Marketing Flashcards
The 4 channels of distribution
Manufacturer
Wholesaler
Retailer
Consumer
Selling to wholesalers
Where manufacturers sell their products straight to a wholesaler who then sells it to consumers or retailers
Pros of selling to wholesalers
.Don’t need to communicate with consumers
.Wholesaler already has costumers so products can get sold quicker
. No need for large storage as the wholesaler will bulk buy products
Cons of selling to wholesalers
. Poor costumer service from wholesaler may affect the manufacturers reputation
Selling directly to retailers
Is where the manufacturer sells directly to retailers
Pros of selling directly to retailers
. Retailer can help to promote products which increases sales
. Using retailers means products can be sold in more places so more potential customers
Cons of selling directly to retailers
. It can be hard for new firms to persuade retailers to stock their product
Selling directly to consumers
Is where manufacturer sells products directly to consumers
Pros of selling directly to consumers
. It is the cheapest channel for consumers which may attract customers due to a cheaper price
. Can easily be done eg: via telesales
Cons of selling directly to consumers
. Manufacturer may need a large stock to store products which increases costs
. Delivery has to be arranged which is expensive if customers live far apart
4 Ps
Product
Price
Promotion
Place
Ways businesses promote their product
Advertising
Sponsors
Public Relations
Sales promotion
Where are products advertised
Newspapers/Magazines Posters and Billboards Leaflets,flyers and business cards Television Internet
What is advertising
Where a business pays a fee for promotion of its product or firm
Where can businesses get sponsors
Sports
Television
What is sponsorship
Where firms give money to organisations and events in return of their name being displayed at the event
Pros of sponsors
Can create a high profile for your business or brand name
Cons of sponsors
If the sponsorship starts to get bad publicity it will affect the image and reputation of the business
What is a public relation
Are firms that work with the media eg doing TV interview or a press release
Pros of public relations
It can be cheap and easy to get a firm noticed by a wide audience
Cons of public relations
Once the firm has spoken to the media it has little control over what the public sees and hears. This could potentially damage and businesses image and reputation
Types of sales promotion
Competitions 2 for 1 offers Free samples Coupons Point of sales display Free gifts
Pros of sales promotion
It can encourage new customers to try a product
Boosts sales short term and long term as the customer may return if they liked the product
Cons of sales promotion
Regular sales promotion might make the prodict feel a less of a luxurious item
Pros of social media advertising
Social media is quick,easy and cheap
Can quickly respond to potential customers
Cons of social media advertising
Negative comments can be seen and spread quickly therefore may put off potential customers to the business/product
Why do firms promote a product
To inform customers of the product
To persuade customers to buy the product
To create or increase sales
What are the 5 pricing strategies
Price penetration Loss Leader Price Skimming Competitive pricing Cost-plus pricing
Price Penetration
Where firms charge a very low price when a product is new to attract potential customers
Pros of price penetration
Good way to establish a market share for a product in a competitive market
Loyal customers will continue to buy products despite the price increase
Cons of price penetration
The product will make very little profit in the short term
Loss Leader
This is where price is set below costs. The firm does not make a profit but the idea is that customers buy other products as well eg: games consoles are priced below cost but firm rely on the games that go with it for profit
Price Skimming
This is where a business charge a high price when a product is new. This is done due to the high demand. Over time the price os gradually lowered when the demand lowers
Pros of price skimming
The high price helps the firm to increase revenue
High price makes the product more desirable as it will be seen as a luxurious item. This improves the firm’s image
Competitive pricing
This is where firms charge a similar price to competitors
Cost-Plus pricing
Where the firm works out the total cost of the product and adds a certain amount of money onto it based on the amount of profit they want to make
2 ways cost plus pricing is done
Using a mark up
Using a profit margin
Boston Matrix Products
Question Marks
Dogs
Cash Cows
Stars
Star Product
an innovative product that is in high demand in which the company earns a high amount of sales and profit
Question Product
a product that is low in demand due to competition or just a casual product. Company may need to innovate that product in hopes to achieve a star product or alter the marketing mix
Cash Cow Products
a product that has a constant flow of income but a low market growth which may be due to it being out of date or trend resulting in the comapany creating a new version of the product to attract more sales and profit
Dog Product
a product that is completely out of fashion and demand. Unless it is innovated these types of product will not generate enough profit for the business to survive resulting in bankruptcy
Market Growth and Share of Star products
High Market Share
High Market Growth
Market Growth and Share of Question products
High Market Growth
Low Market Share
Market Growth and Share of Cash Cow products
Low Market Growth
High Market Share
Market Growth and Share of Dog products
Low Market Growth
Low Market Share
Stages of product life cycle
Research and Development Introduction Growth Maturity Decline
Sales and Profit during development and introduction
Low Sales
Low Profit
Sales and Profit during growth and maturity
High Sales
High Profit
Sales and Profit during decline
Low Sales
Low Profit
Ways markets are segmented
Age
Income
Location
Gender
What does market research mean
It means a business will be able to identify customers needs and find ways to satisfy them
Benefits of market research
Increased Sales
Stay Competitive
Create targeted marketing
What is primary research
Consists of gathering your own data
What is secondary research
Consists of using existing data
What is quantitive data
Data that is of numerical value
What is qualitive data
Data based on opinions and feelings
Types of Primary Research
Questionnaires and Phone surveys
Interviews
Focus Groups
Pros of Primary Research
Questionnaires are Cheap
Phone Surveys and Interviews are quickly responded to
Focus Groups are faster than interviewing individual people
Cons of Primary research
Questionnaires don’t get many responses
Phone Surveys and Interviews are expensive
Quieter individuals in focus groups are not heard
Types of Secondary Research
Internet research
Newspapers and magazines
Government publications
Pros of secondary research
Cheap
Easily found and instantly available
Cons of secondary research
Outdated
Not always relevant
Not specific
Place and location of a business
Products must be sold in a place convenient for the customer. Place also refers to channel of distribution used for a product and which channel is most convenient for the customers
