UNIT 3. Chapter 16: Marketing mix - product and price Flashcards
Def. Marketing Mix
The four key decision that must be taken in the effective marketing of a product. Place, Promotion, Product and Price.
What are the 4Cs?
The 4Ps are more centred on the firm and its product rather than the Customers - 4Cs.
• Customer solution: what the firm needs to provide to meet the customer’s needs and wants (Product)
• Cost to customer: the total cost of the product including extended guarantees, delivery charges and financing costs (Price)
• Communication with customer: providing a 2 way communication links to both promote the product and gain important market research information (Promotion)
• Convenience to customer: Providing easily accessible pre-sales information like demonstrations or locations for purchasing the product. (Place)
Def. CRM
Customer relationship marketing: using marketing activities to establish successful customer relationships so that existing customer loyalty can be maintained.
Def. Product
The end result of the production process sold on the market to satisfy a consumer need. Can be both tangible (goods) and intangible (service).
Def. Consumer durable
Manufactures product that can be reused and is expected to a reasonably long life, such as a car or washing machine.
Def. Brand
An identifying symbol, name, image or trademark that distinguishes a product from its competitors.
Def. Product positioning
The consumer perception of a product or service as compared to its competitors.
Def. Product life cycle
The pattern of sales recorded by a product from launch to withdrawal from the market.
What are the stages of product life cycle? (5)
• Development: No sales as the product is not launched yet.
• Introduction: Launching of the product, sales are often quite low.
• Growth: When sales start increasing rapidly.
• Maturity/Saturation: Sales fail to grow but they do not decline either.
• Decline: Sales decrease.
Graph: pg. 294
Def. Extension strategies
These are marketing plans to extend the maturity stage of the product before brand new one is needed.
What are the possible extension strategies? (5)
- Sell into new market
- New advertising campaign
- New improved version of the product
- Sell through additional retail outlets
- Change packaging
Uses of product cycle? (3)
- Assisting with planning of marketing-mix decisions e.g. at which stage is advertising most important?
- Identifying how cash flow might depend on the product life cycle (Graph pg. 296). Cash flow is negative during the development of the product because costs are high etc.
- Identifying the need for a balanced product portfolio (graph pg. 296). For cash flows to be balanced as positive cash flow of one product can finance negative cash flows of other product. Or in factory capacity as declining output of some goods replaced by increasing demand of other output.
Def. Price Elasticity
Measure the responsiveness of demand following a change in price. Percentage change in quantity demanded / Percentage change in price.
Interpretation of graph pg. 298
Elastic or Inelastic?
0-1 is inelastic
>1 is elastic
(absolute value/magnitude)
What are the factors that determine price elasticity? (4)
- How necessary the product is. e.g Salt is inelastic
- Number of competitors: the higher the number the more elastic
- The level of consumer loyalty: The more loyal the less elastic
- The price of the product as a proportion of consumer’s incomes e.g. matches or toothpicks are inelastic
