2.2 Flashcards
ways to extend the product life cycle
-lowering prices
-increasing advertising
advertising AD and DD
AD:
-can garb customers attention if advert is used in right place ands right medium
DD:
-can be expensive
-can be difficult to work out impact of advertising on sales
sponsorship AD and DD
AD:
-can provide business exposure
DD:
-communicates very little info about the business
product trials AD and DD
AD:
-can encourage customers to use a product they might not have used otherwise
DD:
-can be expensive to give away free products
speical offers AD and DD
AD:
-can boost short term sales
-can clear stock levels
DD:
-not sustainable in the ling term as selling goods at a discount can reduce profit
public relations AD and DD
AD:
-can encourage customers to connect with the brand, trust it and become loyal to it
DD:
-takes a long time to develop a strong brand and brand image which can be damaged quickly by bad publicity
ways a business may differentiate its products
-ensure that its products provides unique functions that are not provided by rival products
-give its products a unique style or design
-create and use a distinctive brand
-provide consistently excellent customer service
-ensure that its product is of very high quality
why is differentiation important to a business
-to position thier products and target different market segments
-to gain an advanatge over rivals when faced with competition
business with a high volume low margin
-business that produces alot of products at a low cost
-keep costs low and have the facilities to produce and distrubute large quantities
business with high margin low volume
-low volume, high price
-might be determined by the quality of the product and brand image
-businesses use this strategy to target the premium end of the market
influences on pricing strategy
-technology, new technology can lower costs of production and allow a business to set more competitive pirces
-branding, products with a strong brand can demand a higher price due to the percieved value and desirability
-competition
-market segment, different prices may be applied to customers with different characteristics
-product life cycle
-costs
channel of distrubution 1
manufacturer-retailer-customer
channel of distrubution 2
retailer-customer
channel of distribution 3
manufacturer-customer
channel of disctrubution 4
manufacturer-third party e tailer-customer
benefits of retailing
-customers have the oppertunity to browse and try products
-retailing offers point of sale promotion
-retailers can provide customers with help and advice
-many customers enjoy the experience of shopping in a retail store
benefits of e tailing
-businesses do not have to rent or own expensive reatil space
-customers can buy at any time of the day
-businesses can access customers all around the world
-small businesses are able to compete with larger businesses without needing retail space
factors a business must consider when choosing location
-cost
-proximity to competitors
-proximity to the labour market
-proximity to resources and transport links
product and price links
improving functionality may have a negative impact on the design features whereas improving the design could lead to increased costs
price and promotion limks
if a business adds value to a products through its design and features, it may be able to charge a premium price, but customers will only be willing to pay this if the business through advertising shows customers it is a premium product
promotion and place links
promotion must be visible to be effective
place and product links
some prodcust are suited to e-tailing whereas other products require the experience and customer service provided by customers
Outline two factors that influence the price a business charges for its product. (4 marks)
Cost of Production – Businesses need to ensure that the price covers production costs, including raw materials, labor, and overhead expenses. If costs are high, the price may also need to be high to maintain profitability. (2 marks)
Competition – If there are many competitors offering similar products, a business may need to set a lower price to attract customers. However, if the product is unique or has strong brand loyalty, the business can charge a higher price. (2 marks)
Explain two benefits of using market segmentation for a business. (4 marks)
Better Targeting of Customers – Market segmentation allows businesses to focus on specific groups of customers with tailored marketing strategies. This increases the chances of attracting and retaining the right audience. (2 marks)
More Effective Use of Marketing Resources – By targeting specific customer segments, businesses can avoid wasting money on broad, ineffective advertising. Instead, they can invest in marketing strategies that are more likely to generate sales. (2 marks)
