The Marketing Mix

Question 1

What are the 7p’s

Answer 1

Product
Promotion
Place
Price
People
Process
Physical Environment

Question 2

What is people in 7p’s

Answer 2

Customer - facing staff (customer service assistants and employees involved in a transaction when a customer purchases a product or service)

Question 3

What is process in 7p’s

Answer 3

Includes the systems in place to support the transaction which the customer must deal with to complete the transaction successfully

Question 4

What is physical environment / evidence in 7p’s

Answer 4

Includes physical remises, the design, and layout of premises and the condition and placement of products within a store

Question 5

Factors influencing the marketing mix and WHY

Answer 5

1) Availability - (convenience items - groceries) needs to be accessed quickly by customer so business may focus on marketing mix factors related to speed and availability
2) Product Info - (computer tablets & clothes) Longer period to purchase so focus on the ‘people’ factor
3) Luxury products - (cars & jewellery) sophisticated stores sp focus on ‘processes & physical evidence’

Question 6

The product life cycle stages

Answer 6

1) Research and Development
2) Introduction (launch)
3) Growth (discovering product)
4) Maturity (sales slowed down)
5) Saturation (peak sales - remain steady)
6) Decline (chane in fashion / tastes)

Question 7

Boston Matrix - Low market share and Low rate of market growth

Answer 7

Dog

Question 8

Boston Matrix - High Market share and Low rate of market growth

Answer 8

Cash Cow

Question 9

Boston Matrix - Low Market share and High rate of market growth

Answer 9

Question Marks / Problem Child

Question 10

Boston Matrix - High Market share and high rate of market growth

Answer 10

Stars

Question 11

Factors affecting Price

Answer 11

Costs
Product life cycle
Nature of product
Degree of competition

Question 12

Why is cost a factor of affecting price

Answer 12

• Businesses aim to make profit
• Price & costs determine the profit made
• Cannot afford to set a price lower than their costs long-term

Question 13

Why is Product life cycle a factor of affecting price

Answer 13

• Determines high/low price

- New product = higher price to take advantage of exclusivity

Question 14

Why is nature of product a factor of affecting price

Answer 14

• luxury product or not (how much)

- if it’s hard to differentiate from competitors affects the price

Question 15

Why is degree of competition a factor of affecting price

Answer 15

• more competition = more variety of products

- compete to attract using lower price

Question 16

Price skimming

Answer 16

High initial price and lowers gradually over time (before facing competition)

Question 17

Why is price skimming used and why

Answer 17

• Maximise revenue = buying early means willingness to pay higher price
• Cover fixed costs (R&D) = recover costs of R&D, which can be expensive for technology products

Question 18

Disadvantage of price skimming

Answer 18

Slower unit sales growth - gives competitors to launch a competing product or service
- Businesses don’t maximise sales at the start so competitors can get more of a chance to enter the market.

Question 19

What is price penetration

Answer 19

Offers a low initial price

Question 20

Advantages of price penetration

Answer 20

• Increase Market Share = Attracts customers from established competitors
• Long -term increase in profitability

Question 21

Disadvantage of price penetration

Answer 21

Lower average profits that would be earned with a higher price

Question 22

What is Loss Leaders

Answer 22

Products/Services sold by a business at a price where they are making a loss ( Average revenue < average costs )

Question 23

What does the loss leader help to achieve

Answer 23

Attract new customers or sell to existing customers, in the hope that they make extra purchases.

Question 24

Cost-plus pricing

Answer 24

Charges the customer based on what it costs to produce the product or service. Work out exactly what it costs to produce it and then adds a “mark up” (extra amount) on top of this cost to make sure that the business makes a gross profit.

Question 25

Competitive pricing

Answer 25

Prices for products / services are based on what competitors in the same market are charging. Used when products are similar.

