Unit 3-Marketing Mix Flashcards
7P’s
Product Price Place Promotion Process People Physical environment
3 types of product
Convenience-cheap,regularly purchased, out of habit
Shopping-bought less regularly e.g clothes
Speciality-luxury, more profit
Boston Matrix and 4 segments
A model of portfolio analysis, measured using market growth and market share Cash cows Dogs Stars Question mark/problem child
Cash cows
High MS Low growth, in maturity phase. Already promoted and produced in high volumes, at low costs.
Stars
High high, future cash cows. Lots of competition due to high growth, so requires heavy promotion. May also need to expand to keep up with demand
Question marks
High growth, but low MS. Uncertain future, need heavy marketing
Dogs
Failed product. Business harvests profit in short term if still profitable, if not, sell off.
Drawback of matrix
Only a snapshot of current position has no predictive value.
Product life cycle stages
Development Introduction Growth Maturity Decline
Development characteristics (3)
- product developed by R&D
- marketing department do research
- high costs, with no sales to cover them (negative CF) eval:pre-orders raise finance
Development often fails, due to marketing finding little demand, or cannot lower costs. E.g ready meals often fail.
Introduction stage characteristics (4)
- high costs, low capacity utilisation, negative CF
- heavy promotion
- high prices to cover promotional costs (skimming), or low prices to encourage sales (penetration pricing)
- business needs to ensure they have enough resources and capacity to cover demand promotion brings
Growth stage characteristics (4)
Sales grow, repeat customers.
Competition attracted.
Product improved/developed
More outlets stock
Maturity stage characteristics
Sales peak, profit increases as fixed costs have been covered.
Saturation (full market+growth)-sales may drop depending on product e.g ones that don’t need regular replacement
Dynamic pricing, prices may fall
Lack of new customers
Decline
Product doesn’t appeal anymore.
May still be profitable if promotional costs reduced enough
Product may be withdrawn/sold to another business (divestment)
Sales may pick up if comp leave first
5 Extension strategies-product
Ways to extend product life cycle: Product development Market development Distribution methods Pricing Promotion
What are focused P’s for development (2)
Product and price-what is wanted, and how much they’ll pay
What are focused P’s for introduction (3)
Promotion and place, to raise awareness
Also people, to train and be knowledgable of product
What are the focused P’s for growth stage (3)
People, physical environment and process. High competition, people well trained for service, physical environment appealing e.g website redesign, process improved for satisfaction
What are the focused P’s in maturity phases (3)
Price, promotion and product. Need to remain competitive to maintain sales
What are the focused p’s in decline stage
All P’s are reduced to cut costs. Prices dropped, promotion may stop, training people may stop etc
Price skimming and eval
Selling at high price when introduced, as has scarcity value. Prices then dropped after it has been on the market.
Eval:customers put off by high initial price, and customers who bought initially may be annoyed when price drops
Penetration pricing and eval
Selling at low prices to attract customers.
Eval:hard to raise prices without losing demand, and brand image.
Industrial marketing characteristics (3)
Selling to other businesses rather than consumers.
Try build relationships worth sacrificing short term profit for.
Promotions are more knowledgable and objective rather than persuasive.
What does the promotional mix depend on? (4)
Budget
Product nature itself
Competitors
Product life cycle
e.g convenience products are advertised. shopping and speciality products are sold by advertising and personal selling.
Alternative promotion to advertising (7)
Merchandising Sales promotions Direct mail Personal selling Relationship marketing PR Event sponsorship
4 distribution channels (Place)
Direct selling (manufacturer>consumer) Indirect selling (manufacturer>retailer>consumer) Direct selling through an agent (manufacturer>agent>consumer) e.g Avon, they are not an Avon employee Indirect selling 2-level channel (manufacturer>wholesaler>retailer>consumer) e.g fast food chains
Wholesaling and value to manufacturers
Buying goods from manufacturers who sell them to retailers.
Good for manufacturers as do not wait for customers to buy.
One delivery rather than separate to many retailers. cuts down paperwork
Reduced storage costs for manufacturer.
Also increases market coverage
Multi channel distribution
Selling by more than one method e.g online and in store,
What factors influence deciding distribution channels
Cost (direct=more profit, no intermediary costs, also can lower prices)
Ease (easier to use intermediaries, less deliveries, wholesalers also increase market coverage)
Control (few stages, more say in final price and promotion) e.g luxury brands dont allow supermarkets to sell to protect image
Trends with long distribution channels (vice versa for short) (5)
Consumer products not industrial Many customers Inexpensive simple goods Frequent sales Goods not services
Process
How easy customers get what they want, when they want it. (The customer’s experience of business)
Technology on processes example
Queue management technology shortens queues and informs waiting times-known waits are shorter than unknown. Improves process
Examples of process elements
User friendly website How long to ship Return process Payment methods available Waiting time e.g in restaurant
Factors influencing marketing mix (5)
Competition-e.g competitive-promotion heavy
Target market-rich=less price sensitive, different promotion for types of people
Type of product/market positioning-e.g people/physical environment less important for cheap products
Goods/Services
Resources-finances affect 7P’s
Why people/friendly good service is important
More likely to buy again (loyalty), recommend, reviews.
