Marketing Mix Flashcards
Marketing Mix
The combination of four areas of marketing activities (price, product, promotion and place) to make sure that customers’ needs and wants are met while generating optimum revenue.
Price
Money charged for a product/service
Product
A good or service produced by a business or organisation and made available to customers for consumption
Promotion
Communication between the business and customer.
Place
The way in which a product is distributed – how it gets from the producer to the consumer
FOMO
Fear Of Missing Out
Target Market
The particular group of customers to which a business aims to sell its product; a particular market segment.
Brand
Name, term, design, symbol, or any other feature that distinguishes an organisation or product from its rivals in the eyes of the customers
USP
The key benefit of a good/service; it differentiates the product from others and will be the focus of advertising and promotion.
Differentiation
Developing the features that set a product apart from others in the market (such as benefits, style, price) and using that as part of advertising and promotion.
Product Portfolio
The range of products offered by one producer.
BOSTON MATRIX
A tool for analysing the contribution made by each product in a business’ product portfolio. It plots each product’s position according to its market share and the rate of growth of the market.
Market Share
The proportion of the whole market for a product that is held by the business.
Product Life Cycle
The stages through which a product travels during its journey from being an idea to being old and dated: research and development, introduction, growth, maturity, decline.
Extension Strategies
Methods that can be used to prolong the life of a product; could include price reductions, modifications to the product or relaunch.
Price Skimming
Setting a very high price when a product (often technology item) is first introduced to the market in relatively small numbers; only those who can afford to pay high prices to own the latest models will be able to purchase the product. The price is later reduced so that others can afford to buy.
Penetration Pricing
Fixing a low price when a new product is first introduced (into an established market) so that the product gains market share quickly. Once the product is established, the price is then raised so that profit is increased.
Competitive pricing
Setting the price of a product so that it is in line with competitors’ prices.
Loss Leader
A good or service sold at below cost price to bring customers into the shop with the intention that, once there, they may purchase full-priced items too.
Cost-plus pricing
Setting the price of a good or service at an amount higher than the cost of producing it so that a profit is made.
Advertising
Communicating to customers
Sales Promotion
Short term activities to attract consumer attention to a product or service in order to increase sales
Public relations
A business organises an event that will undoubtedly get free media coverage for its product or service
Personal Selling
Having a sales force to promoted their products and services
Distribution Channel
The route the ownership of the product transfers from the seller to the buyer; it may be a single transaction or pass through others such as wholesalers, distributors, agents and retailers.
The combination of four areas of marketing activities (price, product, promotion and place) to make sure that customers’ needs and wants are met while generating optimum revenue.
Marketing Mix
Money charged for a product/service
Price
A good or service produced by a business or organisation and made available to customers for consumption
Product
Communication between the business and customer.
Promotion
The way in which a product is distributed – how it gets from the producer to the consumer
Place
Fear Of Missing Out
FOMO
The particular group of customers to which a business aims to sell its product; a particular market segment.
Target Market
Name, term, design, symbol, or any other feature that distinguishes an organisation or product from its rivals in the eyes of the customers
Brand
The key benefit of a good/service; it differentiates the product from others and will be the focus of advertising and promotion.
USP
Developing the features that set a product apart from others in the market (such as benefits, style, price) and using that as part of advertising and promotion.
Differentiation
The range of products offered by one producer.
Product Portfolio
A tool for analysing the contribution made by each product in a business’ product portfolio. It plots each product’s position according to its market share and the rate of growth of the market.
BOSTON MATRIX
The proportion of the whole market for a product that is held by the business.
Market Share
The stages through which a product travels during its journey from being an idea to being old and dated: research and development, introduction, growth, maturity, decline.
Product Life Cycle
Methods that can be used to prolong the life of a product; could include price reductions, modifications to the product or relaunch.
Extension Strategies
Setting a very high price when a product (often technology item) is first introduced to the market in relatively small numbers; only those who can afford to pay high prices to own the latest models will be able to purchase the product. The price is later reduced so that others can afford to buy.
