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Marketing Mix
Theme1
| Question | Answer |
|---|---|
| Channel of Distribution | Firms involved in passing a product to the customer |
| Direct Distribution | Channel goes straight from producer to customer. Products that are difficult to transport due to their bulk will use this method. Firms selling direct avoid hefty overheads resulting from operating retail outlets |
| Non-physical or intangible product or service | Teaching/Financial Consultancy |
| Aesthetics | The look and the feel of the product, how our senses respond to the product |
| Intangible benefits | Pleasure, satisfaction, peace of mind |
| Ethical Sourcing | Buying materials from suppliers that are behaving in a morally correct manner. Fair trade, Responsible and organic farming e.g. free range chickens and using Sustainable sources. |
| Distribution | The ‘process of getting the firm’s product to the market’ |
| Traditional Distribution | Producer/Wholesaler/Retailer/Consumer. It is the most expensive and has the most intermediaries. The extra intermediary mean that costs are higher as wholesaler’s services do not come free |
| Modern Distribution | Producer/Retailer/Consumer. Companies such as M&S would use this method of distribution. |
| Factors affecting distribution | (1) Technically complex products - better distributed when the customer and producer can easily contact each other to solve any problems that arise. (2)Control - The more intermediaries a firm uses , the less control it has over the way it is sold |
| Online Distribution | The distribution of media content digitally as opposed to physically e.g. music/films/news |
| Manufacturer | Take raw materials or components and turn them into finished goods. Operate in the secondary sector e.g. car production |
| Wholesalers | Buy large quantities of supplies from producers and then sell them on in smaller quantities. Act as an intermediary between manufacturers and retailers and consumers. |
| Retailer | An organisation that sells good or services to the public or end user. They are at the end of the channel of distribution. |
| Product | Goods and services that the firm provides |
| Design Mix | The three fundamental elements of product or service design that must be taken into account during the research and development stage i.e. prior to launching onto the market |
| Social Trends | (1) Concern over resources depletion e.g. renewable and non-renewable resources (2) Ethical Sourcing (3) Designing for waste minimisation, re-use and recycling e.g. Refill packs, Recycled materials as a raw material and Recyclable packaging |
| Promotional Mix | The combination of promotional activities that a business uses in order to create consumer awareness and generate sales |
| Promotion | The activities designed to communicate with the market thereby increasing visibility and sales of a product |
| Sales promotions | Short term offers used by firms in order to increase sales for their products |
| Public Relations (PR) | Involves communicating with the media such as newspapers, television and radio in order to get favourable publicity for the organisation |
| Branding | A promotional method that involves the creation of an identity for the business that distinguishes that firm and its products from other firms |
| Brand recognition | Brand recognition comes in many forms including colour, logo, strap line and shape |
| Geographical brand | When a region, city, county or country creates a brand that epitomises the people and the lifestyle of that country, often used in tourism |
| Personal brand | When a person brands themselves e.g. a sports personality or pop star |
| Advertising | Occurs when firms pay for the promotion of their product through the main media such as television, radio and the press. This is known as ‘above the line’ promotion |
| Unique Selling Point | Feature or characteristic within a brand that makes it stand out e.g. SuperJam is sweetened by natural grape juice not sugar |
| Viral Marketing | Use of social media to encourage the spread of promotional activities and increase brand awareness e.g. blogs and online forums |
| Social Media | The use of virtual communities to communicate with actual and potential customers |
| Emotional Branding | Building a brand that will directly tap in to the consumers feelings, personal psychological needs and aspirations e.g. presents a feeling of belonging or success |
| Personal Selling | Occurs when a company’s sales team promote a product through personal contact. Financial services such as pensions, insurance and mortgages are often sold in this way |
| Direct Mailing | Involves sending information about a product through the post. Consumer can usually buy the product by placing an order by post or telephone |
| Price Discrimination | Markets can be broken down into different segments.. It may then be possible to price discriminate. Charge different price to different people e.g. rail card and bus travel |
| Price | The amount paid by the customer for a good or service |
| Cost Plus Pricing | A percentage mark up is added to the cost of producing a good or service to calculate the selling price |
| Penetration Pricing | The price is deliberately set low to gain a foothold in the market and a steady gain in market share. |
| Price Skimming | Sets a high price for the product because people will be desperate to try out the product no matter what price is being charged for it. Used when a new and innovative product is released onto the market |
| Competition Pricing | Setting the price at the same level as the competition |
| Predator Pricing | This occurs when a firm sets out to destroy/weaken competition through low prices e.g. Virgin Airlines |
| Penetration Pricing | This occurs when prices are sold at prices intended to make customers think they are getting a bargain |
| Price Leader | Firms that dominate a market with an existing product set the price and other firms in the market follow suit |
| Price Taker | Smaller firms in the market who set their prices based on the market price. This might be the price set by the market leader or it might be where firms sell similar products and customers find it hard to differentiate the product. |
| Dynamic Pricing | Prices change frequently and quickly in response to changes in demand. Often used by businesses with set capacity e.g. an airline so as the plane reaches full capacity prices will start to rise |
| Product Life Cycle | Shows the different stages that a product passes through and sales that can be expected at each stage e.g. Development, introduction, growth, maturity and decline |
| Decline | Sales start to decline due to changing customers tastes or advances in technology e.g. CD's |
| Development | During this stage product is designed. Suitable ideas tested. If an idea is considered suitable then a prototype is produced. Decision will then be made whether to launch. |
| Introduction | Product is new on the market. Sales are often low. Costs are incurred e.g. building new production lines, promotion and distribution costs. Likely the product will still not be profitable. |
| Growth | Once the product is established and consumers are aware of it, sales begin to grow. If it is a new product and there is a rapid growth in sales, competitors may launch their own version |
| Maturity | this is when the growth in sales levels off. The product has become established with a stable market share. Sales will have peaked. |
| Extension Strategies Examples | Cut price/ Modify the product/Change the packaging/Special offers |
| Stars | Have a dominate share of the market/Market leaders/Fast growing /Make Substantial profit |
| Dogs | Products in decline as they have a low share of the market and no prospects for growth/Operate at a cost disadvantage/ Often in markets that are barely developing |
| Problem Child/Question Marks | Products that have a small share of a growing market/ Require a lot of funds to fulfil their potential/ Rapid growth/ Likely to turn into stars |
| Cash Cows | Products with a dominant share of the market but low prospects for growth/Likely to remain solid earners without the need for much investment/Today’s stars become the cash cows of tomorrow |
| Boston Matrix | Illustrates the position of a firm’s products in terms of their market share and the market growth rates |
| Product portfolio analysis | Looks at the range of products and brands that a firm has under its control. A businesses product range is called its product portfolio |
| Niche marketing | When a firm targets a small subsection or previously unexploited gap in a larger market. Gives a business first mover advantage and allow them to charge a premium price |
| Mass marketing | When a firm targets the whole of a market rather than a particular segment. Gives a business a high volume of sales but often at a low price |
| Industrial markets | Where businesses are selling to other businesses; business to business (B2B) |
| Consumer markets | Where businesses are selling to the public, business to consumer (B2C) |
Created by:
durquhart1
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