1.3-marketing mix and strategies Flashcards
What is the design mix?
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
What is the marketing mix?
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
How does changing social trends affect the design mix?
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
What is promotion?
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
What is personal selling?
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
What is direct marketing?
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
What is above the line marketing?
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
What is below the line marketing?
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
What is PR?
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
What is a sponsorship?
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
What are the different types of sales promotion?
1- buy one get one free
2- discount
3-point of scale
4-money off coupons
5-samples/giveaways
6-events
What is buy one get one free?
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
What is a price discount?
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
What is a money off coupon?
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
what is a sample/giveaway
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
What is point of scale?
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
What is a special event?
activities that the business does to encourage customers to try new products
+ve;
encourages customers to attend and buy
-ve:
can be expensive
What is branding?
characteristics names and logos that distinguishes one business form another
what is corporate /manufacturer branding?
within a corporate brand, there is a range of brands eg. nestle
what is product branding?
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
What is own branding?
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
What is rebranding?
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
Benefits of branding?
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
What is pricing?
a pricing strategy that the business chooses when setting a price for its products
What is cost plus pricing?
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
What is price skimming?
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
What is penetration pricing?
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
What is competitive pricing?
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
What is psychological pricing?
when you price lower to appear cheaper
+ve:
appear lower priced so more competitive
-ve:
price similar to competitors
what is predatory pricing?
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
factors determining price?
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
Changes in price reflecting social trends:
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
what is distribution?
making products or services available to consumers when and where they need it
what is direct selling - 2 stage?
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
What is indirect selling - 3 stage?
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
What is wholesaling -4 stage?
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
What is online distribution?
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
What is stage one of the product lifecycle?
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
what is stage 2?
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
what is stage 3?
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
What is stage 4?
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
What is stage 5?
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
What is an extension strategy?
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