Price Skimming
Fixing a low price when a new product is first introduced (into an established market) so that the product gains market share quickly. Once the product is established, the price is then raised so that profit is increased.
Penetration Pricing
Setting the price of a product so that it is in line with competitors’ prices.
Competitive pricing
A good or service sold at below cost price to bring customers into the shop with the intention that, once there, they may purchase full-priced items too.
Loss Leader
Setting the price of a good or service at an amount higher than the cost of producing it so that a profit is made.
Cost-plus pricing
Communicating to customers
Advertising
Short term activities to attract consumer attention to a product or service in order to increase sales
Sales Promotion
A business organises an event that will undoubtedly get free media coverage for its product or service
Public relations
Having a salesperson promote their products and services by talking 1-1 with the customer
Personal Selling
The route the ownership of the product transfers from the seller to the buyer; it may be a single transaction or pass through others such as wholesalers, distributors, agents and retailers.
Distribution Channel
Factors affecting price (4)
- Cost (Does the product make a profit?)
- Location on PLC (Increase or decrease price)
- Nature of product (luxury or simple)
- Degree of Competition (similar price)
Price Skimming (2+, 1-)
+ Maximises revenue - Attracts customers who buy early on and are willing to pay a higher price but the business can still attract other customers who can pay a lower price later on in the product’s lifecycle.
+ Cover Research and Development Costs
- Slows down growth of a product – Competitors may catch up
Price Penetration (1+, 1-)
+ Increase market share – Attracts customers from established competitors
- Lower short-term profits
Loss-Leaders (2+, 1-)
+ Can offer extra products
+ Makes customers feel more willing to purchase their product
- Very low profit will be earned
Competitive pricing (1+, 1-)
- Only effective when products are similar
+ Price will not be a competitive disadvantage.
Cost-plus pricing (1+)
+ Easy to make a profit
Significance of USP
- Very effective in a competitive market
- Attracts many customers
Significance of a Market-driven approach for developing a product
- Attracts new customers – Satisfies customer needs and wants
Factors influencing product production (3)
- Cost to make
- Aesthetics
- Function (Multi-use)
Extension Strategies for a Decline stage product (5)
- Advertising
- Update packaging or rebranding
- Changing the target market
- Adding more features
- Reducing price
Why have multiple products in different sections of the Boston Matrix? (2)
- Reduces risk – not all of their eggs are in the same basket
- Helps allocate investment
Benefits of developing new products (3)
- Diversification – less risk
- Increased brand value
- More sales
Risks of developing new products (2)
- Damage brand – if bad quality
- Loss of investment – if product fails
Promotional Methods (6)
- Sales promotion
- Sponsorship
- Advertising
- Public Relations
- Product placements
- Social Media
Advertising methods (5)
- Newspapers
- Magazines
- TV
- Internet
- Billboards
Sales promotion examples (6)
- Discount coupons
- Point of sales displays
- Competition
- Samples
- Value for money offers
- Free gifts
Factors influencing promotional mix (5)
- Finance available
- Competitor actions
- Target Market
- Nature of product or service (Needs information or nah)
- Nature of market (fast or slow)
Reasons for promotion (4)
- Change image of the product/service
- Persuasion to buy the product
- Inform customers about the product
- To create or increase sales
Distribution channels (3)
- Manufacturer –> Wholesalers –> Retailers –> Customers
- Manufacturer –> Retailers –> Customers
- Manufacturer –> Customer
Manufacturer –> Wholesalers –> Retailers –> Customers (1+, 2-)
+ Large network of buyers
- Less interaction with customers
- Profit is shared (Customers pay more)
Manufacturer –> Retailers –> Customers (2+, 2-)
+ Higher margins or lower prices
- Hard to contact retailers
+ Have control over shops
- Higher delivery costs
Manufacturer –> Customer (2+)
+ Nobody else takes a cut
- Hard to reach customers
+ E-commerce (no need for physical stores)
