1.3-marketing mix and strategies

Question 1

What is the design mix?

Answer 1

Consists of 3 elements:
1-cost - how much it costs to design a product
2-function- if a product does what its supposed to
3-aesthetic- how a product looks
- a business needs to consider all factors when designing a product

Question 2

What is the marketing mix?

Answer 2

the 4 P’s:
-Product
-place (where its sold)
-price
-promotion
a business needs to consider all 4 when deciding on what marketing strategy to use

Question 3

How does changing social trends affect the design mix?

Answer 3

A business may need to change the function/aesthetics to respond to social trends
1- customers concerned about the over use of natural resources
2-designing for waste minimisation- should be reusable and recyclable
3- reuse and recycling- customers feel like they get better value for money as they can use a product more than once
4-ethical considerations- customers want a product that is created in a safe space by workers who are treated fair

Question 4

What is promotion?

Answer 4

Using marketing tools to bring a product to the attention of potential customers, by informing them on the product and persuading them to buy it

Question 5

What is personal selling?

Answer 5

The personal relationship between a customer and a salesperson (with the salesperson acting on behalf of the business)
+ve= easy to manage customer and business relationships
-ve= can be expensive as staff need a salary, need to be trained, and sometimes paid commission

Question 6

What is direct marketing?

Answer 6

When a business sends direct mail to a customer, based on their past purchases, or a promotional offer to try re-engage a customer
+=engages customers
-=can be a waste of money as they are often ignored

Question 7

What is above the line marketing?

Answer 7

a mass marketing method which targets larger, more general customers
often on tv, ads, media
+ve=
reaches a large audience
good for awareness
repeated advert gives a clear message
-ve+
can be expensive
difficult to measure

Question 8

What is below the line marketing?

Answer 8

direct marketing, but on a smaller targeted audience
methods: PR, events, social media, youtube
+ve;
targets specific audiences instead of mass audience
easier to measure
-ve:
training in social media/it may be required
need deep understanding of customer behaviour

Question 9

What is PR?

Answer 9

sending customers product to try and promote on mass media
can include publicity stunts
+ve:
creates a favourable brand image
reaches wide audience
-ve:
can be expensive
out of control of business- misinterpretations can lead to negative publicity

Question 10

What is a sponsorship?

Answer 10

a positive image associated when a business pays a celebrity/sport to promote their brand
+ve=
raises awareness
-ve=
can be expensive
difficult to tell what impact it has on the business

Question 11

What are the different types of sales promotion?

Answer 11

1- buy one get one free
2- discount
3-point of scale
4-money off coupons
5-samples/giveaways
6-events

Question 12

What is buy one get one free?

Answer 12

when a customer buys one product and gets another for free
+ve:
-attracts customers and boosts sales
encourages customers to swap brands and try new products
-ve:
loss of profit
only short term strategy

Question 13

What is a price discount?

Answer 13

where the recommended retail price has been reduced
+ve:
good way to clear stock
boosts sales
-ve:
reducing price too much may make customers suspicious

Question 14

What is a money off coupon?

Answer 14

customers will get money off their purchase
encourages new customers to try
+ve:
customers feel it is better value for money
-ve:
customers may wait for coupons before purchase

Question 15

what is a sample/giveaway

Answer 15

to try and promote a product for the first time by offering customers testers
+ve:
encourages sales if customers like the product
encourages word of mouth promotion
-ve:
can be expensive as giving product for free
can be difficult to send in the post

Question 16

What is point of scale?

Answer 16

a display stand located close to the till in a store
+ve:
draws customers attention and triggers an impulse buy
promotes new products
-ve:
may be put in poor locations in shops so customers may not see it
need to be put out in stores in time for events eg. christmas

Question 17

What is a special event?

Answer 17

activities that the business does to encourage customers to try new products
+ve;
encourages customers to attend and buy
-ve:
can be expensive

Question 18

What is branding?

Answer 18

characteristics names and logos that distinguishes one business form another

Question 19

what is corporate /manufacturer branding?

Answer 19

within a corporate brand, there is a range of brands eg. nestle

Question 20

what is product branding?

Answer 20

relates to an individual product that customers may know the business by.
aims to show customers the benefits of the product which can differentiate itself from similar products in the market
eg. colour, logo

Question 21

What is own branding?

Answer 21

products that are made on behalf of a supermarket or retailer that are a lot cheaper to produce.
May be seen as lower quality than branded products so cant charge a high price

Question 22

What is rebranding?

Answer 22

a marketing strategy which changes the design/name/promotion/pricing of an existing brand
may be to aim at a new target market or overcome competition
can create a new identity for the business

Question 23

Benefits of branding?

Answer 23

1- allows the business to add value- through design/usp
2-can charge a higher price- usually high quality and customers will make repeat purchases and stay loyal to the business
3- reduces the ped as the product becomes more price inelastic
4-creates a barrier so newcomers cant enter the market

Question 24

What is pricing?

