Component 1 Booklet 7 Flashcards
What is product orientation?
When a business bases it’s marketing mix on what the business sees as its internal strengths
Example-Sony with the Walkman cassette player
What is Market Orientation?
When a business bases it’s marketing mix on its perception of what the market wants
Example-Primark
What is Asset Led Orientation?
When marketing decisions are based on the needs of the consumer and the strengths of the business
Example-Tesco sending details of their back to school children’s clothes promotion to customers on their data base who spend money on fishfingers/burgers
What are the 4 p’s?
Price
Product
Promotion
Place
What is a product?
Any good/service that is offered for sale to customers
What is a product portfolio?
When a business doesn’t sell one product but instead a mixture and range of products that appeal to different customers.
What are the benefits of a product portfolio?
- reach out to the wider audience
- spreads the risk
- benefit from economies of scale
What is branding?
A name,brand,term,sign,symbol, design or any other feature that allows consumers to identify goods and services of a business and which differentiates it from competitors
What are the advantages of branding?
- to create increased consumer loyalty
- to separate the product from the herd
- to increase price elasticity of demand
- to increase the value of the business
What are the disadvantages of branding?
- high cost of advertising
- loss of brand value for one product can affect a whole range of similarly branded products
- brands invite competition
- high cost of research and development
What is a Unique selling point?
The feature a product or service has that separates it from the competition
What is product differentiation?
Making your own products different from those of your competitors as it seperates your brand from other brands.
What are the stages of the product life cycle?
- Research and development
- introduction
- growth
- maturity
- saturation
- decline
- expansion(sometimes)
What is the research and development stage of the product life cycle?
Businesses are researching and developing the products and processes before launching the product to the market.
High costs and no income
What is the introduction stage of the product life cycle?
The product is new to the market and few potential consumers know of its existence.
Price can be high and sales may be restricted which means profits are often low as development costs have to be repaid
What is the growth stage of the product life cycle?
The product is becoming more widely known and consumed.
Advertising is used to try and establish or strengthen the brand and develop an image for the product.
Profits may start to be earned but advertising expenditure is still high.
What is the maturity stage of the Product life cycle?
The product range may be extended.
Competition will increase and this had to be responded to
Advertising should be used to firm up the image of the product in the consumers mind
Sales are at their prime,profits should be high
What is the saturation stage in the product life cycle?
Very few new customers are gained(replacement purchases are the trend)
Businesses should try to reduce their costs so that prices can be more flexible
Profits may stay to decline
What is the decline stage in the product life cycle?
Sales can now fall fast and the product range may be reduced as the business will concentrate on core products
Overall profits will fall.Price is likely to fall but by concentrating on remaining market niches there may be some price stability
What is an extension strategy in the product life cycle?
It’s an attempt to pre long the sales of a product to prevent it declining
What are the potential uses of a Product life cycle to a business?
- can track and monitor patterns in the product mix
- helps decide on production levels
- can track revenue and profit levels
- can help design the marketing that will be used to help people to know what the product is
What is the Boston Matrix?
It is a tool that was devised in the 1960s by the Boston consultancy group and it allows the analysis of a businesses products by dividing the products into 4 categories
What are the 4 categories of the Boston Matrix?
- Stars
- Question Marks
- Cash Cows
- Dogs
What are Question Marks in the Boston matrix?
- have a product in a fast growing market but the products aren’t selling-being beaten by competition
- High Market Growth,Low Market Share
What are Stars in the Boston Matrix?
- High Market Growth,High Market Share
- Products that have a Market Share in a fast growing market.
- have high levels of revenue but also have high levels of cost
What are cash cows in the Boston Matrix?
- Low Market Growth,High Market Share
- very profitable profits and expenditure on such things as advertising is relatively low
- customers know and understand the product and brand value has been established
What are dogs in the Boston Matrix?
what •Low Market Share,Low Market Growth
- Have low market share in a mature market
- not worth spending money on redeveloping products as it’s unlikely to be recouped in increased revenue
- May still be marginally profitable
What is the Market Mechanism?
The interaction of supply and demand
What is a price taker?
They have to accept the price set by the market
What is a price maker?
When a business has the opportunity of using pricing strategies and to make their own price
What is Market skimming?
- Charging a high price to maximise profits on each item sold for a limited period
- aim is to gain as much profit as possible for a new product whilst it remains unique in the market
What is Market penetration?
- objective is to gain market share
- it involves pricing a product at a low level so that retailers and consumers are encouraged to purchase the product in large quantities(buy in bulk)
What is Cost plus?
•A profit percentage is added to the average cost of producing the good.(known as adding a mark up)
What is Competitive/Going rate pricing?
- Where they accept the current market pricing structure so they must sell their goods or services at a price broadly in line with the price charged by competitors
- Common for many small businesses
What is Psychological pricing?
Prices are set at the level that matches what consumers may expect to pay.
What is contribution pricing?
Price will be based on the variable costs plus a contribution towards overheads and profits.
What is promotion?
The attempt,through various forms of media,to draw attention to a product and thereby gain and retain customers
What is the purpose of promotion?
- to provide potential customers with readily available information
- to increase sales/market share
- to give the products an image or to establish a brand identity
- to enable long term business planning to take place
What is above the line promotion?
It is what is generally called advertising.It is used to reach a mass audience.
Example-Through TV adverts
What is below the line promotion?
Promotion that offers a wide range of alternative promotional strategies which aren’t on as mass of a scale
Example-Emails
What influences the type of Promotion used?
- Stage in the life cycle
- Target Market
- Competitor Actions
- Marketing budget
- Product Differentiation
- Cultural Sensitivity
What is place?
Place is ‘the Marketplace’ where buyers and sellers meet.( can be in person,online,over the phone or via mail order)
What is Distribution?
The objective of distribution is:
To make products available in the right place at the right time in the right quantities
What are the methods of Distribution?
- using a wholesaler
- manufacturer to retailer
- direct selling-manufacturer to consumer
- internet marketing
- multi channel
What decisions do businesses have to make when entering over seas markets and selling their products abroad?
- which markets to enter
- whether they need to adapt the product or not
- whether to adapt the marketing mix to suit the new market
Why might a business want to sell their products in a number of different countries?
- to access more customers
- to increase brand recognition
- to spread the risk
- to minimise tax payments
- to benefit from lower cost of production in other countries
- to benefit from less restrictions/legislations
