The Elements of the Marketing Mix Flashcards
All 55 cards in this deck
What is the marketing mix?
The combination of elements a business uses to market a product successfully — price, product, promotion and place.
What are the four elements of the marketing mix (the 4Ps)?
Price, product, promotion and place.
What is the purpose of the 'price' element of the marketing mix?
To decide how much to charge so the product attracts customers while the business still makes a profit.
What is the purpose of the 'product' element of the marketing mix?
To make sure the good or service (its design, features and quality) meets the needs of the target market.
True or false? The marketing mix applies only to physical goods, not to services.
False. Services also need a marketing mix — price, product, promotion and place.
What is price skimming?
Setting a high price when a product is first launched. Used for new or innovative products with little competition.
What is price penetration?
Fixing a low price when a new product is first introduced. Used to attract customers quickly in a market with strong competition.
What is competitive pricing?
Setting the price of a product so that it is in line with competitors' prices.
What is a loss leader?
Selling a product below cost price to attract customers, in the hope they buy other, profitable products too.
What are the steps to set a price using cost-plus pricing?
e.g. a product costs £8 to make and the business adds a 50% mark-up
- Find the total cost per unit: £8
- Work out the mark-up: 50% of £8 = £4
- Add the mark-up to the cost to get the price: £12
Name four factors that influence a business's pricing decision.
Costs of production, the nature of the market, the degree of competition, and the stage of the product life cycle.
What is the basic relationship between price and demand?
As prices rise, demand is likely to fall; as prices fall, demand is likely to rise.
What is a unique selling point (USP)?
A feature that makes a product different from and stand out against competitors' products.
Why is a USP important to a business in a competitive market?
It makes the product stand out from the competition, attracting customers and allowing the business to charge more.
What does it mean to differentiate a product?
To make it clearly different from rivals' products, through design, branding, quality or a USP.
Give one benefit to a business of a strong brand image.
Customers recognise and trust the brand, so they buy repeatedly and may accept a higher price.
State one benefit to a business of developing a new product.
It can attract new customers and increase sales, keeping the business competitive.
True or false? Developing a new product is a low-risk way for a business to increase profit.
False. Research, development and launch cost money, and the product may fail to sell.
What three things should a business consider when designing a new product?
The design (function and appearance), the image it creates, and the needs of the target market.
Name the five stages of the product life cycle in order.
Research and development, introduction, growth, maturity, decline.
Which stage of the product life cycle has sales at their highest with growth slowing down?
Maturity. Competition is strong and the business may soon need extension strategies.
What is an extension strategy?
An action taken to lengthen the life of a product when sales begin to fall.
e.g. new packaging, added features, a new target market, more advertising or a price reduction.Why does a business use the Boston Matrix?
To analyse the balance of its product portfolio (market share against market growth) and decide which products to invest in or withdraw.
In the Boston Matrix, what is a 'star'?
A product with a high market share in a high-growth market. It needs heavy investment and promotion.
In the Boston Matrix, what is a 'cash cow'?
A product with a high market share in a low-growth market. It earns steady cash that can fund other products.
In the Boston Matrix, what is a 'problem child' (question mark)?
A product with a low market share in a high-growth market. Its future is uncertain and it needs investment to grow.
In the Boston Matrix, what is a 'dog'?
A product with a low market share in a low-growth market. It is often withdrawn or sold off.
What is promotion in the marketing mix?
Communicating with customers to make them aware of a product and encourage them to buy it.
State three reasons why a business promotes its products.
To inform or remind customers, to persuade them to buy and increase sales, and to create or change the brand image.
True or false? The only purpose of promotion is to increase sales immediately.
False. Promotion also informs and reminds customers and builds or changes the business's image.
True or false? 'Advertising' and 'promotion' mean the same thing.
False. Advertising is just one method within the promotional mix, alongside PR, sales promotion, sponsorship and others.
What is the promotional mix?
The combination of promotional methods a business chooses to use for a product.
What is sales promotion?
Short-term incentives that encourage customers to buy.
e.g. BOGOF offers, money-off coupons, loyalty cards.What is sponsorship as a promotional method?
Paying to have a business's name or brand linked to an event, team or person to raise brand awareness.
What is a point of sale display?
Promotional material placed where the product is sold, such as a stand or sign near the till, to encourage impulse buying.
Give one benefit of using social media to promote a business.
It is low cost and reaches a large audience quickly, as posts can be shared by customers themselves.
Identify four factors that influence a business's choice of promotional mix.
Finance available (and cost of the method), competitors' actions, the nature of the product or service, and the nature of the market or target market.
What does 'place' mean in the marketing mix?
How and where the product is distributed so it reaches the customer.
What is a channel of distribution?
The route a product takes from the producer to the final consumer.
What is a wholesaler?
A business that buys goods in bulk from producers and sells them in smaller quantities to retailers.
What is a retailer?
A business that sells goods directly to the final consumer, e.g. a shop or supermarket.
What is telesales as a distribution method?
Selling goods or services directly to customers over the telephone.
True or false? Selling direct to the consumer lets a producer keep more of the profit than selling through a retailer.
True. There is no middleman taking a share, and the producer also keeps control of price and image.
What is e-commerce?
Buying and selling goods and services online over the internet.
What is m-commerce?
Buying and selling goods and services using mobile devices such as smartphones and tablets.
Give one benefit to a business of using e-commerce.
It can sell 24/7 to customers anywhere, extending its reach into international markets.
Give one drawback to a business of using e-commerce.
Setting up and maintaining a secure website is costly, and there is more competition online.
True or false? Using e-commerce removes a business's need to deal with distribution.
False. Goods still have to be packed and delivered, which adds cost and can cause returns and complaints.
True or false? The four elements of the marketing mix can be decided separately from one another.
False. They must work together and be consistent, or the product will not appeal to the target market.
If a business charges a premium (high) price, how should the other elements of the mix support this?
e.g. a luxury watch
High-quality product and design, sold in exclusive outlets, with image-based promotion — so the luxury watch is sold only in specialist stores.
Why does a business's marketing mix need to change over time?
Because the product moves through its life cycle and the market changes (competitors, technology, tastes), so the mix must be updated to keep sales up.
Name one external change that might force a business to change its marketing mix.
New technology such as e-commerce and m-commerce.
e.g. also new competitors, changing customer tastes or new laws.What are the steps to use sales data to recommend a change to the marketing mix?
e.g. sales of a snack bar have fallen for three years in a row
- Identify the trend and life cycle stage: falling sales means decline
- Choose the element to change: promotion — an extension strategy such as new packaging plus advertising
- Justify it for the target market: renewed interest should lift sales again
True or false? In the Boston Matrix, a cash cow is a product with a high market share in a fast-growing market.
False. A cash cow has a high market share in a low-growth market.
True or false? Cutting the price of a product always increases a business's total revenue.
False. Demand usually rises when price falls, but sales may not rise enough to make up for the lower price per unit.