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IB business management HL > unit 5 > Flashcards

unit 5 Flashcards

1
Q

What are the 7 Ps

A

Product
Price
Promotion
Place
People
Processes
Physical Evidence

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2
Q

definition of product

A

goods and services that the business sells

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3
Q

consumer goods/producer goods definition

A

consumer goods - bought by consumers

producer goods - bought by businesses

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4
Q

what does the product life cycle represent

A

the stages that a product (good or service) goes through from launch to decline in terms of sales revenue

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5
Q

stages of a product life cycle (including the possible additional step)

A

0 - research and development
1 - introduction/launch
2 - growth
3 - maturity
4 - decline

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6
Q

introduction - stage of product life cycle - what does it entail?

A
  • high cots, lots of promotion needed
  • no economies of scale in production
  • low sales - cash flow problems
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7
Q

growth - stage of product life cycle - what does it entail?

A
  • increasing revenue as shops are willing to stock the product
  • profits can start to be made
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8
Q

maturity - stage of product life cycle - what does it entail?

A
  • high, but flat, sales and market share
  • more economies of scale so profits are made
  • more consumers already own the product
  • saturation - competition enters the market
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9
Q

decline - stage of the product life cycle - what does it entail?

A
  • sales and profits fall
  • could be because the product is out of date etc.
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10
Q

Different types of product life cycles

A
  • traditional
  • boom/classic
  • fad
  • extended fad
  • seasonal or fashion
  • revival
  • bust
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11
Q

what is a brand

A
  • something that differentiates one product from another (image, name or logo)
  • creates a perception in the mind of the consumers
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12
Q

what is brand awareness

A
  • the extent to which a product is recognized and remembered by customers
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13
Q

what is brand development

A
  • the process of building brand identity to maximise sales and profits
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14
Q

what is brand loyalty

A

faithfulness of customers to a brand as shown by repeat purchases

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15
Q

what is brand value/equity

A

when customers are willing to pay a premium price from a brand above a non-branded product

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16
Q

advantages of branding

A
  • instant recognition and product differentiation (USP)
  • brand loyalty and brand value
  • emotional attachment (brand loyalty)
  • employee motivation (employees can be motivated to work for a well-known company - so they can hire better workers)
  • easier to enter the international market
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17
Q

disadvantages of branding

A
  • bad news may affect the whole brand even if the products are not the same
  • marketing cost to build and maintain the brand
  • cultural and language differences - increase in cost for market development
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18
Q

what are extension strategies

A

marketing strategies that lengthen the maturity stage of the product life cycle

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19
Q

examples of extension strategies

A
  • new version of product
  • adding new features
  • redesigning
  • new packaging
  • entering a new market
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20
Q

pros of using extension strategies

A
  • should be guaranteed increased revenue in the future
  • no need to create a whole new product (lower costs)
  • relatively simple (changing packaging etc.)
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21
Q

cons of using extension strategies

A
  • costs involved - designing new product design
  • consumers may see through the strategy
  • taking money away from developing new products
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22
Q

different pricing strategies

A
  • cost plus (mark-up pricing)
  • penetration pricing
  • loss leader
  • predatory pricing
  • premium pricing
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23
Q

what is cost plus pricing

A

adding a fixed mark-up for profit to the unit cost of a product

24
Q

pros/cons of cost plus pricing

A

pro
- guaranteed profit

cons
- price changes with the cost of the product (lost control of price)
- ignores the market

25
Q

what is a marketing mix

A

the key decisions that a firm takes in order to persuade consumers to buy their goods or services

26
Q

what is penetration pricing

A

a pricing strategy - when entering a new market, setting a relatively low price for the product in order to gain market share
- when the product is price elastic

27
Q

con of penetration pricing

A

low profit margins at the beginning
- for a new company - more problematic (cash flow problems)

price rises are unpopular

28
Q

what is loss leader pricing

A

when a product is sold at a very low price (can be below the cost price) - in hopes that it is bought with another product (eg. replacements)

29
Q

what is predatory pricing

A

when prices are set lower than the competition with the intention of driving them out of the market

