The Seven Ps of the Marketing Mix Details Flashcards
Stages of the product life cycle
-Research and development(R&D)
-Introduction
-Growth
-Maturity
-Decline
The product life cycle is based on…
sales revenue(NOT TIME. there isn’t a fixed period of time for any of the stages. Whether you’re in one stage or the other depends on sales revenue)
Features of the Research and Development(R&D) stage
-Covers all activities that take place before a product is released into the market
-Length of stage depends on product and industry(e.g. clothing brands have shorter R&D stages, while pharmaceutical drugs have higher ones)
-Business focuses on market research, product development and preparation of production
Features of the introduction stage
-Initial sales are likely to be low but growing
-Business must focus on promotion(to make customers aware of the product), ideally using its unique selling point(USP)
-Business must carefully consider pricing strategies and the distribution channel
Features of the growth stage
Incrreasing rate of product sales growth
-Business may find new target markets(to continue growth)
-Business may adapt the marketing mix(e.g. expanding distribution channels) to meet demand
Features of the maturity stage
-Sales growing at a slower rate(since market may be crowded with competition)
-High profits(due to high sales revenues and lower promotional costs)
-Increased focus on building customer loyalty
Features of the decline stage
-Decreasing sales/Loss of market share
-Business may reduce prices(to target cost-conscious customers)
Reasons why products may enter the decline stage
-The product may have lost its unique selling point(USP) due to competition
-Technology may be outdated
-Product may no longer satisfy customers
Products may still be profitable during the decline stage(T/F)
True(although sales are falling, costs may also be low too)
When are products usually withdrawn from the market?
When they begin to make a loss(i.e. revenues lower than costs of production)
Examples of extension strategies
-Finding a target market
-Redesign of packaging
-Updating the products
-Price reduction
-New promotional strategies
Important aspects of branding
-Brand awareness
-Brand development
-Brand loyalty
-Brand value
Rules that packaging must follow to be effective
-Protect the product
-Communicate information(about the product)
-Promote the product and communicate its USP
-Make the product eady to use
Elements of the marketing mix that packaging connects to
Product and promotion
Types of pricing methods
-Cost-plus(markup) pricing
-Penetration pricing
-Loss leader pricing
-Predatory pricing
-Premium pricing
-Dynamic pricing
-Competitive pricing
-Contribution pricing
Penetration pricing works best for…
goods that will be purchased repeatedly(i.e. shampoos, magazines, cereals and other ‘fast moving consumer goods’)
Typical conditions for loss leader pricing
-The business must be able to afford to set prices on a product that will result in a loss
-The business must have a variety of products
Circumstances under which dynamic pricing can be applied:
-The groups of consumers(and their respective levles of wealth)
-Time(e.g. lunch time discounts, higher prices at night, etc.)
-Competitors’ prices(in different areas)
-Demand
Benefits of cost-plus(markup) pricing
Simple and easy to ensure all costs are covered
Limitations of cost-plus(markup) pricing
Inward facing(takes no account of the market)
Benefits of penetration pricing
Market share and customer loyalty may be established quickly
Limitations of penetration pricing
-Low profit margins are likely during the initial low price
-Customers may not accept the price rise
Benefits of loss leader pricing
Can lead to a large boost in sales revenue
Limitations of loss leader pricing
-Is only possible for multi-product retailers
-Business may just experience losses(if strategy doesn’t work)
Benefits of predatory pricing
-Competition is eliminated
-Higher prices and higher market share can lead to increased profits(once competition leaves the market)
Limitations of predatory pricing
-Only possible for very large businesses
-Impossible to maintain over a longer period of time
-Illegal in many countries
Benefits of premium pricing
-Potentially higher profit margins
-Can lead to improved public perceptions of a company