exam marketing

• what are the pricing methods?

  market skimming, competitive pricing, penetration, cost plus and promotional
• what is market skimming?

  setting a high price for a new product that is unique or very different from any other product on the market
• features of market skimming?

  higher prices to maximize short run profits and competitors with similar products entering the market will cause prices to fall
• uses of market skimming?

  for new products that are unique/ very different in the market
• benefits of market skimming?

  high prices enable firms to recover research and development costs, high prices might create a quality image for products of the firm
• limitations of market skimming?

  higher profits attract cheaper competitor products, some customers will not be able to afford it (loss of sales)
• what is penetration pricing?

  setting a low price to attract customers to buy a new product
• features of penetration pricing?

  price set lower than similar products in market to increase sales and build customer loyalty, also, once there is customer loyalty prices will increase similarly to competitors' prices
• uses of penetration pricing?

  for new products competing with products already in the market
• benefits of penetration pricing?

  attracts customers quickly, helps products become established in market and increase market share
• limitations of penetration pricing?

  loss of revenue due to low prices, can't recover development costs quickly and if the product's life cycle is too short, they might never be recovered
• what is competitive pricing?

  setting a price similar to that of competitors' products which are already established in the market
• features of competitive pricing?

  price level being similar to those charged by competitors
• uses of competitive pricing?

  for new products, if business already has good brand image and loyalty, and for existing products that have been already priced by market skimming or penetration
• benefits of competitive pricing?

  business can compete on things it might be better at (product quality, consumer service...)
• limitations of competitive pricing?

  if market has a leader price, it would need to be followed and still need to find ways to compete to attract sales
• what is promotional pricing?

  setting low pricing by different methods like loss leader pricing or bogof, to get consumers to buy
• what is loss leader pricing?

  setting the price of a small number of products at below cost to attract customers into the outlet in the hope that they will buy other products priced to earn profit (inside promotional pricing)
• features of promotional pricing?

  discounts, loss leader pricing, bogof...
• uses of promotional pricing?

  used by retailers to attract customers into store, to buy other products at their normal price, to create brand awareness, customer loyalty and sell off surplus
• benefits of promotional pricing?

  good way to sell surplus inventory and increase short term sales and market share
• limitations of promotional pricing?

  revenue on each product is lower so profit may fall
• what is cost plus pricing?

  setting price by adding a fixed amount to the cost of making or buying the product (mark up or full cost)
• features of cost plus pricing?

  price set by adding required profit percentage to the cost of production
• uses of cost plus pricing?

  retailers use it to decide the final price of product
• benefits of cost plus pricing?

  quick and easy to work out price, and price covers all costs
• limitations of cost plus pricing?

  price might be set higher than competitors, reduces sales and profits because consumers are not willing to pay for it
• what is marketing budget?

  the amount of money made available by a business for its marketing activities during a particular period of time
• what is marketing mix?

  four marketing decisions needed for the effective marketing of a product (product, place, price, promotion)
• what is brand image?

  the general impression of a product held by consumers
• what is promotion?

  marketing activities used to communicate with customers and potential customers to inform and persuade them to buy a business's product
• what are the aims of promotion?

  creating and developing brand image, attracting consumers' attention by making them aware or reminding them of a product, increase sales, persuading consumers to buy and explaining how a product is better than the competitor's one
• what are the methods of promotion?

  advertising, sales promotion, personal selling, direct mail and sponsorship
• what is advertising?

  paid-for communication with consumers which uses printed and visual media. the aim is to inform and persuade consumers to buy a product. depending on the available budget, the media used is different
• what is informative advertising?

  information about the product communicated to consumers to create product awareness and attract their interest
• what is persuasive advertising?

  communication with consumers aimed at getting them to buy a firm's product rather than a competitor's product
• what is sales promotion?

  incentives used to encourage short term increases in sales or repeat purchases, also calles below-the-line promotion
• what is below-the-line promotion

  promotion that is not paid-for communication but uses incentives to encourage consumers to buy ( sales promotion )
• methods of sales promotion?

  money-off coupons, loyalty reward schemes and competitions and games
• what is personal selling?

  staff communicating directly with the consumer to achieve a sale and form a long term relationship between firm and consumer