The Marketing Mix (Edexcel IGCSE Business): Flashcards

To protect the product, catch the customer's eye, communicate quality/information, and establish brand image.

Brands increasingly invest in creative, environmentally friendly packaging to reflect sustainability and their CSR policies.

False.

Services are intangible — they cannot be touched, seen or stored, unlike goods.

True.

The 4Ps work together to satisfy the target market while achieving the company's objectives.

It lets the operations team see how the product can be made and identify and fix production problems.

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

Development, introduction, growth, maturity, and decline.

Slow sales growth, as the product is still new and unknown to most consumers.

Sales increase rapidly; the focus shifts to building market share and increasing production.

High sales but slowing growth, with likely market saturation.

In the decline stage, sales fall as the product becomes obsolete or is replaced by newer products.

An extension strategy is a technique used to extend the life of a product beyond its natural life cycle.

Product-related and promotion-related extension strategies.

Modifying the product — e.g. adding features, line extensions (Diet Coke, Coke Zero), or repositioning.

Changing advertising, price promotions (e.g. Cyber Monday), or sales promotions (e.g. loyalty schemes).

Extension strategies are used when a product reaches the late maturity or decline stage of its life cycle.

True.

In maturity, businesses aim to maintain market share and increase profitability by cutting costs and finding new markets.

False.

They aim to extend a product's life and boost sales, not shorten it.

Coca-Cola introduced Diet Coke and Coke Zero as line extensions of the original.

The Boston matrix is a tool that analyses a product portfolio, classifying products by their market share and market growth.

Market share and market growth rate.

Star, cash cow, problem child (question mark), and dog.

A product with high market share in a high-growth market, generating positive cash flow with continued growth potential.

A product with high market share in a mature (low-growth) market, generating significant positive cash flow with little investment.

A product with low market share in a high-growth market — it could become a star if the business invests in it.

A product with low market share in a low-growth market, generating little revenue with no growth potential.

A business often moves away from, or divests, dog products to focus on more profitable ones.

They generate positive cash flow that can fund the development of problem children and stars.

A cash cow generates significant positive cash flow but has low growth potential.

True.

Businesses usually invest in problem children to grow their market share, so their cash flow is often negative.

True.

Cash cows fund problem children and stars, while dogs are divested — keeping a balanced portfolio.

To help a business allocate resources effectively and maintain a balanced product portfolio.

Price is the only element of the marketing mix that relates directly to sales revenue.

False.

A low price can deter customers of a luxury brand, who often buy it as a status symbol.

The wrong price reduces potential profitability — e.g. a low price can cheapen a luxury brand's image.

USPs/differentiation, technology, level of competition, strength of brand, stage in the product life cycle, and costs (any three).

In highly competitive markets, prices are often set low; in less competitive markets, businesses can set higher prices.

A strong brand with loyal customers can command higher prices (e.g. Nike).

Products with many USPs and high differentiation can command higher prices.

In introduction, prices may be low to build share; in growth they can rise; in maturity they may be lowered again.

Candy Crush uses a freemium strategy, where the game is free but users pay for extra features.

False.

A business may use more than one method — e.g. a supermarket with premium ranges alongside loss leaders.

When a retailer offers to match a rival's price to stop customers switching to a cheaper competitor.

Prices must cover the cost of production and provide a reasonable profit margin.

Because customers can easily compare prices online, so retailers use price matching to stay competitive.

A pricing strategy is the approach a business uses to decide what prices to charge customers for its products.

Cost plus, skimming, penetration, competition, and promotional pricing.

Cost-plus pricing calculates the cost of production and adds a mark-up to set the final price.

It is simple and quick, and it ensures a profit is made on each item sold.

Price skimming sets a high price for a new product at launch, then gradually lowers it to keep sales going.

When an established brand launches a new product in high demand (e.g. Apple's MacBook Air); it recovers development costs quickly.

Penetration pricing sets a low price for a new product to quickly capture market share, then raises it later.

Customers may see the product as low quality, and the low price limits profit.

Setting prices based on competitors' prices, useful for maintaining market share in a competitive market.

Using price promotions (e.g. BOGOF) to appeal to customers' emotions and generate high sales for a limited period.

Skimming should not be confused with premium pricing, where a permanently high price signals luxury.

False.

Penetration pricing sets a low price to capture market share; skimming sets a high price.

