1.3 Flashcards
Define Design Mix
Three aspects of a design that companies consider when developing a product. All three functions,cost, function and aestetics
3 factors that make up design mix
Aestetics= look, taste, texture or feel of an item
Function= Is the item does what it’s expected to do and the extent to which it supasses expectations of quality of performance
Economic manufacture= considers the ease and economy with which the item can actually be made on the scale required
Define sustainability
Making something using materials that will be available in the future, perhaps as one tree is planted for every one thats cut down
Define ethical supply chains
A supply chain that operates in a way that delivers the highest levels of ethical + sustainable operations
Define wase minimisation
A waste management approach that focuses on reducing the amount + toxicity of hazadous waste generated
Define branding
The process of giving a meaning to a specific organisation, company, products or services by creating and shaping a brand in consumers minds
Define promotional mix
+4 examples
A combination of marketing methords including: advertising, sales, public relations and direct marketing to achieve a specific marketing goal
3 benefits of a strong brand
Reduced price elasticity of demand, added value, ability to charge premium prices
3 ways to build a brand
unique selling points (USPs)/differentiation
o advertising
o sponsorship
o the use of social media
4 examples of promotion
Advertising , sales promotion, public relations and direct marketing
Define advertising
A way of marketing your business in order to increase sales or make your audience aware of your products or services
Define personal selling
Face-to face selling technique y which a salesperson uses his or her interpersonal skills to persuade a customer in buying a product/ service
Define and explain social media marketing
A form of internet marketing that uses social media apps as a marketing tool. These social media platfors enable brands to connect with their audience to; Build a brand; increase sales; drive traffic to a website and build a community of followers to share and engage with content
Explain advantages and drawbacks of using social media marketing
Low cost, big audience, fast and interaction
Time consuming, risk of negative publicity, loss of control and dilutes brand voice
Define sales promotion
A marketing strategy in which a business uses a temporary campaign or offer to increase intrest or demmand in its product/service
Explain difference between direct and indirect marketing
Direct marketing is when you are asking potential customers to buy from you or use your services. Indirect marketing resources more around your brand that will lead to more business over time
Define the marketing mix What are the 4ps
A combination of factors that can be controlled by a company to influence to purchase its products
4ps- Promotion Product Price Place
Define
Price skimming
Price penetration
Predatory
Price skimming- Launching a product with a high price while product is unique
Price Penetration - Innvolves launching a product at a very low price to entice customers
Predatory - sets low prices to force a competitior out of business
3 examples of financial objectives
Profitability, effficiency, Stability
3 examples of marketing objectives
Increase sales, Build brand awareness, grow market share
Define pricing method
Ways in which the price of goods and services can be calculated by considering all the factors such as the product/service, competition, target audience, products life cycle
5 factors that influence pricing decisions
Cost of making product/service, competition, target audience, products life cycle, price elasticity of demand
3 pros of cost based pricing
Provides full cost coverage + consistent rate of return
Doesnt require a lot of market research
Helpful when businesses doesnt know customers willingness to pay
3 cons of cost based pricing
Creates little incentive for cutting costs or increasing productivity
Doesnt take consumers into consideration
Ignores competition
Whats a loss leader
When a product is sold at a price below its market value to stimulate purchases of more profitable goods/services
Define distribution
The activity of both selling+delivering products and services from manufacturer to customer
Define a retailer
A person or business that you purchase goods from. They dont typically manufacture their own items, they purchase from a manufacturer or wholesaler + sell goods to consumer in small quantities
Define a wholesaler
A person or company that sells goods in large quatities at low prices, typically to retailers
Define a product life cycle
A pattern of sales over time that most products tend to follow. The life cycle has 4 phases following the launch of a product: Introduction, growth, maturity, decline
Define a product portfolio
The collection of all products or services offered by a company
Define a Boston matrix
A model which helps businesses analyse their portfolio of businesses + brands by valuating the products market growth % and market share %
Define an extension stategy
A medium to lobg-term plan for extending the life cycle of a product
3 examples of extension strategies
Product differentiation
Reducing price of the product
Rebranding the product
4 uses for the product life cycle
To determine:
Advertising schedules
Price points
Expansion to new products
Packaging redesigns
3 uses of Boston matrix
Determine what products to:
Build- Try to boost sales of a product with a bright future (usually rising stars)
Milk- Typically assosiated with cash cows, involves taking profits generated by product without spending heavily on that product
Divest- Process of getting rid of products within the portfolio. Often happen to dogs but may occur to problem childs for whom there seem to be too much to do to boost market share profitability
3 critisisms of the product life cycle
Varying market conditions- Market conditions vary from place to place
Inapplicable to every product
Analysis affected by various elements of the marketing mix (4ps)
3 critisms of the boston matrix
High market share doesnt always equal high profits.
Growth rate + relative market share are not the only indicators of profitability
This model ignores + overlooks other indicators of profitability
Whats the difference between B2B and B2C
B2B sells to businesses that resell products while B2C sells directly to the end consumer
What are the different loyalty methords used by business?
