2.2 making marketing decisions Flashcards
What is the design mix?
The three aspects that make up the design of a product:
Aesthetic (How does the product look, feel or taste?)
Function (What problem the product solves?)
Price (Can it be manufactured and sold or prices that make a profit?)
What is the first stage of the product life cycle?
Introduction:
Will involve high costs in research and development
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
Little-to-no cash flow
What is the second stage of the product life cycle?
Growth:
Enjoying rapid growth in sales and profits
The customers are aware of the product and demand is high
High cash flow
What is the third stage of the product life cycle?
Maturity:
Face intense competition now all the producers have joined the market.
Sales are high but profits are starting to fall.
Products have to be discounted to keep sales high
Highest cash flow
What is the fourth and final stage of the product life cycle?
Decline:
May be limited in production.
Profits and sales have fallen.
The product may be withdrawn from sale.
Low cash flow
What are examples of differentiation and why is it important?
Differentiation creates a unique brand image and promotes customer loyalty as a product stands out from its competitors This can be achieved through:
Branding USP Location Design Customer Service Quality Product mix
What is skimming pricing?
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.
The price can be lowered later on, but is high to start with to skim the profit while the product is trending.
What is penetration pricing?
Setting an initial low price for a new product so that it is attractive to customers.
The price is likely to be raised later as the product gains market share.