A key disadvantage of cost-plus pricing is that it ignores the pricing approach of competitors.

True.

Profit margins are usually lower during a price promotion.

Place is where customers buy a business's products and the distribution channels used to move products from producer to consumer.

False.

Place relates to the distribution channels a product passes through, not simply where the business is located.

By locating in areas of high foot traffic for high sales, or using online channels to reach customers who prefer to shop online.

A distribution channel is the intermediaries through which goods move from the business to the end customer.

It moves a product from producer → retailer → final customer (e.g. Toshiba selling laptops to Currys, who sell to customers).

It moves a product directly from the manufacturer to the end customer — also known as e-tailing.

A two-stage distribution channel, where the manufacturer sells straight to the customer, is also known as e-tailing.

It lets consumers shop online and have products delivered, so businesses invest in online presence and fast delivery.

A three-stage channel is often used for products with high profit margins, so the manufacturer can sell to retailers and still profit.

False.

A three-stage channel runs producer → retailer → customer; the retailer sells to the final customer.

Ryanair selling passenger tickets directly to customers on its website.

A retailer buys goods from a manufacturer or wholesaler and sells them in small quantities to end consumers.

By providing convenience and services such as delivery, packing and after-sales service.

Multiples, department stores, supermarkets, hypermarkets, independents, and market/street vendors (any three).

A chain of stores selling the same range of specialised products (e.g. Zara, Sephora).

A large store with separate sections selling different product ranges, often in prime high-street spots.

A hypermarket is a very large warehouse-style store selling a wide range of products, often on the outskirts of towns.

E-tailing is the trade of goods and services over the internet.

Amazon, eBay, or Etsy (any two).

A website is a cheap promotional method, can encourage customers to buy more, and allows dynamic pricing.

Global competition, the need for warehouses/stock systems, no face-to-face feedback, and it is unsuitable for personal services.

They can easily shop around and compare prices, buy 24/7 from anywhere, and access worldwide retailers.

Many consumers worry about identity theft or fraudulent card use, a key security risk of buying online.

False.

E-tailing is not suitable for personal services such as beauty or home improvements.

True.

Retailers sell in small quantities to end consumers, buying from manufacturers or wholesalers.

A drawback of e-tailing for customers is that products cannot be handled before purchase, so are often returned.

To generate customer awareness, interest and desire for a product, and to differentiate it from competitors.

Enhance brand image, provide information, increase sales, support new products, and compete with rivals (any three).

By building brand awareness and loyalty, which encourages repeat purchases and referrals.

Above-the-line promotion is advertising through traditional mass media, aimed at a wide audience.

Below-the-line promotion is marketing a business controls directly and that does not use mass media.

Television, radio, newspapers, magazines, and billboards (any two).

Direct marketing, sales promotions, personal selling, and public relations (PR).

Above-the-line promotion uses mass media to reach a wide audience.

False.

Below-the-line promotion does not use mass media; it is communication the business controls directly.

Promotion communicates a business's value proposition to potential customers.

True.

Above-the-line promotion is advertising through mass media channels.

It generates awareness and interest, helping the new product compete and build a customer base.

Advertising, sponsorship, product trials, sales promotions, and branding (any four).

Its product/service, its target audience, and its budget.

Advertising uses the media (e.g. TV, newspapers, radio) to promote products or brands and increase brand awareness.

It is expensive — e.g. a 30-second Super Bowl advert has sold for as much as $6.5 million.

By using specialist media — e.g. upmarket furniture brands advertising in Country Life magazine.

Sponsorship is where a business gives financial or other support to an event, team or organisation in exchange for marketing exposure.

Emirates gives its name to Arsenal's stadium; brands also sponsor major events like the Olympics.

It can be very expensive, and it is difficult to measure its impact on driving sales.

A product trial introduces a product to some customers before a full launch to assess the market.

To gauge demand and collect feedback, helping forecast sales, plan advertising and plan distribution.

Product trials may not suit durable products, which are bought infrequently and less likely to see repeat sales.

Sales promotions are temporary incentives or discounts that encourage customers to buy products.

Free samples, BOGOF, discount coupons, loyalty cards, or competitions (any two).

True.

Sales promotions quickly boost sales, help clear excess stock, promote a new product or raise cash quickly.

A sales promotion reduces revenue per item, which is likely to increase the break-even point.