Successful marketing
Point-based loyalty program
Offering discounts
Define psychological pricing +adv and dis
The business practices of setting prices lower than a whole number. The idea behind psychological pricing is that customers will read the slightly lowered price and treat it lower than the price actually is. eg.£5.99
Adv- Can help nudge customers into making a purchase by helping them believe they are not paying the whole number
Dis- May have little effect on many planned purchases and may in fact mildly annoy customers
Appropriate when selling impulse purchases of “little treats”
What are the four categories in the boston matrix?
STAR
High market share, High market growth, Cash neutral, Hold
CASH COW
High market share, Low market growth, Cash generating, Harvest/milk
PROBLEM CHILD/ QUESTION MARK
Low market share, high market growth, cash absorbing, build
DOG
Low market share, low market growth, Cash neutral, divest
3 ways of building customer loyalty from B2B and B2C
B2B
Tailoring to customer, personal service, reliablility
B2C
Establishing strong brand image, branding, mass distribution
Why is it important that some products emphasise function in the design mix (5 reasons
More predictable and stable
Longer product life cycles
Lower promotional costs
Build reputation for quality based on reliability
Economic manufacture through economies of scale
Consuquences of a business when products emphasise Aesthetics in the design mix (5 reasons
High added value
Demand fuelled by customer aspiration
Potentially shorter product life cycle
Attracts imitation = need for design protection
Need for greater promotional support
4 promotional objectives
Increase sales
Improve/raise awareness of brand image
Persuade customers to buy your product not the competition
Let customers know about a new product
Above the line advertising (ATL) and 1adv+1dis
Advertising to a mass audience;
TV adverts, online adverts,cinema adverts, daily newspaper adverts
Adv - Reaches a large audience
Dis - Very expensive to make an advert and air it- for example Channel 5 is £17,000 every time its on.
Define Below the line advertising
Below the line is more personal advertising to niche markets;
It is uses to-
Develop attitudes
Create awareness
Communicate information in order to gain a response from the target market.
What are two long and short term methords of promotion
Long
Persuasive advertising
Public relations (creating publicity thats reported by news)
Short
Buy one get one free
Seasonal price cutting promotions
3 changes in branding and promotion to reflect social trends
Viral marketing- Internet+ social media means word of mouth accelerated
Social media- Gives businesses a way to spread messages
Emotional branding- Branding attempting to create some kind of emotional response to the brand from consumers. Some overtly emotional than others such as Ben and Jerry’s sense of fun created through their promotion.
Define predatory pricing + adv, dis and when appropriate
A strategy that sets low enough prices to force a competitor out of business
Adv- Once a rivals been forced to close, prices can be pushed higher, increasing margins
Dis- If it can be proven to be specifically designed to push rivals out of business, predatory pricing is illegal
Appropriate when a firm is clearly more financially powerful than smaller rivals
Define competeitive pricing + adv, dis and when appropriate
Charging a price at the market average or at a discount to the average price in the market
Adv- Should ensure that price will not put customers off buying the product
Helps maintain market share in highly competitive market
Dis- Firms that use competitive pricing stategy have little control over the price they charge and thus the revenue they generate
Appropriate when a company is trying to take on more powerful rivals.
Factors that determine the most appropriate pricing
strategy for a particular situation
number of USPs/amount of differentiation
price elasticity of demand
level of competition in the business environment
strength of brand
stage in the product life cycle
costs and the need to make a profit
2 Social trend factors that cause changes in pricing
Online sales- Pricing online may be more sensitive as easier to compare prices with substitutes. Pricing levels may be lower as less costs online than physical stores. - + dynamic sales
Price comparison sites- Encourages firms to price competitively so their products and services show up best on these sites.
What is a channel of distribution
The route taken by a product as it passes from producer to the consumer
What is an agent in relation to distribution
facilitates sale between a business and a wholesaler, foreign markets,
commission based upon successful sales,
specialist market knowledge
4 considerations business must make when deciding on place/distribution
Cost
Convenience
Coverage (number of places product is available)
Control (over marketing process - decreases as coverage increases)
direct distribution
3positives and 2negatives
manufacturer > consumer (straight to)
-direct marketing
e.g. amazon/solicitor
positives:
1-quicker, 2max rev, 3cheaper for customer
negatives:
1-reduces distribution channel options so becomes less convienient for consumers,
2-internal workload increased
modern distribution
2 positive 2 negative
manufacturer > retailer > consumer
-electronic goods & mass market
all round country = sales vol = higher
positives:
-makes it easier for producers to distribute their products
makes it more convenient for consumers to buy those products
negatives:
poor customer service could limit sales
cause higher prices for the end consumer, as the intermediary must make a profit
traditional distribution
2 positives 1 negative
manufacturer>wholesaler>retailer>consumer
-manufacturers = few wholesalers & sell larger quantities or wholesaler and many retailers
-wholesaler = offer trade credit terms
positives:
-focus on production & save costs (storage)
negatives:
-wholesaler = marketing different & % profits
agent distribution
1 positive 1 negative
manufacturer>agent>wholesaler>retailer>consumer
sell in another country
language/ regulations/ importing and tax
positives:
-selling in another country simple mkt knowledge
negatives:
-supply chain longer = increase final price
