Chapter 54 – product Flashcards
1
Q
What are the four p’s?
A
- Product, price, place and promotion
2
Q
What will help a business to formulate a marketing strategy?
A
- A combination of all the four p’s
3
Q
Product
A
- The product aspect of the marketing mix is the most important part as with no product. There is no marketing mix.
- depending on whether it is a new product or changes made to a product, this will dictate all the other aspects of the marketing mix
4
Q
What depends on the results that the business wishes to achieve and the type of market it is in?
A
- The marketing mix chosen
Example: if the business is changing the style of its product, it will need to use the product and promotion aspects of the marketing mix - The business will also need to consider its market; if it is targeting a global market different strategies will be more appropriate than if the business is targeting a local market
5
Q
Differentiation
A
- Making the product different is important to the success of the business
- Finding a unique selling point helps the product to stand out
- Differentiation in mass marketing will help the product stand out when compared to the rest of the market
- even the best products relaunch or reposition their products
- Repositioning is aimed to increase revenues
6
Q
Types of differentiation
A
- Branding- Logo helps make a brand recognisable
- Branding- May help consumers to recognise the product
- Producing the right types of product- sought to be based on effective research (a market orientated approach is more likely to lead to a successful product0
7
Q
Unique selling point (USP)
A
- a business can increase its market group/share by finding a good or service that has a unique selling point
- USP is something that makes the business stand out against competitors
8
Q
Value analysis
A
- value an analysis looks at the nature of the product to assess its priorities
- Allow the business to focus the manufacturer mind on the main characteristics of the product
9
Q
What’s important to achieve the right balance between in value analysis?
A
- The functions of the product
- The aesthetics of the product
- The economic cost of the product
10
Q
Functions of the product
A
- the functions of the product dictates whether colour, Shape are more important than the functions
11
Q
Aesthetics of the product
A
- meta glasses need to look good as well as having the functional qualities
12
Q
Economic cost
A
- if the first two are high, then this is less important- cost significance will depend on the competitiveness of the market
13
Q
Product life cycle
A
- It shows the stages in a product life; it highlights the typical sales of a product overtime
-this is a model used to aid decision-making - The shape and the length of the product life cycle will differ from one product to another
- each stage of the product life cycle requires a different marketing mix
14
Q
What are the four stages to the product life cycle?
A
- Introduction/development stage.
- Growth stage.
- Maturity/saturation stage.
- Decline stage.
15
Q
Introduction/development stage
A
- during this stage the research and development will have been undertaken to discover what the consumer needs
- The launch of the product will take place either in one particular region of the country or nationally
- Initial sales may be slow until the consumer has tried the product and any marketing activity has had time to build interest
- there is often reluctance on behalf of consumers to try anything new or change from the brand they are used to
- It is at this stage of the life cycle that a product may fail
16
Q
At the development and introduction stages, what factors in its marketing mix for the business need to take an account of?
A
- Sufficient market research to ensure the product meets its consumers needs
- Depending on the nature of the product the pricing will include introductory offers to encourage consumers to try the product
- Occasionally research costs are very high and therefore the price of the product will initially be high until sales increase
- The advertising will be informative to increase consumer awareness
- Distribution Channels will be low though increasing sales outlets will be a priority
17
Q
Growth stage
A
- Once consumers are fully aware of the new product sales are likely to grow more quickly
- Word of mouth and continued promotion may enhance sales still further
- If products can reach this stage and achieve growth, the product is more likely to be a success
- The rate of growth in sales will depend upon the nature of the product and the amount of alternatives (competition) in the market
18
Q
Growth stage (marketing mix)
A
- motifications may be made after initial feedback from market research
- if in a competitive market pricing will have to reflect the market price unless a highly distinctive edge allows for a premium price
- Informative advertising may continue but a move to competitive and persuasive styles is likely
- Distribution is now much wider and therefore additional channels may be required
19
Q
Maturity/ saturation stage
A
-If this stage can be reached, it’s like clear that the product will be profitable
- maintaining the product in this stage of the cycle becomes the next issue
- Sales are likely to flatten out, the nature of any marketing will have changed and competition from new products becomes a concern
- saturation implies that all the consumers who wanted to purchase the product have now done so and therefore any additional sales will be difficult
- Example- Cadbury dairy milk bar
- The marketing of products in the maturity stage is concentrated on keeping sales constant and avoiding sales falling
- The promotion often reminds consumers of the existence of the product
20
Q
What ways can the business encourage consumers to continue buying product in the majority stage?
A
- they use strategies called extension strategies
21
Q
Maturity/saturation stage (marketing mix)
A
- Price reductions may be used as extension strategies
- Advertising will increase if newer products enter the market
22
Q
Decline stage
A
- sales are now falling
- Consumers may have lost interest in the product as newer and better alternatives enter the market
- In this stage a business has to decide if it wants to offer the product at heavenly discounted prices to boost sales or simply allows sales to decline
23
Q
Decline stage (marketing mix)
A
- there is little point in spending money on a product in decline
- Prices may be drastically reduced in order to sell any stock that is left
- Sales promotions may be heavily used to help sell off final stock
24
Q
Extension strategies
A
- Aim to prolong the maturity stage and not let sales decline
- modify the product example: new, extra, added teachers
- Promote more heavily
- Develop complimentary products
- Attempt to increase usage
- Find new uses for the product
25
Q
Cash inflows and outflows
A
- product Life cycle does not show what is happening to the level of cash inflows and outflows
- First stage of product life cycle- negative cash flow for this product
- cost of the research and development, cost of marketing the launch and subsequent promotion means that more money is going out of the business than is coming in
26
Q
Product positioning
A
- selling the right product in the right segment of the market is a decision that a business will have to take
- It’s helpful to undertake research to ascertain what other products are in the market and where each of them is positioned
- once the information has been collected It can be plotted to show the positioning.
27
Q
What can product positioning be achieved by?
A
- Price in relation to that of competitors in a market
- Having beneficial quality when compared to others in the market
- Satisfying a small segment of the market
- being Something completely different
28
Q
Product portfolio
A
- Businesses produce many products this is their product portfolio
- deciding what products to have in the portfolio is important
- A product positioning chart can help see where other similar products are and what gaps exist
29
Q
Boston matrix
A
- this is a tool to help position products and to help decide what to produce
- The matrix considers products in terms of their market share and potential for market growth
30
Q
What are the four categories on the Boston matrix?
A
- Rising star.
- Cashcow.
- Problem child.
- Dog.
31
Q
Rising star
A
- High market share and potential to grow
- It’s a good category to be in but needs a lot of advertising to promote it and maintain it
- Can lead it to be a cash cow
32
Q
Cash cow
A
- ensures high revenues
- Well established product
- High share of the market
- Low market growth but the product generates large amounts of cash
- Mature product that does not need heavy marketing expenditure
- Very profitable
- It is sold in large quantities allows for low unit cost and therefore high profits
- The large profit gained from cash cow products can be used to support problems child products
33
Q
Problem child
A
- Low market share in a growing market
- Aim is to be a star or Cashcow
- Needs heavy investment to increase market share
- Normally a new product that is not established yet
- profile needs raising
34
Q
Dog
A
- Low market share and low market
Growth - No future
- Should be dropped by the business
35
Q
Advantages of using the Boston matrix
A
- See if you have a balance portfolio
- does not need dogs but needs cash cows to convert problem child products into stars or cash cows
- Too many stars may be a drain on financial resources as they require large funds to maintain there position
36
Q
Service marketing
A
- Does not have a tangible product
- Therefore customer recommendations are important
- Therefore, the product has to be of the highest quality in the service sector
