Theme 1.3 Flashcards
What are three elements of the design mix?
Function
Aesthetics
cost
What are three key benefits of branding?
Adds value
Able to charge higher price
builds customer loyalty
What is brand extension?
When a business uses brand name on a new product that has some of that brands characteristics
What is brand stretching?
Where a brand is used for a diverse range of products, not necessarily connected
What are three key factors influencing Promotional decisions & strategy?
- Stage of product life cycle
- Competition
- Target market
What are three evaluation points on advertising?++-
+Wide coverage
+repetition means message can be communicated effectively
-Often expensive
What are three evaluation points on Personal selling?+- -
+High interactivity with customer
-High cost
-Limited amount of customers to promote to
What are three evaluation points on sales promotion?++-
+encourages customers to trial a product or switch brands
+Effective at achieving a quick boost in sales
-sales effect may only be short-term
What are three evaluation points of Direct marketing?++-
+Can personalise the marketing message
+relatively easy to measure response and success
-Databases expensive to maintain and keep accurate
What is viral marketing?
Uses social media and online platforms to try to produce increases in brand awareness or to achieve other marketing objectives
What are two evaluation points of cost influencing pricing? +-
+Easy to calculate
-Ignores PED
What is price skimming?
launching a brand new product at a high price while the product is still unique
What are three evaluation point on price skimming? ++-
+High prices can help create a desirable image for the product
+High prices generate rapid profits; helps recover costs spent on R+D
-Image may suffer when price begins to fall
What is penetration pricing?
Involves launching a new product at a very low price to encourage customers to buy it
What are three evaluation points on Price penetration?++-
+Low prices boost sales volumes - cutting production costs
+Encourages customers to develop a habit of buying the product
-Products image may instantly be seen as ‘cheap’
What is predatory pricing?
A strategy that sets low enough to force a competitor out of business
What are two evaluation points of Predatory pricing? +-
+once rival has been forced to close, the firm can raise the products price
-Illegal
What is competitive pricing?
Changing a price at the market average or at a discount to the average price in the market
What are two evaluation points of competitive pricing? +-
+Should ensure that price will not put customers off buying the product
-A firm will have little control over the price they charge and thus the revenue they generate
What is psychological pricing?
Having the price of a product look cheaper i.e. £3.99
What are two evaluation points of psychological pricing? +-
+can help nudge the customer into buying the product
-May have little effect and may mildly annoy customers
What is a loss leader?
A product which is sold at a low (even loss making) price in order to encourage customers to buy other full price products from the business along with the loss leader
What is dynamic pricing?
Where a business sets flexible prices for products or services based on current market demands
What is a distribution channel?
moves a product through the stages from production to finale consumption
What is a retailer?
The final step in the chain; deals with customers directly
What are two key advantages of retail distribution?
- Convenience for customers
- Retailer holds the stock
What’s a wholesaler?
Buying in large quantities from producers and breaking into smaller quantities
What are two advantages of Wholesalers?
- Reduces the producers transport costs (fewer journeys)
- Retailers can order in smaller amounts from wholesalers
What is a distributor?
sell on products and serve as a local sales point (Usually specialise in a certain industry)
What is an agent?
A specialist type of distributor that does not hold stock which usually specialises in services i.e. travel and they earn commission based on sales achievements.
What is direct distribution?
A channel where a producer and consumer deal directly with each other without the involvement with an intermediary
What is indirect distribution?
Involves the use of intermediaries between the producer and the consumer
What is a multi-channel Distribution?
involves a business using more than one type of distribution channel
What are three evaluation point of a Multi-channel Distribution?
+Allows more target segments to be reached
-Can be more complex to manage
-Potential for channel conflict - e.g. competing with retailers by also selling direct
What are two uses of the product life cycle?
- Forecast future sale trends
- Help manage and analyse product portfolio
What are the 5 stages of the product life cycle?
- Development
- Introduction
- Growth
- Maturity
- Decline
What are two disadvantages of the product life cycle?
-Decline is not inevitable
-It is difficult to recognise exactly where a product is on the product life cycle
What are three ways to extend the product life cycle?
- Lower price
- Change promotion
- Change product - improve and develop it
What is the Boston Matrix?
Assesses each product within a firm’s product portfolio. The two key variables on the axis are Market growth and Market share.
What are the four quadrants of the Boston Matrix?
Problem child
Rising star
Cash cow
Dog
What is a problem child?
These products may be successful in the future but currently have low market share
What is a rising star?
A product with high growth and high market share
What is a cash cow?
A product with high market share with little growth
What is a dog?
A product with low growth and low market share
What is business to business marketing?
The sale of one businesses product to another business or organisation i.e. Rubber gloves to a local hospital
What is business to customer marketing?
the sale of a business
What is an example of a mass marketing strategy?
Expensive advertising campaigns
What is an example of a niche marketing strategy?
Strong customer service (don’t have a big budget)
