The Marketing Mix (AQA A Level Business): Flashcards

Political, economic, social and technological shifts can force rapid changes to the mix. Businesses that respond quickly can gain a competitive advantage.

True.

The rapid growth of social media has transformed promotional strategies, with budgets shifting towards platforms such as Instagram, TikTok and YouTube.

Product is the good or service a business offers to meet the needs of its target market.

False.

A product also includes its quality, branding, packaging and after-sales service, as well as its core features and design.

The product life cycle describes the different stages a product goes through from its conception to its eventual decline in sales.

The five stages are development, introduction, growth, maturity and decline.

In the growth stage, competitors take notice and begin entering the market with rival products.

False.

Sales peak in the maturity stage. It is typically the most profitable stage overall, as development costs have been recouped and production is efficient.

Production must scale up during growth and maturity, then scale back during decline.

An extension strategy is an action taken by a business to slow down or reverse a product's decline and extend its profitable life.

True.

Rebranding can breathe new life into a tired product, but it carries the risk of alienating loyal existing customers.

Adapting the product is the most substantive extension strategy and the one most likely to provide a lasting boost.

Product portfolio analysis involves reviewing all the products a business sells to understand how they are performing and how resources should be allocated between them.

The Boston Matrix uses relative market share and market growth rate.

False.

That describes a star. A cash cow has a high market share in a low-growth market and generates surplus cash to fund other products.

Products with a low market share in a high-growth market are called question marks.

New product development (NPD) is the process of designing, creating and launching a product that is new to the business or to the market.

First-mover advantage is when being first to market with an innovation lets a business establish brand leadership before competitors can respond.

False.

A new product may cause cannibalisation, taking sales from an existing product in the same portfolio rather than generating new revenue.

Price is the amount a customer pays for a product or service.

Price is the only element that generates revenue. Every other element represents a cost to the business.

True.

Price acts as a powerful signal of value. Customers use it as a cue about quality and status, so a premium price suggests a premium product.

It aims for the price point that generates the highest total profit, which is not necessarily the one with the highest sales volume.

The cost of producing a unit sets a floor, which is the minimum price below which the business would sell at a loss.

False.

For a price elastic product, the rise in demand more than compensates for the lower price, so total revenue increases.

Revenue is the total income a business earns from sales.

Revenue = Price × Volume sold

Profit margin measures how much profit a business makes as a proportion of its revenue, expressed as a percentage.

Profit margin = Profit ÷ Revenue × 100

False.

A lower price reduces profit margin per unit, but it may increase volume sold and raise total profit. The outcome depends on price elasticity of demand.

The selling price is £14, because a 40% mark-up adds £4 to the £10 unit cost.

Demand-based pricing sets a price according to what customers are willing to pay, rather than what the product costs to make.

Dynamic pricing adjusts prices in real time based on current levels of demand, time of day, availability or customer profile.

False.

Penetration pricing sacrifices short-term profit margin in exchange for a stronger long-term market position.

Price skimming is most effective when the product is genuinely innovative with no close substitutes, such as new consumer technology.

Setting prices broadly in line with competitors, matching the market average, is called going rate pricing.

Rivals respond by lowering their own prices, which erodes profit margins across the industry.

If customers cannot easily access the product, sales will still suffer. Convenience and accessibility are critical in the purchase decision.

Place is about making the product available in the right location, at the right time and in the right quantity.

False.

A premium product should be distributed through select, high-end outlets that reinforce its exclusivity. Wide distribution suits mass-market products.

A distribution channel is the route a product takes from producer to final customer.

Distribution channels create place utility, by making products available where customers want to buy them, and time utility, by making them available when customers want them.

Direct distribution means the producer sells its products straight to the final customer, without using any intermediaries.

False.

With direct distribution, no intermediary takes a share of revenue, so the business retains more profit per sale.

The business must manage its own logistics, warehousing, fulfilment and returns, which requires significant resources.

E-commerce involves selling online through a business's own website or app.

Because customers cannot physically inspect products bought online, e-commerce can increase return rates.

Intermediaries are businesses that operate between the producer and the final customer, such as wholesalers and retailers.

The wholesaler buys products in large quantities from producers and sells them in smaller quantities to retailers.

False.

Using intermediaries means a loss of control. The producer has limited influence over how the product is displayed, priced or presented to customers.

Multi-channel distribution means making a product available to customers through two or more different channels at the same time.

Combining online ordering with store pickup saves delivery fees for customers and brings footfall into shops.

True.

Inventory management becomes more complex, because available inventory must be visible and accurate across all outlets.

If online prices or promotions are not matched in-store, a multi-channel business risks channel conflict, which confuses customers.

The purpose of promotion is to communicate with potential and existing customers to influence their attitudes and behaviour towards a product or brand.

Keeping the brand in the minds of existing customers to encourage repeat purchase is the remind aim of promotion.

It involves highlighting what makes the product unique or superior to alternatives, which strengthens the brand's competitive position.

False.

Promotion is essential in the introduction stage, where building awareness is the priority.

Promotion communicates the value of the product, helps justify the price and directs customers to where they can buy it.

The promotional mix is the combination of promotional tools a business uses to communicate with its target market.

Personal selling is used, as a sales representative communicates directly with a potential customer.

True.

A restricted budget may require a business to focus on one or two highly targeted tools rather than a broad mix.

A younger, digitally active audience is best reached through social media platforms such as Instagram, TikTok and YouTube.

Sales promotions stimulate repeat purchase and sponsorship maintains brand visibility.

When the objective is customer retention, direct marketing and loyalty schemes target existing customers personally.

Cutting promotional spend risks losing visibility and market share to rivals.

False.

B2B promotion focuses on personal relationships, technical performance and direct communication with decision-makers. Emotional appeal is more typical of B2C markets.

Advertising is a paid form of non-personal communication used to promote a product, service or brand to a target audience through media channels.

Above-the-line advertising uses mass media channels, such as television, national press, radio and outdoor, to reach a broad, largely undifferentiated audience.

True.

Advertising keeps the brand in customers' minds and encourages repeat purchases, which is particularly useful in mature markets.

Influencer marketing involves partnering with individuals who have a significant and engaged online following to promote products or services to their audience.

Businesses can engage in direct conversation with customers, responding to comments, questions and feedback in real time.

Influencers with 10,000 to 100,000 followers and highly engaged, niche audiences are known as micro influencers.

Sales promotions are short-term incentives designed to encourage immediate purchase, increase sales volume or reward customer loyalty.

Discounts and clearance events let a business sell slow-moving or end-of-line products before they become a costly problem.

Sponsorship involves a business providing financial or material support to an event, individual, team or organisation in exchange for brand visibility and positive association.

False.

Businesses also sponsor events such as music festivals, media such as television programmes and podcasts, and individuals such as musicians.

Personal selling is direct, one-to-one communication between a sales representative and a potential or existing customer, intended to make a sale or build an ongoing commercial relationship.

An account manager focuses on managing and developing ongoing relationships with existing clients.

Account managers look for opportunities to upsell, which means selling clients higher-value products.

These purchases need significant explanation, technical knowledge or negotiation, which a skilled salesperson can provide.

A brand is a name, design, symbol or combination of these elements that identifies a business's products or services and distinguishes them from competitors.

A well-regarded brand adds value beyond the physical product, so customers will pay more, which increases profit margins.

False.

The positive associations of a strong brand transfer to new items, cutting the need for heavy introductory advertising.