Branding is creating a unique, identifiable name, design or symbol that differentiates a product or company from competitors.

Negative publicity if they are involved in a scandal — e.g. Adidas dropping Kanye West in 2022.

False.

Building a brand takes a long time and needs significant investment in promotional activities.

Above-the-line promotion is advertising through mass media, aimed at a wide audience to create awareness.

Mass reach, non-targeted, high cost, and brand building (any two).

Informative, persuasive, and reassuring.

Advertising that gives factual information about a product's features and benefits, helping customers make informed decisions.

Advertising designed to influence attitudes and behaviour, convincing customers a product is desirable or superior.

Advertising that reminds existing customers they made the right choice, encouraging loyalty and repeat purchases.

A key disadvantage of above-the-line promotion is its high cost, especially for small businesses.

Below-the-line promotion is marketing a business controls directly that does not use mass media.

Direct marketing, sales promotions, personal selling, merchandising, and exhibitions/trade fairs (any three).

Communicating directly with customers via email, text, social media or post (e.g. takeaway menus through letterboxes).

Where a salesperson interacts one-to-one with customers, in person or digitally (e.g. skincare reps at department-store counters).

It can be targeted and personalised, and it is measurable, so results can be tracked.

Sales promotions are likely to attract deal-seeking customers who may not be loyal to the brand.

False.

Above-the-line promotion is non-targeted — it aims to reach as many people as possible.

True.

Specific target markets attend — e.g. the London Toy Fair attracts toy retailers and enthusiasts.

Public relations (PR) is a business building relationships with the public, promoting a positive image and managing its reputation in the media.

Sponsorship, media relations, community outreach, publicity stunts, and public events (any three).

An announcement of a key business decision sent to media outlets, in the hope journalists write favourable reports.

An event where media are invited to attend and ask questions about a key business announcement (e.g. Apple's product launches).

Supporting local organisations with donations or resources to improve reputation — e.g. the Ronald McDonald House Charity.

An eye-catching event designed to attract media coverage — e.g. SpaceX launching a Tesla Roadster into space.

Some businesses hold open days, where customers or suppliers can experience the business's facilities first-hand.

It can enhance reputation and credibility, is often cost-effective, and can achieve a wide reach via social media.

It is time-consuming, its impact on profit is hard to measure, and specialist PR firms are expensive.

False.

PR is often cost-effective compared with advertising or personal selling.

Sponsoring a high-profile event increases the visibility of a business's logo and can enhance its reputation and credibility.

True.

A publicity stunt is an eye-catching event designed to attract media coverage for a brand.

Targeted online advertising, viral marketing, social media, and e-newsletters.

Adverts directed at specific customers whose online activity shows they may be interested — e.g. Amazon recommendations.

Viral advertising uses online platforms to spread eye-catching, shareable content (often humorous or interactive).

The ALS Ice Bucket Challenge, which spread videos on Facebook and YouTube to raise awareness of motor neurone disease.

Wide reach, inexpensive compared with TV, accurate targeting, and hyperlinks that direct customers to the website.

Users' interactions allow detailed analysis of their behaviour, preferences and interests.

Fashion businesses often promote products on Instagram through influencer partnerships.

Promotional material sent to an email mailing list of people who have expressed an interest in a business's products.

To persuade customers to give up their email address — e.g. Uniqlo offers 10% off a first order.

A business must avoid sending too many emails, as this may annoy potential customers or be ignored.

True.

Responding quickly to changing technological trends helps a business better meet its customers' needs.

False.

Social media is inexpensive compared with television and can be targeted very accurately.

Branding is creating a unique, identifiable name, design or symbol that differentiates a product or company from competitors.

Added value, ability to charge premium prices, recognition and identity, and business differentiation.

Customers perceive strongly branded products as higher quality, so they may be willing to pay more.

It creates a perception of quality, reliability and reputation.

It builds trust and credibility and creates an emotional connection with customers.

Brands are considered intangible assets on a company's balance sheet, adding to its net worth.

Developing USPs, advertising, sponsorship, social media, and emotional branding (any three).

Building strong emotional connections with customers by appealing to their values and beliefs — e.g. Patagonia's environmental commitment.

True.

A strong brand adds to a company's intangible assets and net worth, making it more attractive to investors.

False.

Branding differentiates a business from its competitors.