Topic 11-The Marketing Mix Flashcards
The Marketing mix
The marketing mix refers to all the key activities used in the marketing a firm’s products.These are often called the 4 P’s-Product,Price,Place and Promotion.The elements of the marketing mix need to complement each other.Different combinations will also be used at different stages of the product life cycle
Price
This is amount charged by a business for its product.It is influenced by the price charged by competitors,the costs of production and the amount customers are willing to pay
Competitor Based Pricing
The is where a firm sets a price similar to or just below the price charged by the competition.The price is competitive but does not have a damaging effect on the reputation of the product.However a firm does not know how a competitor will respond and it could lead to a price war which could threaten the profit margin of the firm.
Skimming/Creaming
This is where a firm sets a high price due to a lack of competition or because of the Research and Development costs.It is often used by a firm if they have a new or improved product and therefore have a short term monopoly.Prices may have to be reduced when competitors enter the market
Penetration pricing
This is when a new product is introduced and a firm wants to establish it in the market.A firm sets a low price to make it appear price competitive.As consumers build up trust in the product and consumer loyalty develops them the firm will raise the price back towards the market level.It is relevant in markets where repeat purchasing is undertaken.However, the low price may have a damaging effect on the image of the product.It should encourage sales in the short term but it might not be profitable.
Place
This is how a product is disrupted from the product to the customer.The options include directly to the customer,through a retailer or through a wholesaler
Promotion
This involves marketing activities aimed at making customers aware of products and gaining their attention.Examples of promotion include:advertising,sales,promotion,PR and sponsorship
Factors that affect price
- Demand
- Costs of production
- Need to make a profit
- Competition in the market
- The price that the market can bear
- Seasonality
- Quantity of inventory in hand-surplus inventory will lead to sales
Demand
This involves the quantity that people are willing and able to buy at a series of prices.There is an inverse relationship between price and demand.A high price is likely to lead to a lower level of demand and a lower price is likely to lead to a higher level of demand
What should promotion do
Awareness-A promotion should raise awareness
Interest-A promotion should make a consumer want to find out more about the product
Desire-A promotion should create a desire for consumers to buy this product
Action-A promotion should make it clear how a consumer can buy this the product
Advertising
This involves marketing activities aimed at making customers aware of products and gaining their attention.Examples of where advertising can be done are:TV,radio and cinema.Advertising can be informative,persuasive or generic
Advantages of using television to advertise
- Wide audience
- Target different market segments
Disadvantages of using television for advertising
- Expensive
- Channel hopping
Advantages of using the internet for advertising
- Worldwide audience
- Large amounts of information
Disadvantages of using the internet dor advertising
-Ignored
