CH19 - Marketing mix Flashcards
What are the 4p’s ?
Product
Price
Promotion
Place
What is a brand?
Identifiable symbol , model /Name trademark differentiates it form other products
What are intangible attributes ?
subjective opinions about products cannot be compared easily
What are Tangible attributes ?
measurable features of product that can be compared
What is New Product Development NPD?
Design creation and services of new goods
Critical to success, especially in quick changing markets
What is Unique Selling Point USP?
marketed effectively (features that make it different form others)
Benefits of USP
Product dif - different qualities that create a lead due to differences
Promotion can focus on the different products
Opportunities to charge more due to differences
Free publicity from media
Higher sales
Customers being more willing to be identified with brand
What is product positioning ?
A consumers view of product or service compared to its competitors
(View of a product compared to another version of the same thing
Apple v competitor in view of customer)
What is market mapping ?
graph to show behaviour and spots of market
What is the Boston Matrix?
Used by business to analyse product portfolio - make strategic decisions about products
Using the matrix allows business to allocate their resources effectively, can also produce marketing strategies help produce products with potential in market
What are the parts of the Boston Matrix ?
Cash cow
Question mark
Star
Dog
Cash cow
High market share in a market that is no longer growing
- Significant cash flow is produced
- Low potential growth
- Focus on mainting the share of the market it is in
Question mark
Low market share in a growing market have potential to become ‘star’ if development is invested in
- Negative cash flow , a business will usually invest into the product so it becomes a star
- If there is no growth the product may be discontinued as its not Turing a large enough profit
focus efforts on increasing market share and brand recognition
Star
High market share in a growing market , companies will usually invest in the products to maintain / increase the share
- Large amount of positive cash flow (Profit)
- have the potential to continue growing the market share
- Brand recognition , increase market share and keeping its profitability (Marketing)
valuable assets, maximising potential should be a focus
Dog
Low market share in ‘Low-growth’ market
- Little revenue for a company and have no growth potential
- More often invest in more profitable products
No marketing efforts are put into the product - if any it is minimal
What is a product portfolio analysis
Analysing the range of existing products over business to help allocate resources effectively between them
What are the stages of a product life cycle
- Development ( research / development of a new product )
- Introduction ( launching the product )
- Growth ( when sales are increasing at fastest rate )
- Maturity ( sales are near the highest but rate of growth is slowing )
Decline ( final, sales being to fall )
What are extension strategies ?
Strategies aimed to lengthen the life of the product before the market demands new product
Packaging changes
Relaunch
What are uses of a product life cycle
- Assists with planning ( marketing mix decisions )
- Identify cash flow might depend on cycle
- Recognise need for balanced portfolio
What is pricing ?
The process of pricing is the choice of pricing strategy a business makes when setting prices for their products or services
What is Cost plus pricing ?
Setting price which covers cost and provides a good profit margin for the business
Most logical as it achieves the aims and objectives of maximising profit
E.g. : 75p to make + 200% = total price of £2.25
Benefits of cost plus pricing
Protects the profit margin of the business
Easiest method of pricing a product to apply
Easy to estimate profit levels
Drawbacks of cost plus pricing
Method doesn’t take into account competitors pricing
What is price skimming ?
Used when launching a product
Set a high price to start, may create large amounts of profits - often used to pay research and developments
Usually used in tech and innovate products , price is reduced as competitors enter market
Benefits of Price Skimming
Can establish an upmarket image
Bring in high profits from early buyers who want the latest product/ service
Drawbacks of Price skimming
Cheaper imitations of the product may appear on market to doon and take sales away from product
Risky Strat as customers may be put off from buying because of the price
What is competitive pricing ?
Products / services that are priced in line with competitors
Customer will have to judge a product or service on ‘non-price’ methods such as quality
Used where products in market are similar
Benefits of Competitive pricing
Useful where one brand is dominate , others may discount or offer lower pricing
Drawbacks of Competitive pricing
May not cover all the costs
Bad for small business - different economies of scale
What is Penetration Pricing ?
Setting prices really low to encourage sales , keep buying as prices increase
Help with market share
Mass markets
Benefits of Penetration pricing
Works best with new products being launched
Drawbacks of Penetration Pricing
Expensive as it takes profits from business and reduces sales profit
Customers may have brought it anyway without the low price
What is Predatory Pricing?
In market with just a few large business, existing businesses may lower prices to push competitors out of the market, so the competition can’t make a profit
Aggressive price cutting is used to deter competitors / push them out of the market
Depends on the strength of the brand and financial strength of the firm
What is Mark up Pricing ?
A business adds a percentage to the unit cost of each item they buy from the producer or wholesale
Size of markup will depend on demand for the product, number of competitors and stage of the products life cycle
Benefits of Mark up Pricing
Price set will cover all costs of production
easy to calculate for single-product firms
suitable for firms that are ‘price makers’ due to
market dominance
Drawbacks of Mark up Pricing
inaccurate for businesses where there is doubt over the allocation of fixed costs
doesn’t take market into account , inflexible
sales fall average costs often rise could lead to price being raised
What is contribution / Marginal cost Pricing
Setting prices based on the variables costs of making a product in order to make a contribution towards fixed costs and profit
Benefits of contribution / Marginal cost Pricing
All variable costs will be covered by price and contribution made to fix cost
Suitable for all firms producing several products
Flexible price can be adapted to suit market condition
Drawbacks of contribution / Marginal cost Pricing
Fixed costs may not be covered
Prices vary too much due to flexibility advantage then regular customer might be annoyed
What is a Loss leader
Common way of attracting customers , setting some products at low prices that doesn’t covet cost of production. But hope low prices attract customers enough to buy other products which do make money
What is Price discrimination ?
Happens when a firm charges different price to different groups of different customers for a product or service. Reasons are not associated with cost of supply.
What is Dynamic Pricing?
Method involves setting constantly Changning prices when selling products to different customers especially online through e-commerce
Consumers cannot tell what other buyers are paying, can vary prices according to demand patterns or knowledge that they have a particular consumer and ability to pay
What is Psychological pricing?
Setting a price at level which matches consumer views about a product perceived value
Prices set just below key price levels to make them appear lower than they are
