Introduction to Marketing Details Flashcards
Elements of the marketing mix(the seven Ps)
-Product
-Price
-Promotion(advertising, sponsorships, sales promotion, etc.)
-Place(the physical distribution of products)
-People(those involved in offering a service)
-Processes(how a service is delivered to customers; including how a customer places and order)
-Physical evidence
What do the first four elements(i.e. product, price, promotion, place) focus on(goods, services, both)?
Goods
What can all the seven Ps be applied to(goods, services, both)?
Services
Features of product orientation
-Research and development of high-quality, specialised products is prioritised
-Market research isn’t considered as important
Advantages of product orientation
-Unique selling point(USP) and high-quality products
-Monopoly power(via a patent)
-Lack of competition(if totally new products are made)
Disadvantages of product orientation
-High risk(potentially little to no customer interest)
-High costs
Features of market orientation
-Needs and wants of customers are prioritised
-Focus on market research
-New products developed only based on customers needs/wants
Advantages of market orientation
-Low risk
-Higher chance of repeat customers
Disadvantages of market orientation
-No unique selling point(USP)
-Greater competition
-Reliance on quality of market research(poor market research → poor product development)
-Less agility(harder to respond to changing market conditions)
When calculating the market share, you need to specify…
-the market being referred to(how broad or narrow it is)
-the time period
How can company A, which has higher sales, generate less revenue than company B?
Company B’s products may be more expensive
Advantages of selling in growing markets for businesses
Easier to sell many products(and generate more revenue) since there’s more customers
Disadvantages of selling in growing markets for businesses
Growing markets tend to attract more competitors
Advantages of market leadership for a business
-Positive feedback loop may be created which strengthens the market leader and reduces competition
-Greater access to distribution channels(e.g. some retailers only stock the leading brand of each product line)
-Brand recognition
-Economies of scale
-Price leadership
Advantages of strong market leadership for customers
-Networks(a business may create network effects, where the product becomes more valuable the more people use it(e.g. social media networks))
-The business may be able to lower prices for customers(due to economies of scale lowering production costs)
-Greater potential for the business to invest in product research or development(due to higher sales/profits)
Disadvantages of strong market leadership for customers
-Business may abuse their power in networks(e.g. social media privacy violations)
-No guarantee that business will lower prices(even if economies of scale is achieved)
-Business can raise prices for customers(due to low competition)
-Low incentive to innovate(due to low competition)
Disadvantages of market leadership on the business
-Relatively low incentive to innovate
-Their high profits may attract new competitors(who can innovate more quickly)
-May experience diseconomies of scale
-Greater legal restrictions(e.g. antitrust laws)
Disadvantages of market leadership for the economy, society, and the environment
Businesses may be able to:
-Create favourable legislation(by lobbying political leaders) for the business and weaken the environment, labour and antitrust laws
-Gain support for mergers and acquisitions that lessen competition in the market(by lobbying political leaders)
-Resisting trade unions and efforts of less powerful workers to negotiate fair wages and conditions
-Finding tax loopholes to avoid paying a fair level of tax
Uses of the Boston Consulting Group(BCG) matrix
-Helps businesses with multiple products decide on their marketing strategies
-Helps see if the business’s perception of itself and the customer’s perception of it are aligned
Features of cash cows
-High market share
-Low market growth
-Products create high sales revenue from an established customer base
-Promotion likely focuses on replacement products and maintaining loyalty
Features of dogs
-Low market share
-Low market growth
-Products may be at the end of their product cycle
-Products may be niche products competing in low-growth markets
Features of stars
-High market share
-High market growth
-Create substantially growing revenues
-Requires significant investment to maintain growth
Features of problem children(also called ‘question marks’)
-Low market share
-High market growth
-Products are often recently launched in response to the rapidly growing revenues of competitors
-Considerable investment required to gain market share
-Likely to have negative cashflow(especially if investment is put in)
Disadvantages of the Boston Consulting Group(BCG) matrix
-Categories may be misleading
-Does not account for future external developments
