Marketing 4.1-4.5

Marketing mix

The combination of marketing strategies a business uses to market its products or services.

It includes the 4 Ps:

• Product

• Price

• Place

• Promotion

For service businesses, it also includes the 3 additional Ps:

• People

• Processes

• Physical Evidence

What is product orientation? State its advantages and disadvantages.

Definition: Focuses on developing high-quality products based on the business’s expertise and innovation.

Advantages:

1. High-quality, innovative products.

2. Strong reputation for product expertise.

Disadvantages:

1. May ignore customer needs.

2. High R&D costs.

What is market orientation? State its advantages and disadvantages.

Market orientation is focusing on customer needs first, driven by ongoing market research.

Advantages:

1. Meets customer needs, increasing sales.

2. Reduces risk of product failure.

Disadvantages:

1. Market research is expensive.

2. Constantly changing customer preferences can be difficult to keep up with.

What are market characteristics?

Market Characteristics 

• Size - total sales of all business in that given market

  • Volume - number of goods bought by customers (units)

  • Value - amount spent by consumers (revenue $)

• Growth - change in size (volume or value) over a period of time

• Share - Percentage of one firm sales in relation to the total sales in that market = (Firm's sales / Total sales in the market) * 100

What is the BCG matrix?

A tool that helps a business decide what to do with the products in its portfolio, by classifying each product by its relative market share and the market growth rate.

Stars: high market share and high market growth. Successful products, high demand.
Question marks: low market share and high market growth. Need money and investment in product and marketing strategies to develop product and interest.
Cash cows: low market growth and high market share. Well established product in a mature market. No need for high investment because established products.
Dogs: low market growth and low market share. Not growing but declining, low prospects, could have cash issues.

What is a Star in the BCG matrix?

High market share and high market growth. Successful products, high demand.

What is a Question Mark in the BCG matrix?

Low market share and high market growth. Need money and investment in product and marketing strategies to develop product and interest.

What is a Cash Cow in the BCG matrix?

Low market growth and high market share. Well established product in a mature market. No need for high investment because established products.

What is a Dog in the BCG matrix?

Low market growth and low market share. Not growing but declining, low prospects, could have cash issues.

What is market leadership? State the advantages and disadvantages of being a market leader.

Product or brand with the highest market share.

Advantages: Brand recognition, Economies of scale, Market power, Strong distribution channels: supermarkets are more likely to stock its products because of high consumer demand. Competitive advantage: smaller competitors may struggle to match its prices, production capacity and brand reputation.

Disadvantages: Complacency: a market leader can become too comfortable and stop innovating, Diseconomies of scale, Misuse of market power:

Explain how marketing objectives are different for a profit and non-profit organization

Marketing objectives are goals that guide marketing activities and support overall business objectives, so they differ because the overall objectives differ.

For a profit organization, marketing objectives focus on increasing sales, increasing market share, increasing profit, increasing brand awareness, and increasing customer loyalty.

For a non-profit organization, marketing objectives focus on raising awareness of its cause, increasing donations, increasing volunteers, changing behaviour, and delivering its services to meet its social mission, rather than on making a profit.

How do you calculate market share?

Market share = (firm's sales divided by total sales in the market) multiplied by 100.

Firm's sales means the sales of the one firm you are measuring. Total sales means the sales of every firm in that market added together.

There are two versions of the same formula, one by value and one by volume. By value, you use money, so firm's revenue divided by total market revenue. By volume, you use units, so firm's units sold divided by total market units sold. They can give different answers.

Example: a firm sells $20, and the total market sells $100, so its market share is 20 divided by 100, multiplied by 100, which is 20 percent. A real example from your notes is Matthew Walker, with about 95 percent of the UK Christmas pudding market.

How do you calculate market growth?

Market growth = (total sales in period 2 minus total sales in period 1) divided by total sales in period 1, multiplied by 100. It measures the change in size, by volume or value, over a period of time.

Example: total sales were $200 in 2024 and $250 in 2025, so growth is 250 minus 200, divided by 200, multiplied by 100, which is 25 percent.

What are BCG strategies?

The four strategies used to decide what to do with products in the BCG matrix: Holding, Building, Harvesting, and Divesting.

What is the Holding strategy in the BCG matrix? When do you use it, what is it used for, and what is its limitation?

Holding means maintaining the current position of a product with a high market share, like a Star or a Cash Cow, without trying to grow its share further. It is used to protect a strong position without large new investment. Its limitation is that it can miss growth opportunities if the market changes.

What is the Building strategy in the BCG matrix? When do you use it, what is it used for, and what is its limitation?

Building means investing money to increase market share, usually to turn a Question Mark into a Star. It is used to grow a product with high market growth but low market share. Its limitation is that it is expensive and risky, and the product may still fail.

