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Bcom MBM Year 2 S2
Marketing
| Question | Answer |
|---|---|
| Identify the different forms of pricing constraints | Demand for the product class, product and brand. Newness of the product: stage in the product life cycle. Single product versus a product line. Cost of producing and marketing the product. Cost of changing prices and time period to which they apply. |
| Explain "Demand for the product class, product and brand" under different forms of pricing constraints. | The demand for a product (number of potential buyers) is seen as a pricing constraint as it affects the range of prices that can be asked for a product. If the demand for a product is high, the pricing can generally be set higher and vice versa. |
| Explain "Newness of the product: stage in the product life cycle" under different forms of pricing constraints. | The stage in the product life cycle in which a product exists is as well seen as a pricing constraint as a higher price can be asked for a relatively new product and vice versa. |
| Explain "Single product versus a product line" under different forms of pricing constraints. | Whether a product is a single product or part of a product line is seen as a pricing constraint as a product which is part of a product line has to generally be adjusted according to the pricing of the other products. |
| Explain "Cost of producing and marketing the product" under different forms of pricing constraints. | The fact that a firm should always set the price as to cover their costs is seen as a pricing constraint. If a firm sets the price to be lower than their costs, they will run at a loss and are therefore forced to set their prices higher. |
| Explain "Cost of changing prices and time period to which they apply" under different forms of pricing constraints. | Difficult to change relates 2 how large customer base. If business = large customer base, difficult to change price in terms of informing them and vice versa. The time period it will take to inform their customers will be extended and vice versa. |
| Identify the unique characteristics of a service. | Intangible, Inseparable, Variable, Perishable. |
| Identify the steps in the new product development process. | 1) Organization for product development. 2) Generation of product ideas. 3) Screening of product ideas. 4) Concept development. 5) Business analysis. 6) Physical product development. 7) Test-marketing. 8) Commercialization. |
| Discuss the benefits of branding to the consumer. | Facilitates product identification. Communicates features and benefits. Helps produce evaluation. Reduces risk in purchasing. Creates interest and character for the product image. |
| Discuss the benefits of branding to the seller. | Captured market. Segmented market. New product launches. |
| Discuss the benefits of branding to the manufacturer. | Gives legal protection. Helps create brand loyalty. Creates differential advantage. Allows premium pricing. Facilitates product diversification in certain respects. Increases power over the retailer. |
| Name the various phases in the product life cycle. (explain) | Introduction, growth, maturity, decline. |
| Explain the strategies that can be used in the introductory phase. | Slow Skimming (High Price, Low Promotion). Slow Penetration (Low Price, Low Promotion). Rapid Skimming (High Price, High Promotion). Rapid Penetration (Low Price, High Promotion) |
| Explain the strategies that can be used in the growth phase. | The introduction of new features. The improvement of quality. Additions to distribution channels. Targeting new segments. |
| Explain the strategies that can be used in the maturity phase. | Modify market. Modify product. Modify marketing mix. Repackaging of the product. Co-branding. |
| Explain the strategies that can be used in the decline phase. | Maintenance. Harvesting. Divesture. Rebranding. Repositioning. |
| What is the main objective of the strategies that can be used in the decline phase? | The main objective is to reduce costs and milk the brand. |
| Give an example of a model that can be used in the product portfolio analysis. | Boston Consulting Group (BCG) portfolio matrix. |
| What does the BCG growth-share matrix do? | The BCG growth-share matrix classifies an organisation’s products according to the cash usage and their cash generation along two dimensions (relative market share and market growth rate. |
| Name the four categories of products that the BCG matrix classifies products into. | Question marks. Stars. Cash cows. Dogs. |
| Explain "Question marks/Problem children" under the four categories of products that the BCG matrix classifies products into. | Businesses in high growth market with low relative shares. The problem child is often a new product which could become a star if developed successfully. |
| Explain "Stars" under the four categories of products that the BCG matrix classifies products into. | Businesses in high growth market with high relative shares. As the industry matures, they become cash cows. |
| Explain "Cash cows" under the four categories of products that the BCG matrix classifies products into. | Businesses with high relative market share of low growth market. The primary generators of profit, they do not require additional cash investment. |
| What can the money from cash cow businesses be used for? | Organisations can use the cash from these businesses to support question marks and stars. |
