (% of profit a firm wishes to gain for every product that it sells) to the average cost of producing a product

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29
Q

Advantages of cost plus pricing

A
  1. simple and quick method to calculate the selling price of a product
  2. good way to ensure that a business covers its cost and makes profit
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30
Q

Disadvantages of cost plus pricing

A
  1. fails to consider market needs or customer value when setting prices
  2. competitors prices are not considered
  3. could lose sales if it sets a selling price higher than competitors
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31
Q

Penetration pricing

A

setting a low initial price for a product with the aim of attracting a large number of customers quickly and gaining high market share

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32
Q

Advantages of penetration pricing

A
  1. low prices: consumers are encouraged to buy the products, leading to high sales volume and market share
  2. decreases in the costs of production
33
Q

Disadvantages of penetration pricing

A
  1. gaining a high sales volume does not always mean achieving high profits
  2. customers may perceive the product as low quality
  3. only suitable for use in price sensitive markets
  4. increasing prices over time might risk losing customers
34
Q

Promotional pricing

A

temporarily reducing the price of a good or service to attract customers

35
Q

Price skimming

A

setting a high price when introducing a new product to the market

36
Q

The loss leader

A

charging low prices for a product, below its average to attract consumers to buy other higher-priced products

37
Q

Advantages of the loss leader

A
  1. businesses selling a large number of products may attract many customers and benefit from higher overall profits
  2. may use loss leaders as a promotional strategy to encourage consumers to switch to their brand instead of buying from others
38
Q

Disadvantages of the loss leader

A
  1. firms using this strategy may be accused by competitors of undercutting them by using unfair businesses practices
39
Q

Predatory pricing

A

when a firm deliberately sets a very low price on its good or service with the aim of driving its competitors out of the market

40
Q

Advantages of predatory pricing

A
  1. gaining dominant position in the market
  2. minimized competition
  3. new entrants are deterred from entering the market, cutting competitors
41
Q

Disadvantages of predatory pricing

A
  1. anti-competitive behaviour, illegal in many countries
  2. may work in a short term
  3. difficult to sustain as new competitors enter the market
42
Q

Premium pricing

A

setting a high price for a high quality product, gives customers the impression that the firms product is superior

43
Q

Advantages of premium pricing

A
  1. customers are convinced of the high quality not trying to buy it from less
  2. potential to maximize profit
  3. increases brand value
  4. product becomes exclusive
  5. high status in a society
  6. status symbols or symbols of luxury
  7. owners tend to show it off, providing free advertising
44
Q

Disadvantages of premium pricing

A
  1. misses out on price conscious consumers who find price too high
  2. high marketing costs to create brand awareness
  3. cannot be applied to all products, especially to those with stiff competition
45
Q

Dynamic pricing

A

charging different prices for their products depending on which customers are buying them or when the products sell

46
Q

Advantages of dynamic pricing

A
  1. potential for high sales and profits
  2. prices can be increased when demand rises
  3. can beat competitors easily if a business has a product that is producing a good profit, giving the flexibility to focus on other business areas or different sources of revenue while still breaking even during difficult times
  4. helps with better stock management
47
Q

Disadvantages of dynamic pricing

A
  1. can lead to customer dissatisfaction
  2. loss of sales if customers find a product priced lower
  3. not applicable to all industries, works better in certain areas
  4. some businesses want to prioritize customer satisfaction than aiming for high profit margins
  5. can lead to price flunctuarions
48
Q

Competitive pricing

A

setting the price of its product relative to the competitors price

49
Q

Advantages of competitive pricing

A
  1. can prevent a firm from losing customers and market share to its competitors
  2. helps keeping a stable customer base and aids business growth
  3. low risk strategy as the competitors are usually well known players
  4. can be used in combination with other pricing strategies
50
Q

Disadvantages of competitive pricing

A
  1. not sustainable in the long term, competitors might change their pricing strategy
  2. focusing purely con competing with others misses out important aspects like covering overheads
  3. difficult to idfferentiate itself from other competitors
51
Q

Contribution pricing

A

calculation of the variable cost of production for a firms product after which the products price is set

