Marketing Mix Flashcards
Define the marketing mix
The combination of marketing that influences a customers decision to buy
What are the 7 Ps?
Product
Price
Place
Promotion
Physical environment
Process
People
Describe product
The product itself including features design reliability guarantees after sale service (it can be a service too)
Describe price
The prices of all versions of the products and payment terms
Describe place
Distribution channel I.e how the product moves from the producer to the final customer eg can the customer buy direct from the producer
Describe promotion
How the business communicated about its product
Describe people
The people (employees ) involved in the transaction. The skills and attitude affect customers perceptions of the product.
Describe physical environment
The physical premises -how this looks affect your perception of the product
Describe process
How you buy the product eg internet , mobile phone payments , queueing at tills? How easy is it ? Customer experiences ?
What are the internal reasons why the marketing mix may have to change?
Changes in available finance could affect price promotion or product
changes in staff could affect people and products (skills changing)
greater efficiencies meaning prices can be loaded
changing objectives for example improving product to try and get repeat customers
What are the external reasons why the marketing mix may have to change ?
Political and legal – if the legislation changes products may have to be adapted for example product safety or labelling
Economic -if as a recession the prices may have to be lowered and vice versa
Social – trends towards social responsibility (to be environmentally friendly )
Technological -may make changes to product possible or allows alternative payment options (process)
Competition-if this increases then the features may need to change and be promoted more
What is a consume product ?
Products bought for consumption by the general public e.g luxury goods, everyday goods, impulse purchases
How does marketing mix affect luxury goods?
People and physical environment are very important
Promotion is targeted
Price is less important
Distribution channels may be limited
How does the marketing mix affect everyday goods?
Distribution channels are very wide
Physical environments is less vital
People are less vital
How does the marketing mix affect regular purchases?
Price product and promotion are very important
What are industrial products
Products sold to businesses for use in their own processes
If a business sells industrial products what are professional buyers like?
Less interested in packaging or branding and are more interested in the technical performance of the product
Will want to understand how the product gives value for money and helps to improve competitiveness (could affect the price and people elements)
Process of purchase would also be important for the business
What does the product consist of ?
The core benefit eg drier dries clothes
The tangible product I.e its features , specification
The augmented product I.e the extras such as brand name ,guarantee , after sales service
Why is product often viewed as the most important element?
If the product isn’t right customers aren’t going to buy again (lack of repeat custom )
What is product differentiation.
Developing and marketing a product that is distinctly different to rival products . It’s the USP or point of difference
How could a business achieve product differentiation?
Different features than rivals
Ethically sourced goods
Better quality than competitors
Offer a guarantee that rivals don’t
Benefits of product differentiation
Can charge a higher price (premium pricing )
Could create price inelastic demand (becomes very niche )
What is the product life cycle ?
Shows the sales of a product over time
What are the five main stages of the product life cycle ?
Development
Introductions
Growth
Maturity
Decline
Why’s it important to identify which stage of the life cycle the product is in?
It helps determine the correct marketing strategy (different strategy for different stages)
It helps the firm plan seafood (you know what stage is next )
Describe development in the product life cycle
Negative cash flow
Product testing to see if it’s worth launching
Investment into research and development
Describe introduction in the product life cycle
A lot of promotion-costly-build awareness
Low sales
Negative cash flow
High unit costs -no economies of scale
Limited distribution channels
Low price but can be high eg iPhone-can use price skimming/penetration
Describe growth in the product life cycle
Cheaper to produce high volumes so unit costs begin to fall
Change in price (lower if started off high-price can be increased if they started low due to brand loyalty)
Cash flow becomes positive
Target new market segments
Product modifications and improvements
Sale growing rapidly-market is growing :attracts competition
Generate interests -promotion
Growing number of outlets-wider distribution
More competition is likely to be there
Describe maturity in the product life cycle
New products released
Promotion stresses USP
Wide distribution channels
Low unit costs as you start to have higher volumes being sold
Sales at their highest
Rate of sales growth slows (intense competition)
High profits for those with high market share
Competitive pricing
Describe decline in the product life cycle
Price decreasing
Decreasing promotion -introduce sales promotion
Falling sales
Market is saturated
Unit costs start to rise (lower volume)
Fall in profits and weak cash flow
Remove weaker products -focus on one product
Reduce unprofitable distribution channels
Why do businesses use extension strategies
A business will want to do it can to extend the growth and maturity phases of the life cycle and to delay the decline phase
Define extension strategies
Extend the life of a product before it goes into decline
How can you extend the life of a product ?
Special offers , competitions etc increased promotional expenditure to renew interest
Price reduction
Target new segments for example, new country new age
new packaging
New flavours
new uses for product
Add value for example, add new features
How have product life cycles changed?
Product life cycles are getting shorter. Consumers are less brand loyal than in the past and are constantly looking for new projects.
What do businesses do in response to changing product life cycle trends?
This means businesses need to plan shorter more intensive promotional campaigns and spend more time developing new products to replace old ones
Higher prices may be needed to compensate for higher cost and lower overall sales
What are examples of case studies with changing product life cycle trends?
Segway:end of the road for the much hyped two wheeler -2020: ended production of the two wheeler not very popular with public - turned out to have product life cycle of twenty years
Apple: discontinues ipod twenty years after released now made redundant as phones do the same job
How does the Boston matrix help managers?
The Boston matrix does not tell managers exactly what to do. They must interpret and plan the most effective way forward. However if managers can identify what type of products they have they can start to create the right strategy for each product. This is a benefit of using the Boston matrix.
Define building and which space on the Boston matrix does this relate to?
Building involves investment promotion and distribution so question mark
Define holding and what part of the Boston matrix does it relate to?
Holding in involves market spending to maintain sales so star
What is milking and how does it relate to the Boston matrix ?
Take profits with much new investment so cow
Define divesting and where on the product life cycle does it link to?
Divesting : sell off the product (dog or question)
