Theme 2- Making Marketing Decisions Flashcards
What are the 3 aspects of the design mix
Appearance, function, cost (in terms of business costs)
What is the introduction phase in a product life cycle
The product is launched/released onto the market
What is the growth phase of the product life cycle
Product gains market share and competitors enter the market
Describe the maturity phase of a product life cycle
Sales growth slow down, but repeat customers continue to buy and be loyal. The market becomes saturated as rivals bring out competing products
Describe the decline phase of a product life cycle
Eventually the product is outdated and there is a big fall in sales, leading to withdrawal
How can the product life cycle be extended
Lower prices
Increase promotion
Modify the product
Rebrand
What is product differentiation
Making a product different from other products in someway
Why is product differentiation important
- to position their products and target different market segments
- to gain an advantage over rivals when faced with competition
How to differentiate a product
usp
name
design mix
packaging
quality
customer service
Why is price important in marketing mix
gives customers indication of quality
can have significant influence on demand in competitive markets
branded products are more expensive due to high promotion costs
Different types of price
Premium price
Competitor pricing
Low price
What is a margin strategy
Setting a price that achieves a high profit margin
What is a volume strategy
Setting a price with a low profit margin, which requires high sales volumes in order to be profitable
Influences on price strategies
Competition- a business has to consider its competitors and the position of its brand in the market
Branding- products with a strong brand can demand higher price due to the perceived value and desirability
The choice of promotion technique or medium depends on …
The characteristics of the market segment (or target market)
Advantages and disadvantages of product trials
A) can encourage customers to use a new product or service they might not try otherwise
D) can be expensive to give away free promotiond
Advantages and disadvantages of public relations
A) Can encourage customers to connect with the brand, trust it and become loyal to it
D) takes a long time to develop a strong brand, and brand image can be damaged quickly by bad publicity
Advantages and disadvantages of advertising
Advantages:
- Reach large number of people
Disadvantages:
- Total cost is high
Advantages and disadvantages of sponsorship
A) provides business with good exposure + can be associated with good causes
D) communicates little info about the features and benefits of the products + services
Advantages and disadvantages of special offers
A) can boost short term sales and clear stock levels
D) not sustainable in the long term as selling at a discount will reduce profit
How does strong branding help businesses
Instant recognition of logo + what it represents
Customer loyalty + trust of a well known brand
Technology in promotion
Social media, Apps, Targeted advertising and emails
Channels of distribution
Retailing: manufacturer, retailer, customer
Retailing: retailer, customer
E-tailing: manufacturer, customer
E-tailing: manufacturer, third party e-tailer, customer
Benefits of retailing
Customers have opportunity to browse and try products,
help and advice can be provided to customers,
point of sale promotion
customers enjoy retail stores.
Benefits of e-tailing
- Businesses do not have to rent or own expensive retail space
- Customers can buy at any time of any day
- Businesses can access customers around the world
- Small businesses are able to compete with larger businesses without needing retail space
What must a business consider when choosing location
Cost
Proximity to competitors, labour market and to resource and transport links
Why create an integrated marketing mix
To meet customer needs
Describe how product and pricing are related
Increasing the features + function of a product will have a direct impact on the businesses pricing strategy
Describe how product and place are related
Diff products can be sold in diff places as some are more suited to e-tailing while others require the retail experience + customer service provided by retailers
Describe how pricing and promotion are related
If a business used a high volume low margin pricing strategy, it is very likely that there will be very little budget available for promotion
Describe how product and promotion are related
A product targeted at a premium market must be promoted using appropriate channels to ensure the message reaches its target audience (eg magazines or online)
What is competitive advantage
An advantage that a business has over a competitor which is unique and difficult to copy
How does product build competitive advantage
a product with unique features and a strong brand can be highly desirable
How does price build competitive advantage
A business that finds a way to set its prices lower than its competitors’ will be more competitive
How does promotion build competitive advantage
A successful advertising campaign can attract consumers’ attention and build a unique brand
How does place build competitive advantage
A highly visible and convenient business location can help a business attract customers that other competitors can’t attract
