The Marketing Mix Flashcards
What are the 7p’s
Product Promotion Place Price People Process Physical Environment
What is people in 7p’s
Customer - facing staff (customer service assistants and employees involved in a transaction when a customer purchases a product or service)
What is process in 7p’s
Includes the systems in place to support the transaction which the customer must deal with to complete the transaction successfully
What is physical environment / evidence in 7p’s
Includes physical remises, the design, and layout of premises and the condition and placement of products within a store
Factors influencing the marketing mix and WHY
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’
The product life cycle stages
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)
Boston Matrix - Low market share and Low rate of market growth
Dog
Boston Matrix - High Market share and Low rate of market growth
Cash Cow
Boston Matrix - Low Market share and High rate of market growth
Question Marks / Problem Child
Boston Matrix - High Market share and high rate of market growth
Stars
Factors affecting Price
Costs
Product life cycle
Nature of product
Degree of competition
Why is cost a factor of affecting price
- Businesses aim to make profit
- Price & costs determine the profit made
- Cannot afford to set a price lower than their costs long-term
Why is Product life cycle a factor of affecting price
- Determines high/low price
- New product = higher price to take advantage of exclusivity
Why is nature of product a factor of affecting price
- luxury product or not (how much)
- if it’s hard to differentiate from competitors affects the price
Why is degree of competition a factor of affecting price
- more competition = more variety of products
- compete to attract using lower price
Price skimming
High initial price and lowers gradually over time (before facing competition)
Why is price skimming used and why
- 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
Disadvantage of price skimming
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.
What is price penetration
Offers a low initial price
Advantages of price penetration
- Increase Market Share = Attracts customers from established competitors
- Long -term increase in profitability
Disadvantage of price penetration
Lower average profits that would be earned with a higher price
What is Loss Leaders
Products/Services sold by a business at a price where they are making a loss ( Average revenue < average costs )
What does the loss leader help to achieve
Attract new customers or sell to existing customers, in the hope that they make extra purchases.
Cost-plus pricing
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.
Competitive pricing
Prices for products / services are based on what competitors in the same market are charging. Used when products are similar.
What are promotional methods
Methods that businesses use to inform consumer about their products & services in order to persuade customer to buy them
Examples of promotional methods
Public relations Sponsorship Advertising Social media Sales promotion Product placement
Advertising promotional methods
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.
Types of advertising platform
Newspapers Magazines Television Internet Billboards Social Media Make sure the platform used reaches the right target market.
What is Public relations
Business’ reputation - maintaining a good public image.
The aim of public relations
- Managing the spread of information about the business
- This information is as positive as possible and reaches the largest possible audience
Examples of Public Relations
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.
What is Sales Promotion
The business tries to boost sales using a temporary promotion
Examples of sales promotions
Discount coupons Free gifts Point of sale displays Samples Competitions Value for money offers (buy one get one free)
What is the promotional mix
The combinations of different promotional methods that a business uses.
Factors influencing the promotional mix and WHY
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
Why do businesses use promotions
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).
What are distribution channels (Place) and examples
How the product gets to the consumer
1) manufacturer - consumer
2) manufacturer - retailer - consumer
3) manufacturer- wholesaler - retailer - consumer
Advantage of using a wholesaler
Have a large network if buyers - let’s a business reach a lot of customers quickly
Disadvantages of using a wholesaler
- 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)
Consequences of Manufacturer- retailers - consumers
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
Consequences of Direct to Consumer
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.
