unit 3 Flashcards
marketing mix
all the activities that go into marketing a product or service
developing new products (benefits)
-will give business a USP
-allows business to expands into new markets
developing new products (drawbacks)
-market research= high costs
-brand image could be damaged if product doesn’t meet customer needs
-trial products are expensive
brand image
identity given to a business which give it a personality of its own and distinguishes it from competitors
benefits of brand image
-strong brand image=USP
-customer loyalty=increase sales
-may allow the business to charge premium price
role of packaging
- has to be suitable for the product to be stored
- used for promoting the product, provides information
extension strategies
- sell to new markets
- modify the packaging
- use a new advertising campaign
- introduce a new or improved version of old products
- sell through additional retail outlets
development
-market research
-prototype is tested
-0 sales
introduction
-sales are low
-capital spent on advertising
-no profit
growth
-sales grow rapidly
-prices are still high
-profits are made
maturity
-increase competition
-advertising to maintain sales
saturation
-sales reach their highest point
-prices have to be reduced because of competition
e-commerce
buying products and services online
benefits of e-commerce
-convenient for customer
- website to promote product is much cheaper than other forms of advertisement
-larger geographical target market
-can buy raw materials online
drawbacks of e-commerce
-many more competitors
-lack of customer service (no face -to face)
-website design and updates are expensive to maintain
-customers worried about online fraud
-increased variable costs (shipping)
internet promotion (benefits)
-target focus groups
-ads and information on social media can be updated regularly
-cheap to use as can advertise on their own page
internet promotion (drawbacks)
-customers may find ads annoying=impacting brand image
-potential customers may not use social media
-negative comments=negative brand image
place
businesses have to decide where to sell their products and have to decide on the best distribution channel
distribution channel
mean by which a product is passed from producer to consumer
distribution channel 1
-producer consumer
-lower price for customer
-suitable for fresh produce
-high delivery fees
- impractical for many products as consumers may live far away
-not suitable for products that cant be easily sent by post
distribution channel 2
- producer retailer consumer
- reduced delivery fees
- producer has no direct contact with consumer ( lack of personal service)
- costs higher than DC 1, need to cover costs of retailer
distribution channel 3
-producer wholesaler retailer consumer
-reduces storage costs+save storage space for small retailers
-wholesaler could give trade credit to retailer = increases retailer cash flow
-takes longer fro fresh produce to reach retail store=bad quality
-consumer price is higher (cover costs + make profit)
distribution channel 4
-producer agent wholesaler retailer consumer
-producer may not know the best way to sell in another country (cultural and language barrier)
-agents will be aware of local conditions and will be in best position to select best places to sell
-agent takes portion of revenue (less profit)
-producer has less control over how product is sold
using an agent
if the product is exported to another country, the producer will sometimes use an agent to sell their products on behalf of them
aims of promotion
- to increase brand awareness + increase sales
- to introduce new products to the market
- compete with competitors product
4.improve company image (brand image)
TV
-targets large audience, target specific segments
-increase fixed costs (expensive), customers may prefer to watch netflix as it is more convenient
radio
-often uses memorable song/tunes = increases brand awareness
-cannot put across a visual image, spotify
newspapers
-adverts are permanent, relatively cheap in local papers
- many young people do not purchase newspapers, not very attention grabbing
magazines
- niche business can advertise their business specifically to their target market
-not often published, less opportunities to advertise, more expensive than newspapers
posters/ billboards
-cheap, can be seen by everyone who passes by
-people may ignore (phones) not a lot of detail can be added-limited persuasion for customer
ads in cinema
-effective to target specific target market
-expensive, people stream at home, seen by limited people
leaflets
-cheap, can be delivered door-to-door
-may be ignored and dumped (junk mail)
internet
-can be viewed by existing customers, direct link to buying product, emails can be sent to existing customers
-may ignore emails (junk mail), some may not use the internet
below the line promotion
-free gifts
-BOGOF
-price reductions (sales)
-free samples
-point of sale display
marketing budget
specifies how much money is available to promote or advertise a product
low marketing budget limits the ways of advertising for a business
price elastic
consumers are sensitive to a change in price if prices increase sales will decrease significantly
price inelastic
consumers are not sensitive to a change in price, if price increase demand may not decrease significantly
competitive pricing
-setting prices in line with your competitors or just below them
-if product is not overpriced compared to competitors=sales are likely to be higher
-if costs of production of the business are higher than competitor=potential loss (profit)
-high quality product needs to be sold at a high price to give it. higher quality image
penetration pricing
-when the price is set lower than the competitors (to be able to enter a new market)
-useful for new products
