2.2 Making Market Decisions Flashcards
What factors are in the design mix?
- Function
- Aesthetics
- Cost
What element of the marketing mix does the design mix come under?
Product
What is function?
How well a product does it’s job + how easy a product is to use
What is aesthetics?
Look, feel and visual appeal of a product
What is the cost?
Producing the product for a cost that allows the business to make a profit
What are the 4 stages of the product life cycle?
- Initial growth
- Growth
- Maturity
- Decline and discontinuation or extension
What is ‘Introduction’ in the product life cycle?
- Research, development and a launch of new products
- Sales are low coz product awareness is low + brand reputation is not well known
What is ‘Growth’ in the product life cycle?
- Product becomes more and more popular
- Sales increase rapidly
- Customer reviews and word of mouth replaces some form of promotion
- Business may raise price coz of it
What is ‘Maturity’ in the product life cycle?
- Growth has slowed down
- limit to the number of new customers
- Business likely to experience economies of sale
- Business should be able to maximise profitability
What is ‘Decline’ in the product life cycle?
- Sales drop as product loses popularity
- Product may go out of fashion etc.
- Business will lower product price
What are the different types of extension strategies?
- Lowering Prices
- Increasing Advantage
- Rebranding the product
What is an extension strategy?
Any action a business takes in order to lengthen the product life cycle
What is differentiation?
Process of developing a distinctive or unique product
How can a business differentiate it’s product?
- Give product unique style or design
- Create a distinct brand
- Excellent customer service
- Product= high quality
Why is differentiation important?
- Increases competitiveness of that buisness
- Allows business to charge a higher price for a product
What are 2 factors businesses will consider when setting the price of a product?
- The volume of the product
- The product’s profit margin + cost of producing the product
What is a high volume pricing strategy?
- Producing a lot of a product at a low cost
- Buying raw materials in bulk for cheaper
- Allows a business to reduce production costs and set a low price for the product
What is a high margin pricing strategy?
- Business attempts to maximise the difference between the production cost and retail price
- Adding value to a product
- High margin strategy often results in low volume( only small number of customers are willing to pay a high price)
How does technology influence pricing strategy?
- Allows flexible pricing strategy
- Makes it easier for customers to compare prices charged by competing businesses
- Makes market more competitive
How does competition influence pricing strategies?
- Linked to supply of a product
- Business usually sell at lower prices coz of competition
- The less competition the higher the price of products/services
How does market segments influence pricing strategies?
- Business target different customers with a product at a different price so they can meet needs and wants
- Mass market products have lower prices coz product is generic
- Niche market products = higher price
- New products= high price
How does the product life cycle influence pricing strategy?
- Visibility, Popularity and demand will change
- Thus price will change, especially in decline phase
What are the different types of promotion strategies?
- Advertising
- Sponsorships
- Product trials
- Special offers
- Branding
What is advertising?
- When a business pays to put an advert in order to communicate a message to customers/potential customers
- Uses a lot of media( TV, Radio etc)
What are sponsorships?
- When a business supports an event, activity or person
- Finacially or by providing product + services
What is product trials?
- The giveaway of a product
- Can be expensive
- Efficient method that encourages customers to buy the products
What are special offers?
- Often referred to as sales promotion
- Helps boost sales over a short period of time
- Take form in discounts
What is publicity?
- Any communication about a business that is created by the business, it’s customers and third party
- Public relations are used
What is branding?
- Personailty/ image of product
- Generated through marketing activities
How can social media and viral advertising be used as a form of promotion?
- Viral advertising= a message/image distributed among a lot of people
- Helps increase brand awareness
- Can be used to support campaigns
How does the use of apps help promote a business?
- Helps creatively engage with customer
- Give customers access to catalogue of products
How does emails and e-newsletters help promote a business?
- Helps build long-lasting relationships
- Can be used to communicate large amounts of info
- Customers can buy products online
