Maketing P3 Flashcards
Penetration pricing
Low prices are set to break into a market or to achieve a sudden increase in market share
E.g - charge low prices on apps
Spotify so people become hooked after trial phase ends
Price skimming (creaming)
Firm charges highest initial price that customers will pay + then lower over time
E.g - customers buy at higher price and still do over time when prices are lowered builds customer loyalty
Predator pricing
Low prices in order to drive other firms out of the market
E.g illegal in uk
Cost plus pricing
Adding % (mark up) to the costs of producing a product to get the price
E.g - you choose how much profit you make
Psychological pricing
Impression of value
E.g - £3.99 instead of £4
Competitive pricing
Pricing strategies based on Prices charged by rivals
E.g - beat competition and gain competitive edge resulting in your business getting more sales
Design mix and social trends
Environmental issues
Waste minimisation
Ethical supply chain
Environment issue
Design for reuse/ recycle
Ethical sourcing
Waste minimisation
Product last long time
Smaller - lighter
Reduce packaging + manufacture of disposable goods
Ethical supply chain
Consumers interested in buying from ethical businesses
How products made key issue for many consumed
Differentiation and usp
Higher prices can be charged
Amount of competition
Strength of brand
Price and elasticity of demand
Dynamic pricing
Varying price for a product or service to reflect changing market conditions
Price comparison websites
Availability of auction sites
Personalised pricing
Using data such as purchase history and demographic data to set a unique price
Subscription pricing
Charging customers a regular monthly fee for the use of a service or access to a specific product
Price elasticity of demand PED-
Quantity demanded of a good or service is affected by change in price
Price elasticity demand
Price results in a greater change in demand
Price inelastic demand
Change in price results in a proportionally smaller change in demand
Factors influencing price elasticity of demand
Habit / addiction —> inelastic
Availability of substitute —> elastic
Brand loyalty —> inelastic
Necessity —> elastic
Income elasticity of demand YED
Value of income is above 1 demand income elastic
Value of income elasticity of demand is below 1 demand is said to be income inelastic
Product lifestyle
Stages through which a product passes from development to being withdrawn from sale
Extension strategies
Increase market share for given product or service - keep it in maturity phase
Special editions
Modifications to product
Change in promotion / packaging
Value of product lifecycle
Product lifecycle is process of examining a product + making strategic decisions
Design
Pricing + promotion —> optimise product each stage of its cycle
Help companies determine if they need to develop new products in maturity or decline stage
Boston matrix
Total product portfolio analysis that classifies product according to the market share of the product + the rate of growth of the market in which the product is sold
Product portfolio
Range of product a business will sell
Star
Heavy advertising needed
Potential to be a future cash cows
Problem child (?)
Small market share in rapidly growing industry
Large amount of market research + promotion
Aim to be a star/ cash cow
Cow
High revenue
Established product
Little advertising needed
Dog
No real future
May become unprofitable
Product lifecycle
Stages through which a product passes from its development to being withdrawn from sale
Changing from product to service
Tetiary sector has grown at the expense of primary sector
Music - from CDS to streaming
Films from DVDS to Netflix
Newspaper
Objective of distribution
Products available right place + right time in right quantities
Distribution channel
Moves product through stages from production to final consumption
Changes in prosecution
Online distribution
Business to consumer ( B2C) - click and collect
Business to business (B2B) advantage
Lower start up cost — fixed and variable are lower
Offer goods to wider market
More choice where to locate
Business to business (B2B) disadvantage
Increase competition
Lack of human contact
Technical problems
Direct selling advantage
Consumers preference buying direct
Expand customer base
Higher margins
Retailer
Easy shopping experience
Personalisation
Targeted discounts
Nature of product
Tangible or intangible goods or service that a company offers to its customers
Cost
Expense incurred for making a product or service that is sold by a company
Control
Control reputation/ customer reputation
Market
Type of customer values so can determine distribution
Product lifestyle
Stages through which a product passes from its development to being withdrawn from sale
Development
Spending large amounts on creating + preparing products to sell
No sale rev
Introduction
Launch of product
No sales cash flow negative
Penetration
Advertising sales large amount of above line advertising
Growth
Becoming popular + known = new customers build brand
Sales increase
Competition/ phsychological offers
Market research business could target new market segments
Maturity
Sales at highest most profitable stage lots of competition
Most profitable / cash flow
Competition pricing
Steady promotion billboards
Decline
Demand is dropping
Reducing cash flow as product becomes less popular
Price drop to try to sell more of declining product
Less promotion
Extension strategies
Increase market share for given product or service —-> keep it in maturity phase rather than go into decline
Special editions
Modifying product
Change in promotion / packaging
Value of product lifestyle
Product lifestyle process of examining product + making strategic decisions
Pricing promotion — optimise product each stage of its life cycle
Help companies determine if they need to develop new products in maturity or decline phase
Boston matrix advantage
Business has a balances portfolio
Sufficient cash cows to fund the problem child
Not to many stars as they maybe a drain on financial resource
Boston matrix disadvantage
Market growth inadequate measure of a market attractiveness
Focus on market share + market growth ignores issues such as developing sustainable competitive advantage
Dog may still be profitable to business
Marketing strategy
Set of plans that aim to achieve a specific marketing objective
Maketing objective
Become the market leader in an area
E.g create website take online bookings
Strategy for mass market
Product - similar products may need to develop a USP to stand out
Price - competitive pricing
Promotion - invest heavily in promotion + advertising
Place - multiple channels of distribution
Strategies for niche market
Place - selective choose distribution channels
Product - strong USP designed to focus on the need of specific customer
Price - less competition higher prices
Promotion - targeted promotion / specialises
Strategies to business to business + business to consumer
Outbound making strategies - direct mail , e,aols
Inbound marketing strategies attracting customers to websites - blogging social media
Hybrid strategy combination of t(em birth
Develop customer loyalty
Regular communication
Excellent customer service
Customer incentives - loyalty cards
Personalisation
Preferred treatment - VIP lounge
