4.5 The four 4Ps: product, price, promotion & place

Predatory pricing

________: deliberately undercutting competitors prices in order to try to force them out of the market.

Consumer durables

________: manufactured products that can be reused and are expected to have a reasonably long life, such as cars.

Extension strategies

________: marketing plans that extend the maturity stage of the product before a brand new one is needed.

Psychological pricing

________: setting prices that take account of customers perception of value of the product.

Promotional pricing

________: special low prices to gain market share or sell off excess stock includes "buy one get one free.

emotional attachment

A(n) ________ can develop between the brand and customers, increasing customer loyalty.

Market skimming

________: setting a high price for a new product when a firm has a unique or highly differentiated product with low price elasticity of demand.

Boston Consulting Group

________ matrix: method of analyzing the product portfolio of a business in terms of market share and market growth.

Loss leader

________: product sold at a very low price to encourage consumers to buy other products.

Internet

________ (online) marketing refers to advertising and marketing activities that use the ________, email and mobile communications to encourage direct sales via electronic commerce.

Penetration pricing

________: setting a relatively low price often supported by strong promotion in order to achieve a high volume of sales.

Brand

________: identifying symbol, name, image or trademark that distinguishes a product from its competitors.

Channel of distribution

________: chain of intermediaries a product passes through from producer to final consumer.

Promotion mix

________: combination of promotional techniques that a firm uses to communicate the benefits of its products to customers.

Product

end result of the production process sold on the market to satisfy a customer need

Consumer durables

manufactured products that can be reused and are expected to have a reasonably long life, such as cars

Product life cycle

pattern of sales recorded by a product from launch to withdrawal from the market

Extension strategies

marketing plans that extend the maturity stage of the product before a brand new one is needed

Boston Consulting Group matrix

method of analyzing the product portfolio of a business in terms of market share and market growth

Brand

identifying symbol, name, image or trademark that distinguishes a product from its competitors

Brand awareness

extent to a which a brand is recognized by potential customers and is correctly associated with a particular product can be expressed as a percentage of the target market

Brand loyalty

faithfulness of consumers to a particular brand as shown by their repeat purchases irrespective of the marketing pressure from competing brands

Brand value (or brand equity)

premium that a brand has because customers are willing to pay more for it than they would for a non-branded generic product

Family branding

marketing strategy that involves selling several related products under one brand name (also known as umbrella branding)

Product branding

each individual product in a portfolio is given its own unique identity and brand image (also known as individual branding)

Company or corporate branding

company name is applied to products and this becomes the brand name

Own-label branding

retailers create their own brand name and identity for a range of products

Manufacturers brands

producers establish the brand image of a product or a family of products, often under the company's name

Cost-plus pricing

adding a fixed mark-up for profit to the unit price of a product

Penetration pricing

setting a relatively low price often supported by strong promotion in order to achieve a high volume of sales

Market skimming

setting a high price for a new product when a firm has a unique or highly differentiated product with low price elasticity of demand

Psychological pricing

setting prices that take account of customers perception of value of the product

Loss leader

product sold at a very low price to encourage consumers to buy other products

Promotional pricing

special low prices to gain market share or sell off excess stock includes "buy one get one free"

Predatory pricing

deliberately undercutting competitors prices in order to try to force them out of the market

Promotion

use of advertising, sales promotion, personal selling, direct mail, trade fairs, sponsorship and public relations to inform consumers and persuade them to buy

Above-the-line promotion

form of promotion that is undertaken by a business by paying for communication with consumers, e.g

Below-the-line promotion

promotion that is not a directly paid-for means of communication but based on short-term incentives to purchase, e.g

Sales promotion

incentives such as special offers or special deals directed at consumers or retailers to achieve short-term sales increases and repeat purchases by consumers

Promotion mix

combination of promotional techniques that a firm uses to communicate the benefits of its products to customers

Viral marketing

use of social media sites or text messages to increase brand awareness or sell products

Guerrilla marketing

unconventional way of performing marketing activities on a very low budget

Channel of distribution

chain of intermediaries a product passes through from producer to final consumer

Product

End result of the production process sold on the market to satisfy a customer need

Consumer durables

Manufactured products that can be reused and are expected to have a reasonably long life, such as cars

Product life cycle

Pattern of sales recorded by a product from launch to withdrawal from the market

Introduction, growth and maturity or saturation

3 stages of the product life cycle

Extension strategies

Marketing plans that extend the maturity stage of the product before a brand new one is needed

Boston Consulting Group matrix

Method of analyzing the product portfolio of a business in terms of market share and market growth

Cash cow, star, problem child and dog

4 sectors created by the Boston Consulting Group matrix

Brand

Identifying symbol, name, image or trademark that distinguishes a product from its competitors

