Theme 2 Flashcards
What are the stages of the product life cycle ?
introduction, growth , maturity, extensional strategies/decline
What changes must be made to the marketing mix when globalising , and what are the reasons for this change ?
How may a company grow internally ?
- new products
Expensive, time : product portfolio (customer loyalty) - new markets
Risk, completion : more potential consumers
How may a company grow externally?
🔵Merge
Increased product portfolio (new business created)
🔵takeover
In general :
✅economies of scale, maximise profit margin
✅rapid increase in revenue and market share
✅can place products in more stores, reach a larger audience
❌expensive
❌management styles may clash
Pros and cons of PLCs
public limited company
✅limited liability
✅easy to raise sources of finance through share capital
❌susceptible to hostile takeovers
❌increased media attention
❌financial information less private
What are some internal sources of finance ?
- retained profit
Shareholders may frustrated by lack of dividends - selling assets
loss of asset and security,Sudden lump sum of money
What are some external source of finance?
- loan capital
Interest rates fluctuate, have to have reasonable financial security (limiting), may take time for loan to approve : immediate flow of money, - share capital
Less control over the business,future dividends cannot retain profit : immediate lump sum of money
Why do business aims and objectives change as a business evolves?
- market conditions (competition levels/ economic conditions )
- technology (competition, but lager audience , decreased costs)
- performance (profit / loss / breaking even)
- legislation (may increase things like income tax, or wage of employees, less profit, have to make more sales/ increase price)
- internal management reasons(ethically or maximising profits)
How might a business’s aims and objectives change as a business evolves?
🟡focus on survival or market growth
🟡entering or exiting new markets (growth plans, or focusing investment elsewhere
🟡growing or reducing the workforce (minimising costs)
🟡increasing /decreasing product range (increased product portfolio/ shutting down products that are no longer on demand)
*minimising costs in response to poor economic conditions
What is the impacts of globalisation?
🔵imports ( cheaper raw materials
🔵exports (entering new markets abroad, growth , wider tarter market and audience )
🔵changing business locations (entering / opening stores in more wealthy countries with a higher disposable income)
🔵multi national co operations
What are some barriers to international trade ?
🟣Tarif ( tax imposed, reducing overall profits , increase in costs , breaking even)
🟣trade bloc ( good as may be able to take advantages of cheaper Labor and lower tax rates from member counties, but may not be able to operate with countries outside of the trading bloc)
How do businesses compete internationally?
🟣using the internet and e- commerce ( using social media as promotion and staying in touch with customers from all around the world, customer loyalty, 24/7 sales, cheap )
🟣changing the mix to compete internationally (price :changes depending on currency,, tarrif, exchange rate fluctuate, average income of consumers, place: where the people there like to shop culturally , promotion: language difference, products: taste and cultural preferences, physical differences
What is the impact of ethical and environmental considerations on businesses?
🟠ethics and profit trade offs (risk of bad publicity in media, brand reputation, but then profit margin as well)
🟠environmental considerations, trade off between the environment, sustainability and profit
🟠pressure group activity on the marketing mix (
*being ethical provides competitive advantage and customers tryst business more
What might a business have to do when responding to a pressure group
Change elements of its’s marketing mix
Product: Change be key ingredients to be more ethically sourced raw materials
Price: increased price as a result of paying fair prices to supplies
Place: sourcing local products/ raw materials to reduce carbon footprint (less transport)
Promotion : including honest and complete information on packing,
What is the design mix?
🟣function
🟣aesthetics
🟣costs
What is the product life cycle ?
🟡initial introduction (low sales, promotional strategies, cash requirement )
🟡growth (increase in sales , demand /increasing price)
🟡maturity, trying to remain relevant , high sales and economies of scale )
🟡decline/discontinuation/ extension
What are some extension strategies?
🟣lowering prices
🟣increasing advertising
🟣 totally rebranding product
Why is it important for a business differentiate it’s products/ services ?
🟣USP, competing advantage
🟣may meet the needs of a particular target market, adding value, can a charge a higher price
What are some pricing strategies?
🟣high volume pricing strategy (economies of sale, can sell at lower price (lower profit margin)
🟣high margin pricing strategy ( low volumes but a high profit margin, adding value, making it ‘exclusive’
What influences pricing strategies ?
🟠technology (more cheaper production costs, able to promote better, bale to advertise luxury more)
🟠competition (may have to lower prices, if not so competing then higher prices )
🟠market segments (mass market, niche market )
🟠product life cycle (levels of popularity and demand)
What are some appropriate promotional strategies for different markets?
🟡advertising (emotive language and a range of media: expensive, not guarantee sales)
🟡sponsorship (better brand reputation )
🟡product trials
🟡special offers (reducing stock)
🟡branding (emotional connection, adding value or differentiating from competitors)
🟡publicity (better brand reputation, customers more likely to buy)
What are some medium for advertising
🟣digital (social media)
🟣television
🟣radio
🟣print (magazines or newspapers
Impacts to a business of using technology in promotion?
🔴targeted advertising (more likely to reach target market )
🔴virtual advertising/ social media (increased exposure of business, increased demand)
🔴apps (staying in contact with customers, brand loyalty, repeated purchases, more relevant
🔴E Mails and newsletters (relationship with consumers, directed straight to e commerce website )
What are some methods of distribution?
🟡retailers(face to face support, physically use the product, shopping experience, more likely to buy the product: physical premises overhead cost, reducing profit margin as retailers will markup price so needs to reasonable)
🟡e-tailers (no rent of a building, access international markets, easier to start up,: customers not confident when buying, delivery costs , needed extensive digital marketing to ensure sales)
Integrated marketing marketing mix?
Eg: product affecting price
Price in promotion (more luxury products)
Place helping to promote (eg in shopping mall or in a basement )
Place and product(eg is e commerce than can it be designed to be delivered properly)
How can a marketing mix build competitive advantage?
Competitive advantage= customers are more likely to buy products over competitors, as they are more attracted, difficult for rivals to replicate
Product: better than competition is design , quality and function
Promotional: memorable campaign, strong brand image
Price: cheaper
What is the purpose of business operations?
To produce services /goods
What are the different production processes?
🟡job
🟡batch
🟡flow
Job
(One unite per time)
Low level of automation
High profit margins, meets exactly the customer needs
Very flexible for consumer, good relationship between bus and customer
No economies of scale, no bulk buying
Requires employees that are highly skilled
Batch
Economies of scale, reduced cost
Flexible and can vary the product being produced
Down time between batches, rate of production falls
Unsure demand, could produce too much or too little