unit 5 Flashcards
What are the 7 Ps
Product
Price
Promotion
Place
People
Processes
Physical Evidence
definition of product
goods and services that the business sells
consumer goods/producer goods definition
consumer goods - bought by consumers
producer goods - bought by businesses
what does the product life cycle represent
the stages that a product (good or service) goes through from launch to decline in terms of sales revenue
stages of a product life cycle (including the possible additional step)
0 - research and development
1 - introduction/launch
2 - growth
3 - maturity
4 - decline
introduction - stage of product life cycle - what does it entail?
- high cots, lots of promotion needed
- no economies of scale in production
- low sales - cash flow problems
growth - stage of product life cycle - what does it entail?
- increasing revenue as shops are willing to stock the product
- profits can start to be made
maturity - stage of product life cycle - what does it entail?
- 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
decline - stage of the product life cycle - what does it entail?
- sales and profits fall
- could be because the product is out of date etc.
Different types of product life cycles
- traditional
- boom/classic
- fad
- extended fad
- seasonal or fashion
- revival
- bust
what is a brand
- something that differentiates one product from another (image, name or logo)
- creates a perception in the mind of the consumers
what is brand awareness
- the extent to which a product is recognized and remembered by customers
what is brand development
- the process of building brand identity to maximise sales and profits
what is brand loyalty
faithfulness of customers to a brand as shown by repeat purchases
what is brand value/equity
when customers are willing to pay a premium price from a brand above a non-branded product
advantages of branding
- 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
disadvantages of branding
- 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
what are extension strategies
marketing strategies that lengthen the maturity stage of the product life cycle
examples of extension strategies
- new version of product
- adding new features
- redesigning
- new packaging
- entering a new market
pros of using extension strategies
- should be guaranteed increased revenue in the future
- no need to create a whole new product (lower costs)
- relatively simple (changing packaging etc.)
cons of using extension strategies
- costs involved - designing new product design
- consumers may see through the strategy
- taking money away from developing new products
different pricing strategies
- cost plus (mark-up pricing)
- penetration pricing
- loss leader
- predatory pricing
- premium pricing
what is cost plus pricing
adding a fixed mark-up for profit to the unit cost of a product
pros/cons of cost plus pricing
pro
- guaranteed profit
cons
- price changes with the cost of the product (lost control of price)
- ignores the market
what is a marketing mix
the key decisions that a firm takes in order to persuade consumers to buy their goods or services
what is penetration pricing
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
con of penetration pricing
low profit margins at the beginning
- for a new company - more problematic (cash flow problems)
price rises are unpopular
what is loss leader pricing
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)
what is predatory pricing
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
what is premium pricing
setting a high price in order to show that the product is high quality or luxury
premium pricing qualities s
- consumers can buy the product to show their success and wealth
- high profit margins
- fewer customers and requires and exclusive image/product
definition of promotion (one of the 7 ps)
communicating with customers about the product to raise sales through knowledge of the product
objectives of promotion
- inform
- persuade
- remind
what are the methods of promotion
- above the line promotion
- below the line promotion
- through the line promotion
what is above the line promotion?
- promotion directly paid for by the company to communicate with consumers
- through mass media (eg. tv/radio ads)
what is below the line promotion?
- 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)
what is through the line promotion?
- uses both above the line and below the line promotion
- eg. in store sales + online ads
what is social media marketing?
using social media to connect with the target audience
pros of social media marketing
- can read a larger audience
- can reach a target audience
- can measure the success
cons of social media marketing
- costs involved to hire management
- safety concerns
- no control over the reaction from audience
what does place mean (from the 7 ps)
- the process of the product from manufacturer to consumer
- the chain of intermediaries of a product as it passes from producer to final customer
types of distribution channels of a product
- direct selling (zero level)
- single intermediary channel
- two intermediary channel
what is direct selling - as a distribution channel
- when a manufacturer sells directly to a customer without intermediaries
pros of direct selling
- 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
cons of direct selling
- less exposure for the produce to consumers
- have to handle storage and distribution
- not specialised in selling - may not reach full potential
what is a single intermediary channel
selling through one intermediary (eg. a retailer or an agent)
pros of a single intermediary channel
- reach a wider range of customers
- consumers can see and feel the product
- retailer takes care of storage and distribution
cons of a single intermediary channel
- retailer will take some profit
- lose control of marketing mix (e. price/promotion etc.)
- product is likely to be displayed near competitors
what is a two-intermediary channel
when a manufacturer sells through two intermediaries (usually a wholesaler and a retailer)
two-intermediary channel pro
- takes care of storage and distribution
- wider geographic reach
two-intermediary channel con
- more profit is taken from intermediaries
- less control of marketing mix
what are some factors to consider when choosing a distribution channel method?
- Cost (profit margin high enough?)
- Control over the brand
- Where are the consumers (wholesalers - global)
- Mass vs Niche market
what is considered people? (7 ps) - definition
how employees interact with customers
eg. customer interactions
after-sales service
use of social media - how do they present themselves?
what can vary in the people aspect of the 7ps?
cultural variations
- packing bags in supermarkets
- do staff approach customers?
definition of processes (7ps)? - and examples
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
definition of physical evidence (7ps)? - examples
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
what does appropriate marketing mix mean?
all aspects of the 7ps should work together and be appropriate for the product
