1.3 Flashcards
Design mix
shows the essential elements required for successful production of product
Aesthetics
aesthetics is what the product looks like. business ca add value to a prod thats aesthtically pelasing, so customers liekly to be mroe attracted to the apperance, increasing sales, revnue, differentiating from rivals
able to charge higher prices
improved market position
Function
longer product life cycles, build rep for quality and reliability
Cost
Designing products to meet social trends
ethically sourcing, customers incrasingly intersting in bying from ethical businesses, how products amde key issue, damage to reputation if issue discovered in supply chain.
waste minimisation: well-designed product manufactured with minimal wastage. process starts with computer-aided design (CAD) software, enables the designer to work out the wastage implications of the production process. keeps production costs down and helps reduce the environmental footprint of the business. This, in turn, might be used as a marketing message to convey to customers: ‘We are serious about every aspect of the environment.’
sustainability: making a product without affecting long term suppliers of the inputs into the product. As resources deplete, their price will rise. This will be the signal for designers to try to find alternative solutions based on different materials.
Promotion
Above and below the line promotion
Influences on promotion
Branding
Ways to build a brand
Importance of branding
adds value to product- charge higher.
* It enables the business to reduce the amount spent on promotion.
* Customers are more likely to purchase the product again (repeat purchase). loyalty.
* It is easier to persuade retailers to put the products in their stores.
* Other products can be promoted using the same brand name.
reduce PED: strong branding can be placed somewhere on the spectrum from brand loyalty to brand obsession, producer to push prices up with little damage to sales volume.
Ways to build a brand
USP, creating a feature within a brand that makes it stand out like a logo, different ingredient, feature
advertising, creating brand awareness communicating clear brand message
sponsorship, associating brand name wit an event to raise its profile to public, business pays to sponsor event in return for visual coverage.
social media,vitual comm to comm with potent customers. targeted newsfeed, based on searched on other webpages cookies.
social trends: viral marketing, use of SM to encourage spread of promo activities and increase brand awareness, blog and forums.
emotional branding, tap into customer feelings, personal pysch needs and aspirations, sells a status or life style choice
Influences on price
Pricing strategies
Types of pricing strategies
Adv and dis of price skimming and penetration
Price skimming
Price penetration
Factors affecting choice of price strategy
Distribution
concering getting products t the right place for customers and at the right time
Distribution network
What influences distribution
Online distrubition
Benefits of online distribution for business and customers
Product life cycle
Value of PPA
PPA
Boston matrix
Marketing strategies
Adapting marketing mix for mass and niche
Outbound and inbound marketing
Customer loyalty
promotion
to inform and persuade, ensuring cutomers are aware of existence of products.
promo mix: descries promo methods that a buss uses to pursue marketing obj. adverstiing, sales promotion, personal selling, public relations, direct marketing
advertising
paid for communication, wide coverage, control of message, repetition means that the message can be communicated effectively.
effective for bulding barnd awareness.
expensive, impersonal methods, one way communication, lacks flexibility
personal selling
promotion on a person to person basis.
high customer attention, message customised, interactive, develop relationship, two way communication
high cost, labour intensive, reach limited num
sales promotion
tactical point of sale material or otehr incentives designed to simulate purcahses, free samples, coupons.
effcive at achieving quick boost of sales
encourages to trial
may only be short term, may naticpate further promotion
PR
activities are those that create goodwill toward an individual, build image and reputation of business, commuincate effectively.
cost plus existing product
basing price on costs.
calculating the production costs per car, then adding a percentage mark-up that reflects the profit level the company wants from the product. total costs/number of units + mark up
easy to calcaualte, price increases can be justified when costs rise, managers can eb conf that each product sold at a profit
ignores PED, may not take into account comp, profit lost if set too low
comp pricing
when the price is set at the market level or at a discount to the market, simialr to price set by rivals. price leader dominate who set price and others follow, price takers
pred
means pricing low enough to drive a rival or rivals out of business.
the predator is strong financially, perhaps because the product or service involved in the price war is not an important part of the overall business, the other company or companies are weak financially;
The more differentiated a product the greater the ability to charge higher prices as customers will pay more for the unique features of the product
Price elasticity of demand
If customers are sensitive to changes in price i.e. the product is price elastic then a business might keep prices similar to competitors
Level of competition in the business environment
If the market is dominated by a few large firms, businesses will follow a strategy of competitive pricing
Businesses may choose a strategy of predatory pricing in order to reduce the level of competition in the market
A strong brand adds value allowing a firm to charge a premium price
How established the product is
When launched onto the market a firm may choose skimming or penetration depending upon the nature of the product and the marketing objective
A technologically advanced product, for example, may use price skimming
Costs and need to make a profit
A business will need to set a price that covers costs in order to make a profit and may therefore use cost plus pricing
The % mark up added will be determined by their profit objective