-will lead to an increase in sales and market share
-low price=lower profit per unit
-not ideal for branded product with good quality reputation
-customer dissatisfaction business wants to increase prices
price skimming
- a high price set for a new product on a market
- help product to be perceived of high quality
- research and development costs can be payed due tot he profit made from high prices
-high price discourage people from buying the product
-business high profit may encourage competitors to enter market= decrease sales
cost plus promotion
-estimating how many products will be sold calculating total cost of making these products and then adding a percentage mark up profit
-each product earns a profit
-easy method to apply
-business could loose sales if price is too high compared to competitors
-costs are passed to customers= high selling prices
promotional pricing
-product is sold at a low price for a short time
-rid of stock that will not sell
-help renew interest of the product
-revenue will be lower
-pice war with competitors, they might reduce too
benefits of developing new products
-will give business a USP
-allows business to expand into new and existing markets
drawbacks of developing new products
-the business will have to carry market research (expensive)
-the brand image could be damaged if the company fails to meet customer needs with new product
-cost of producing trial products is expensive
role of packaging
-it has to be suitable for the product to be stored in
- packaging is also used to promote the productq
why have some market become more competitive
- globalisation of markets
- transportation improvements
- internet/e-commerce
how can a business respond to changing spending patterns and increase competition
- maintain good customer relationships
- keep improving its existing products
- bring out new products to keep customers interest
- keep cost low to maintain competitiveness
mass market advantages
- total sale in these market can be very high
- the business can benefit from economies of scale
- risks can be spread, as often will sell several variations of the products to the mass market, if on fails others are likely to succeed
- opportunities of growth for the business due to the high sales
mass market disadvantages
- high levels of competition
- high costs of advertising and promotion
- standardised products or services are produced so may not meet the specific needs of all customers potential customers, therefore leading to a cost of sales
niche market advantages
- small businesses may be able to sell successfully in niche markets as larger businesses may have not identified them
- the needs of customers can be more focused and targeted
niche markets disadvantages
- small businesses which can have limited sales potential
market segment
an identifiable sub-group of a whole market in which consumers have similar characteristics or preferences
benefits of market segmentation
- to identify suitable products to suit that market segmentation in the market
- to ensure that pricing , packaging and place are ideal for the market segment chosen-effective customer reach
market research
the process of gathering, analysing and interpreting information about a market
why do businesses use market research
- give the business a better understanding of its target market
- develop products to meet the customers needs and wants
- can increase sales and prevent any wasted time and resources
- helps the business develop an appropriate marketing strategy
- help it gain more market share
primary research
the collection and collation of original data via direct contact with potential or existing customers
methods of primary research
- interviews
- questionnaires
- online surveys
- focus groups
benefits of primary research
- detailed information can be obtained (price customers are willing to pay)
- opinions can be obtained on open ended questions
drawbacks of primary research
- gathering and collating these results is time consuming
- bias could occur if they do not question a fair sample
methods of sampling
- random sampling
- quota sampling (people are picked on the basis of characteristics age,gender…)
methods of secondary research
- government statistics
- newspapers
- market research agencies
- looking at customer sales, record and history
secondary research advantages
- cheaper
- easy and quick to maintain
secondary research disadvantages
- more likely to be out of date
- not collected for the business itself therefore not specific
- rival firms have access to the same sources
main stage of product life cycle
development, introduction, growth, maturity, saturation
benefits and drawbacks of online surveys
+ can find out what the customer wants
+ quick respond time as it is filled out online
- absence of interviewer may cause customer to answer to briefly
- consumers may rush survey
- not suitable for a business who’s target market doesn’t use the internet
benefits and drawbacks of interviews
+ detailed information can be gathered based on what customers like or dislike
+ the interviewer can explain the questions carefully so consumers answer them carefully
- very time consuming to carry out
- could lead to bias if interviewer prompt the customer to what they wanna hear
benefits and drawbacks of postal questionnaires
+ detailed information can be obtained
+ opinions can be obtained on open-ended questions
- gathering and collating results is time-consuming
- bias can occur if they do not question a fair sample
benefits and drawbacks of focus groups
+ provide detailed information about customers’ taste and preferences
+ quicker and cheaper than individual interviews
- feedback could be biased if people on the feedback council be influenced by others
- if conducted by a specialist market research company can become very expensive and time consuming.
