1.3 Marketing mix and strategy Flashcards
the 3 functions of the design mix
function
aesthetics
cost
what is the design mix
the combination of elements that make up a products design
what happens if you balance all 3 elements
functional, and attractive whilst also being cost effective for both the manufacturer and the consumer.
what is function and why is it the most important in the design mix
- its the purpose and how well specific tasks are intended to perform
- its the most important, how well it meets the needs of customers
2 aspects of Aesthetics on the design mix
-a products visual and sensory appeal
and so
-by attracting customers it will help build brand loyalty and encourage positive word of mouth.
2 aspects of Cost in the design mix - a well designed product
-cost considers cost of production as it directly influences price
and if
-if a product is well designed it should balance cost and value
what are social trends and what it requires a business to do
-social trends are the changes in attitudes, behaviours and lifestyles
-this requires as business to adapt their product to remain relevant
the 2 social trends that affects a companies design mix
resource depletion
ethical sourcing
2 changes as a result of resource depletion on customers and the design mix - give an example
- customers becoming more aware about the need to conserve natural resources
and so - design mix may change to reflect waste minimisation and recycling
Superdry announced jackets use only recycled polyester (plastic bottles) rather than new polyester
ethical sourcing as a social trend on the design mix- give an example
- ethical sourcing means products are produced without exploitation of workers or environmental damage
and so - companies may change their design mix to incorporate sustainable materials and production processes
Tonys Choco lonely, produces chocolate made from cocoa farmed with 100% free child labour
what is promotion
important element of the marketing mix to generate customer awareness.
give 3 types of promotion
these different types of promotional methods available to a business to communicate with their target market
why promotion is important in the marketing mix
-A business can communicate its value proposition to differentiate itself.
and so
-a business can build brand awareness and loyalty - may lead to repeat purchases
advertising 2 benefits 2 drawbacks
benefits:
-reaches large audiences and increases brand awareness
-creates specific brand image e.g comparethemarket (meercat)
disadvantages:
-expensive
-effectiveness is difficult to measure
direct marketing 2 advantages 2 drawbacks
benefits:
-targets specific audiences and can personalise their message to individuals
-its measurable, enables business to track and adjust their strategy if needs be
drawbacks:
-intrusive to customers, may be perceived as spam
-Costly method if business doesn’t have a established customer database
sales promotion (buy one get one free) 2 advantages 2 drawbacks
Benefits:
- customer engagement boosts sales
-can encourage impulse purchases
Drawbacks:
-expensive especially if promotion requires heavy discounting
-Deal seeking customers - may not be loyal to brand sand reduce sales of full priced products
personal selling 2 advantages 2 drawbacks
benefits:
-build relationships with their customers and understand specific needs
-personalised advice and guidance
Drawbacks:
-expensive as cost to hiring and training sales staff
- Difficult to scale to large audiences
Sponsorship 2 advantages 2 drawbacks
benefits:
-builds brand awareness
- creates emotional connections
drawbacks:
-expensive for high profile events
- may not directly drive sales
public relations 2 advantages 2 drawbacks (KFC FCK)
benefits:
- can enhance a businesses reputation and credibility therefore higher customer loyalty
- Cost effective compared to advertising or personal selling
Disadvantages:
-Time consuming
-difficult to measure direct impact of PR activites on profits
digital communications 2 advantages 2 drawbacks (instagram marketing)
benefits:
-specific customer segments
-real time engagement and feedback
drawbacks:
-Significant investment in technology may be required
-Not effective in reaching older or less tech savvy audiences
What is branding
creating a unique and identifiable name or other feature that differentiates a product or the company from its competitors
3 ways in which branding is important
-recognition and identity
-differentiates from competitors
-supports marketing and advertising efforts
3 types of branding available to businesses
corporate branding
product branding
own brand product
what is corporate branding (think nestle)
use of companies name or logo to promote all of the products offered by the company
corporate branding 3 advantages 2 drawbacks
Benefits:
-strong brand recognition and reputation - customer loyalty
-leverage existing reputation - introduce new products
- builds economies of scale by promoting multiple products under one brand, less marketing costs
Drawbacks:
- if reputation is damaged by one product can have a negative effect on all products offered.
- intense competition may affect sales of all products
what is product branding - coco-cola
use of a unique name or design to promote a product.
product branding 2 advantages 2 drawbacks
benefits:
-a distinct identity helps differentiate it from competitors
-allows business to market different products to different segments e.g. coco-cola and coke zero
Drawbacks:
-very costly to create and promote a new brand for each product
- different products within the brand may have different levels of quality
what is own brand product (private label branding) e.g tesco
use of a retailers name to promote a specific product. tescos finest range
own brand product (private label) 2 advantages 1 drawbacks
benefits:
-retailers can differentiate themselves from competitors
-retailers can offer products at lower prices than branded products which can increase sales
drawbacks:
-own brand products have lower perceived quality than branded products, may affect customer loyalty
3 benefits of a strong brand with brief definition of each
added value - better perception of quality
charge premium prices - willing to pay more as its perceived as worth the extra cost
reduces price elasticity of demand - less sensitive to price changes therefore more likely to continue purchasing even if price increases
the 4 ways to build a brand
USP
Advertising
Sponsorship
Social media
so what is the difference between branding and promotion
branding is creating a unique and identifiable name, whereas promotion is generating customer awareness
an example of how creating a USP has affected brands - iPhone
sleek design and quality sets it apart from competitors therefore is recognised worldwide for premium quality
an example of how using advertising has affected brands - coco cola
iconic adverts encourages people to buy
an example of how sponsorship has affected brands - Nike
Nike sponsored many high profile athletes which builds their reputation further
an example of how social media has affected brands - glossier
engaging with audience builds a loyal customer base.