52
Q

Advantages of contribution pricing

A
  1. contribution per unit measure is useful as it enables the firm to know how much profit it will earn for every unit sold beyond the point where the firm breaks even
  2. conduced using existing information
  3. useful if it is needed to determine the price to charge for a special order
53
Q

Disadvantages of contribution pricing

A
  1. price set from this might not be competitive in the market
  2. important to check what competitors are charging before pricing it
  3. allocating costs appropriately across the whole range of a firms products can be difficult which may lead to inaccurate pricing
54
Q

Price elasticity of demand

A

measurement of how the quantity demanded of a good is affected by changed in its price
- 0-1: inelastic (small change)
- =1: unit elastic (percentage change in price is matched by an equal percentage change in quantity demand)
- 1+: elastic (large change)

55
Q

Price discrimination

A

charging different prices to different groups of consumers for the same product

56
Q

Advantages of price discrimination

A
  1. time-based price discrimination can be a benefit for both consumers and firms
57
Q

Disadvantages of price discrimination

A
  1. need to be certain about the type of elasticity of demand of their consumers
58
Q

Promotion

A

ways of convincing consumers why they need a product and why they should buy it

59
Q

Above-the-line promotion

A

paid form of communication that uses independent mass media to promote a firms products

60
Q

Advertising

A
  1. informative advertising (info about features, price, etc)
  2. persuasive advertising (convince to buy it instead of competitor’s products)
  3. reassuring advertising (remind consumers they made the right purchasing decision when they chose to buy it)
61
Q

Below-the-line promotion

A

form of communication that gives a business direct control over its promotional activities so that it is not reliant on the use of independent media

62
Q

Forms of below the line promotion

A
  1. direct marketing (aiming, direct mail)
  2. personal selling (personal contact)
  3. public relations (publicity/sponsorships)
  4. sales promotions
    – a. money off coupons
    – b. point of sale displays (eg placing sweets near checkouts)
    – c. free offers or free gifts for buying
    – d. competitions (having a chance to win a prize for buying)
    – e. buy one get one free
63
Q

Through the line promotion

A

a form of promotion that combines both above the line and below the line promotion strategies

64
Q

Examples of through line promotion

A
  1. 360 degree marketing
  2. digital marketing
65
Q

Choosing a promotional methods

A
  1. cost
  2. legal framework
  3. target market
  4. stage in the product life cycle
  5. type of product
66
Q

Social media marketing (SMM)

A

marketing approach that uses social networking websites to market a firms products

67
Q

Benefit of social media marketing

A
  1. wide reach
  2. engagement
  3. market information
  4. cost saving
  5. brand recognition
  6. speed
68
Q

Limitations of social media marketing

A
  1. accessibility problems
  2. lurkers (individuals who merely absorb information online rather than promote or share it)
  3. used as a supplement for other methods
69
Q

Place

A

where the product will be sold and how it will be delivered to the market

70
Q

Distribution channels

A

path taken by a product from the producer or manufacturer to the final consumer

71
Q

Zero intermediary channel

A

sold directly from the producer to the consumer

72
Q

One intermediary channel

A

intermediary (such as retailer or agent) to sell the products from the producer to the consumer

73
Q

Two intermediaries channel

A

two intermediaries (usually wholesalers and retailers) are used by producers to sell the product to the consumer
producer > agent > wholesaler > retailer >consumer
useful selling over large geographical distances

74
Q

People

A

human capital in terms of skills, attitudes and abilities necessary in the production of goods or the provision of services

75
Q

Processes

A

procedures and policies pertaining to how an organizations product is provided and delivered

76
Q

Physical evidence

A

tangible or visible touch points that are observable to the customers in a business

77
Q

Benefits of 7 Ps

A
  1. brings together marketing ideas and concepts in a simple manner
  2. assists in strategy formulation and implementation
  3. allows a business to vary its marketing activities based on customer needs, resource availability and market conditions
78
Q

Limitations of 7 Ps

A
  1. incorporations of 3 extra Ps may be complicated for those who were used to only 4 Ps
  2. misses out on addressing issues related to business productivity
  3. product is mentioned in singular, not considered other products the business sells

Unit 4: Marketing (6 decks)

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