Unit 3-Marketing Mix

Question 1

7P’s

Answer 1

Product
Price
Place
Promotion
Process
People
Physical environment

Question 2

3 types of product

Answer 2

Convenience-cheap,regularly purchased, out of habit
Shopping-bought less regularly e.g clothes
Speciality-luxury, more profit

Question 3

Boston Matrix and 4 segments

Answer 3

A model of portfolio analysis, measured using market growth and market share
Cash cows
Dogs
Stars
Question mark/problem child

Question 4

Cash cows

Answer 4

High MS Low growth, in maturity phase. Already promoted and produced in high volumes, at low costs.

Question 5

Stars

Answer 5

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 6

Question marks

Answer 6

High growth, but low MS. Uncertain future, need heavy marketing

Question 7

Dogs

Answer 7

Failed product. Business harvests profit in short term if still profitable, if not, sell off.

Question 8

Drawback of matrix

Answer 8

Only a snapshot of current position has no predictive value.

Question 9

Product life cycle stages

Answer 9

Development
Introduction
Growth
Maturity
Decline

Question 10

Development characteristics (3)

Answer 10

• 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.

Question 11

Introduction stage characteristics (4)

Answer 11

• 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

Question 12

Growth stage characteristics (4)

Answer 12

Sales grow, repeat customers.
Competition attracted.
Product improved/developed
More outlets stock

Question 13

Maturity stage characteristics

Answer 13

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

Question 14

Decline

Answer 14

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Product may be withdrawn/sold to another business (divestment)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

Question 15

5 Extension strategies-product

Answer 15

Ways to extend product life cycle:
Product development
Market development
Distribution methods
Pricing
Promotion

Question 16

What are focused P’s for development (2)

Answer 16

Product and price-what is wanted, and how much they’ll pay

Question 17

What are focused P’s for introduction (3)

Answer 17

Promotion and place, to raise awareness

Also people, to train and be knowledgable of product

Question 18

What are the focused P’s for growth stage (3)

Answer 18

People, physical environment and process. High competition, people well trained for service, physical environment appealing e.g website redesign, process improved for satisfaction

Question 19

What are the focused P’s in maturity phases (3)

Answer 19

Price, promotion and product. Need to remain competitive to maintain sales

Question 20

What are the focused p’s in decline stage

Answer 20

All P’s are reduced to cut costs. Prices dropped, promotion may stop, training people may stop etc

Question 21

Price skimming and eval

Answer 21

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

Question 22

Penetration pricing and eval

Answer 22

Selling at low prices to attract customers.

Eval:hard to raise prices without losing demand, and brand image.

Question 23

Industrial marketing characteristics (3)

Answer 23

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.

Question 24

What does the promotional mix depend on? (4)

Answer 24

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.

Question 25

Alternative promotion to advertising (7)

Answer 25

Merchandising
Sales promotions
Direct mail
Personal selling
Relationship marketing
PR
Event sponsorship

Question 26

4 distribution channels (Place)

Answer 26

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

Question 27

Wholesaling and value to manufacturers

Answer 27

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

Question 28

Multi channel distribution

Answer 28

Selling by more than one method e.g online and in store,

Question 29

What factors influence deciding distribution channels

Answer 29

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

Question 30

Trends with long distribution channels (vice versa for short) (5)

Answer 30

Consumer products not industrial
Many customers
Inexpensive simple goods
Frequent sales
Goods not services

Question 31

Process

Answer 31

How easy customers get what they want, when they want it. (The customer’s experience of business)

Question 32

Technology on processes example

Answer 32

Queue management technology shortens queues and informs waiting times-known waits are shorter than unknown. Improves process

Question 33

Examples of process elements

Answer 33

User friendly website
How long to ship
Return process
Payment methods available
Waiting time e.g in restaurant

Question 34

Factors influencing marketing mix (5)

Answer 34

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

Question 35

Why people/friendly good service is important

Answer 35

More likely to buy again (loyalty), recommend, reviews.