What is the Harvesting strategy in the BCG matrix? When do you use it, what is it used for, and what is its limitation?

Harvesting means focusing on generating cash flow from a product, usually a Cash Cow, to invest that cash in other products. It is used to take cash from a mature product with low investment. Its limitation is that cutting investment too much can cause the product to decline faster.

What is the Divesting strategy in the BCG matrix? When do you use it, what is it used for, and what is its limitation?

Divesting means phasing out or selling off a low performing product, usually a Dog with low market share and low market growth, so it no longer uses money and time. It is used to stop supporting a product with low prospects. Its limitation is that a Dog may be kept for future growth or for a niche, so divesting too early can lose that chance.

What is a target market?

Group of consumers with common needs/wants that business is focusing on.

What is segmentation? What are the benefits and limitations of segmentation?

Market segmentation is dividing a population into groups of consumers with similar needs, characteristics or interests. It helps businesses create products and marketing strategies for specific customers.

The three main types are geographic, demographic, and psychographic segmentation.

Benefits: it helps businesses identify gaps in the market, design suitable products for specific customers, reduce waste by targeting the right customers, and spread risk across different segments.

Limitations: it can be expensive and time consuming to research segments, segments can be too small to be profitable, and customer preferences can change over time, so segments need to be updated.

What is geographic segmentation?

Dividing consumers based on location, such as country, region, or urban and rural areas.

Advantages: Adapts marketing to local needs, cultures and climates.
Disadvantages: People in the same location may have different preferences.
Example: Advertising winter clothing in colder regions.

What is demographic segmentation?

Dividing consumers based on age, gender, income, occupation and education.

Advantages: Helps identify customer groups and develop suitable products.
Disadvantages: People with similar characteristics may have different interests.
Example: A clothing brand targeting teenagers.

What is psychographic segmentation?

Dividing consumers based on lifestyles, interests, values and preferences.

Advantages: Creates targeted marketing and can increase customer loyalty.
Disadvantages: Interests can be difficult to measure and may change over time.
Example: Marketing fitness products to people interested in exercise.

What is mass marketing?

Mass marketing (undifferentiated marketing): targets the entire market. Example: Everyday products.

What is segmented marketing?

Segmented marketing is targeting a specific market segment, or several segments, with marketing designed for each segment, rather than targeting the entire market.

What is niche marketing?

Niche marketing (concentrated marketing): smaller, more specific market segments. Example: Luxury goods, niche sports, local. It focuses on a small, specific customer group. It can reduce competition and suit businesses with limited budgets.

What is a Unique Selling Proposition (USP)? Explain the importance of a business having a USP.

A feature or benefit that makes a product or business different from and better than its competitors.

Importance: it helps a business stand out in the market, attract customers and gain a competitive advantage. A strong USP makes the product easier to remember, gives customers a reason to choose it over competitors, and can allow the business to charge premium prices and build customer loyalty.

What is a consumer profile?

A detailed description of a business's target customers, including age, gender, income, social status, spending patterns, interests, lifestyle, needs and buying habits. It helps businesses understand their target market and create products, marketing strategies and pricing that appeal to their customers.

What is competitive advantage?

Offering a better product or a product at a lower production cost.

What are the elements of a marketing plan?

1. Marketing objectives: goals that guide marketing activities and support overall business objectives.

2. Marketing budget: the amount of money allocated to marketing.

3. Market segmentation and target market: dividing consumers into groups with similar needs and characteristics, then selecting the most suitable or profitable group to target.

4. Market research: gathering information about consumers' needs, preferences, habits and tastes to make informed decisions and identify opportunities.

5. Marketing strategies: long-term actions used to achieve marketing objectives through the 7 Ps

6. Control tools: used to evaluate whether marketing objectives have been achieved. Examples include sales revenue, profit data, repeat customer numbers, surveys and focus groups.

What are Porter's generic strategies?

Strategies for a business to respond to external competition. There are four strategies, based on broad or narrow target, and low cost or differentiation.

Cost leadership: lowest cost producer in a broad market. A large business can reduce unit cost through economies of scale, specialized technology or a more efficient supply chain. Products are standardized. Example: Bic pens.

Differentiation: product is better or different than competitors, with a USP, in a broad market. It charges premium prices. Example: Starbucks.

Cost focus: low cost producer in a niche market, with a narrow target.

Differentiation focus: specialized or differentiated product in a niche market, with a narrow target. Example: high quality, very exclusive, special characteristics. Example: custom shoes.

What is a position map?

A visual diagram that shows how customers perceive a business's products compared to competitors based on two chosen attributes (e.g., price and quality). It helps businesses identify market gaps, understand their position against competitors and find opportunities to differentiate their products. Example: Comparing clothing brands by price and quality to identify an opportunity for affordable, high-quality clothing.

