chapter 12 - the marketing mix: product

Question 1

what are the 4 P’s of the marketing mix (4)

Answer 1

• Product – this applies to the good or service itself. (design, features and quality).
• Price – the price at which the product is sold to the customers.
• Place – this refers to the channels of distribution that are selected.
• Promotion – this is how the product is advertised and promoted

Question 2

what are the different types of products (4)

Answer 2

• Consumer goods – these are goods which are bought by consumers for their own use.
• Consumer services – these are services that are bought by consumers for their own use.
• Producer goods – these are goods that are produced for other business to use.
• Producer services – these are services that are produced to help other businesses.

Question 3

what does a successful product have (6)

Answer 3

• satisfies existing needs and wants of consumers
• design - performance, reliability, quality should all be consistent with the product’s brand name.
• capable of stimulating new wants from the consumer.
• to too expensive to produce
• the first business to produce the new product or introduce new changes to the original product before its competitors.
• has something very distinct that makes it appear different.

Question 4

benefits of developing new products (4)

Answer 4

• Unique selling point will mean that the business will be first into the market with the new product.
• Diversification – broader range of products to sell.
• May allow the business to expand into existing markets.
• Allows the business to expand into new markets.

Question 5

limitations of developing new products (4)

Answer 5

• Costs money when carrying out market research and analysing the results.
• Costs money when producing trial products.
• Lack of sales if the target market is wrong.
• The loss of company image if the new product fails to meet customer needs.

Question 6

describe brand image (3)

Answer 6

• Advertising and other promotions will constantly refer to this brand name and will make consumers aware of the qualities of the product to try to persuade them to buy it.
• Branded products are normally sold as being of higher quality than unbranded products.
• The brand is more than just an assurance of quality. By careful use of promotion and public relations, a business will try to create a complete image for the product based around the brand name.

Question 7

branding (8)

Answer 7

• needs advertising to reinforce the brand’s qualities
• unique name (brand name)
• higher price than unbranded products
• higher quality than unbranded products
• creates a brand image
• always of the same standard
• unique packaging
• encourages customers to keep buying it.

Question 8

packaging (7)

Answer 8

• protects the product
• easy to transport the product
• easy to open the container and use the product
• suitable for the product to fit in
• eye-catching
• carries information about the product
• promotes the brand image.

Question 9

what are the stages of a product life cycle (6) (take note of the graphs as well)

Answer 9

• 1. A product is developed. The prototype is tested and market research carried out before the product is launched. No sales yet.
• 2. It is then introduced on to the market. Sales grow slowly at first. No profits are made at this point as development costs have not been covered yet. Informative advertising.
• 3. Sales start to grow rapidly. Persuasive advertising is used. Prices are reduced a little as new competitors enter the market. Profits start to be made as the development costs are covered.
• 4. Maturity – sales now increase only slowly. Competition becomes intense and pricing strategies are now competitive or promotional pricing. Profits are at their highest.
• 5. Sales reach saturation point and stabilize at their highest point. Profits start to fall as sales are static and prices have to be reduced to be competitive.
• 6. Sales of the product decline. the product is usually withdrawn from the market when sales become so low and prices have been reduced so far that it becomes un profitable to produce the product.

Question 10

how stages of the product life cycle in pricing decisions (4)

Answer 10

• A branded product is likely to be sold at a high price when it is first introduced to the market.
• Prices are likely to be relatively higher than those of competitors in the growth stage as the product may still be newer.
• During maturity stage, the price is likely to be reduced as competitors may have launched newer versions of their own products.
• Some substantial price discounts might be offered during the decline stage.

Question 11

how stages of the product life cycle influence promotion decisions (3)

Answer 11

• Spending on promotion will be higher at the introduction stage than in other stages as the business has to inform consumers of the product.
• Advertising would probably be reduced in later stages due to either the product is well-known or the budget is planned for other newer products.
• Promotion spending might be increased again if the business decides to adopt an extension strategy.

Question 12

extending the product life cycle (6)

Answer 12

introduce new variations of the original product
- sell into new markets
- make small changes to the product’s design, colour or packaging
- use a new advertising campaign
- introduce a new, improved version of the old product
- sell through additional, different retail outlets.

Question 13

what happens if the extension strategies are effective?

Answer 13

• If the extension strategies are effective, the maturity phase of the product life cycle will be prolonged.