Marketing Flashcards
Name the Marketing Mix (7ps)
Product Place Process Price Promotion People Physical Evidence
What is needed on a Product Life Cycle Graph
Axis (Sales y axis and Time x axis) Research and Development Introduction Growth Maturity Saturation Decline Title SEE PAGE 1 OF NOTES FOR GRAPH
What is Research and Development?
When market research is conducted and prototypes are produced.
During this stage there are no sales, costs are high and no profits.
Research and development stages
Come up with an idea for a new product. Conduct market research. produce a business plan. Produce a prototype. Launch in a small area - Test Marketing. Receive feedback from customers.
Introduction
When a product is LAUNCHED onto the market.
The product is advertised heavily.
Customers are learning of the product.
Low sales high costs and or no profit.
Recovery of R&D ( Research and Development) costs occur at this stage.
Growth
Sales RISE Rapidly.
Customers are more aware of the product.
Profits rise at this stage.
Maturity
Sales peak as the product is well known in the market.
Heavy competition in the market.
Extension Strategies are often used.
Highest profits are achieved.
Saturation
Supply of Product is higher than the demand.
Customers who want the product have it.
Competitors start to fail and drop out of the market.
Prices and Profits fall.
Decline
Sales fall as new/better alternatives are now available.
Customers tastes have changed and no longer want the product.
Sales and prices fall until the product is with drawn from the market.
Profits and losses are made.
Extension Strategies Example
Product
- change the name/brand name
Example - Opal fruits to starburst or cadbury’s caramel to diary milk with caramel.
Product Line extension
Example - Coca Cola
Change/alter the packaging - for example - iron Bru.
improved quality of features - e.g. washing up liquid/ Washing powder.
Change the shape, size or features e.g Apple
Change the use of the product e.g. Lucozade.
Price
Reduce or increase the price.
For example Barr drinks
Place
Change where the product is sold.
For example - online or through a wholesaler
Product Portfolio/Mix/Range
When a business sells more than one product or service.
How do they sell more than one product or service? (Product Portfolio)
Have a range of products or a good mix of products.
Product range should all be at different stages of the product life cycle.
Advantages of having a Product Portfolio.
To reduce the risk of failure.
To assist financing the Launch of new Products.
To cater for different market segments.
To increase sales and profits.
To improve the reputation of the business.
To cope with seasonal fluctuations.
Disadvantages of having a Product Portfolio.
If one product receives bad reputation then the whole image of the range is tarnished.
Reduced opportunity to gain economies of scale.
Cost of Purchasing different machinery.
Training staff to produce different products.
R&D costs will be high for a range of products.
Sales promotions and advertising costs will all be high.
Boston Matrix.
SEE PAGE 6 OF NOTES FOR DIAGRAM.
The Boston Matrix is used to help a business decide on the range of products which it offers.
It can help a business decide when new products need to be introduced or withdrawn from the market.
Boston Matrix/Box Elements
Star
- High Market share/High Market growth - growth stage
- A business will strive to have as many of these as possible.
Cash Cow
-High Market share/Low Market growth - maturity stage
Example a Mars Bar to Mars.
-Will often finance the development and introduction of new products.
Problem Child
High Market growth/Low Market share - introduction stage.
-An expensive product to promote.
-Does not generate much income as R&D costs have not been covered yet.
-Promotion comes from the finance generated from the Cash Cows.
Dog
Low market share/low market growth - Decline Stage
-A product with no future.
-Perhaps a saturation or decline product.
Cost Plus
When a Percentage of profit is added to the cost of purchasing a product.
Justification - simple to work out proceed as the same percentage is added to all products.
Penetration.
When a business Charged a low price when a product is first introduced onto the market.
Development - once customer loyalty is established the price is increased.
Justification - To increase awareness of a product or to increase sales.
Disadvantage - some customers will stop buying the product when the price rises.
Destroyer Pricing
When a large Plc deliberately sell their products at a price much lower than competitors.
Development - prices are then increased higher than the original price.
Justification - Competitors are forced out of the market (Competition is destroyed) as they cannot compete.
Disadvantage - Customers are faced with price rises and limited choice of company.
Promotional pricing
When a business reduce the price of its product for a short period of time.
Justification - helps the business reduce stock levels at the end of a season.
Disadvantage - customers often wait to purchase products at times of discounts.
Loss Leaders Pricing
When a business deliberately sells a product at a loss.
Development - Highly advertised to give the impression that all products are inexpensive.
Justification - most customers would buy other products whilst in the store resulting in a profit being made from the customers whole purchase.
Justification - gives the impression that all products are inexpensive.
Disadvantages - some customers will only purchase the discounted products.
Psychological
When a business sells its products at a price ending with 99p.
Justification - To give the illusion that prices are cheaper than
they actually are.
Competitive
When a business sells their products at the same price or lower than competitors.
Justification - Increased sales/market share.