What is time series analysis?

Time series analysis predicts future sales from past sales. Time is the independent variable and sales is the dependent variable.

What is a trend?

A visible pattern over a period of time.

What are fluctuations in time series analysis?

Seasonal: depends on the season, pattern would repeat each year. Example: toys at holidays, sunscreen in summer.
Cyclical: based on the business cycle, can extend for more than one year. Example: cars and TVs and the business cycle, with peak, recession, trough and expansion.
Random: change that stands out, unpredictable. Example: a natural disaster, a sporting event, or political unrest.

What is extrapolation?

Extension of the trend line to predict future sales.

What is variation?

Difference between actual sales and trend values.

What is sales forecasting? Explain the benefits and limitations of sales forecasting.

Sales forecasting is predicting future sales. Quantitative forecasting uses data, and qualitative forecasting uses informed opinion.

Benefits:

1. Better cash flow management with better understanding of the variation.

2. Increase efficiency, number to produce.

3. Better workforce planning.

4. Improve marketing planning.

5. Improved decision making and reduced uncertainty, by estimating future demand before making decisions.

Limitations:

1. Time consuming.

2. Ignores external factors (STEEPLE).

3. Past trends may not reflect future sales, because markets change and external factors like a recession can reduce demand.

4. New products have no historical sales data, so it is hard to forecast demand for them accurately.

What is market research? What is the purpose of market research?

Gathering information about consumers' needs, preferences, habits and tastes to make informed decisions and identify opportunities.

Purpose: to identify and estimate future demand, to identify the right marketing mix, to avoid waste and minimise risk, to set marketing objectives and budgets, and to evaluate options.

What is the difference between quantitative and qualitative research?

Quantitative research collects numerical data that can be measured, counted and analysed using statistics.

Qualitative research collects non-numerical data, such as opinions, feelings, experiences and descriptions.

What are sample methods?

A sample is a group to represent the target market.

Random: most representative.
Quota sampling: a group chosen from a segment (based on given characteristics). Example: within a group, a certain number of males and females. Faster and easier to organize, and less expensive.
Convenience: people that are willing to take part. Easiest but not the most representative of the target group.

What is primary research? What are the advantages and disadvantages of primary research methods?

New research collected first hand, specific to the business and up to date. Methods are survey, interviews, focus groups and observations.

Advantages: up to date, relevant, and specific to the business.
Disadvantages: expensive and slow to collect.

What is secondary research? What are the advantages and disadvantages of secondary research?

Research using existing data collected by others. Sources are academic journals, media articles, government publications and market analysis.

Advantages: fast and cheap to access.
Disadvantages: may be outdated, imprecise, and not specific to the business's needs.

What is bias in sampling, and what are the problems with data presentation and interpretation?

Bias in sampling is when the sample does not properly represent the target market. For example, convenience sampling is easiest but not the most representative, and quota sampling is not random.

Problems with data presentation:

1. Misleading scales: can make differences appear larger or smaller than they really are.

2. Incorrect percentages: can give a false impression of the data.

3. Too much information: makes data difficult to understand.

4. Inappropriate charts: using the wrong type of graph can make comparisons confusing.

5. Biased presentation: showing only selected data can mislead the audience.

6. Title of a diagram, axes and scale can be misleading.

7. Correlation vs. causation: correlation does not mean one thing caused the other.

What is the mean?

The average of a set of numbers (add all values and divide by the number of values).

What is the median?

The middle value when data is arranged in order.

What is the mode?

The value that appears most frequently.

What is a pie chart?

A chart that displays percentages or proportions of a whole using slices

What is a bar chart?

A chart that uses bars to compare different categories of data.

What is an infographic?

Presenting information and data using visuals, graphics and short text.

What is a brand?

Name, symbol, sign or design that differentiates a firm's product from its competitors.

What is branding? What is the importance?

Branding is creating and building a brand image and reputation for a product or business, to differentiate it from competitors and create recognition.

Importance: for a business start up, creating image, recognition and share; for a business that is well known, reputation and increased market. It also provides protection, promotion, convenience and information.

What is brand awareness?

Recognition of a product.

What is brand development?

Brand development is improving and strengthening a brand's image, by investing in sales promotions and advertisement, for example samples.

What is brand loyalty?

Brand loyalty is commitment to a brand, and brand preference for that brand over competitors.

What is brand value?

rand value is the worth of a brand in terms of its reputation. Example: Starbucks.

What are the stages in the product life cycle?

R&D, Introduction, Growth, Maturity, and Decline.

R&D: research product design and prototype the product.
Introduction: launch new products to the market, with low but growing sales.
Growth: make small improvements to meet consumers' needs and wants, with accelerating sales.
Maturity: introduce some updates to a product to extend its demand, with high but steady sales in a saturated market.
Decline: develop new products to replace products in decline, with falling sales.

