1.3 Flashcards
Design mix
Three aspects of design that companies need to consider when developing a product
- Function
- Aesthetics
- Cost
Methods of promotion
- Advertising.
- Public relations & sponsorship
- Personal selling
- Direct marketing
- Sales promotion
Types of branding
- Personal branding
- Product branding
- Service branding
- Retail branding
- Cultural and geographic branding
- Corporate branding
- Online branding
- Offline branding
How to build a brand
- Research your target audience and your competitors
- Pick your focus and personality
- Choose your business name
- Write your slogan
- Choose the look of your brand (colors and font)
- Design your brand logo
- Apply your branding across your business
Sponsorship
Provide financial support to an event/person/organisation, either through free products or services, or financial payment
Cost-plus pricing
Cost to produce product is calculated and money is then added on top of that
+ Simple/easy to calculate
+ Prices set can be justified
- Doesn’t think about competitors
- Ignores demand elasticity
- Sales lost if customers think price is too high
Penetration pricing
Price starts very low to encourage sales and persuade customers to buy it, price then increases once the product has built up some customer loyalty
+ Encourages sales and new customers
+ Builds customer loyalty
+ Long term profitability
- Could result in low profits being made
- Difficult to raise selling price
- Tends to be used by many companies
Price skimming
Produce is priced high to begin with as it has a desirable factor meaning customers will want it brand new and over-time it gradually gets cheaper
+ Receive profit straight away
+ Price implies good quality product
+ Pays back research and development
- Requires customer loyalty for success
- Not all customers will be willing to pay
- Requires strong brand reputation
Competitive pricing
Business will look at prices charged by competitors. used for strong competition
+ Research means justified prices
+ Can lead to change is rivals product prices
+ Prices should attract the customers
- Not useful if there isn’t much competition
- May still use other businesses
Psychological pricing
High value/status items may be priced higher to meet customers expectations. Price products to associate them with a standard of quality
+ Price indicates quality
+ Product matches customers expectations
+ Encourages purchases to target market
- Brand reputation may not be good enough
- Product might not actually match price
- Low price could be indicating bad quality
Predatory pricing
Aggressive price cutting used to push other businesses out the market (for monopolies) and lower their prices to prevent competitors making a profit and set barriers to discourage new competitors
+ High market control/power
+ Limits business competitors
+ Gains more customers/sales
- Reputation must be good enough
- Unethical
- Product may reflect the price set
Factors effecting pricing strategy
- Number of USP or amount of differentiation
- Price elasticity of demand
- Level of competition in the business environment
- Strength of brand
- Stage in the product lifecycle
- Costs and the need to make profit
Distribution
Delivery of goods from producers to consumers
Direct selling
Producers selling their products directly to the consumers.
* Internet
* Direct mail
* Door-to-door selling
* Mail order catalogues
* Direct response adverts
* Shopping parties
* Telephone selling
+ Intermediaries are not required.
+ They are able to generate more profit.
+ They cannot reach consumers to shop if they don’t like it
- Some methods makes consumers not seeing products physically
- Some people object to direct mail and unwanted telephone calls.
Retailing
- They are businesses that buys goods and sells them to the general public and provide services.
- They buy large quantities from manufacturers/wholesalers. They sell these in small quantities to their consumers called breaking-bulk.
- It sells in location that are convenient to the consumers and they may add value to products by providing other services.
Wholesaler
- Businesses that buys goods from manufacturers and sells them in small quantities to retailers.
- Use them to distribute goods and they usually buy the from manufacturers.
- They break-bulk, repack goods, redistribute quantities, store goods and provide delivery.
- Stock goods produced by manufacturers and so retailers gets to select a wide range of merchandise.
Agents/brokers
- They link buyers and sellers and are used in various markets.
- They may be used when exporting and can reduce risk of selling oversea with knowledge of the country and the market.
They buy goods from manufacturers and then sell them to wholesalers.
Boston Matrix
Long term strategic plan to help business consider growth opportunity by reviewing portfolio of products
Star: High market share and growth, profit grows
Question mark: High market growth, low market share - often building customer loyalty
Cash cow: Reaching maturity but still have loyalty - product should be produced until decline
Dog: Declining sales in declining markets, these should be removed from sales
Product portfolio
Collection of all the products or services offered by a company, each with a different growth rate and market share.
Business to business marketing (B2B)
Marketing of products or services to other businesses and organizations
Business to consumer marketing (B2C)
Transaction that takes place between a business and an individual as the end customer
Product lifecycle
Development: Stage where product is thought of and made including research
Introduction: The product is advertised and put into the market
Growth: Draws in more sales, place in the market is established, becomes better known
Maturity: Product is still bringing in sales and has place in market - it has peaked
Decline: Product sales dip, it becomes less popular and out of date - leading to obsolete
Extension: Business adapts product so it is brought back as something new and improved
Strategic drift
Happens when the strategy of a business is no longer relevant to the external environment facing it
E-commerce
Conducting business transactions online
Ethical sourcing
Using materials, components and services from suppliers that respect the environment, treat their workforce well and generally trade with integrity
Recycling
Making use of materials that have been discarded as waste
Resource depletion
The using up of natural resources
Waste minimisation
Reducing the amount of resources that are discarded in the production process
Above the line promotion
Advertising activities that are non-targeted and have a wide reach. Usually used to build awareness of the brand.
Below the line promotion
A more targeted approach to promotion. This method avoids mass media like television or radio, and instead uses direct mail, face-to-face, etc. in order to sell specific products to specific consumers.
Advertising
Communication between a business and its customers where images are placed in the media to encourage the purchase of products
Merchandising
A promotion specifically at the point of sale of a product
Sales promotion
Methods of promoting products in the short term to boost sale
Public relations
An organisation’s attempt to communicate with interested parties through putting positive stories into the media.
Breaking-bulk
Dividing a large quantity of goods received from a supplier before selling them on in smaller quantities to customers