2.2 - Making marketing Decisions Flashcards

1
Q

What are the three elements of a design mix ?

A

Aesthetics
Function
Cost

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2
Q

Explain the function element of the design mix ?

A
  • it’s how well a product does its job
  • how easy a product is to use
  • how easy , fair or convenient the service is for someone to access and use
  • improving products functionality can improve competitiveness
  • allow it to target specific groups of customers
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3
Q

Explain the aesthetics aspect of the design mix

A
  • refers to the look , feel and visual appeal of a product
  • must be attractive and appeal to customers
  • for most customers aesthetics is the most important ( eg. Sofa , watches , shoes, perfume )
  • huge influence on customers choice
  • for some function is more important ( eg. Medicine )
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4
Q

Explain the cost aspect of the design mix

A
  • make sure product is financially viable

- producing product for a cost that allows business to make a profit

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5
Q

Explain the advantage of cost of production being low

A
  • sell products at lower price

- still make high profit margin

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6
Q

Explain the disadvantage of low cost of production ?

A
  • trade-off between costs and function/aesthetics
  • cheaper materials = lower durability of product ( direct impact on products function )
  • cheaper materials = product looks uglier ( impact on aesthetics )
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7
Q

How should a business balance function , aesthetics and cost

A
  • business might choose the accept increased costs of additional features
  • additional costs should be covered by the value the features bring to product
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8
Q

State the four stages of the product life cycle

A

Initial introduction
Growth
Maturity
Decline and discontinuation / extension

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9
Q

Explain the introduction phase

A
  • covers the research , development and launch of new product
  • sales are low = product awareness is low ( brand reputation not well know )
  • will not start to make a profit yet
  • business needs to do a lot of promotion to attract attention / use special offers to attract customers
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10
Q

Explain the growth phase

A
  • successful during introduction phase = enter growth phase
  • products becomes popular and sales increase rapidly
  • important business is able to keep up with demand
  • business might choose to raise price , if it believes the popularity will maintain demand even at higher price
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11
Q

Explain the maturity phase

A
  • growth slows down but sales still at peak
  • likely to receive repeat purchases from customers , limit to number of new customers that are interested
  • try to maintain sales at maturity for as long as possible ( promotion )
  • sales high during maturity = business experience economies of scale + maximise profitability
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12
Q

Explain the decline phase

A
  • sales start to drop as product loses popularity
  • might go out of fashion , replaced by tech
  • business lowers price and use promotion to encourage customers to buy product again
  • business has to decide to either discontinue or attempt extension strategy
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13
Q

What is an extension strategy ?

A

Any action that a business can take in order to lengthen the product life cycle and encourage growth in sales during decline phase

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14
Q

What are the two simplest extension strategies that a business can use ?

A
  • lower prices

- increase advertising

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15
Q

Describe a complex extension strategy

A
  • totally rebranding the product
  • modifying product , giving it a new name and logo , creating a new promotion campaign
  • stimulates new demand + interest for original product or completely reposition the product in the market and target a different market segment
  • introducing new varieties
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16
Q

Explain how a business may differentiate its product

A
  • product provides unique function , not provided by competitors
  • give product a unique style or design
  • create and use a distinctive brand
  • provide consistently excellent customer service
  • ensures products is of very high quality
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17
Q

How does a differentiated product affect costs ?

A
  • add value to product

- allows business to charge at higher price

18
Q

What are the two factors a business considers when setting prices ?

A
  • the volume of the product

- the products profit margin

19
Q

Explain the high-volume pricing strategy

A
  • producing a lot of product at a low cost in bulk( achieve economies of sales )
  • common for simple , standardised products
  • reduce production costs and set low price
  • low profit margin , however increase number of sales
20
Q

Explain the high margin pricing strategy

A
  • ( cost of making - price it sells at ) = adding value
  • value asses through products quality , branding
  • generate a premium product , customers willing to pay premium price
  • results in low volumes ( smaller proportion willing to pay high price )
  • lots of product may reduce a customers impression that the product is exclusive
21
Q

How does technology influence price ?