| Explain "Dogs" under the four categories of products that the BCG matrix classifies products into. | Businesses in low market growth with low relative market share. They typically generate low profits or losses. Strategies that can be implemented are divesture and harvest. |
| Name the five limitations of the growth-share matrix. | Only uses two variables. Market growth rate inadequate descriptor. Relative market share is inadequate descriptor. Little guidence on how to implement strategies. Assume all business units independant except cash flow. |
| Explain "Dogs" under the four categories of products that the BCG matrix classifies products into. | Businesses in low market growth with low relative market share. They typically generate low profits or losses. Strategies that can be implemented are divesture and harvest. |
| What role does price play in the marketing mix? | Price plays a strategic role in organizations' marketing efforts. It can be used as a strategic tool to combat competition, to differentiate itself from essentially similar products, or even to create a niche' market for itself. |
| What sets guidelines for price an promotion strategies? | Strategic choices about market targets, products and distribution. |
| What helps establish the price range? | Quality of product, features, type of distribution channel, end users served and intermediaries. |
| Name the 4 strategies in the marketing mix that price relates to. | Product strategy. Distribution strategy. Promotion strategy. Positioning strategy. |
| Explain the relationship between price and the product strategy. | Strategies can be simple/complex. Can limit price on product and make money long-term on spares, maintenance and petrol etc. Prices based on total mix, not individual. High price = high perceived quality vv. |
| Explain the relationship between price and the distribution strategy. | Price of product is influenced by channel. More expensive/better channel = higher price vv. Distribution intensity + configuration influence price as well. Intermediaries mb considered as it will add to $. |
| Explain the relationship between price and the promotion strategy. | High quality high $ products should be advertised in media that complement image of product. Use of inappropriate media can limit image of product. Type of media is determined by target markets. |
| Name the uses of price in the positioning strategy. | It is used as a signal to the buyer, an instrument of competition, a means of improving financial performance and to perform other marketing mix functions. |
| Explain the uses of price in "signal to the buyer". | Price offers means of communicating to buyer, means of comparison. Position the brand as high quality or pursue head-on competition with another brand. When product cant be evaluated, price can be used. |
| Explain the uses of price in "instrument for competition" | Price offers a way to quickly attract competitors, alternatively to position a company away from direct competition price strategy is always related to competition. |
| Explain the uses of price in "a means of improving financial performance" | Price is the only instrument that generates income directly. Price should generate enough income to cover costs + make profits. |
| Explain the uses of price in "other marketing mix functions" | Eg. Promotional pricing. Prices often used with other instruments as some markets are price sensitive. When new product is introduced to market, price is used to peetrate market via special offers etc. |
| What can the marketing mix as well be known as? | Marketing instruments. |
| Name the 7 types of pricing objectives. | Survival. Profit. Sales. Competition. Product-quality leadership. High quality. Social responsibility. |
| Explain the 7 types of pricing objectives. | Survival: adjust price just to fit organizational goals. Only care about surviving. Profit: highest possible profit. This is unclear as its hard to estimate. bad strategy. Sales: increase price, minus sales vv. Competition: price stable, with competition. |
| Explain the 7 types of pricing objectives. | Product-quality leadership: high quality, usually demands higher price. high quality = survival. Social responsibility: recognize obligation 2 society. eg. milk and bread. Non- profit and other public org. |
| Name the 6 methods that can be used to select an approximate price level. | Going-rate pricing. Above-market pricing. Below-market pricing. Customary pricing. Loss-leader pricing. Sealed-bid pricing. |
| explain "Going rate pricing" under methods used to select an approximate price level | follow the leader. based on competitors prices less attention paid to own costs |
| explain "Above-market pricing" under methods used to select an approximate price level | competitors prices point of departure. image of high quality must be differentiated |
| explain "below market pricing" under methods used to select an approximate price level | lower quality cost is lower market penetration |
| explain "customary pricing" under methods used to select an approximate price level | based on tradition, eg vending machine price stays same level for long |
| explain "loss leader pricing" under methods used to select an approximate price level | lower price than cost. attract customers. increase sales. limited quantities. new store? |
| explain "sealed bid pricing" under methods used to select an approximate price level | price based on how org. thinks competitors will price. hope to price less high price = lower chance of contract |
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