What is the importance of packaging?

Packaging protects the product, communicates information such as ingredients, price and health and safety, promotes the USP by text, colour, material and shape, and makes the product easier to use.

What are pricing strategies?

Pricing strategies are methods a business uses to set the price of a product or service. The strategies are cost-plus pricing, penetration pricing, loss leader pricing, predatory pricing, premium pricing, dynamic pricing, competitive pricing, and contribution pricing.

What is cost-plus pricing? What are its benefits and limitations?

Pricing a product or service whereby all total direct costs and some allocation of indirect costs are added together along with some mark up to determine the sales price to customers. Benefits: simple and easy to ensure all costs are covered. Limitations: inward facing and takes no account of the market.

What is penetration pricing? What are its benefits and limitations?

Pricing method that businesses use to attract customers to a new product or service. Benefits: market share and customer loyalty may be established quickly. Limitations: low profit margins are likely during the initial low price, and customers may not accept the price rise.

What is loss leader pricing? What are its benefits and limitations?

Item sold at low or negative profit margin to attract customers. Benefits: can lead to a large boost in sales revenue, and draws customers in to potentially buy more expensive products. Limitations: is only possible for multi-product retailers, and is risky, suitable only for established businesses.

What is predatory pricing? What are its benefits and limitations?

Selling a product or service at such a low price that other businesses cannot compete and as a result are forced to exit the market. Benefits: once competition is eliminated, higher prices and higher market share can lead to increased profits. Limitations: it is illegal in many countries.

What is premium pricing? What are its benefits and limitations?

Involves keeping the price of one of the products or services high in order to create a positive perception among customers. Benefits: can lead to higher profit margins and improved public perceptions of a company. Limitations: can only be applied to a target market, which limits the possibilities to sell the products to a mass market.

What is dynamic pricing? What are its benefits and limitations?

Changing the price of a good or service according to demand. Benefits: higher profit and sales, adjusting to the competition, flexibility, and better inventory management. Limitations: customer dissatisfaction leading to loss of sales, and not applicable to all markets.

What is competitive pricing? What are its benefits and limitations?

Involves a business setting the price at the same level as its competitors. Benefits: aligned with rivals. Limitations: pricing is not low enough to attract customers.

What is contribution pricing? What are its benefits and limitations?

Sets price above production cost. Benefits: allows flexibility in the pricing of individual products, and demand factors can be taken into consideration. Limitations: difficult to classify the costs as direct and indirect.

What is promotion? What are the different forms of promotions?

Promotion is communication used to create awareness, persuade consumers to purchase or switch products, remind customers to retain or gain new customers, and enhance brand image.

The different forms are above the line, below the line, and through the line promotion.

What is above the line promotion?

Paid form of communication, to reach a large target market, to inform, persuade or reassure. Example: advertising (TV, radio, newspapers, magazines, outdoor, billboard, bus).

What is below the line promotion?

Promotion not carried out in mass media. It includes sales promotions (coupons, price deals, free offers, buy one get one), direct marketing (direct mail, email), personal selling (sale representatives), publicity (media coverage without directly paying for it), public relations (sponsorship, news, school support, maintain reputation in a crisis), loyalty cards, after sales service (warranties, advice, repairs, delivery), merchandising (pens, hats, t-shirts), and exhibitions and trade fairs.

What is through the line promotion?

Combination of above and below the line promotional methods, mass and direct marketing. It includes 360 degree marketing, for example television advertisement and pamphlets of the advertised product attached to newspapers, and digital marketing, online through web browser behaviour, which allows businesses to customize the message.

What is the relationship between the product life cycle and the marketing mix?

The marketing mix changes at each stage of the product life cycle.

R&D: research product design and prototype, research competitors pricing and product costs, research promotion options, research distribution channels, use networks to recruit the best employees, research efficient ordering and payments, and research customer experience design.
Introduction: launch new products, use penetration or premium pricing, use informative promotion to create awareness, start with a specific small number of shops and direct distribution, use influencers to raise awareness, adjust processes after first customers, and adjust designs as customers engage.
Growth: make small improvements to meet needs and wants, increase the price, use persuasive promotion to convince customers to repeat purchase, increase the number of shops and markets, focus on excellent customer service, maintain best processes, and maintain best designs.
Maturity: introduce updates to extend demand, use different pricing strategies to maintain sales and prevent new competition, use promotion to increase brand loyalty, expand to a large number of shops, focus on customer service, and maintain best processes and designs.
Decline: develop new products to replace products in decline, reduce prices to eliminate stock, use very limited promotion, consider discount retailers, move most capable employees to new projects, and maintain best processes and designs.