C2: Marketing mix, budgeting and cash flow (everything) – Flashcards
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define market orientation
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marketing based on what the market wants
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define product orientation
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marketing based on their product and its features
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what is asset led marketing?
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marketing based on needs of consumer and business strengths
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what is meant by the marketing mix
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mixture of marketing techniques : price, product, place and promotion
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what is a product portfolio
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mix of products a business produces and sells
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what's good about having a product portfolio
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- spreads fixed costs -reduces risk -creates opportunities for growth -allows targeting of wider markets
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what is a unique selling point (USP)
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products feature that sets it apart from its competition
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what are 3 advantages of branding?
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-increase customer loyalty -increase businesses value -separates product from its competitors
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what are 3 disadvantages of branding?
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-high cost of advertising -high cost of R&D -brand invites competition
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define product life cycle
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shows stages in products life and sales achieved at each stage
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what are the stages in a product life cycle
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-introduction -growth -maturity -saturation -decline
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what is an extension strategy e.g new packaging/design
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changes to product to extend its life and sales
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what is the relationship between cash flow and the stages in the product life cycle
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- during introduction initial losses are made -during growth revenue increases - during saturation revenue at its highest -during the decline cash flow drops.
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how can the boston matrix be used to manage a product portfolio
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matrix allows owners to see which products are successful and unsuccessful
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what are the stages in the boston matrix
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-Cash cow: high market share, low growth -Stars: high market share, high growth -Question marks: low market share, high growth -Dogs: low market share, low growth
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what is penetration pricing e.g printer
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low price to enter market, then gradually raise price
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what is price skimming e.g innovative electric products / new phone
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charge a high initial price, then reduce it down slowly
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what is competitive pricing e.g fuel
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price based on competitors
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what is psychological pricing e.g retail stores
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99p, using this, customers perceive the price to be cheaper and more value for money
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what is cost plus pricing e.g corner shop products
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add mark up % onto production cost
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what is loss leader pricing
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sell the product at a loss, with expectations that other products will make up for the lost revenue
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what is contribution pricing
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variable cost plus contribution towards overheads and profits - aim is to ensure selling price generates contribution to cover fixed costs
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why is selecting an appropriate pricing strategy important?
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-maximize your margins. -small businesses use price to compete -change market share
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define promotion
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use media to draw attention to a product and gain customers
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what is above the line promotion e.g. magazines, tv and newspapers
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advertising to a mass audience
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what is below the line promotion e.g. direct mail, personal selling
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target consumers directly
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what factors impact a promotional strategy?
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- competitor actions - marketing budget - target market - stage in product life cycle
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define place
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where the business sells their products, and through which distribution method
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what are the different distribution channels
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- wholesaler buys bulk from manufacturers , sells to retail -manufacturer: sells large quantities to retailer - direct selling: manufacturer to consumer (B2C)
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what is meant by multi-channel distribution
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when a business uses a combination of distribution channels
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why is global marketing and brands important
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-benefits from marketing and production economies of scale - benefit from product appealing to customers in different countries
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define budget
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financial plan of action , covering a specific period of time.
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what is the purpose of a budget
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-forecast income and expenditure -determine profitability
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define cashflow
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total amount of money going in and out of a business
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define cash flow forecast
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predicts how much money will be paid in and out over a given period
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what are the components of a cash flow forecast
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1) revenue/income 2)expenses 3)balances ( net cash flow, opening balance, closing balance)
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what causes cash flow problems
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- costs increase e.g. raw materials - sales not at the expected level e.g. increase/decrease competition, economic growth/decline -internal factors e.g. poor budgeting
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how can you improve cash flow
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- reduce costs -promotion to raise sales
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what are the main components of a profit and loss account
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1) sales 2) cost of sales 3) gross profit 4) expenses 5)Net profit (before tax) 6)Tax 7)Net profit after tax 8)Dividends 9) Retained profit
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how can a business improve its profits
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- reduce costs/expenditure -promotion to raise sales
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what is gross profit
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sales revenue- cost of goods sold
