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Business > 2.2 > Flashcards

2.2 Flashcards

1
Q

Define the design mix

A

The combination of 3 elements that make up the design mix-function, aesthetics and costs (economic manufacture). These are considered when a business design the product/service in theR&D stage

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2
Q

What is a limit of the design mix

A

Bias

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3
Q

What is meant by function

A

What problem/purpose does the product or service solve? Is it durable?

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4
Q

What is meant by aesthetics

A

How does the product look, feel, sound, taste? (5 senses

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5
Q

Define product lifecycle

A

A visual tool to demonstrate the progress of a product through its lifetime, based on sales overtime

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6
Q

What is are benefits to a business of focusing on keeping low costs

A

○ Increase in profit

○ Should lead to a lower break-even point

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7
Q

What is are drawbacks to a business of focusing on keeping low costs

A

○ Reputation- assuming bad quality

○ Could mean business operates in a mass-market

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8
Q

What is are benefits to a business of focusing on keeping function

A

○ Reputation is sustainable

○ Loyal customers

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9
Q

What is are drawbacks to a business of focusing on keeping function

A

○ The purpose may only suit certain targets needs
○ High costs
○ Customers may only to buy one. Fewer sales

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10
Q

What is are benefits to a business of focusing on keeping aesthetics

A

○ Build customer attention
○ The popular brand will mean a free source of advertising
○ Increase the selling price through added value

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11
Q

What is are drawbacks to a business of focusing on keeping aesthetics

A

○ May have to spend money on ads

○ May lead to less focus on the important aspect of the functionality of product/service

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12
Q

Whatis the order of the product life cycle

A
  1. Introduction
  2. Growth
  3. Extension strategy
  4. Maturity
  5. Decline
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13
Q

Explain the introduction phase

A

○ The introduction phase will involve high costs in research and development and the product may have been test-marketed before launching, so profits may be negative
○ Sales will be low as customers may to yet be aware of the products
○ The business will have to invest heavily in marketing/ advertising to create awareness

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14
Q

Explain the growth phase

A

○ Products are enjoying a rapid increase in sales
○ At this stage the customers are aware of the product and demand is rising
○ The business will start to break even and begin making a profit

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15
Q

Explain the extension strategy phase

A

○ Extention strategy nay be used to try to save the product from becoming obsolete
○ At this stage, R&D will be injected into innovating the product and recreating awareness to encourage new sales

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16
Q

Explain the maturity phase

A

○ Maturity phase products face intense competition now all the producers have joined the market
○ Sales are high but profits may be starting to fall
○ Products have to be discontinued to keep sales high

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17
Q

Explain the decline phase

A

○ Decline phase products may be limited in production
○ At this stage profits and sales have fallen
○ The product may be withdrawn from sale
○ Lack of demand
○ Too much competition

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18
Q

What are benefits to a business of using the product life cycle

A

○ Identify the level of demand
○ To plan ahead
○ Spot mistake
○ Gain a competitive advantage

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19
Q

What are drawbacks to a business of using the product life cycle

A

○ Products can be affected by external factors short terms
○ Doesn’t always work un the logical stages for every product
○ Only shows sales

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20
Q

Define differentiation

A

When a business makes its products or service distinct from the competition by giving it a USP

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21
Q

What are the 7 ways a business can differentiate

A
  1. Branding
  2. Convenience
  3. Location
  4. Design
  5. Customer service
  6. Quality
  7. Adapt marketing mix (4Ps)
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22
Q

What is product design

A

the process of creating new products or services for firms to sell.

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23
Q

What is meant by the marketing-driven approach of product design

A

Is an approach that listens to the needs and wants of customers

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24
Q

Define brand image

A

The reputation of a company.

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25
Q

Define product image

A

The way an item looks.

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26
Q

What are the 3 aspects of the design mix

A

Function
Cost
Aesthetics

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27
Q

What is The stage before a product has actually been made.

A

Research and

development

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28
Q

What is The stage when sales of the product have peaked?

A

Saturation

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29
Q

What is the stage where a business launches the new product (or service) to the market

A

Introduction

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30
Q

What is The stage when the number of new customers buying the product has slowed down

A

Maturity

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31
Q

What is The stage that follows the product’s launch.

A

Growth

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32
Q

What is the stage when demand for a product begins to fall.

