Marketing

Question 1

What are the 5 stages of a product lifecycle

Answer 1

Development
Introduction
Growth
Maturity
Decline

Question 2

What happens in product development

Answer 2

This s the first stage. Market research and research and development is carried out in order to create ideas for a marketable product. Material research is also used to find the best and cheapest material

Question 3

What happens in the introduction stage

Answer 3

The product is launched for the first time. There is a lot of promotion and it’s launched at important places so people know where to buy it

Question 4

What happens in growth

Answer 4

Profit increases until the product becomes well established and sales plateau

Question 5

What happens in maturity

Answer 5

This is where sales are at there peak, there will be less promotion as people already know about it and instead focus will be on making sure the product is widely available

Question 6

What happens in decline

Answer 6

Sales begin to fall as rival products take over, may be from same company or competitors, the product becomes obsolete

Question 7

What is direct marketing

Answer 7

Marketing where the business goes straight to the customer such as sending out junk mail

Question 8

How do businesses benefit from sponsoring others

Answer 8

If they sponsor something popular like a TV show they will gets lots of publicity.

Question 9

Explain manufacturer - whole saler - consumer

Answer 9

Customer buys from a cash and carry warehouse. It’s good for manufacturer as they get bulk sales to the wholesaler and also the wholesaler takes the cost of storage

Question 10

Explain manufacturer - wholesaler - retailer - consumer

Answer 10

Manufacturer gets all the same benefits as previous method. Retailers also benefit as they can buy in smaller quantitys than from manufacturer so less risk of overstocking. However, goods take a long time to go from manufacturer to consumer

Question 11

Explain manufacturer - retailer - consumer

Answer 11

Faster than previous method and manufacturer gets better customer feedback. Retailer risks over stocking as they can’t buy in small quantities

Question 12

Manufacturer - consumer explain

Answer 12

Cheapest for consumer but harder as manufacturer only sells their product, you have to go elsewhere to look for other brands, customer service is also usually lower

Question 13

Why do businesses need a variety of products

Answer 13

They need lots on sale and in development so when some decline, the ones that were in development can be put onto sale. The products in maturity can be used to fund new product development

Question 14

What is an extension strategy and example

Answer 14

A strategy used by business to extend the maturity stage of a product to increase product such as redesigning its look or discounting it

Question 15

What is a product portfolio

Answer 15

The range of different products a firm sells

Question 16

What is penetration pricing

Answer 16

When a firm sells its product at a low price during introduction to get lots of people interested

Question 17

What is loss leader pricing

Answer 17

When a product is sold at a loss to get people interested in other products of the business. Price may be increased later on like in penetration pricing

Question 18

What is price skimming

Answer 18

The opposite of penetration pricing. Starts of at a high price to appeal to wealthy people and price is later lowered to make it more affordable for a wider market

Question 19

What is competitive pricing

Answer 19

Where a firm prices their product to a similar price to other firms. This is used when there isn’t much differentiation between products or much choice for the consumer such as petrol

Question 20

What is cost plus pricing

Answer 20

It is used when there isn’t much competition so the firm can charge what consumers are willing to pay such as 50% more than manufacturing cost.

Question 21

What is the difference between mark up and profit margin in cost plus

Answer 21

Mark up is when you add percentage to cost of making to make the cost of selling such as 25% mark up from £2 = 2+.5 = £2.50
Profit margin is when you say how much of a profit margin you want, e.g. 20% profit margin from £2 means that £2 is 80% of selling price so you do 2 / .8 = 2.5