Marketing and operations Flashcards
what is the purpose of the marketing department
3 points
raise awareness of products
inform customers about products
Anticipate what customers want
describe product led
When a business develop a product first and then try to sell it to the customer through intensive advertising
Give to examples of companies that would work product lead
Apple and Tesla
What is one advantage of product lead
Organisations can focus on the quality of their products and take their time in production
What is one disadvantage of product lead
The actual needs of the market are ignored
Explain market lead
When a business finds out what the customer wants for intensive market research and then creates a product that will satisfy those wants
What is one advantage of market lead
It has more confidence in the launch of the new product due to research being carried out
What is one disadvantage of market lead
Market research is very expensive to carry out
Identify three types of consumer buying behaviour
Routine
informed
impulsive
Describe routine purchases
They require little involvement by the customer
purchases are made automatically for example cereal
Describe informed purchases
Buyer takes time to investigate the product then they will consider different products that are on offer for example a car
Describe impulsive purchases
They happen without any prior planning authority e.g chocolate
What are the five stages of the product life cycle
research and development
Introduction
growth
maturity
decline
Describe research and development stage
The product is not in the market yet research and development testing takes place no sales and profit are made
Describe introduction stage
Sales will be low as just launched onto the market
advertising cost will be high and ordered for the product to get noticed
Describe the growth stage
Sales begin to grow
advertising costs are still high
a small profit can be made of our research and development course I’ve been covered
Describe maturity stage
Sales at their peak profits
Advertising can be reduced as the product is well known
Describe the decline stage
Sales begin to fall as the product begins slow death imitations may take over it therefore profits will fall
What are 4 extension strategies of the product life cycle
Change the price of the product change the place of the product change the packaging of the product and change the name of the product
Describe changing in the price of a product
Please can we lowerd to allow new customers to buy it
Describe changing the place of a product
Products can be sold in different countries to gain more sales as well as online etc to reach wider market
Describe change in the packaging of a product
The packaging may be changed together new appearance of the new and improved product
Describe changing the name of a product
Product suffered from bad publicity and sales are falling a tried and tested technique is used to simply changing the name
Name for advantages of having a wide product portfolio
-Can increase profits from selling a large range of different products
-greater brand awareness
-easier to launch new products as brand is already established
-can meet different market segments
What are three disadvantages of having a wide product portfolio
-Increased research and development costs due to multiple products being produced
-marketing and advertising cost can be high
-bad publicity may affect sales of all other products within the product portfolio
What are stars (Boston matrix)
Products have high market share in a fast-growing market
What are cash cows (Boston matrix)
Have high market share in a slow growing market
What are problem children (Boston matrix)
Products have a low market share in a fast-growing market
what are dogs (boston matrix)
Products with a low market share in a slow growing market
What are two advantages of using a Boston matrix
Allows firms to identify products that may require further investment for example turn a problem child enter star
Allows a firm to identify poor performing products and make decisions about which products to drop i.e. dogs
Are two disadvantages of using a Boston matrix
Firms cannot measure what is going to happen in the future
Does not take into account external factors such as competitors actions
Describe high/premium pricing advantage and disadvantage
Price is higher than rivals to signify luxury or quality
They will usually have a high profit margin on each sale
May be difficult to attract customers who may look for better value from the competition
Describe market/competitive pricing and one advantage
Involves a business setting their price at a similar one to competitors
The business will then compete on other factors such as convenience and customer service
Describe low value pricing with an advantage and disadvantage
Prices are below the market price in order to attract customers
Customers are often look for the cheaper products to save money
Low prices are associated with her quality even if that’s not always the case
Describe psychological pricing with an advantage
Used to make customers think the price of a product is lower than it actually is for example £19.99 instead of £20 this leads to customers thinking they are receiving a great deal which could secure a sale
Describe price discrimination pricing
Used when demand for products or service may change due to changes in consumer demand for example price of snacks at a service station
Describe cost plus pricing with an advantage and disadvantage
Method of pricing is based on calculating the cost of producing the item and then adding on the percentage profit
SMSes insures all costs are covered however it does not consider external factors such as competitors pricing
Describe penetration pricing with an advantage and disadvantage
The price will be set lower than competitors to gain market share once product becomes established the price will then increase
A strategy can be used to encourage customers to switch brands
Company will not make as much profit during initial launch
Describe promotional pricing and give an advantage
Prices are reduced for a period of time through discounts and vouchers
often used to attract a lot of media interest or help clear stock for example January sales
Describe destroyer pricing and give an advantage and disadvantage
Involves a business setting a very low price in order to attract customers away from competitors who will struggle to match the low price and go bust
used to eliminate competition whoever it is legal in the UK
Describe market skimming prices in and give an advantage and disadvantage
A product is launched at high price and reduced over time
The business can build a quality image
Loss and status when you eventually lower the price
Describe loss leader pricing and giving advantage
Involve selling certain products at a loss or below market value to encourage customers to come into the business
This method of pricing should increase sales of other full Price products in store
Identify four methods of direct selling
Mail order
e-commerce
direct mail
personal selling
What are two advantages of direct selling
Products can be tailored to customers specific requirements
Set the middleman which increase profits for the manufacturer
What disadvantages of direct selling
Increase costs due to advertising storing stock and administration
Time and cost and organising product delivery
What are two advantages to wholesaler
Low transport and admin costs by relieving the manufacture of having to make lots of small deliveries
The wholesaler can be packaged and labelled products in smaller quantities meaning less work
What are two disadvantages to a manufacturer when using a wholesaler
Wholesaler may damage reputation of the manufacturer
Manufacturer loses control over what happens to the product after they have sold it and may not like the way product is being portrayed by wholesalers
Identify for PR activities
Sponsorships
press conferences
press releases
charity donations
describe sponsorships
Companies pay to have their name associated with a organisation for example football teams
describe press conferences
When members of the press are invited to a presentation given by the company to report information for example a new product
describe press releases
Written statements that are given to the media to inform them on any information
describe charity donations
Letting the public know your company donates to support a charity
Describe maximum inventory level
Highest level of infantry that can be held at any one time to avoid overstocking
Describe minimum inventory level
The lowest amount of inventory that a business can hold at any one time to avoid understocking
Describe reorder level
The level at which inventory should be re-ordered taking account of usage and leadtimes
Describe reorder quantity
The man that is ordered to take the inventory back up to maximum level
Describe lead time
The time taken between ordering new inventory and it been delivered
Describe buffer inventory
There’s always a buffer inventory of a items held in case deliveries are held up or there is an unexpected large order
What are three advantages to just-in-time
Reduce wastage as less risk of stock going out of date or over fashion
less storage space required
Organisation is more responsive to customer demand
What are three disadvantages to just-in-time
Organisations can lose out on bulk buying discounts
Delay in receiving orders from suppliers will lead to production having to stop
Stock being delivered frequently increases Administration and delivery costs
what are 2 advantages to centralised warehousing
Suppliers are delivering to one location which reduces delivery costs
Economies of scale are gained to bulk ordering
What are two disadvantages of centralised warehousing
High costs due to special equipment and large storage facilities
May incur increased delivery times and delays in receiving stock to the department
To advantages of decentralised warehousing
Inventory is accessible so no delay in receiving required goods
Small amounts of stock being held prevents wastage