A

Decline

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33
Q

What may a business do to prevent its product from going into the decline stage

A

Extension Strategies

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34
Q

What are the 7 pricing strategies

A
  1. Cost-plus pricing
  2. Competitive pricing
  3. Penetration pricing
  4. Price skimming
  5. Premium pricing
  6. Predatory pricing
  7. Promotional pricing
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35
Q

What is cost-plus pricing

A

○The price is worked out by calculating the total cost to produce the product or service and then profit is added on top

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36
Q

What are the advantages of cost-plus pricing

A

Increase profit margins

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37
Q

What are the disadvantages of cost-plus pricing

A

Sales depend on customer demanding products or to pay high prices

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38
Q

What is competitor pricing

A

Some products which are very similar (like orange juice) will be priced very similar to competitors

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39
Q

What are the advantages of competitor pricing

A

Maintains stable revenue

40
Q

What are the disadvantages of competitor pricing

A

○ More purchasing power for customer

○ The business will have to differentiate

41
Q

What is skimming pricing

A

A product is priced high, to begin with as it has a desirability factor (novelty) that will mean customers will want it when it is new

42
Q

What are the advantages of skimming pricing

A

Demand will be higher so the business can set their own prices

43
Q

What are the disadvantages of skimming pricing

A

The price will decrease over time. Decrease profits long term

44
Q

What is penetration pricing

A

This means setting prices really low for a new product or service to encourage sales and to persuade customers to try the product for the first time

45
Q

What are the advantages of penetration pricing

A

○ Works well in competitive markets
○ Increases customer loyalty
○ Larger companies can afford to set lower prices
○ Maximize revenue

46
Q

What are the disadvantages of penetration pricing

A

○ Lower profit margins

○ Possible perception of lower quality

47
Q

What is predatory pricing

A

○ Existing businesses may hold off the threat of a new entrance by lowering their prices so that any competitor cannot make a profit
○ the intention is to drive competitors out of the market place or set barriers to entry to discourage

48
Q

What are the advantages of predatory pricing

A

○ Reduces competition
○ Increases sales and market share
○ Higher quality of output

49
Q

What are the disadvantages of predatory pricing

A

○ Very little profit margins

○ Possible lower perceptions

50
Q

What is psychological pricing

A

This means pricing a product at £1.99 rather than £2.00 to appear cheaper

51
Q

What are the advantages of psychological pricing

A

○ Gives the perception of added value

○ Should encourage sales

52
Q

What are the disadvantages of psychological pricing

A

Restricts profit per item on a larger scale

53
Q

What is promotional pricing

A

A product or service is offered for sale at a cheaper price for a limited time

54
Q

What are the advantages of promotional pricing

A

○ Short term increases in sales
○ gives perception of lower price for quality product
○ Reduce stock levels unwanted goods

55
Q

What are the disadvantages of promotional pricing

A

○ Increases advertising costs

○ Cannot cost-effective long term

56
Q

What is premium pricing

A

A goods price is set at a higher price than competitors to give a perception of high quality

57
Q

What are the advantages of premium pricing

A

○ Higher profit margins
○ Will attract customers with higher disposable income
○ Gives perception of high quality

58
Q

What are the disadvantages of premium pricing

A

○ Smaller target markets to appeal to

○ Higher (possible) material costs

59
Q

What factors influence the prices a business sets for its product/service

A 
○ Location
○ Current economy
○ Demand
○ Income levels
○ Target market
○ Levels of market share
○ Tax levels
○ Changes in technology
○ Cost of important
○ Exchange rate
○ Competition 
○ Minimum wage
60
Q

What is meant by PLACE in terms of the marketing mix

A

Place is about making products and services available to customers when and where those customers want them to be

61
Q

Define channel of distribution

A

Channel of distribution is the process in which the product travels from the manufacture to the end customers

62
Q

What are the different ‘places’ (marketing mix)

A 
○ Location
○ Retail
○ Wholesale
○ Mail order
○ Internet
○ Direct sales
○ Peer to peer
○ Multi-channel
63
Q

Define retailer

A

A retailer is a business that sells goods directly to a consumer through a ‘bricks and mortar’ shop

64
Q

Define e-retailer

A

An e-tailer is a business which sells goods directly to a consumer via the internet

65
Q

What is meant by an independent retailer

A

Not part of a chain

66
Q

What are advantages of being a retailer

A

○ An enjoyable experience
○ Try on clothes
○ no shipping time
○ Customers may need to test the product

