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AS Business flashcards > The marketing mix 3.3 > Flashcards

The marketing mix 3.3 Flashcards

1
Q

Define the term “Marketing mix”

A

The four key decisions that must be taken in the effective marketing of a product.

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2
Q

What are the 4P’s?

A
  • Price
  • Product
  • Place
  • Promotion
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3
Q

Define the term “Customer relationship management (CRM)”

A

Using marketing activities to establish successful customer relationships so that existing customer loyalty can be maintained.

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4
Q

What are the 4C’s?

A
  • Customer solution : What the firm needs to provide to meet the customer’s needs and wants.
  • Cost to customer : The total cost of the product including extended guarantees, delivery charges and financing costs.
  • Communication with customer : Providing up-to-date and easily accessible two-way communication with customers to both promote the product and gain back important consumer market research information
  • Convenience to customer : Providing easily accessible pre-sales information and demonstrations and convenient locations for buying the product.
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5
Q

Define the term “Brand”

A

An identifying symbol, name, image or trademark that distinguishes a product from its competitors.

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6
Q

Define the term “Intangible attributes of a product”

A

Subjective opinions of customers about a product that cannot be measured or compared easily.

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7
Q

Define the term “Tangible attributes of a product”

A

Subjective opinions of customers about a product that cannot be measured or compared easily.

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8
Q

Define the term “Product”

A

The end result of the production process sold on the market to satisfy a customer need.

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9
Q

Define the term “Product positioning”

A

The consumer perception of a product or service as compared to its competitors.

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10
Q

Define the term “Product portfolio analysis”

A

Analyzing the range of existing products of a business to help allocate resources effectively between them.

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11
Q

Define the term “Product life cycle”

A

The pattern of sales recorded by a product from launch to withdrawal from the market and is one of the main forms of product portfolio analysis.

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12
Q

What are the 4 stages of a product’s life cycle?

A
  1. Introduction : This is when the product has just been launched after development and testing.
  2. Growth : If the product is effectively promoted and well received by the market, then the sales should grow significantly.
  3. Maturity : At this stage, sales fail to grow, but they do not decline significantly either.
  4. Decline : During this phase, sales will decline steadily. Either no extension strategy has been tried or it has not worked, or the product is so obsolete that the only option is replacement.
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13
Q

Define the term “Consumer durable”

A

Manufactured product that can be reused and is expected to have a reasonably long life, such as a car or washing machine.

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14
Q

Define the term “Extension strategies”

A

These are marketing plans to extend the maturity stage of the product before a brand new one is needed.

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15
Q

What are the 4P’s for a product in the introduction stage of the product life cycle?

A

Price : May be high or low compared to competitors (Price skimming or price penetration)

Promotion : High levels of INFORMATIVE ADVERTISING to make consumers aware of the product’s arrival on the market.

Place : Restricted outlets - possibly high-class outlets if a skimming strategy is adopted.

Product : Basic model

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16
Q

What are the 4P’s for a product in the growth stage of the product life cycle?

A

Price : If successful, an initial penetration pricing strategy could now lead to rising prices.

Promotion : Consumers need to be convinced to make repeat purchases.

Place : Growing numbers of outlets in areas indicated by strength of consumer demand.

Product : Planning of product improvements and developments to maintain consumer appeal.

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17
Q

What are the 4P’s for a product in the maturity stage of the product life cycle?

A

Price : Competitors likely to be entering market - there will be a need to keep prices at competitive levels. (COMPETITIVE PRICING)

Promotion : Brand imaging continues - growing needs to stress the positive differences with competitors’ products

Place : Highest geographical range of outlets possible developing new types of outlets where it is possible.

Product : New models, colors, accessories, etc. As part of extension strategies.

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18
Q

What are the 4P’s for a product in the decline stage of the product life cycle?

A

Price : Lower prices to sell of stock - or if the product has a small “cult” following prices could even rise.