Answer 24

a pricing strategy that the business chooses when setting a price for its products

Question 25

What is cost plus pricing?

Answer 25

where a business adds a % mark up onto the costs of making a product price= unit cost (unit cost ) ( ------------ x mark up) ( 100 ) +ve: creates a good profit margin easiest method of pricing -ve doesn't consider competition doesn't consider all customers

Question 26

What is price skimming?

Answer 26

setting a high price for a product first , usually a new innovative product, and then gradually lowering it after it has been on the market a while or when new competitors enter high initial price is set to pay back r and d costs +ve: keeps an upmarket image which keeps the brand exclusive -good profit from people willing to pay a premium -ve: cheaper products may appear on the market too soon customers may wait till the price drops

Question 27

What is penetration pricing?

Answer 27

This is where you set a low price at first for a new product, to encourage people to try and then gradually increase it over time. effective in mass markets that are price sensitive +ve: encourages customers to try -ve: can be costly as it reduces revenue and profit

Question 28

What is competitive pricing?

Answer 28

where you price similar to competitors, which forces customers to judge businesses based on non-price factors usually in markets where products are similar +ve: useful in markets where one brand is dominant -ve: compete on other factors may not cover costs for smaller businesses as they dont benefit from economies if scale

Question 29

What is psychological pricing?

Answer 29

when you price lower to appear cheaper +ve: appear lower priced so more competitive -ve: price similar to competitors

Question 30

what is predatory pricing?

Answer 30

when you are in a market with not many competitors, you price lower to drive competitors out of the market however, depends on the strength of the brand and the financial strength of the brand +ve; drives competitors out of market -ve: depends on PED of the product depends on costs

Question 31

factors determining price?

Answer 31

1- USP/ differentiation if you differentiate from competitors, may have a competitive advantage and can price higher 2-PED if product id price elastic -sensitive to a change in price If price too high- buy from rivals If price too low - seen as inferior -inelastic demand- can charge a higher price as customers are willing to pay 3-competition -if one rival lowers price, may force all to 4-strength of brand customers likely to remain loyal, so can charge a higher price 5-stage in the product life cycle development- usually use price skimming to pay r and d costs growth/maturity- use competitive decline- price lower 6- need to cover cost and make a profit

Question 32

Changes in price reflecting social trends:

Answer 32

1- online sales products online tend to be cheaper as they don't need to have a physical store need dynamic pricing as they are constantly changing based on competitors 2- price comparison sites allows customers to shop around and find the cheapest quote

Question 33

what is distribution?

Answer 33

making products or services available to consumers when and where they need it

Question 34

what is direct selling - 2 stage?

Answer 34

where the manufacturer sells directly to the consumer, with no intermediaries can be through: online/websites/door-to door/ telephone +ve: no intermediaries so can be prices cheaper, and more profit margin for manufacturer -ve: if bought online, cant physically see the product tend to ignore telephone and door-to door

Question 35

What is indirect selling - 3 stage?

Answer 35

where the manufacturer sells to a retailer to a consumer offers convenience to customers as they can go in a physical store to get the product can add value by offering other services examples: retailer supermarket online department store

Question 36

What is wholesaling -4 stage?

Answer 36

manufacturer to wholesaler to retailer to consumer this is where the wholesaler purchases good sin bulk, and breaks it down for retailers to sell to consumers- known as breaking bulk +ve manufacturer doesnt need to sell to each individual retailer -ve: all want to make a profit so will increase the cost

Question 37

What is online distribution?

Answer 37

streaming and downloading media content online rather than purchasing it from a physical store +ve cheaper convenient accessible worldwide and 24/7 businesses can respond to changing customer needs quicker environmentally friendly- no transport -ve: more IT skills are needed

Question 38

What is stage one of the product lifecycle?

Answer 38

development the product is designed and market research is carried out to create a product that meets customer needs very expensive as there is no sales revenue coming in high rate of failure as all capital is an investment at this stage

Question 39

what is stage 2?

Answer 39

Introduction: product is launched onto the market sales may be low as not many customers are aware use heavy promotion and advertising to build sales price can be skimming - to pay back high costs- or penetration- to encourage sales

Question 40

what is stage 3?

Answer 40

growth: this is where the products sales grow rapidly as customers are now aware of the product and it is in high demand. Advertising is used to take advantage of the high demand competitors may start to enter the market the product is improved and targets new markets

Question 41

What is stage 4?

Answer 41

maturity: where sales reach its peak market is saturated- most customers have already bought the product so sales are likely to drop intense competition price may get reduced to stimulate demand

Question 42

What is stage 5?

Answer 42

decline: the product no longer appeals to customers anymore so sales fall rapidly may be taken off the market can be due to product becoming obsolete, changing consumer tastes or poor marketing

Question 43

What is an extension strategy?

Answer 43

used to improve the sales when a product is starting to decline -change the product- the design mix to make it more relevant to customers change the promotion - rebrand/relaunch a product -target a new market