Theme 1 Flashcards
Advantages/ Disadvantages of segmenting a market
Allows to specialise, increase productivity
Can target marketing more effectively
May ignore some segments (profit max not sales max)
Not good for dynamic market, segments always change
Advantages/ Disadvantages of market mapping
Allows you to spot a gap in the market
Makes you consider you rivals
Only considers two variables
Even if there is a gap in the market, there may not be demand for it. Needs to be done with market research etc
Advantages/ Disadvantages of differentiating your product
Can charge a premium price, from the added value
Acts as a barrier to entry
Makes it more unique -> branding
Costly to R&D / Market
Increase production times, bad for a DM
Advantages/ Disadvantages of product orientating
Business produce what they want
Avoid expensive market research costs
USP-> competitive advantage-> adds value -> charge premium price
First mover advantage
No garuntee there will be demand for the product
Riskier approach
Advantages/ Disadvantages of market orientation
Easier to find a guaranteed market
Less risk
Research is expensive and takes time, bad in DM
Advantages/ Disadvantages of primary research
Can cater to research to your business
Garunteed method to understand the market
Up to date info, good for a DM
Time consuming/ costly
Advantages/ Disadvantages of secondary research
Less time consuming/ cheaper
-> good for small businesses, helps with liquidity
Research carried put many be better than what. small business could do
Not specific to your business
May be out of date
What are the 4 elements of the marketing mix
Product
Place
Price
Promotion
What are the 3 elements to the design mix
Function
Aesthetic
Cost to create
What is branding
It is a way of giving your product a USP
Why is it useful to brand
Gives a USP -> justifies a higher price -> added value -> increase PED -> acts as a barrier to entry -> increases consumer loyalty -> repeat purchase
What is cost plus pricing
Advantages/ Disadvantages
A fixed markup, on top of production costs
Banker who take commission, builders
+ Assuming you can predict sales, it allows you to forecast cash flows
+ Can plan investment
- Lacks flexibility, ignores the actions or rivals and the economy
What is price skimming
Advantages/ Disadvantages
When you release the product at a high price and then as demand starts falling you drop the price, and keep repeating. To exploit the early adopters
+ Maximises revenue from each consumer
- Can damage brand image
- Could alienate consumer
- May cause a lack of demand when the product is released
What is penetration pricing
Advantages/ Disadvantages
Set a low price to enter the market to compete with established firms
+ helps overcome barriers to entry
- > brand loyalty etc
- Can strain cash flow / working capital
What is predatory pricing
Advantages/ Disadvantages
When you drop your pricing below other firms average costs, to push them out of the market. Ilegal
+ Reduces competitiveness -> monopoly power
+ Extension strategy on product lifecycle
- Anti competitive -> illegal
- LR, less choice and higher prices
