Marketing Tactics/Mix (4Ps)

Question 1

Marketing Tactics

Answer 1

When we finally want to bring our product to the market, some final decisions need to be made. In order for all clients to choose our product, we settle on a certain marketing mix for our products. Decisions need to be made about the 4 marketing P’s.

Question 2

Product Life Cycles

Answer 2

Common assumptions:
- products have a limited life
- product sales pass through distinct stages with different challenges and opportunities
- product require different marketing, financial, manufacturing strategies in each life-cycle phase

There are 4 stages:
1. Introduction:
- profits are negative or non-existent
- period of slow sales growth caused by the introduction of the product in the market, - competition is light
- most of the investment money is spent on quality control

2. Growth:
   - quick market acceptance and substantial profit improvement for the product
   - competitors enter the market rapidly, aiding market growth
   - investment to improve the product to compete
   - segments emerges, product will differentiate
3. Maturity:
   - sales start to slow down as the market becomes saturated and achieved acceptance by most potential buyers
   - profits stabilise or decline due to greater competition
   - emphasis on creating new products or innovations in order to re-introduce growth
4. Decline:
   - sales and profit decline
   - focus turns to profit rather than sales or market share
   - reducing marketing budget

Some claim life-cycle patterns are too variable in shape and duration.

Question 2

Product

Answer 2

Anything that can be brought to a market to satisfy a need.

Several types of products:
1. Physical goods
2. Services
3. Events
4. Experiences

Question 3

How Do Consumers Evaluate Product?

Answer 3

3 different types of product attributes:

1. Search attributes: can be evaluated prior to consumption
2. Experience attributes: evaluated post-consumption, difficult to quantify
3. Credence attributes: can not be evaluated, these are things you have to trust, you can not prove it, but they do affect your likelihood of purchasing a product, e.g. nutritional values

Question 4

Price: Expectation

Answer 4

The willingness to pay is driven by more than just a comparison of perceived value vs price, but what customers think the beer should cost.

Question 5

Common Pricing Objectives

Answer 5

Survival: price is just low enough to survive

Maximise Profit: price to maximise profit made by the establishment, relatively short-term strategy

Maximise Market-Share: creates positive image for the brand and is likely to result in repeat customers, long-term strategy

Question 6

Surplus

Answer 6

Three different kinds:

1. Unrealised surplus: how much the product is actually worth minus how the consumers perceive it
2. Consumer surplus: difference between the price and the perceived value of the product
3. Producer surplus: difference between the cost and the price of a product

How to increase producer surplus: reduce variable costs, increase the price and cut into consumer surplus, increase the perceived value and increase the price, cutting into unrealised surplus

Question 7

Price Discrimination

Answer 7

Selling a product at a multitude of prices that do not reflect a difference in costs.

1st Degree: seller charges each buyer their maximum willingness to pay price

2nd Degree: seller charges less to buyers who buy in bulk

3rd Degree: seller charges different amounts to different classes of buyers

Question 8

Loss