1.3 Flashcards
What are the 3 components of the Desgin Mix?
- Aesthetics
- Function
- Economic manufacture
What does aesthetics include?
How the senses respond to the product. e.g. look,feel,smell,taste
What does function include?
Is the product fit for purpose?
function, job, purpose, tasks, reliability, features
What does economic manufacture (cost) include?
can it be made efficiently?
can it be produced at a lower cost than the competitors?
what is the minimum cost the product can be made for whilst retaining quality?
Define Branding
Involves giving a product a name, a sign, a symbol or logo design or any feature that allows customers to instantly recognise the product and differentiate from competitors
Benefits to branding?
- added value
- ability to charge premium prices
- reduced PED
Disadvantages to branding?
- takes a long time (to build trust + loyal consumers)
- very expensive
- limited flexibility (can be difficult to rebrand)
- makes it difficult to change the perception of a business if a scandal were to occur
Types of brands?
- manufacturer brands e.g. Coca-Cola
- own label brands e.g. Tesco value baked beans
- generic brands e.g. paracetamol
Ways to build a brand?
- unique selling points
- sponsorship
- social media (by interacting with customers)
- customer service
- advertising (builds brand awareness)
- colour scheme
- packaging
- slogan
Define Promotion
The process by which people are encouraged to buy an organisation’s product or service
What is the role of promotion?
- allows customers to know what the business is
- encourages the customer to buy from the business
- offers an “incentive” to the customer to buy the product
What is above-the-line promotion?
Placing adverts using the media
Examples of above-the-line promotion?
- TV
- newspapers
- cinema
- radio
- posters and billboards
- internet
Benefits and drawbacks of above-the-line promotion?
+ easy to build brand awareness
+ tailored to reach mass audiences
+ very expensive
- difficult to measure clear results from a campaign
- very expensive
Examples of below-the-line promotion?
- sales promotions
- PR
- merchandising/packaging
- direct mailing
- direct/personal selling
- exhibitions/trade fairs
- sponsorship
What is below-the-line promotion?
Any promotion that does not involve the media
Benefits and drawbacks of below-the-line promotion?
+ easy to measure if campaign has reached audience
+ easy and inexpensive
+ more targeted to specific niche segments
- extensive training on working IT may be needed for marketing staff
- deeper understanding of buyer behaviour required
- targeting diverse cultures with the same theme is difficult
Factors to consider before promotion?
- cost
- market type
- legal factors
- product type
- competitors promotions
- stage in the product lifecycle
What are the 5 pricing strategies?
-cost-plus pricing
-skimming pricing
-competitive pricing
-penetration pricing
-psychological pricing
What is the cost-plus pricing equation?
total costs / quantity + (%mark up)
Define Distribution
Is about availability. It includes physical or online distribution availability and visibility.
OR
The ways in which a product/service reaches a consumer
Define Pricing Strategy
The plan for setting a product’s price for the medium-to-long term.
Define Price
The amount paid by consumers for a good or service.
Define Product Life Cycle
Theoretical Model that describes the stages a product goes through over it’s life.
What are the 5 stages of the product life cycle?
- Development
- Introduction
- Growth
- Maturity
- Decline
What is an extension strategy?
Used to extend the lifecycle of a product in the maturity phase.(possibly decline)
What is a Product Portfolio?
A collection of all the products and services offered by a company.
Define Boston Matrix
A planning tool for marketing which helps managers to plan for a balanced product portfolio.
What are the 4 stages of the Boston Matrix?
- Question mark products
- Star products
- Cash Cow products
- Dog products
Limitations of the Boston Matrix?
- too simple and may not be able to be applied to all businesses
- some businesses don’t fit into one section
- high market shares do not always lead to high profits - not accurate
- does not provide qualitative information
- too simple
- external factors may mean the BM changes regularly
- does not provide information about competitors
Drawbacks to branding?
- expensive
- takes time to establish strong brand
- external factors
- branding of competitors may be stronger
benefits + drawbacks of cost-plus pricing
benefits:
- protects profit for business
- easy to estimate profit levels
- easiest method to apply and calculate
drawbacks:
- doesn’t take into account prices of competition
benefits + drawbacks of skimming pricing
benefits:
- high starting price = upmarket image
- for innovative products - can harvest high profits from early buyers who want latest gadgets
drawbacks:
- cheaper imitations may appear on the market
- risky as consumers may be put off by high price
benefits + drawbacks of competitive pricing
benefits:
- useful in market where one brand dominates as low prices can encourage consumers to buy
drawbacks:
- competitive pricing may not cover costs of small business who cannot get the same economies of scale as larger ones
benefits + drawbacks of penetration pricing
benefits:
- encourages consumers to buy
- helps launch of new product
drawbacks:
- consumers may have bought the product at full price anyway
- expensive method as it can reduce sales revenue
benefits + drawbacks of psychological pricing
benefits:
- encourages many sales form price elastic consumers
drawbacks:
- can be risky if comparable products are available for lower prices - consumers may be tempted away