  • illegal in many countries
  • cost can be raised when competition left - more monopoly power
30
Q

what is premium pricing

A

setting a high price in order to show that the product is high quality or luxury

31
Q

premium pricing qualities s

A
  • consumers can buy the product to show their success and wealth
  • high profit margins
  • fewer customers and requires and exclusive image/product
32
Q

definition of promotion (one of the 7 ps)

A

communicating with customers about the product to raise sales through knowledge of the product

33
Q

objectives of promotion

A
  • inform
  • persuade
  • remind
34
Q

what are the methods of promotion

A
  • above the line promotion
  • below the line promotion
  • through the line promotion
35
Q

what is above the line promotion?

A
  • promotion directly paid for by the company to communicate with consumers
  • through mass media (eg. tv/radio ads)
36
Q

what is below the line promotion?

A
  • promotion activities that are generally targeted towards a specific market share or group of people
  • not paid for by business (not directly)
  • no money paid to advertising agencies
    (eg. buy 1 get 1 free, loyalty cards, free samples)
37
Q

what is through the line promotion?

A
  • uses both above the line and below the line promotion
  • eg. in store sales + online ads
38
Q

what is social media marketing?

A

using social media to connect with the target audience

39
Q

pros of social media marketing

A
  • can read a larger audience
  • can reach a target audience
  • can measure the success
40
Q

cons of social media marketing

A
  • costs involved to hire management
  • safety concerns
  • no control over the reaction from audience
41
Q

what does place mean (from the 7 ps)

A
  • the process of the product from manufacturer to consumer
  • the chain of intermediaries of a product as it passes from producer to final customer
42
Q

types of distribution channels of a product

A
  • direct selling (zero level)
  • single intermediary channel
  • two intermediary channel
43
Q

what is direct selling - as a distribution channel

A
  • when a manufacturer sells directly to a customer without intermediaries
44
Q

pros of direct selling

A
  • higher profit margins (less intermediaries to pay)
  • direct contact with customer
  • more control over the marketing mix (eg. pricing promotion etc.)
  • in general: highest profit margins
45
Q

cons of direct selling

A
  • less exposure for the produce to consumers
  • have to handle storage and distribution
  • not specialised in selling - may not reach full potential
46
Q

what is a single intermediary channel

A

selling through one intermediary (eg. a retailer or an agent)

47
Q

pros of a single intermediary channel

A
  • reach a wider range of customers
  • consumers can see and feel the product
  • retailer takes care of storage and distribution
48
Q

cons of a single intermediary channel

A
  • retailer will take some profit
  • lose control of marketing mix (e. price/promotion etc.)
  • product is likely to be displayed near competitors
49
Q

what is a two-intermediary channel

A

when a manufacturer sells through two intermediaries (usually a wholesaler and a retailer)

50
Q

two-intermediary channel pro

A
  • takes care of storage and distribution
  • wider geographic reach
51
Q

two-intermediary channel con

A
  • more profit is taken from intermediaries
  • less control of marketing mix
52
Q

what are some factors to consider when choosing a distribution channel method?

A
  • Cost (profit margin high enough?)
  • Control over the brand
  • Where are the consumers (wholesalers - global)
  • Mass vs Niche market
53
Q

what is considered people? (7 ps) - definition

A

how employees interact with customers

eg. customer interactions
after-sales service
use of social media - how do they present themselves?

54
Q

what can vary in the people aspect of the 7ps?

A

cultural variations
- packing bags in supermarkets
- do staff approach customers?

55
Q

definition of processes (7ps)? - and examples

A

the way in which the good or service is actually delivered to the consumers (the experience)

eg.
payment methods
waiting times
interaction with a website

56
Q

definition of physical evidence (7ps)? - examples

A

tangible aspects of the business when a consumer buys/consumes the goods or service

eg. (see, smell, hear, feel, taste)
- smell of fresh bread in bakery
- cleanliness of a hotel room

57
Q

what does appropriate marketing mix mean?

A

all aspects of the 7ps should work together and be appropriate for the product

IB business management HL (12 decks)

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