Introduction to Marketing Details

Question 1

Elements of the marketing mix(the seven Ps)

Answer 1

-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

Question 2

What do the first four elements(i.e. product, price, promotion, place) focus on(goods, services, both)?

Answer 2

Goods

Question 3

What can all the seven Ps be applied to(goods, services, both)?

Answer 3

Services

Question 4

Features of product orientation

Answer 4

-Research and development of high-quality, specialised products is prioritised
-Market research isn’t considered as important

Question 5

Advantages of product orientation

Answer 5

-Unique selling point(USP) and high-quality products
-Monopoly power(via a patent)
-Lack of competition(if totally new products are made)

Question 6

Disadvantages of product orientation

Answer 6

-High risk(potentially little to no customer interest)
-High costs

Question 7

Features of market orientation

Answer 7

-Needs and wants of customers are prioritised
-Focus on market research
-New products developed only based on customers needs/wants

Question 8

Advantages of market orientation

Answer 8

-Low risk
-Higher chance of repeat customers

Question 9

Disadvantages of market orientation

Answer 9

-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)

Question 10

When calculating the market share, you need to specify…

Answer 10

-the market being referred to(how broad or narrow it is)
-the time period

Question 11

How can company A, which has higher sales, generate less revenue than company B?

Answer 11

Company B’s products may be more expensive

Question 12

Advantages of selling in growing markets for businesses

Answer 12

Easier to sell many products(and generate more revenue) since there’s more customers

Question 13

Disadvantages of selling in growing markets for businesses

Answer 13

Growing markets tend to attract more competitors

Question 14

Advantages of market leadership for a business

Answer 14

-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

Question 15

Advantages of strong market leadership for customers

Answer 15

-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)

Question 16

Disadvantages of strong market leadership for customers

Answer 16

-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)

Question 17

Disadvantages of market leadership on the business

Answer 17

-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)

Question 18

Disadvantages of market leadership for the economy, society, and the environment

Answer 18

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

Question 19

Uses of the Boston Consulting Group(BCG) matrix

Answer 19

-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

Question 20

Features of cash cows

Answer 20

-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

Question 21

Features of dogs

Answer 21

-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

Question 22

Features of stars

Answer 22

-High market share
-High market growth
-Create substantially growing revenues
-Requires significant investment to maintain growth

Question 23

Features of problem children(also called ‘question marks’)

Answer 23

-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)

Question 24

Disadvantages of the Boston Consulting Group(BCG) matrix

Answer 24

-Categories may be misleading
-Does not account for future external developments