Unit 5 Marketing Mix Flashcards
What is the marketing mix
product
price
place
promotion
what is the product in the marketing mix
creating value
- Includes services and physical / tangible goods
- Brand
- Size
- Quality
- Packaging
- Warrenty
what is the price in the marketing mix
transacting value
- list price
- discounts
- allowance
- costs
- payment method
- credit terms
what is the promotion aspect of the marketing mix
communicating values
- advertising
- sales promotion
- personal selling
- public selling
- direct marketing
- digital media
what is the place aspect of the marketing mix
delivering value
- marketing channels
- distribution
- locations
- retailers vs online
- supply chain
- logistics
what is the complexity of products
actual product: brand name, quality level, packaging, features and design
associated services: financing, product warranty, product support
BCG Portfolio Analysis
Stars
- High markets share & High growth
- Most ideal for long-term profits
Cash cows
- High market share & Low growth
- Keep making money
Question marks
- Low market share & High growth
- There is potential - this could increase market share and could be good (Or it could happen the other way)
Dogs
- Low market share & Low growth
- The worst type of products/brands (Do something dramatic or get rid of them)
Growth Strategies (Ansoff Product Market Matrix)
Market penetration
- Existing product & Existing market
- Do more promotion/advertising (ex. Coke Cola)
Market development
- Existing product & New market
- Ex. Taco Bell in India
Product development
- Existing market & New product
- Coming out with a new car (Toyota)
Diversification
- New product & New markets
- Ex. Apple launches a new product (iPhone)
Diffusion of Innovation
Innovators - Consumers who buy the first products
Early adaptors - The ones who follow the innovators
Early majority - Larger group of consumers
Late majority - The latter half of consumers who adopt the new product
Laggards - Will try not to adopt new technology & Hold on to old technology for as long as they can
Product Life Cycle
Introduction
- sales: low
- profits: negative or low
- typical consumers: innovators
- competitors: one or few
Growth
- sales: rising
- profits: rapidly rising
- typical consumers: early adaptors and early majority
- competitors: few but increasing
Maturity
- sales: peak
- profits: peak to declining
- typical consumers: late majority
- competitors: high number of competitors and competitive products
decline
- sales: declining
- profits: declining
- typical consumers: laggards
- competitors: low number of competitors and products
Price signal
Prices can be both too high or too low
Price is too low may signal poor quality
Price set too high might signal low value
Pricing strategies
Cost-oriented
Competitive-oriented
Demand-oriented
Value-based pricing
Price discrimination
economics approach to find price
profit = quantity (price) * (price - unit cost)
find price where marginal costs = marginal revenue
Cost-oriented pricing
When a company sets its prices as costs + markup percentage or fixed amount (cost plus)
Markup pricing makes sense:
- If average unit cost are fairly constant for different points on the demand function
- If costs elasticity are constant over time
Very common, but ignores the current elasticity of demand when setting prices, and will probably not lead, except by chance, to max profits
Competitive-oriented pricing
When a company bases its price chiefly on what its competitors are charging rather than on cost or demand
Competitive-oriented pricing mostly characterizes markets with homogeneous commodities
Creates a price-stagnant market:
- If a firm increases prices – loses a lot of market shares
- If a firm decreases prices – other quickly follow suit