Brand awareness

Extent to a which a brand is recognized by potential customers and is correctly associated with a particular product can be expressed as a percentage of the target market

Brand loyalty

Faithfulness of consumers to a particular brand as shown by their repeat purchases irrespective of the marketing pressure from competing brands

Brand development

Brand development measures the infiltration of a product's sales, usually per thousand population; if 100 people in 1000 buy a product, it has a brand development of 10

Brand value (or brand equity)

Premium that a brand has because customers are willing to pay more for it than they would for a non-branded generic product

Family branding

Marketing strategy that involves selling several related products under one brand name (also known as
umbrella branding)

Product branding

Each individual product in a portfolio is given its own unique identity and brand image (also known as
individual branding)

Company or corporate branding

Company name is applied to products and this becomes the brand name

Own-label branding

Retailers create their own brand name and identity for a range of products

Manufacturers' brands

Producers establish the brand image of a product or a family of products, often under the company's name

Importance of packaging

Protection (or function); attracting customers, promotion and information; differentiation and brand support

Costs of production; competitive conditions in the market; competitors' prices; marketing objectives; price elasticity of demand; whether it's a new or an existing product

6 factors determining the price decision

Cost-plus pricing

Adding a fixed mark-up for profit to the unit price of a product

Penetration pricing

Setting a relatively low price often supported by strong promotion in order to achieve a high volume of sales

Market skimming

Setting a high price for a new product when a firm has a unique or highly differentiated product with low price elasticity of demand

Psychological pricing

Setting prices that take account of customers' perception of value of the product

Loss leader

Product sold at a very low price to encourage consumers to buy other products

Price discrimination

Price discrimination occurs a when a business sells the same product to different consumers at different prices

Promotional pricing

Special low prices to gain market share or sell off excess stock includes "buy one get one free"

Price leadership

Price leadership exists when one business sets a price for its products and other firms in the market set the same or similar prices (they "follow suit")

Predatory pricing

Deliberately undercutting competitors' prices in order to try to force them out of the market

Promotion

Use of advertising, sales promotion, personal selling, direct mail, trade fairs, sponsorship and public relations to inform consumers and persuade them to buy

Above-the-line promotion

Form of promotion that is undertaken by a business by paying for communication with consumers, e.g.
advertising

Below-the-line promotion

Promotion that is not a directly paid-for means of communication but based on short-term incentives to purchase, e.g. sales promotion techniques

Sales promotion

Incentives such as special offers or special deals directed at consumers or retailers to achieve short term sales increases and repeat purchases by consumers

Promotion mix

Combination of promotional techniques that a firm uses to communicate the benefits of its products to customers

Internet (online) marketing

Internet (online) marketing refers to advertising and marketing activities that use the internet, email and mobile communications to encourage direct sales via electronic commerce

Viral marketing

Use of social media sites or text messages to increase brand awareness or sell products

Guerrilla marketing

Unconventional way of performing marketing activities on a very low budget

Channel of distribution

Chain of intermediaries a product passes through from producer to final consumer

Product life cycle (introduction)

Introduction is when the product has just been launched after development and testing. Sales are often quite low to begin with and may increase only quite slowly but there are exceptions, such as a newly launched DVD by a major rock star

Product life cycle (growth)

If the product is effectively promoted and well received by the market, then sales should grow significantly. This stage cannot last forever, although all firms wish that it would. Eventually, and this may take days, weeks or even years, sales growth will begin to slow and might stop altogether, which leads the product into the next stage. The reasons for declining growth include increasing competition, technological changes making the product less appealing, changes in consumer tastes and saturation of the market

Product life cycle (maturity or saturation)

Sales fail to grow, but they do not decline significantly either. This stage can last for years, for example Coca-Cola. The saturation of consumer durables markets is caused by most consumers who want a certain
product having already bought one

BCG matrix ("cash cow")

This is a well-established product in a mature a market. Typically, this type of product creates a high positive cash flow and is profitable. Sales are high relative to the market and promotional costs are likely to be low, as a result of high consumer awareness

BCG matrix ("star")

This is clearly a successful product as it's performing well in an expanding market because of this it is often called a "star". The firm will be keen to maintain the market position of this product in what may be a fast-changing market therefore, promotional costs will be high to help differentiate the product and reinforce its brand image

BCG matrix ("problem child")

It consumes resources, but it generates little return at least in the short-term. If it's a newly launched product, it's going to need heavy promotional costs to help it become established - this finance could come from the cash cow

BCG matrix ("dog")

"Dogs" seem to offer little to the business either in terms of existing sales and cash flow or future prospects, because the market is not growing. They may need to be replaced shortly or the firm could decide to withdraw from this market sector altogether and position itself into faster-growing sectors