marketing mix

• marketing mix

  product, price, place, promotion, people, process, physical evidence
• product life cycle graph

  general pattern of growth and decline of a product
• stage one of the product life cycle


  R&D - unreleased, R&D occur, prototypes made, no sales
• stage two of the product life cycle


  introduction - product launched on the market, high advertising costs to make the product well known
• stage three of the product life cycle


  growth - sales begin to rise, advertising costs still high, profit may be made if all R&D costs are recouped
• stage four of the product life cycle


  maturity and saturation - peak sales, advertising can be reduced as product is now well known
• stage five of the product life cycle


  decline - sales begin to fall
• boston matrix


  way to analyse a product portfolio
• question mark


  @ introduction stage, require a lot of investment to grow market share, decision must be made on whether the investment is worth the risk, profitability cannot be guaranteed, low market share in fast growing markets
• star


  @ growth stage, requires heavy investment to maintain growth, profits will grow and stars become cash cows
• cash cows


  @ maturity stage, require little investment, profits can be milked for cash, must be maintained for strong cash flows, support development of stars
• dogs


  @ decline stage, not worth investment, might break even or make little profit, eventually withdrawn from market
• extending product life cycle

  business can change the product, packaging, price, promotion, place sold in, usage, name
• advantages of large product portfolio

  spreads risk between markets, greater brand awareness, encourages customer loyalty, easier to launch new products, meet the needs to different market segments, allows seasonal fluctuations, allows for new products to replace old products at decline stage, increase profits from selling a range of different products
• disadvantages of large product portfolio


  increased R&D costs, high marketing and advertising costs, bad publicity of one product affects sales of all products in the portfolio, resources may be spread too thin which affects performance of cash cows
• setting a price

  business must consider the competition, quality, image, production cost, profit per unit
• premium pricing


  products priced higher than rivals to signal luxury or quality which obtains a high profit margin per sale, do not require many sales, do not attract customers who look for better value
• competitive pricing


  products priced at same level as competitors so the business competes on other factors such as convenience, customer service, after sales service
• value pricing


  products priced below market price to attract customers, customers will purchase if it is value for money, but low prices are associated with poor quality which can put customers off
• psychological pricing


  product priced at just below numbers which make customers think the price is lower than it is
• cost plus pricing


  product priced by calculating cost of production then adding percentage of profit required, but does not consider external factors like competition or economic climate
• penetration pricing


  product priced lower than competitors initially to gain market share before gradually increasing it to become more like the market price once it becomes more established, used to enter a new market but can cause customers to switch brands and company does not make a lot of profit initially
• promotional pricing


  product price reduced for a short time through discounts, special offers, vouchers, which attracts media interest, helping to clear old stock or gain brand awareness
• price discrimination


  product or service price fluctuates based on changes in customer demand
• destroyer pricing


  product price set very low to attract customers away from competitors who may try to match it and go bust, eliminating them, only large businesses can do this
• market skimming pricing


  new product price set very high so impatient people will buy it, letting the business make a high initial profit, as sales slow the price is reduced so more customers can afford it, short term strategy which only works when there are little or no competitors
• loss leader


  product price set at a loss or below market value to encourage customers to come so they can buy other full price products, increases customer loyalty and numbers
• channel of distribution


  how the product gets from the manufacturer to consumer
• manufacturer


  company that makes the product
• wholesaler


  business that buys in bulk from the manufacturer then sells on smaller quantities
• retailer


  business that sells small quantities of products to the consumers
• consumer


  people who buy goods
• direct selling


  sellers contact buyers directly without middlemen
• methods of direct selling

  mail order, direct mail, e-commerce
• direct marketing


  advertising products and services directly to customers
• methods of direct marketing

  text, emails, mail, calls, online ads, flyers, kiosks, door to door, coupons
• mail order

  goods sold via catalogues
• advantages of mail order

  credit facilities, can be exclusive, saves expensive high street locations
• disadvantages of mail order

  lack of personal service, many goods returned, high advertising costs, high levels of bad debt occur
• advantages of direct mail

  consumers within specific target market segments targeted, wide geographical area reached