Chapter 18 Flashcards
What is the marketing mix? (4 P’s)
Price
Place
Promotion
Product
What are the 4 C’s tied to the marketing mix (4 P’s)?
Price
-cost to customer
The total cost of the product
Place
-convenience to customer
Convenience of purchasing locations and information
Product
-customer solution
Meeting customer needs and wants
Promotion
-communication with customer
Up to date communication for promotion and feedback
What is customer relationship management?
This is using marketing activities to establish successful customer relationships so that existing customer loyalty can be maintained
How can we develop effective long term relationships with consumers?
Target marketing
Customer service and support
Social media
What are some important features in attracting a customer based?
Quality
Durability
Performance
Appearance
How is meeting intangible expectations for a product most often done?
It is most often achieved through effective branding
Why do tangible attributes need to be met?
They need to be met as these are easily compared between other similar products and could become disadvantageous otherwise
Why do intangible attributes need to be attained too?
You need recognition too and something besides physicality that makes consumers chose you’re product ver someone else’s. and product reliability is often used to reach these
How can branding influence marketing and consumers?
- creates powerful consumer perception ( positive or negative)
Why’s re product life cycles useful?
They help you decide when to launch anew product or update a new one and keep track of released products
- assist marketing decisions
- identifying how cash might flow
- help balance portfolio
What a re the phases of a product life cycle graph?
- Intro
- Growth
- Maturation
- Decline/ extension strategies
How does the product life cycle affect cash flow?
Cash flow is strained in the introduction (heavy promo)l
It is negative in the development of the product
Positive in maturity;
Decline caused decline is cash
Why is the product life cycle useful?
- helps asses product performance
- identify any changes/actions that need to be made
What does PED mean?
The value shows the change in demand for the 1% change in price
What does a PED greater than one mean?
Elastic
What does a PED lesser than one mean?
Inelastic
What does a PED equal to one mean?
Unit elasticity
How is PED calculated?
% change in demand / % change in price
(Old demand number-new demand number)x100
DIVIDED BY
((Old price- new price)/old price )x 100
Why is unit elasticity preferable?
Profits can be maximised this way
What can you do with an elastic PED?
You can drop sales because lots of people will want to buy due to high demand and therefore a lot of money is earnt
What can you do with an inelastic PED?
You can raise prices as doing this won’t change your demand much
(Often used for fuel; medicine)
What factors determine price elasticity?
- how necessary the product is
- similarity of competing brands and their products
- level of customer loyalty
- price of product in comparison to consumers’ incomes
How is PED useful?
- making more accurate sales forecasts
- helping with pricing decisions
What is important to remember about PED?
PED assumes that only the price has changed and nothing else has
It would be different if e.g. a competitor left the market
What 3 sections can pricing methods be separated into?
Cost based
Market based
Competition based
What is cost based pricing?
This is the idea that firms will asses their costs for providing each unit of product and then add to that, the calculated costs
What is mark up pricing?
It is a cost based strategy that consists of adding a fixed percentage of profit to the unit piece of a product
What is target pricing?
It is a cost based pricing strategy that involves setting a prive that will give a required rate of return at certain outputs/ sales.
An example of taret pricing
5
Advantage and disadvantages to full cost pricing
A- price set will cover all production costs
D- doesn’t take market conditions into account
Advantage and disadvantage to contribution pricing
A- all variable costs will be covered by prive and contribution is made to fixed costs
D- fixed costs have a chance of not being covered
What is full cost pricing
5
what is contribution pricing
T
Competition based pricing
D
