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-Technology may be outdated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When are products usually withdrawn from the market?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
Limitations of premium pricing
Can only be applied to a target market
Benefits of dynamic pricing
-Higher profit and sales
-Adjusts to the competition
-Flexibility
-Better inventory management
Limitations of dynamic pricing
-Customer dissatisfaction(leading to a loss of sales, since customers paying more may feel cheated)
-Not applicable to all markets
Benefits of competitive pricing
Price aligned with rivals
Limitations of competitive pricing
Pricing alone is not low enough to attract customers(other methods of differentiation may be needed)
Benefits of contribution pricing
-Allow flexibility in the pricing of individual products
-Demand factors can be taken into consideration
Limitations of contribution pricing
-Difficult to classify costs as direct or indirect
What value must the price elasticity of demand(PED) have for the situation to be considered as price elastic demand?
PED > 1
What value must the price elasticity of demand(PED) have for the situation to be considered as price inelastic demand?
0 < PED < 1
What value must the price elasticity of demand(PED) have for the situation to be considered as unitary elastic demand?
PED = 1
PED Classifications
-Price elastic demand
-Price inelastic demand
-Unitary elastic demand
Factors that determine the PED for a product
-Number and proximity of substitute goods available
-Time period
Types of promotion
-Above the line promotion(ATL)
-Below the line promotion(BTL)
-Through the line promotion(TTL)
Methods of above the line(ATL) promotion
-Television advertising
-Newspaper advertising
-Magazine advertising
-Radio advertising
-Outdoor advertising(e.g. billboards, bus sides)
Methods of below the line(BTL) promotion
-Direct marketing
-Sales promotion
-Loyalty cards/Loyalty programs
-After-sales service
-Public relations(e.g. supporting charitable causes)
-Merchandising
-Exhibitions and trade fairs
Examples of sales promotion
-“Buy one get one free”
-Free samples
-Point-of-sale display
-Half-price offers
-20% off
Methods of through the line(TTL) promotion
-DIgital marketing
-360-degree marketing
Benefits of through the line(TTL) promotion
-It allows businesses to reacch as broad or defined an audience as they want
-It allows businesses to customise the message according to the profile of their target market
-It makes it possible to incrrease brand exposure, and, at the same time, generate sales
Ways that businesses use social media to promote their products
-Paid advertisements
-Content generated by users(e.g. comments)
-Direct messages
-Influencers
Advantages of using social media for promotion
-Differentiation at low cost
-More knowledge about customers
-Improvement of customer service
-Easy way to measure the performance of businesses
Disadvantages of using social media for promotion
-Social media must be part of a broad promotional strategy
-Social media production has marketing costs(e.g. hiring social media specialists)
Types of intermediaries
-Wholesalers
-Retailers
-Agents/brokers
Features of wholesalers
-Purchase large quantities of stock from producers and store it
-Sell stock to retailers(or sometimes, customers9 afterwards
-Act as a central delivery and collection point
-Reduces the amount of deliveries needed from producers to retailers
-Break-bulk
Examples of retailers
-Convenience stores
-Supermarkets
-Online retailers
-Department stores
-Vending machines
-High street shops and chain stores
Difference between an agent and a retailer
The agent does not own the product that it is selling. Instead, the agent promotes the product and charges a commission
Examples of agents
-Price comparison websites
-Travel agents
-Estate agents
-eBay
-International distributors
Factors that determine the exact combination of intermediariees used
-Product type
-The size of the distributor
-Cost
-Control
-Legal factors
Types of distribution
-Direct distribution
-Indirect distribution
Benefits of direct distribution
-Eliminates intermediary expenses
-Increases direct contact with customers(gives the producer a chance to carry out market research)
-Provides control(i.e. the producer can take decisions over the marketing mix of the product)
Limitations of direct distribution
-Reduces distribution options
-Increases internal workload
-Raises costs
Benefits of the producer → retailer → consumer distribution channel
Easy distribution of the product(i.e. the producer can deliver its products to more places)
Limitations of the producer → retailer → consumer distribution channel
-Intermediary keeps some profit
-Loss of control over the products(i.e. producers lose control over the marketing mix of the products)
Benefits of the producer → wholesaler → retailer → consumer distribution channel
-Reduces advertising and storage costs(due to the wholesaler)
-Gives producers the possibility of entering new markets(which would be harder to access otherwise)
Limitations of the producer → wholesaler → retailer → consumer distribution channel
-Another intermediary keeps some profit
-Loss of control
Benefits of using agents/brokers
-Opportunities for new markets(since agents have specific knowledge of the legal aspects of each country, which is needed to introduce the new products successfully)
-Potentially increased sales
Limitations of using agents/brokers
-A commission must be paid(so reduced profits for the producer)
-Loss of control
Elements of process(as a part of the marketing mix)
-Placing and paying for orders
-Delivery systems
-Customer feedback
-After-sales service
Factors which affect the marketing mix of a particular product
-Whether or not a business is providig a good or a service
-The type of business organisation and the resources available for creating and implementing a specific marketing mix
-The characteristics of the market in which the business operates and the possibilities for it to grow and increase revenue
-The characteristics of the target market
-The legal and cultural aspects of the country in which the business is located
How the product life cycle can be linked to the Boston Consulting Group(BCG) matrix
-Problem children(question marks) → introduction stage
-Stars → growth stage
-Cash cows → maturity stage
-Dogs → decline stage
The links between the BCG matrix categories and the product life cycle are not absolute(T/F)
True
In which stage of the product life cycle do businesses tend to put their highest investments into a product?
Research and Development(R&D) stage
