Paper 1- Theme 1.3- Marketing mix and strategy Flashcards
Define marketing mix
combination of factors (4 p’s) to help the business take into account the customers needs when selling a product
Define design mix
what factors does it consider
way in which aspects of a products designed are considered
function, aesthetic, economic manufacture (capability to be manufactured at a cost below selling price)
How does the design mix change to reflect new social trends
-design should be sustainable so that the long term resource supplies are not affected
- designed for waste minimisation
- keeps costs down and can be used as marketing strategy
- designed to be recycled as waste materials
- ethically sourced - sustainably sourcing resources, the chain of supply needs to be considered and not damaging people’s livelihoods or condition of workers
Factors of the design mix
Function
Economic manufacture
Aesthetics
Define promotion
The use of methods to communicate with existing and potential customers to buy your product
Types of promotion
- advertising- tv, radio
- personal selling- sales people, telemarektong
- publicity- speeches, PR stunts
- sales promotion- vouchers, deals, BOGOF
- sponsorship- business sponsor and Individual or event
Define distribution
Distribution is the process of getting products to the right place for consumers at the right time
Describe the direct distribution channel
Pros and cons
manufacturer —> consumer (e.g. online Amazon store)
PROS:
- full control of supply and marketing
- max revenue as no intermediaries
CONS
- may not be available in retail stores so lose potential sales
Describe the modern distribution channel
Pros and cons
manufacturer —> retailer —> consumer
PROS:
- use established infrastructure to access all over the country
- less cost and more control as no wholesaler
CONS
- hard to maintain relationships with retailers
- large retailers are tough with negotiations on price, credit and demanding that you pay for special offers
- brand image may be damaged in retail stores
Describe the traditional distribution channel
Pros and cons
manufacturer —> wholesaler —> retailer —> consumer
PROS:
- gain distribution to small independent shops to
- producer can focus on production, not worry about retailers
- helps small producers gain access to retail stores
CONS
- wholesaler markets product
- lose out on profit due to wholesalers benefitting from EoS and share of profit
Describe the use of an agent distribution channel
Pros and cons
manufacturer —> use of an agent —> wholesaler —> retailer —> consumer
PROS:
-makes selling in foreign country easier due to knowledge of the market (tax, regulations and language)
CONS:
- supply chain longer (more separate parties slows down distribution)
- takes commission
Define an agent
- someone who facilitates the sale between a business and a wholesaler (usually in foreign markets)
How was distribution changed to reflect social trends
• increase online distribution
- reach wider geographical market
- can be accessed without need for physical copy
• changing from product to service
(e.g. music going from vinyls to streaming services)
Define the product life cycle and state it’s stages
-model showing the lifespan of a product’s sales from launch up until its removal from market
research and development introduction growth maturity decline extension strategy
define an extension strategy
•ways that a business can modify its product or marketing strategy to prevent a decline in medium-long term sales
2 types of extension strategy
Product
- name change
- new flavour/differentiation
Promotion
- new packaging
- new use for product
- new target market
define Boston Matrix and then describe its set up
-tool used to analyse a product’s market share and market growth
cash cow (high share, low growth) rising star (high share, high growth) problem child (low share, high growth) dog (low share, low growth)
positives of Boston Matrix model
- identify where each product in portfolio is positioned in the market
- assess when is right time to launch and recall products to max. profit
negatives of Boston Matrix
-only uses market share and growth to analyse the portfolio
—>costs are not considered (high share doesn’t mean high profits)
-current market share tells little about future share
-possible short term impacts on market having low growth not considered
define marketing
management process of identifying, understanding and meeting customer needs and wants: providing products or services to meet those and creating profitability
- through promotion and selling
define marketing strategy
• a plan of medium - long term actions to achieve the company’s marketing goals
describe the marketing strategy appropriate for mass markets
- heavy promotion (mainstream media)
- product should be differentiated but not niche
- lower costs as mass produced (EoS)
describe the marketing strategy appropriate for niche markets
- direct advertisement at target market segment (e.g. Ferrari advertise in sports car mag)
- develop relationship with consumer so they build brand loyalty
- focus the marketing on reinforcing the distinctive characteristics of each product
describe the marketing strategy appropriate for business to business markets
•when a businesses main customers is another business or org.
- business don’t buy with emotion they just want most reliable service for lowest price
- advertising must be informative and clear
- focus on understanding and meeting the businesses needs (most reliable but cheapest service)
describe the marketing strategy appropriate for business to consumer markets
- emotional connection built with customer by advertising emotionally
- must maintain good relations with customers (build brand loyalty)
- high need to research customers and adjust every aspect of product or service to fit their needs (as their loyalty builds is essential)
define customer loyalty
a preference for a product or brand based on previous purchases and emotional connection
(leads to repeat purchases)
why is customer loyalty useful
•selling to existing customer is cheaper (less promotional spending and market research)
- costs 5x more to attract a new customer than keep an existing one
•increase market share as choosing you over competitors
How business develops customers loyalty
- emotional advertising
- loyalty cards and saver schemes
- positive previous experiences of product or brand (focuses on needs of customer)
define pricing strategy
approach which a business decides on the price of its products or services
- when entering a new, or in a existing market
name the different pricing strategies
skimming - enter market with a high price, before competitors enter market or if product is superior
predatory - illegal tactic used by dominant firms where they deliberately sett prices very low to drive competiton out of market
penetration - relatively low price compared to competition to attract new customers
–> make them switch product, to achieve high market share
psychological - make consumers think price is more appealing than it truly is by rounding down
competitive - price the same or a little less than competing products
–> following with the demand and supply forces (price taker)
premium - higher than market average, due to added value
cost plus - adding a % on top of total costs
cost leadership - operate at a loss to maximise market share
Factors that determine the best possible pricing strategy
ones I wouldn’t remember
- strength of brand
- price elasticity of demand
- stage in product life cycle
- is it selling online? easy comparison checks
How has pricing changed to reflect social trends
•online sales - E, M, S commerce
-prices change frequently in response to change in demand, due to technology that tracks demand and levels of interest
•price comparison websites
-businesses have to be more competitive as customers can compare prices easily
pros and cons of cost plus pricing
pros
- easy to calculate and agile with changing costs
- always lead to profit
cons
- doesn’t consider demand change (external factors)
- ignores effects of their price elasticity of demand
- -> product orientated rather than market orientated
pros and cons of price skimming
