2.2 - Making marketing Decisions Flashcards
1
Q
What are the three elements of a design mix ?
A
Aesthetics
Function
Cost
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
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 )
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
5
Q
Explain the advantage of cost of production being low
A
- sell products at lower price
- still make high profit margin
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 )
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
8
Q
State the four stages of the product life cycle
A
Initial introduction
Growth
Maturity
Decline and discontinuation / extension
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
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
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
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
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
14
Q
What are the two simplest extension strategies that a business can use ?
A
- lower prices
- increase advertising
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
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
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
