2.2 (market mix) Flashcards
What is the design mix
Function
Aesthetics
Cost
What are features of products focussed on aesthetics?
- High added value
- shorter product lifecycle
- Patents/Copyright
What are features of products focussed on function?
- longer product lifestyle
- lower promotional costs
- demand is more stable and predictable
Why do businesses focus on when considering costs ?
- how much value is added
- sales ability
What are the stages of the product lifestyle?
1- intro
2- growth
3- maturity
4- decline
What happens during the intro of the products lifestyle?
- costs High
- low level of sales
- negative cash flow
What is price penetration?
setting a relatively low price to boost sales
What is price skimming?
setting a relatively high price to boost profits.
What happens in the growth stage?
- advertising
- fast growing sales
- cash flow may become positive
- wider distribution
What happens in the maturity stage?
- slower sales growth
- fight for market share
- Attract new users
What happens in the decline stage?
- falling sales
- market saturation
- weaker cash flow
Why do products enter the decline stage?
- changes in consumer wants
- increased competition
- failure to develop product
What are extension strategies for?
To keep the product sales at the highest level
What are examples of extension strategies?
- advertising
- price reduction
- new packaging
What is the purpose if the product lifestyle?
- forecast future sales trends
- helps analyse product portfolio
Why are pricing decisions important?
They directly affect revenue
What are the main influences on pricing strategies?
- technology
- competitors
- market segments
What are the advantages to setting a high price?
- High profits
- product may gain a reputation for quality
What are the disadvantages to setting a high price ?
- price skimming cannot last for long
- may slow down sales growth
What are advantages to setting a low price?
- builds customer loyalty
- long term profitability
What are the disadvantages to setting a low price?
- lower profits
- price may remain low in the future
Price =
Unit cost + (mark up x unit cost)
What are advantages to setting prices based on cost?
- profit is guaranteed on each item sold
What are disadvantages to setting prices based on cost?
- price may be too expensive compared to rivals
Why promote a product?
- inform and persuade customers
- explain product benefits
- to compete with other businesses
What are some methods of promotion?
- sponsorship
- advertising
- branding
- social media
