Seven P's

Question 1

Provide examples of extension strategies

Answer 1

• Improve/change advertising
• Start sales promotions
• Update products
• change the packaging/rebranding
• Hold special event
• joint venture with another company
• change the price
• change target market
• celebrity endorsement

Question 2

Describe the advantages of having a wide product portfolio

Answer 2

Can target a variety of market segments which increases sales revenue and there market share

Can avoid seasonal fluctuations

Spreads risk of failure as a product in growth/maturity stage could subsidise a product in introduction/decline

Increases brand awareness making it easier to introduce new products

Question 3

Describe the disadvantages of a Wide Product portfolio

Answer 3

Costs of promoting

If one product receives a poor reputation or image this may impact the sales of other products

Maintaining a varied product portfolio will involve a high cost of research and development

Cost of purchasing and maintaining different machinery for different types of products may be high

Staff may require training on the features of different products - time consuming and expensive

Question 4

Describe psychological pricing

Answer 4

Setting the price just below a whole number to make the customer think that the product is cheaper

Question 5

Describe skimming pricing

Answer 5

A high price is set when the product is first introduced to the market

When the product is established and competition starts the price is lowered

Question 6

Describe penetration pricing

Answer 6

Used to introduce a new product into an already established market - the price is set really low in order to gain a foothold in the market

Once customer loyalty is established price goes up

Question 7

Describe promotional pricing

Answer 7

Setting the price lower for a set amount of time

Question 8

Describe destroyer pricing

Answer 8

This is used by firms already established in the market

Price is set extremely (artificially) low to get rid of competition

Question 9

Describe loss leaders

Answer 9

The price charged is lower than the cost of making the product

Question 10

Describe price Discrimination

Answer 10

Charging different prices for different market segments for the same products

Eg. Cinema - adult, child, OAP prices

Question 11

State several methods of market research

Answer 11

Survey 
Personal interviews 
Telephone interview 
Online survey 
Test marketing 
Focus groups