1.3 Flashcards
what is the design mix
a strategic tool which encourages a business to focus on 3 different areas when designing there product
what are the three elements of the design mix
cost
function
aesthetics
what are the two social trends that influence the design mix
- resource depletion
- ethical sourcing / sustainability
what are the 6 types of pricing strategies
- cost plus
- price skimming
- penetration
- predatory
- competitive
- psychological
what is cost push pricing
its positives and negatives
adding a % to the cost of producing to get final price
+easy to calculate
+costs covered and sure profit
- doesn’t consider competition
what is price skimming
+ and -
set a high price for a product and lower overtime
+high revenue for low quantity
-may be lower demand
-can be effected by economic factors
what is penetration pricing
+and-
setting low price when launching new product
+can easily increase market share
-people question quality
-low profit margins
what is predatory pricing
+and -
charging very low price for period of time until rivals leave market
+increase market share
-question quality
-short term loss
what is competitive pricing
+and-
charge what competition is charging
+maintain market share
+maintain competitive environment
-less profitability
what is psychological pricing
setting price below round figure 4.99
+easier to target specific customers
-consumers don’t always fall for it
what are the 5 factors that effect which pricing strategy to use
- level of differentiation from competitors
- PED
- number of competitors
- brand strength
- stage in product life cycle
- costs and need for profit
what is a distribution channel
the route a product takes from the manufacture to the consumer
what is a multichannel distribution
business that sells through more than 1 way like online and in store
what is promotion
informing and persuading customers to buy your products
what are the two types of promotion
- above the line
- bellow the line
what is above the line promotion
+and-
advertising that involves the media
+targeted to the mass market
-expensive
what is bellow the line promotion
+and-
advertising on a smaller scale
+ cost effective
+ target particular audience
- size of sponsorship
what are 5 ways to build a strong brand
- quality
- sponsorship
- social media
- advertisement
- USP
what is emotional branding
advertising or brand is attached to lifestyle values or aspirations
what are the 3 main benefits of building a strong brand
- added value
- charge premium price
- reduced PED
what are the 4 stages of the product lifestyle
- introduction
- growth
- maturity
- decline
what are the characteristics of an introduction in product life cycle
- sales are low but increasing
- negative cashflow
- lots of above line promotion
what are the characteristics of a growth in product life cycle
- sales increasing rapidly
- cashflow improving
- still lots of promotion
what are the characteristics of a maturity in product life cycle
- sales become more stable
- positive cashflow
- bellow line promotion
what are the characteristics of a decline in product life cycle
- sales begin to fall
- remain positive but weak
- no promotion
what is an extension strategy
business reforms product or increases advertising to try and rebirth product set to decline
benefits and drawbacks to extension strategies
+cost effective
-may damage original product
-original customers may be unhappy
what is the Boston matrix
a decision making tool that allows businesses to strategize a product portfolio in relation to market gain
what are the 4 sections of the Boston matrix
- question marks
- stars
- dogs
- cash cows
what is a question mark in Boston matrix
product with growing market but low market share
what is a star in Boston matrix
product with growing market and large market share
what is a cash cow in Boston matrix
product with high market share but low market growth
what is a dog in Boston matrix
product with low market share and low market growth
+and- of Boston matrix
+ identify poor performing products which need work done to improve
- doesn’t factor in trend and competition
what is the mass market
products tend to be generic and suit needs and wants of everyone
what is the niche market
smaller more distinctive product with clear USP
what is business to consumer (b2c)
business selling to average consumer
what is business to business (B2B)
business providing good or service to another business
what is an outbound strategy
directing marketing material direct to the consumer whether they’re expecting it or not
what is an inbound strategy
attracting potential customers to websites when they are looking