67
Q

What are disadvantages of being a retailer

A

○ Only open during the day-people are busy
○ Customers may have to wait in a queue or carry heavy bags
○ May charge a higher price-more costs

68
Q

What are advantages of being an e-retailer

A

○ Can be started with a smaller investment as no premises and less staff needed
○ Can sell a much larger range
○ Can undercut competitors prices by being cheaper
○ Can grow rapidly and be global
○ Lower fixed costs

69
Q

What are disadvantages of being an e-retailer

A

○ Hard to establish trust
○ Website costs can be high
○ Security and fraud for online transactions
○ Only as strong as your distribution /delivery if this is late may damage your reputation

70
Q

WHat impacts where a business decides to sell

A 
○ Proximity to the target market
○ Proximity to resources/ transport links
○ Proximity to labour
○ Proximity to competitors
○ Costs
71
Q

What is promotion

A

Promotion is an element of the marketing mix which is used by businesses to communicate and generate awareness to its current and potential customers about their products, services or companies.

72
Q

Define advertising

A

Businesses pay-TV companies and newspapers to have their adverts broadcasted or printed. It is used to inform, persuade or reassure.

73
Q

Whatis a sponsorship

A

– businesses attract publicity by linking their brands with events, E.g. Capital One cup, Barclaycard Wireless festival.

74
Q

What are the product trials

A

free miniatures and samples were given away to help collect feedback from customers

75
Q

What is meant by Sales offers/promotions

A

incentives used to encourage people to buy products. May be used to break into a new market or reward loyal customers. Can measure success through returned voucher/coupon.

76
Q

What are public relations

A

communicating with stakeholders to improve business image and increase sales. E.g. press release/conference.

77
Q

What are the 5 types of promotion

A 
Advertising
Product trials
Public relations
Sales offers/promotions 
Sponsorship
78
Q

What are the benefits of advertising

A

Wide coverage
Control of message
Repetition means that the message can be communicated effectively
Effective for building brand awareness and loyalty

79
Q

What are the drawbacks of advertising

A 
Often expensive
Impersonal
One way communication
Lacks flexibility
Limited ability to close a sale
80
Q

What are the benefits of sponsorships

A

Wide coverage
Control of message
Effective for building brand awareness

81
Q

What are the drawbacks of sponsorship

A 
Often expensive
Time-consuming
Based on celebrity popularity
Celebrity may not be admired by all
If celebrity behaves badly can harm brand reputation
82
Q

What are the benefits of product trials

A

Limited coverage – targets those who want to try
Effective for encouraging new customers

Can provide feedback to the business on customer demand

83
Q

What are the drawbacks of product trials

A

Often expensive – lower profit margins

Costly and time-consuming to administer

Results may not be representative of the full target market, leading to inappropriate decisions

84
Q

What are the benefits of Sales offers/promotions

A

Effective at achieving a quick boost to sales

Encourages customers to trial a product or switch brands

85
Q

What are the drawbacks of Sales offers/promotions

A

Sales effect may only be short-term
Customers may come to expect or anticipate further promotions
May damage brand image

86
Q

What are benefits of public relations

A 
Wide coverage
Control of message
Effective for building brand awareness
Two way communication
Ability to close a sale
87
Q

What are drawbacks of public relations

A

Often expensive
Costly
Time consuming
Based on location specific target market

88
Q

Define mass market

A

Where a business targets the larger population where customers have generic everyday needs and wants

89
Q

Define niche market

A

Where a business targets a smaller segment of a larger market, where customers have specific needs and wants

90
Q

Define branding

A

A characteristic name or symbol that distinguishes one product from another suppliers

91
Q

What is the benefit of having a strong brand?

A

Positive brand recognition – spreads word of mouth promotion
Able to charge high prices – increases profit margins
Customer loyalty – increases repeat purchases
Strong brand reputation
Customer trust – can be innovative and encourage demand with new products

92
Q

How can a business use technology in promotion?

A

Viral advertising via social media
Apps
E-newsletters
Targeted advertising online

93
Q

Define Viral advertising via social media

A

to generate interest and the potential sale of a brand or product through messages that spread over the internet quickly.

94
Q

Define Apps

A

software application designed to run on a mobile device

95
Q

Define E-newsletters

A

type of email that informs your audience of the latest news, tips, or updates about your product or company

96
Q

Define Targeted advertising online

A

placing ads on websites based off of individual’s demographics, buying history or digital behaviors like social media follows.

Business (10 decks)

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