1.3.5 Influence of Social Trends on Branding and Promotion Flashcards

1
Q

1.3.5 Influence of Social Trends on Branding and Promotion -
Viral marketing

A

Viral marketing refers to a business using its existing social networks to promote a product or service.

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2
Q
  1. 3.5 Influence of Social Trends on Branding and Promotion
    - Social media
A

Social media use refers to businesses using digital platforms to create and share content socially.

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3
Q
  1. 3.5 Influence of Social Trends on Branding and Promotion

- Emotional branding

A

-Emotional branding refers to a business developing a brand that appeals directly to a customer’s emotional state.
Nike’s 2018 Kaepernick campaign was also an example of emotional branding.

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4
Q
  1. 3.6 Pricing strategies

- factors that influence a business’ pricing strategies

A

Costs - internal
Product life cycle -internal
Nature of the product - external
The degree of competition - external

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5
Q
  1. 3.6 Pricing strategies
    - factors that influence a business’ pricing strategies
    - costs
A
  • Costs influence business’ pricing decisions because businesses usually aim to make a profit.
  • A business’ price and costs determine how much profit the business will make. Businesses cannot afford to set a price lower than their costs forever.
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6
Q
  1. 3.6 Pricing strategies
    - factors that influence a business’ pricing strategies
    - Product life cycle
A
  • Where a product is in the product life cycle determines whether the business will charge a high or low price for the product.
  • When a new product is launched, businesses may charge higher prices to take advantage of exclusivity.
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7
Q
  1. 3.6 Pricing strategies
    - factors that influence a business’ pricing strategies
    - nature of the product
A
  • The nature of a product affects pricing in 2 key ways:
  • Whether a good is a luxury good will affect how much a business charges.
  • Whether the good is hard to differentiate from competitors affects how much a business can charge. If it is similar (homogenous), then businesses usually price at a similar level to competitors.
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8
Q
  1. 3.6 Pricing strategies
    - factors that influence a business’ pricing strategies
    - Degree of competition
A
  • The degree of competition affects the pricing decision of businesses because the more competition a business faces, the more options customers have.
  • When customers have lots of options for similar products, businesses must compete to attract customers using a lower price.
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9
Q

1.3.6 Pricing strategies -Price skimming

A

Price skimming is a pricing method where a business sets a relatively high initial price and then gradually lowers it over time. This is often used before a business faces competition in the market. Once competition arrives, there will be downward pressure on the price to fall.

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10
Q

1.3.6 Pricing strategies Why is price skimming used? Benefits?

A
  • Maximise revenue

- To cover fixed costs (research and development)

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11
Q

1.3.6 Pricing strategies Why is price skimming used? - maximise revenue

A
  • Price skimming is used to try and maximise revenue.
  • Consumers who buy early on are willing to pay a higher price but the business can still attract other customers who can pay a lower price later on in the product’s lifecycle.
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12
Q

1.3.6 Pricing strategies Why is price skimming used? - To cover fixed costs (research and development)

A

Price skimming can help to recover the costs of research and development, which can be expensive for technology products.

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13
Q

1.3.6 Pricing strategies What is a disadvantage of price skimming?

A
  • A disadvantage of price skimming is that it can slow down the growth of a product and this can give competitors more time to launch a competing product or service.
  • A business does not maximise the number of sales at the start so competitors can get more of a chance to enter the market.
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14
Q

1.3.7 Pricing methods

price penetrations

A

Price penetration is where a business tries to increase market share by offering a low initial price.

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15
Q

1.3.7 Pricing methods

Why use price penetrations?

A

-When these goods or services enter the market, a business can attract customers from established competitors.

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16
Q

1.3.7 Pricing methods

Disadvantage of penetration pricing

A

In the short term, price penetration can lead to lower average profits than would be earned with a higher price.
However, market share may be more important for the long-term profitability of a business.

17
Q

1.3.7 Pricing methods

Loss leaders

A
  • Loss leaders are products or services that are sold by a business at a price where the business makes a loss (average revenue < average cost).
  • Loss leaders can attract new customers or sell to existing customers, in the hope that they make extra (incidental) purchases.
18
Q

1.3.7 Pricing methods

Competitive pricing

A
  • Competitive pricing is when a business sets its prices for its products and services based on what other businesses in the market are charging.
  • Competitive pricing is used when the products in a market are similar.
19
Q

1.3.7 Pricing methods

Cost-plus pricing

A
  • Cost-plus pricing is a pricing strategy where a business charges the customer based on what it costs to produce the product or service.
  • They work out exactly what it costs to produce the product (or service) on average and then add a “mark-up” (extra amount) on top of this cost to make sure that the business makes a gross profit.
20
Q

1.3.7 Pricing methods
Cost-plus pricing
What is the “mark-up” in cost-plus pricing?

A

An addition to the cost of production to make sure the business makes a profit on each unit sold

21
Q

1.3.8 Price Wars -

the long pocket strategy

A

-Palich et al (2000) published a research paper describing the ‘Long Pocket Strategy’. Their research concluded that the business with the most money in the bank normally wins a price war between businesses.

22
Q

1.3.8 Market power

A

-Power in a market can show itself through predatory pricing or price penetration to win market share

23
Q

1.3.9 Influence of social trends

A

Businesses can change their selling price to reflect changing social trends including online sales and price comparison sites.

24
Q

1.3.9 Influence of social trends

A

Technology

Price comparison sites

25
Q
  1. 3.9 Influence of social trends

- Technology

A

Technological advances have allowed many businesses to sell their products online.
High street retailers may update their approach to pricing to ensure that they can compete against online retailers.

26
Q
  1. 3.9 Influence of social trends

- Price comparison sites

A
  • Many businesses have also introduced price guarantees to reassure customers and reduce the impact of price comparison sites on business competitiveness.
  • Skyscanner makes the cost of airline flights more transparent, forcing more airlines to compete on price.