Disadvantage - Small profit margins are made.
Premium
When a business permanently sells its products at a high price.
Justification - gives the business a high quality/exclusive image.
Disadvantage - company misses out a whole market segment.
Price Discrimination
When a business charges a high price when the demand is high.
Development - holiday companies charge high prices in the summer and christmas time.
Justification - customers demand is high. so they will pay the inflated pricing.
Market skimming
When a business sells its products at a high price when they have just been introduced onto the market.
Development - few or no competitors in the market.
Justification - gives the product an exclusive image.
Disadvantage - can only be used as a short term pricing strategies.
Promotion
Any form of communication which draws consumers attention to your product.
What are the three main aims of promotion?
Persuading - Convincing customers to buy your product.
Informing - Letting customers know about your product.
Reminding - telling customers your product still exists.
The 3 main types of Promotion
Advertising - Long-term promotion tactic used to build customer loyalty.
Sales promotion - used to compliment an advertising campaign. They are a short-term tactic to encourage customers to buy your product.
Public Relations - Communications aimed to an organisation public in an attempt to improve the image of its products and/or of the whole organisation.
Sales promotion
Into the pipeline Dealer Loader (W->R) (Wholesaler to Retailer)
Sales or Return (M->R) (Manufacturer to Retailer)
Encourages retailer to buy more products
Example - DC Thompson.
Credit Facilities (M->W) (M->R)
When the business receives the product and has 30 days to pay for it.
Point of Sale Display
When a product displays are produced by manufacturers so products are situated close to cash registers.
-Provide for free or low cost (M->R)
Dealer Competition
when manufacturers offer sales staff in retail outlets large prizes for selling the most products.
Staff training
When training is provide to retail staff so they detailed product knowledge that can be passed onto customers.
Out of the pipeline
Coupons/vouchers Loyalty cards Extra free BOGOF (Buy One Get One Free) Free Gifts Competitors Credit Terms Promotional pricing Demonstrations Frees samples Product Endorsement/Product placement (Sponsorship) (Celebrity Endorsement)
Advantages of Product/Celebrity Endorsement
-Consumers associate products with personality
gives a good image of the organisation
- Consumers will purchase products to be seen as the same as the personality.
- Increase sales if the personality is successful.
- Increased selling price
- Product seen as good quality.
Disadvantages
Involves a very high costs to pay personalities for their name image.
If personality has a problem then the product can suffer the negative publicity.
Public Relations
PR Activities
Corporate calendars and gifts.
Charitable donations
Even sponsorship of sporting/cultural events
Product endorsements by famous celebrities
Press Conference/releases.
Public Relations can provide:
Public with information build/reduce confidence create customers of products/services Develop/reduce public image Support and enhance advertising selling.
Place
Where the product is sold to the customer
Channel of Distribution
Manufacturer->Wholesaler->Retailer->Customer
Manufacturer->Wholesaler->Customer
Manufacturer->Retailer->Customer
Manufacturer->Customer
Which channel of distribution
The demand The Product -Perishable -Exclusive image The manufacturers logistics (Fleet of lorries) The manufacturers storage facilities Legal restrictions Availability of Finance Reputation & reliability of retailers
Wholesaler
Buy in bulk from manufacturers and sell to retailers.
Wholesaler Benefits (Advantages)
Reduced the cost of holding stock for the manufacturer/retailer.
Manufacturer/Retailer will not be left with unsold stock if demand changes.
Less risk for both manufacturer and retailer.
Retailer can purchase in small amounts form Wholesaler.
Wholesaler often labels products from manufacturer.
The manufacturer does not have to make as many small deliveries as retailers.
Admin costs are also saved
Wholesaler can also promote the product - reduced cost for the manufacturer.
Retailer can reduce/remove storage facilities.
Wholesaler costs (Disadvantages)
Manufacturer loses control of marketing of their products
Image portrayed not having manufacturers choice.
Wholesaler also makes a profit. - More expensive the the customer
Discounts achieved from economies of scale can be lost by the retailer.
Retailer
Business that sells the products to customers.
Trends of retailing
Out of town shopping centres
Locating in the outskirts of a town.
sell almost everything/wide range of goods
24 hour shopping
E- Commerce/E-Tailer
Decline of the weekly shop
Customers tend to weekly shop more frequently.
Types of retailer
Supermarket
- Traditionally sell food and drink
- Most have expanded product portfolio to include clothing and household items
- Local supermarket are growing in popularity - example Tesco express
- Destroying many local independent stores
Discount Retailer
Branded goods at a discounted price.
Limited availability of products sold.
Products that are sold change regularly.
E-tailer
Shopping online and having the products delivered.
No expensive retrailer outlets required (rent and rates)
Large warehouse on the outskirts of towns.
Logistics companies are often hired to deliver the products.
Convenience Retailer
small store that offer a limited amount of products.
found on residential areas
More expensive as goods are bought from wholesalers.
