Unit 4.5 !!! Price and Product Flashcards
Define marketing mix
The key decisions that a firm takes in order to persuade consumers to buy their good or service
Product
Price
Promotion
Place
Define product life cycle
The stages that a product (G or S) goes through from launch to decline in terms of sales revenue
Product life cycle graph
What are the stages of the product life cycle
- Research and development high costs
- Introduction high costs as lots of promotion is needed
- Growth Profit can start to be made
- Maturity high but flat sales
- Decline sales and profit fall
Define extension strategies
Marketing strategies that prolong the maturity stage of the product life cycle
What are some examples of extension strategies
New version of the production - e.g. iPhone X
Adding features – e.g. better camera on smartphone
Redesign - special editions, special features
Reduce price on older models
Repackaging – update design
New markets
New models
More frequent use - e.g. “Got Milk”
Pros and cons of extension strategies
Pros of using extension strategies
Should be guaranteed increased revenue in the future - e.g. new Star Wars movies
No need to create a new product
Relatively simple - change packaging, new name etc
Cons of using extension strategies
Costs involved - e.g. designing new product design
Consumers may see through the strategy - may be seen as a brand without new ideas
At some point, you have to let the product decline and die
The relationship between the product life cycle, investment, profit and cash flow
What are the four sectors of the BCG matrix
Question marks High market growth, Low market share
Star High market growth, high market share
Cash Cow Low market growth, high market share
Dog Low market growth, Low market share
Importance of packaging
Protection E.g. Milk E.g. Apples
Attracting customers
Design, colors etc.
Differentiation and branding To stand out.
Information Usage, ingredients, warnings
Help distribution and shelf placement E.g. boxes
Define brand
Logo, Name, Image that differentiates one producer from another
Creates a perception in the mind of consumers
Define brand awareness
Extent to which a product is recognized by potential customers
Define Brand Development
How infiltrated the brand is in the market, usually per 1000 people e.g. 100 in every 1,000 of the population buy the brand then 10%
Define brand loyalty
Faithfulness of customers to a brand Shown by repeat purchases
Define brand value/equity
When customers pay a premium for a brand
Amount the price is above the price for a non-branded product
E.g. non-branded trainers = $30 Your brand trainers = $90
Advantages of branding
Instant recognition and Product differentiation (USP)
Brand loyalty
Higher prices
Emotional attachment
Employee motivation
Easier to enter international markets
Disadvantages of branding
Bad news may affect the brand even if the products are the same
A problem for one product may negatively impact all products in the brand
Increased marketing costs to establish/maintain
Cultural and language differences – increase in costs for market development
BCG Matrix
Name the pricing strategies
cost-plus (mark-up)
penetration
skimming
psychological
loss leader
price discrimination
price leadership
predatory
Promotional
Define mark up/cost plus
Adding a fixed mark-up for profit to the unit cost of a product
Define loss leader
Product sold at a very low price to encourage consumers to buy other products
Define price skimming
Setting a high price for a new product when a firm has a unique product
Define psychological pricing
Setting prices that take account of customers’ perception of value of the product
Define predatory pricing
Deliberately undercutting competitors’ prices in order to try to force them out of the market
