C2: Marketing mix, budgeting and cash flow (everything)

define market orientation
marketing based on what the market wants
define product orientation
marketing based on their product and its features
what is asset led marketing?
marketing based on needs of consumer and business strengths
what is meant by the marketing mix
mixture of marketing techniques : price, product, place and promotion
what is a product portfolio
mix of products a business produces and sells
what’s good about having a product portfolio
– spreads fixed costs
-reduces risk
-creates opportunities for growth
-allows targeting of wider markets
what is a unique selling point (USP)
products feature that sets it apart from its competition
what are 3 advantages of branding?
-increase customer loyalty
-increase businesses value
-separates product from its competitors
what are 3 disadvantages of branding?
-high cost of advertising
-high cost of R&D
-brand invites competition
define product life cycle
shows stages in products life and sales achieved at each stage
what are the stages in a product life cycle
-introduction
-growth
-maturity
-saturation
-decline
what is an extension strategy e.g new packaging/design
changes to product to extend its life and sales
what is the relationship between cash flow and the stages in the product life cycle
– during introduction initial losses are made
-during growth revenue increases
– during saturation revenue at its highest
-during the decline cash flow drops.
how can the boston matrix be used to manage a product portfolio
matrix allows owners to see which products are successful and unsuccessful
what are the stages in the boston matrix
-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
what is penetration pricing

e.g printer

low price to enter market, then gradually raise price
what is price skimming

e.g innovative electric products / new phone

charge a high initial price, then reduce it down slowly
what is competitive pricing

e.g fuel

price based on competitors
what is psychological pricing

e.g retail stores

99p, using this, customers perceive the price to be cheaper and more value for money
what is cost plus pricing

e.g corner shop products

add mark up % onto production cost
what is loss leader pricing
sell the product at a loss, with expectations that other products will make up for the lost revenue
what is contribution pricing
variable cost plus contribution towards overheads and profits

– aim is to ensure selling price generates contribution to cover fixed costs

why is selecting an appropriate pricing strategy important?
-maximize your margins.
-small businesses use price to compete
-change market share
define promotion
use media to draw attention to a product and gain customers
what is above the line promotion e.g. magazines, tv and newspapers
advertising to a mass audience
what is below the line promotion e.g. direct mail, personal selling
target consumers directly
what factors impact a promotional strategy?
– competitor actions
– marketing budget
– target market
– stage in product life cycle
define place
where the business sells their products, and through which distribution method
what are the different distribution channels
– wholesaler buys bulk from manufacturers , sells to retail

-manufacturer: sells large quantities to retailer

– direct selling: manufacturer to consumer (B2C)

what is meant by multi-channel distribution
when a business uses a combination of distribution channels
why is global marketing and brands important
-benefits from marketing and production economies of scale

– benefit from product appealing to customers in different countries

define budget
financial plan of action , covering a specific period of time.
what is the purpose of a budget
-forecast income and expenditure
-determine profitability
define cashflow
total amount of money going in and out of a business
define cash flow forecast
predicts how much money will be paid in and out over a given period
what are the components of a cash flow forecast
1) revenue/income
2)expenses
3)balances ( net cash flow, opening balance, closing balance)
what causes cash flow problems
– 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
how can you improve cash flow
– reduce costs
-promotion to raise sales
what are the main components of a profit and loss account
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

how can a business improve its profits
– reduce costs/expenditure
-promotion to raise sales
what is gross profit
sales revenue- cost of goods sold