Ch 18 marketing mix - product

Question 1

Define marketing mix

Answer 1

The four key decisions that must be taken in the effective marketing of a product. Consists of Product, Price, Promotion, Place

Question 2

What are the 4Cs?

Answer 2

• Customer solution
• Cost to customer
• Communication with customer
• Convenience to customer

Question 3

Cost to customer

Answer 3

the total cost of the product including extended guarantees, delivery charges and financing costs

Question 4

Customer solution

Answer 4

what the firm needs to provide to meet the customer’s needs and wants

Question 5

Communication with customer

Answer 5

providing up-to-date and easily accessible 2 way communication links with customers to both promote the product and gain back market research information

Question 6

Convenience to customer

Answer 6

providing easily accessible pre-sales information and demonstrations and convenient locations for buying the product

Question 7

How the 4Cs relate to the 4Ps?

Answer 7

• Product: Customer solution
• Price: Cost to customer
• Promotion: Communication with customer
• Place: Convenience to customer

Question 8

What is the customer relationship marketing (CRM)?

Answer 8

Using marketing activities to establish successful customer relationships so that existing customer loyalty can be maintained

Question 9

Define product

Answer 9

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

Question 10

Define brand

Answer 10

An identifying symbol, name, image or trademark that distinguishes a product from its competitors

Question 11

Define USP

Answer 11

The special feature of a product that differentiates it from competitors’ products

Question 12

Define product differentiation

Answer 12

Making a product distinctive so that it stands out from competitor’s products in consumers’ perception

Question 13

Define consumer durable

Answer 13

Manufactured product that can be re-used and is expected to have a reasonably long life, such as a car

Question 14

Define product positioning

Answer 14

The consumer perception of a product or service as compared to its competitors

Question 15

Define product life cycle

Answer 15

The pattern of sales recorded by a product from launch to withdrawal from the market

Question 16

What are the stages of the product life cycle?

Answer 16

• Introduction
• Growth
• Maturity/Saturation
• Decline

Question 17

Introduction phase

Answer 17

• 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

Question 18

Growth phase

Answer 18

• 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

Question 19

Maturity phase

Answer 19

• 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

Question 20

Decline phase

Answer 20

• 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

Question 21

Define extension strategies

Answer 21

These are marketing plans to extend the maturity stage of the product before a brand new one is needed

Question 22

Examples of extension strategies

Answer 22

• Modify the product
• Changing prices
• Promotional campaign
• Altering distribution patterns

Question 23

Uses of the product life cycle

Answer 23

• 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

Question 24

How does it assist with the planning of marketing mix?

Answer 24

• 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)

Question 25

How does it identify how cash flow might depend on the cycle?

Answer 25

• 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