the 3 changes in branding and promotion to reflect social trends
viral marketing
social media
emotional branding
why its important respond quickly to social trends
to better meet the needs of customers and communicate with them
viral marketing - think McDonalds
online platforms to promote products at specific times. e.g during covid McDonalds ran campaigns that emphasised community, which fell inline with the need for social support
Social media
social media is evolving so strategies must adapt to keep up with trends e.g. TikTok’s as they are short form videos that quickly get the message across
emotional branding (environment) patagonia
building emotional connections with customers by appealing to their values e.g. Patagonia’s commitment to the environment
why pricing strategies are important
choosing the right pricing strategy is essential for a business to be profitable, competitive, and successful in the long run
types of pricing strategies
cost plus
-cost of production is calculated then a mark up is added to determine the final price.
-The markup covers the cost of production and the businesses desired profit margin
price skimming (apple)
-the business will set a high price initially which is most effective in established businesses as there’s high demand for the product e.g apple
- high prices help to cover the costs of R+D.
-Prices are lowered overtime to ensure sales continue
penetration pricing
-the business will charge a lower price initially which is most effective to capture market share and attract price sensitive customers.
-once enough customers are brought in, prices will gradually rise.
predatory pricing
a business will set prices so low that it will drive customers out of the market.
This is illegal in many countries as it is considered anti-competitive and reduces choice amongst consumers.
competitive pricing
a businesses prices for their products are determined by competitors in the market, this is most effective in businesses that operate in highly competitive markets and want to keep market share.
psychological pricing
this approach takes into account the customers beliefs, attitudes and emotions to a particular price, such as charging 9.99 instead of 10 as customers perceive it as better value.
why choosing the right pricing strategy is important
so a business can position the brand in the market to compete effectively
factors to consider when choosing a price strategy (7)
number of USPs
Price elasticity of demand
Level of competition
Brand strength
Stage in the product life cycle
Costs and the need to make a profit.
number of usps
command charging premium prices
price elasticity of demand e.g. what would happen if a business is in a highly competitive market with many substitutes
set lower prices if…
set higher prices if…
customers will be more sensitive to price changes therefore should charge lower prices to increase revenue.
set lower prices if product is price elastic. as demand changes more than price so demand would fall significantly if prices are too high.
set higher prices if product is price inelastic. as demand changes less from an increase in price so more revenue can be generated
level of competition e.g what would happen in highly competitive markets
what would happen in less competitive markets
in highly competitive markets businesses may need to set their prices lower to remain competitive and increase their demand.
in less competitive markets businesses may be able to set higher prices
strength of the brand
strong brand with loyal customer base can command premium prices to be charged
stage in the product life cycle
what prices wld be set in
intro
growth
maturity
introduction stage - prices may be set lower to attract customers
growth stage - prices increase as demand for the products increases.
maturity stage - prices may need to be lowered again
Costs and the Need to Make a Profit. think restaurant
prices must cover the costs of production and provide reasonable profit margins.
what do distribution channels mean
intermediaries through which goods/services move from the manufacturer to the end customer
4 stage distribution
-producer
-wholesaler
-retailer
-consumer
3 stage distribution
-producer
-retailer
-consumer
2 stage distribution e.g online
-producer
-consumer
changes in distribution to reflect social trends
e commerce (selling online is more popular)
product based to service based (consumers prefer experiences)
e commerce - think dropshipping on amazon
selling without holding stock - reduces costs and complexity
product to service based (uber)
distribution for services may be online such as a mobile app e.g uber app removes retailers or wholesalers which reduces costs.
what are the 5 stages of the product life cycle
what are extension strategies
extend the product beyond its natural life cycle to boost sales and maintain profitability
two types of extension strategies
product related - more appealing to customers
promotion related
3 types of product related
-product improvements - upgrades
-line extensions - new versions with different purposes (coke zero)
-repositioning - entering new market
3 types of promotion related
-advertising - new ads
-price promotions - discounts
-sales promotions - loyalty program e.g pubs
whats the boston matrix
a tool used to analyse their product portfolio and make strategic decisions based on each product in which products are classified into four categories based on their market share or market growth rate.
label the boston matrix
how putting products into different categories benefits a business
a business can now allocate resources more effectively which will optimise their cash flow
cash cow
what kind of cash flow
what kind of marketing strategy
high market share in a mature market
-positive cash flow
-market isn’t growing so marketing focuses on maintaining their market share
question mark
what kind of cash flow
what kind of marketing strategy
low market share in high growth market
- potential to become a star if company invests in them therefore negative cash flow
-marketing efforts focus on increasing market share
star
what kind of cash flow
what kind of marketing strategy
high market share in high growth market
- invests in these products to maintain or increase market share so positive cash flow
-marketing focuses on increasing brand recognition from them
dog
what kind of cash flow
what kind of marketing strategy
low market share in low growth market
-generate little revenue and has no growth so limited cash flow
-businesses move away from these to focus on more profitable products therefore no minimal marketing efforts
marketing strategies vary depending on the 4 markets
mass
niche
b2b
b2c
what are mass markets and a business inside them will do
large numbers of people with similar needs
businesses will focus on building brand awareness
niche market and what a business inside them will do
smaller groups with specific needs, a business will try target a specific segment
business to business
focuses on selling products to other businesses, a business will aim to build relationships with other businesses and how it will help them become more successful.
business to consumer (clothing retailers)
selling directly to consumers businesses try to build brand loyalty by creating a positive experience
