Ch 18 marketing mix - product Flashcards
Define marketing mix
The four key decisions that must be taken in the effective marketing of a product. Consists of Product, Price, Promotion, Place
What are the 4Cs?
- Customer solution
- Cost to customer
- Communication with customer
- Convenience to customer
Cost to customer
the total cost of the product including extended guarantees, delivery charges and financing costs
Customer solution
what the firm needs to provide to meet the customer’s needs and wants
Communication with customer
providing up-to-date and easily accessible 2 way communication links with customers to both promote the product and gain back market research information
Convenience to customer
providing easily accessible pre-sales information and demonstrations and convenient locations for buying the product
How the 4Cs relate to the 4Ps?
- Product: Customer solution
- Price: Cost to customer
- Promotion: Communication with customer
- Place: Convenience to customer
What is the customer relationship marketing (CRM)?
Using marketing activities to establish successful customer relationships so that existing customer loyalty can be maintained
Define product
The end result of the production process sold on the market to satisfy a customer need. Products can be tangible (goods) and intangible (services) or have both attributes
Define brand
An identifying symbol, name, image or trademark that distinguishes a product from its competitors
Define USP
The special feature of a product that differentiates it from competitors’ products
Define product differentiation
Making a product distinctive so that it stands out from competitor’s products in consumers’ perception
Define consumer durable
Manufactured product that can be re-used and is expected to have a reasonably long life, such as a car
Define product positioning
The consumer perception of a product or service as compared to its competitors
Define product life cycle
The pattern of sales recorded by a product from launch to withdrawal from the market
What are the stages of the product life cycle?
- Introduction
- Growth
- Maturity/Saturation
- Decline
Introduction phase
- Price: May be high compared to competitors (skimming) if the products are hi-tech or low (penetration)
- Promotion: high levels of informative advertising to make consumers aware of the product’s arrival on the market
- Place: restricted outlets - possibly high class outlets if a skimming strategy is adopted
- Product: basic model
Growth phase
- Price: if successful, an initial penetration pricing strategy could now lead to rising prices
- Promotion: consumers need to be convinced to make repeat purchases - brand identification will help to establish consumer loyalty
- Place: growing numbers of outlets due to strength of consumer demand
- Product: planning of product improvements and developments
Maturity phase
- Price: competitive pricing as competitors likely to be entering the market
- Promotion: brand imaging continues, stress the positive differences with competitor’s product
- Place: highest geographical range of outlets possible
- Product: new models, colours, accessories, etc
Decline phase
- Price: lower prices to sell off stock
- Promotion: advertising likely to be very limited - may just be used to inform of lower prices
- Place: eliminate unprofitable outlets for the product
- Product: prepare to replace with other products - slowly withdraw from certain markets
Define extension strategies
These are marketing plans to extend the maturity stage of the product before a brand new one is needed
Examples of extension strategies
- Modify the product
- Changing prices
- Promotional campaign
- Altering distribution patterns
Uses of the product life cycle
- Assisting with planning marketing mix decisions, such as new product launches and price or promotion changes
- Identify how cash flow might depend on the cycle
- Recognising the need for a balanced product
How does it assist with the planning of marketing mix?
- When to advise a firm to lower the price (decline)
- Which phase is best for advertising (introduction and maturity)
- When variations of the product are needed (maturity)
How does it identify how cash flow might depend on the cycle?
- Cash flow is negative during the development costs
- The most positive cash flows can be seen at the maturity phase
- As products passes into decline, price deductions and falling sale are likely to combine to reduce cash cashflows. So if the business had too many of its products either at decline or the introduction -> cash flow problems