Direct Selling
Manufacturer who sell directly to the customer.
Retailer Benefits (Advantages)
Retailers are located closer to the customer.
They often have established customer base.
Have trained sales staff who have product knowledge.
Will attract customers by offers of credit facilities.
Can offer appropriate after sales services & guarantees.
Large retailers buy in bulk.
Reduce delivery cost.
Retailers pay for advertising
Products displayed attractively by the retailer.
Methods of Direct Selling
Selling directly from the manufacturer to the customer.
Examples:
Internet Selling
- E-Tailing
- S-commerce
- Internet websites.
Mail order
Direct mail
Specialist Magazines
Tv Selling
Internet Selling Advantages
Convenience of buying products from comfort of own home 24/7.
Inexpensive to set up a website.
World wide customer base.
Attract those who find it difficult to leave their own home.
Changes can be made instantly.
Saves costs on retail outlets.
Can charge lower prices to customers.
Product can be demonstrated.
Increased profits as reduced channels of distribution.
Profits can also be made from the delivery charge.
Compare with other products.
Check stock availability.
Can check reviews before purchasing.
internet selling disadvantages.
Cannot see goods before purchasing. (Physically)
Web Designer required to design and maintain = expensive.
Wait on good arriving.
Some don’t like using credit cards online.
Internet problems can make purchasing stressful.
Lost or damaged good while in transport.
Returning goods can be problematic.
Social Media (S- commerce) Advantages
Can reach a global audience.
Less expensive than other methods of advertising.
Can make changes once and the whole advert is changed for everyone.
Customers can share the page.
Social Media (S-Commerce) (Disadvantages)
No control over the comments made by others.
- Comments can be deleted
- Screenshots can be taken.
- Damage reputation
Still have to use other methods advertise as not everyone uses social media.
Mail Order - Goods being sold through catalogues
Offers credit facilities.
Can be exclusive and only way to purchase some products.
Saves expensive high street locations.
Consumer may not like the lack of personal service
Many goods require to be returned - more complicated.
Involves high advertising costs.
High level of bad debts occur.
Direct Mail
Companies send letters/leaflets advertising their products for sale directly to homes of possible consumers.
Consumers within specific market segments can be targeted directly.
Can reach wide geographical areas.
Consumers do not respond well to vast amounts of junk mail.
TV Selling - Bidup or QVC
Can reach wide geographical areas.
Can be exclusive and only way to purchase some products.
Can give demonstrations.
Saves expensive high street locations
Physical Evidence
The tangible aspect of providing a product or a service.
- The location
- Store layout.
- Store fixtures and fittings
- Clean
- Decor
People
Those Providing the services - for example the employees.
Recruiting the correct employees.
Training them to the highest standard
Motivating employees to work hard.
Rewarding hard work - Eg promotion.
Process -The different processes and systems used to deliver a product.
For example - a supermarket.
Hand-held scanners
Self Scanning
Click and collect.
E-Commerce
Loyalty cards
Marketing Dept use of ICT
EPOS to record customers buying habits.
DATABASE to store customers personal details.
EMAIL to send out special offers and promotions.
WP (Word Processing) to create an advertising poster/flyers.
WP to create a survey
TEXT MESSAGE to send out special offers and promotions.
TEXT MESSAGE inform customers that their product has been dispatched.
WEBSITE to conduct an online survey (Survey Monkey)
WEBSITE/E-COMMERCE - selling products online
APP to sell products to customer.
DTP/PUBLISHER to create business cards for sales Rep.
DTP to design packaging
SPREADSHEET to calculate the selling price of a product.
WEBSITE to advertising products and provide customers with information.
QR CODE - To provide customers with information about your products.
Market Research - what is market research?
Market research is gathering,recording and analysing of data about problems relating to the marketing of good and services.
Field Research
Research that you have gathered and used for your own purpose.
Methods of field Research
Personal interviews
Postal Survey
Consumer Panel/Audit
Telephone Survey
Focus Group
Observation
Test Marketing
Hall Test
EPOS (Electronic Point Of Sale)
Online Surveys ( Survey Monkey)
Field Research Ads
Reliable
Field Research Ads
Reliable as the source is known
Relevant as gathered for a specific Purpose
Most up to date information available
Can be kept private.
Field Research
Time consuming to collect
Expensive to gather
Train employees to carry it out
Respondent may have lied
Researcher bias
Leading Questions
Promotion
Change the sales promotion eg McDonald’s
Change the advertising eh Cadbury’s creme egg
Sampling
Random individuals are chosen from a list
- they are normally telephoned
- limits interviewer bias as they already been chosen
Quota - the person interviewing is told the number of people and the type of person who is interviewed.
Eg women who are over 40 and earn over £40 000
Stratified - the sample is chosen based on the make up population
Eg 60% must be female and %40 male
Interview selects those who meet the criteria - leads to interviewer bias