Promotion : Advertising likely to be very limited - may just be used to inform of lower prices.

Place : Eliminate unprofitable outlets for the product.

Product : Prepare to replace with other products - slowly withdraw from certain markets.

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19
Q

Define the term “Price elasticity of demand”

A

Measures the responsiveness of demand following a change in price.

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20
Q

Define the term “Mark up pricing”

A

Adding a fixed mark-up for profit to the unit price of a product.

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21
Q

Define the term “Target pricing”

A

Setting a price that will give a required rate of return at certain level of output/sales.

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22
Q

List the 4 methods of pricing.

A
  1. Full-cost pricing
  2. Contribution pricing
  3. Competitor
  4. Price discrimination
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23
Q

List 2 Advantages of Full-cost pricing.

A
  1. Price set will cover all costs of production
  2. Easy to calculate for single-product firms where there is no doubt about fixed cost allocation
  3. Suitable for firms that are ‘price-makers’ due to market dominance.
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24
Q

List 2 Disadvantages of Full-cost pricing.

A

Answers may include :

  • Inaccurate for businesses with several products where there is doubt over the allocation of fixed costs.
  • Does not take market/competitive conditions into account.
  • Tends to be inflexible
  • If sales fall, average costs often rise - this could lead to the price being raised using this method
25
Q

List 2 Advantages of Contribution pricing.

A
  • All variable costs will be covered by the price-and contribution made to fixed costs.
  • Suitable for firms producing several products - fixed costs do not have to be allocated.
  • Flexible - price can be adapted to suit market conditions or to accept special orders.
26
Q

List 2 Disadvantages of Contribution pricing.

A
  1. Fixed costs may not be covered
  2. If prices vary too much - due to the flexibility advantage - then regular customers might be annoyed.
27
Q

List 2 Advantages of Competitor pricing.

A
  1. Almost essential for firms with little market power - price takers.
  2. Flexible to market and competitive conditions
28
Q

List 2 Disadvantages of Competitor pricing.

A
  1. Price set may not cover all of the costs of production
  2. May have to vary price frequently due to changing market and competitive conditions.
29
Q

List 1 Advantage of Price discrimination.

A

Uses price elasticity knowledge to charge different prices in order to increase total revenue.

30
Q

List 2 Disadvantages of Price discrimination.

A

Answers may include :

  • Administrative costs of having different pricing levels.
  • Customers may switch to lower-priced market.
  • Consumers paying higher prices may object and look for alternatives.
31
Q

Define the term “Full-cost pricing”

A

Setting a price by calculating a unit cost for the product (allocated fixed and variable costs) and then adding a fixed profit margin.

32
Q

Define the term “Contribution-cost pricing”

A

Setting prices based on the variable costs of making a product in order to make a contribution towards fixed cots and profit.

33
Q

Define the term “Competition-based pricing”

A

A firm will base its price upon the price set by its competitors.

34
Q

Define the term “Dynamic pricing”

A

Offering goods at a price that changes according to the level of demand and the customer’s ability to pay.

35
Q

Define the term “Penetration pricing”

A

Setting a relatively low price often supported by strong promotion in order to achieve high volume of sales.

36
Q

Define the term “Market skimming”

A

Setting a high price for a new product when a firm has a unique or highly differentiated product with low price elasticity of demand.

37
Q

Define the term “Promotion”

A

The use of advertising, sales promotion, personal selling, direct mail, trade fairs, sponsorships, and public] relations to inform consumers and persuade them to buy.

38
Q

Define the term “Promotion mix”

A

The combination of promotional techniques that a firm uses to sell a product.

39
Q

Define the term “Above the line promotion”

A

A form of promotion that is undertaken by a business by paying for communication with consumers.

40
Q

Define the term “Advertising”

A

Paid-for communication with consumers to inform and persuade.

41
Q

Define the term “Below the line promotion”

A

Promotion that is not a directly paid-for means of communication, but based on short-term incentives to purchase.

