2.2 Making marketing decisions

Question 1

What is the design mix?

Answer 1

Function- how fit for purpose a product is
Cost- The amount of money required to make enough products for a profit, this allows the product to be financially viable.
Aesthetics- the look, the feel and the visual appeal of the product.

Question 2

What are the stages of the product life cycle?

Answer 2

Introduction- the research, development and launch of the product, a lot of promotion is required and sales are low.

Growth- product becomes popular, demand increases, sales increase sharply, the price of the product can be raised.

Maturity- Sales growth slows down, market becomes saturated due to rivals, business gets repeated purchases, business will experience economies of scale.

Decline- Sales drop, product loses popularity.

Question 3

What are examples of extension strategies?

Answer 3

• lowering prices
• increasing advertising
• rebranding the product

Question 4

What are the benefits of product differentiation?

Answer 4

• it helps businesses position their product towards different market segments
• gain an advantage over rivals.

Question 5

Ways of differentiating a product?

Answer 5

• unique style
• customer service
• high quality
• advanced packaging

Question 6

What is the importance of price in the marketing mix

Answer 6

• price gives an indication of quality
• changes in prices can influence demand
• branded products usually have a higher price

Question 7

What are the two pricing strategies, explain.

Answer 7

High vol- low margin
Producing a lot of a product at a low cost, perhaps cheaper to buy in bulk, more viable for standardised products .
This allows there to be low production costs which means low pricing—>low profit margin.

High margin-low vol
Business maximise the difference between production costs and price, by adding value. Low volumes are produced, aimed at a smaller niche market, premium pricing.

Question 8

How does technology influence pricing?

Answer 8

• New technology can reduce production costs allowing the business to set higher prices.
• technology can make it easier for customers to compare prices, making the industry more competitive.
• Allows there to be more flexibility for the business in terms of pricing.

Question 9

How does competition affect pricing?

Answer 9

-The higher the competition, the more variety customers have, this means that the business has to set prices lower than their competitors.

Question 10

What other factors affect marketing?

Answer 10

• Market Segmentation: some products are sold in mass markets, so pricing is low as the customer needs are quite similar. Some products are sold in the niche market, where quality standards are higher hence product’s pricing is higher.
• Costs: the cost of production affects the pricing, price needs to be high enough to make a profit.
• Branding: strong branded products have a higher demand, hence prices are higher.
• The product life cycle: during diff stages of the product life cycle, the demand changes and the pricing has to be adjusted.

Question 11

Evaluate the use of advertising?

Answer 11

ads: -can attract large amounts of customers
- can be done through social media etc, to have a global reach
- can be effective at the right place and right time

dis: - can be expensive, it increases costs
- might require a specialist team to be hired, this also increases costs.
- its hard to identify how effective advertising is in bringing new sales.
- CAN BECOME VIRAL–>negative impact on sales

Question 12

Evaluate the use of sponsorships?

Answer 12

ads:

• business can gain popularity if endorsed through a celebrity
• business can gain get a lot of exposure
• increases customer awareness

dis: -may not communicate enough about the brand itself
- may be expensive

Question 13

Evaluate the use of product trials?

Answer 13

ads:
- free access encourages more customers
- small samples may not be very costly but attract potential customers

dis: - customers may only take advantage of them and not buy them
- it can be expensive to give away free products.

Question 14

Evaluate the use of special offers?

Answer 14

• can boost short term sales
• can clear the stock levels
• customers may be more inclined towards buying
• can be expensive
• selling at discounted rates could reduce the profit

Question 15

Evaluate the use of Public relations?

Answer 15

• good publicity generates interest in the business
• good publicity makes the business more trustworthy and well established
• may require a PR team
• responding to customer feedback is time taking

Question 16

what are the benefits of strong branding?

Answer 16

• customers trust the brand, they can instantly recognise it and what it represents
• a well branded name will have a more long lasting impression on the customer
• increase brand loyalty
• strong branding allows the business to charge a premium price

Question 17

What is the impact of technology on promotion?

Answer 17

Social media:
relatively inexpensive way of increasing sales
provides for viral advertising
Apps:more accessible
targeted advertising-e.g cookies
Email: communication through newsletters and special offers

Question 18

Evaluate selling through retailers?

Answer 18

• customers can physically have contact with the product
• retailers provide help and advice
• customers enjoy the experience of retail therapy
• retailers may cost businesses more(markup)
• renting costs
• staff needs to be employed
• higher competition

Question 19

evaluate selling through e-tailing

Answer 19

• no retail space needed
• customers can buy at any time of day
• global access
• small businesses can compete with larger ones
• customers invest less trust in the etailer
• product takes longer to reach customer
• delivery charges
• hard to initially make people aware of the website

Question 20

How are products and price related?

Answer 20

the price determines the profitability through the product
adding value to a product increases its price
price depends on the costs of making the product

Question 21

how are price and promotion related?

Answer 21

if the price is low, the budget for promotion will also be very low

Question 22

how is promotion and price related?

Answer 22

a product with premium pricing must be promoted through appropriate channels.

Question 23

place and product

Answer 23

some products are more suited to e-tailing whereas other are better to be sold through retailers.

Question 24

What as=re the advantages of an integrated marketing mix?

Answer 24

• products that are unique are more desirable
• businesses with lower prices than competitors can get higher sales
• successful advertising can increase the customers for the business and decrease the customers for a competitor
• highly visible place can increase footfall and attract more customers