A
  • gives flexibility ( price adjusted up and down depending on demand for products)
  • in-game purchases
  • easier for customers to compare prices , makes market competitive hence forces business to lower prices
22
Q

How does competition influence price ?

A
  • increase competition = customers have more choice hence shop for best deal
  • business set lower prices ( eg. In busy town markets where business locate close to each other )
  • decrease competition = customers have less choice hence forced to buy a product at higher price
23
Q

How does mass market influence price ?

A
  • mass market : large market where customers have similar needs
  • lower priced because products are generic
  • customers have a wide choice of similar products to choose from
24
Q

How does niche market influence price ?

A
  • niche market : smaller market where customers have specific needs
  • charge higher price , as they meet specialist needs for customers
  • customers willing to pay more
25
Why do business charge more for brand new products ?
customers are willing to pay a high price as they want to be first ones to own the product ( first movers / early adopters )
26
What is advertising ?
- business pays to put out an advert in order to communicate a message to customers ( potential ) - Grab customer attention through humour , emotive language etc - develop effective adverts through specialist advertising agencies - through multiple medium , tV , radio , digital , print , outdoor - expensive ( TV ) , difficult to analyse impact ad has on product sales - large business afford Tv adverts , regional business = local radio - choose medium that allows it to access target market
27
What are sponsorship ?
- business supports event , activity , person or organisation either financially or providing products and services - encourage positive consumer attitudes towards its brand and generating awareness
28
What are product trials ?
- free access to or the giveaway of a product - very expensive - effective method of encouraging potential customers to sample a new product
29
What are special offers ?
- sales promotion , boost sales over a short period of time - entice customers into ship - strategy to clear business stock - take form of discounts or free upgrades
30
What is meant by publicity ?
- any communication about a business that is created by business , customers or third party - good publicity = generate interest in business , customers more likely to trust independent source - can be dangerous as it can come from someone outside business - some business use PR ( public relations ) to deal with this , help influence and manage publicity - business spend time responding to feedback to manage publicity
31
What is branding ?
Personality or image of a product which is generated through marketing activities - strong brand = generate customer loyal , add value + differentiate
32
How can business promote through technology ?
- targeted advertising on websites : banner/ side-bar adverts allow business to get exposure to potential customers - websites able to track customer searches and use this to show advert that are linked = more relevant
33
What is viral advertising ?
- message , video or image is distributed and shared among a lot of people on social network - increases sales and boosts brand , generates global interest + exposure
34
How can business use apps to promote its products ?
- Software Apps developed for smartphones and tablets - use apps creatively to engage with customers - gives customers access to catalogue of products , allow them to book appointments + show latest offers etc.
35
How are emails and e-newsletters used to promote ?
- business collect small detail such as telephone and email address - build long -lasting relationships with customers - advert can be tailored + personalised = more effective - e-newsletter communicate large amount of info with customers , generate positive attitude towards brand - allows customers to access further info , immediately buy
36
What is retailing ?
- traditional way in which products or services are distributed to customers - selling products and services through a shop / other physical building
37
Advantages of retailing
- allows customers to access face to face support - gives customers chance to trial ; encourages customers ; enjoyable customer experience - add value through excellent customer service / high street convenience - sign of long established and trustworthy business
38
Disadvantages of retailing
- expensive overhead costs such as rent or mortgage payments | - reduce manufacturer profit margin due to price mark up
39
What is e-tailing ?
- products and services are sold directly to a customer through a website
40
Advantages of e-tailing
- business does not need to own / rent a physical building - business can access national / international market - small business start up easily through low costs - small business access wider target market than it would access on own ( Amazon ) - allows new markets to grow
41
Disadvantages of e-tailing
- customer can’t check products quality before buying - concerns about buying from fake websites - e-tailors have to manage their own distribution costs - business still needs to undertake extensive digital marketing
42
How can a business achieve a competitive advantage ?
- PRODUCT : sell a product better than competitor through products design , quality , functionality etc. - PROMOTION : business advertising campaign unique and memorable ( viral ) increase public awareness - products brand image generated through promotion - organise production , procurement and logistics cheaply to lower costs than competitors