42
Q

Define the term “Sales promotion”

A

Incentives such as a special offers or special deals directed at consumers or retailers to achieve short-term sales increases and repeat purchases by consumers.

43
Q

Define the term “Personal selling”

A

A member of the sales staff communicates with one consumer with the aim of selling the product and establishing a long-term relationship between company and consumer.

44
Q

Define the term “Sponsorships”

A

Payment by a company to the organizers of an event or team/individuals so that the company name becomes associated with the event/team/individual.

45
Q

Define the term “Public relations”

A

The deliberate use of free publicity provided by newspapers, TV and other media to communicate with and achieve understanding by the public.

46
Q

Define the term “Branding”

A

The strategy of differentiating products from those of competitors by creating an identifiable image and clear expectations about a product.

47
Q

Define the term “Marketing budget” OR “Promotional budget”

A

The financial amount made available by a business for spending on marketing/promotion during a certain time period.

48
Q

What promotional strategies will be used during the introduction stage of the product life cycle?

A
  • Informative advertising to make consumers aware of the product’s existence, price and main features.
  • Sales promotion offering free samples or trial periods to encourage consumers to test the product - incentives may need to be offered to the trade to stock of the product.
49
Q

What promotional strategies will be used during the growth stage of the product life cycle?

A
  • To continue some informative advertising, but the focus may now move to brand building and persuasive advertising.
  • Sales promotion to encourage repeat purchase.
  • Attempt to develop brand loyalty.
50
Q

What promotional strategies will be used during the maturity stage of the product life cycle?

A
  • Advertising to emphasizes the differences between this product and competitors.
  • Sales promotion incentives to encourage brand switching and continued loyalty.
51
Q

What promotional strategies will be used during the decline stage of the product life cycle?

A
  • Minimal advertising, apart from informing consumers of special offers.
  • Sales promotion - there may be a little additional support for the product if the intention is to withdraw it
52
Q

Define the term “Channel of distribution”

A

This refers to the chain of intermediaries a product passes through from producer to final consumer.

53
Q

Define the term “Internet marketing” OR “Online marketing”

A

Refers to advertising and marketing activities that use the internet, email, and mobile communications to encourage direct sales via electronic commence.

54
Q

Define the term “E-commerce”

A

The buying and selling of goods and services by businesses and consumers through an electronic medium

55
Q

Define the term “Viral marketing”

A

The use of social media sites or text messages to increase brand awareness or sell products.

56
Q

List 3 benefits of internet marketing and e-commerce.

A

Answers may include :

  • It is relatively inexpensive when compared to the ratio of cost and the number of potential consumers reached.
  • Companies can reach a worldwide audience for a small proportion of traditional promotion budgets
  • Consumers interact with the websites and make purchases and leave important data about themselves
  • The internet is convenient for consumers to use - if they have access to a computer or any other device that is compatible.
  • Accurate records can be kept on the number of clicks or visitors and the success rate of different web promotions can be quickly measured.
  • Computer ownership and usage are increasing in all countries of the world.
  • Selling products on the internet involves lower fixed costs than traditional retail stores.
  • Dynamic pricing - charging different prices to different consumers - is easier.
57
Q

List 3 Limitations of internet marketing and e-commerce.

A

Answers may include :

  • Some countries have low-speed internet connections and in poorer countries, computer ownership is not widespread.
  • Consumers cannot touch, smell, feel, or try on tangible goods before buying - this may limit their willingness to buy certain products online.
  • Product return may increase if consumers are dissatisfied with their purchases once they have been received.
  • The website must be kept up to date and user, friendly good websites can be expensive.
  • Worries about internet security may reduce potential growth.
58
Q

Define the term “Integrated marketing mix”

A

The key marketing decisions complement each other and work together to give consumers a consistent message about the product.

AS Business flashcards (11 decks)

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