Question 26

What are promotional methods

Answer 26

Methods that businesses use to inform consumer about their products & services in order to persuade customer to buy them

Question 27

Examples of promotional methods

Answer 27

``` Public relations Sponsorship Advertising Social media Sales promotion Product placement ```

Question 28

Advertising promotional methods

Answer 28

Most obvious way. Sometimes called “above the line”, Involves a business paying to have their product or service promoted in a public space, to make consumer aware and to get them to make a purchase.

Question 29

Types of advertising platform

Answer 29

``` Newspapers Magazines Television Internet Billboards Social Media Make sure the platform used reaches the right target market. ```

Question 30

What is Public relations

Answer 30

Business’ reputation - maintaining a good public image.

Question 31

The aim of public relations

Answer 31

- Managing the spread of information about the business | - This information is as positive as possible and reaches the largest possible audience

Question 32

Examples of Public Relations

Answer 32

Newspaper editorials -people in the business manages business’ relationships with different newspapers, sending them article to publish about the business. They do not pay for this.

Question 33

What is Sales Promotion

Answer 33

The business tries to boost sales using a temporary promotion

Question 34

Examples of sales promotions

Answer 34

``` Discount coupons Free gifts Point of sale displays Samples Competitions Value for money offers (buy one get one free) ```

Question 35

What is the promotional mix

Answer 35

The combinations of different promotional methods that a business uses.

Question 36

Factors influencing the promotional mix and WHY

Answer 36

Finance available - more available money to spend on promotions. Some are more expensive (TV advertising). The nature of product / service - the type of the product. A technical product (laptop) may want to give consumer more info, whilst orange juice doesn’t need much info. Target Market - Different types of people use different platforms. Competitor actions - reach customers using same channel as rivals The nature of the market - As market matures, the rate of growth changes. Growing slow = advertising less important. Growing fast = battling for market share and willing to spend more on advertising

Question 37

Why do businesses use promotions

Answer 37

1) To persuade customers to buy the product = advertise benefits of using a product and to explain why you should buy it = bets product for them 2) Create / Increase Sales = constantly reminding existing customers about product / service and it’s benefits. Informing consumers that are not aware of it can create sales. (Likely to happen during the periods before short “sales windows”; Easter and Christmas. 3) Inform / Remind customers about the product = cannot sell if no one knows about it. Inform target market, at the right time, I’m the hope they will buy it. 4) Create or change the image of the product = It has large impacts on how customers see a product, a business can give the product fun, luxury or innovative image. (Perception of the products).

Question 38

What are distribution channels (Place) and examples

Answer 38

How the product gets to the consumer 1) manufacturer - consumer 2) manufacturer - retailer - consumer 3) manufacturer- wholesaler - retailer - consumer

Question 39

Advantage of using a wholesaler

Answer 39

Have a large network if buyers - let’s a business reach a lot of customers quickly

Question 40

Disadvantages of using a wholesaler

Answer 40

- The business will not have much personal interaction with customers, leads to worse customer service - Wholesalers and retailers take a cut of the profit, customers are likely to pay higher prices. Makes the business less competitive on price. (Profit Sharing)

Question 41

Consequences of Manufacturer- retailers - consumers

Answer 41

1) Higher margins or lower price - bypassing wholesalers makes it likely that customers will pay lower prices because the business is “cutting out the middle man” 2) Hard to contact retailers - Hard, especially start-ups, to contact retailers to stock their products. Harder to reach as many people and takes longer to sell the products 3) Control over shops - doing directly means producers can have complete control over which shops customers buy their products from 4) Higher logistics costs - selling to retailers may increase a business’ delivery and logistics costs if they have ti deliver all the pro to a retailer themselves

Question 42

Consequences of Direct to Consumer

Answer 42

1) Cheapest channel 2) Nobody else takes a cut - Let’s a business charge lowest price possible to the consumer because there are no intermediaries who take a cut of profit 3) Hard to reach customers - Hard to reach as quickly because the business will have to invest time and money into setting up new stores or their own website 3) E-commerce - Easier to reach more, no physical stores.