Unit 2 - Marketing Flashcards
Explain what happen in the development sector of the product life cycle
It is the first stage of a product life cycle
Scientific research is done and needed
The aim during product development is used to find the most cost effective material and methods to use
What is the stages involved in a product life cycle
Development Introduction Growth Maturity Decline
Explain what happen in the introduction sector of the product life cycle
The product is launched for the first time.
Lots of advertising & sales promotion.
Place is also a very important P here
Explain what happen in the growth sector of the product life cycle
Sales and profitability increase until the product becomes established
Explain what happen in the maturity sector of the product life cycle
Sales are at their peak- promotion becomes less important
As the products popularity grows business will try to make the product widely available
Towards the end of this phase the market becomes saturated and there is no more room to expand
Explain what happen in the decline sector of the product life cycle
Eventually sales start to fall as rival products take over & the product becomes obsolete
How is the life cycle linked to cash flow of the business during the life of the product
Development & introduction
During development & introduction the firms spends money on research and promotion but sales of the product are usually low . The business will expect to make a loss during these stages
How is the life cycle linked to cash flow of the business during the life of the product
Growth and maturity
The business will hope to earn enough money to pay back their initial investment and make a profit
How is the life cycle linked to cash flow of the business during the life of the product
Decline
The firm will probably spend less money supporting the product as sales fall it will begin to make a loss
What is price skimming
Is when a high price is set for a product when it first enters a market this strategy is used when day is a high demand
The price is then reduced in order to attract new customers who need a lower price to get them interested
What does penetration pricing mean
This approach is used to launch a product with a low price in order to get sells quickly
What does competitive pricing mean
Firms are using competitive pricing to match the price that others are charging
What does loss leaders mean
??
What does cost plus pricing mean
This is when the aim is to ensure the business covers it’s cost and makes a profit
What factors can influence the price
The cost
Demand
The nature of the market and degree of competition
Product life cycle
