3.5.1 The Marketing Mix Flashcards
1
Q
What is marketing mix made up of? [4]
A
Product in terms of
1. Design
2. Performance
3. Price
4. Promotion
including advertising and place in terms of where and how the product will be sold to customers.
2
Q
What is the marketing mix commonly referred?
A
The marketing mix is commonly referred to
as the 4Ps and are key decisions that must be made to ensure successful marketing of a product.
3
Q
What is market success of the marketing mix?
A
Although not all the 4Ps have the same degree of significance for each market situation, it
is important to have an optimum combination of the 4Ps fitting together into a coherent and integrated plan to ensure marketing success.
4
Q
What is important to note about 4Ps?
A
It is important to note that the 4Ps must
be carefully coordinated to ensure that customers are not confused by conflicting messages
provided about the good or service sold.
5
Q
What is a product? [2]
A
- A product is anything that can be offered to a market to satisfy a need or a want.
- Products that are marketed include physical goods, services, events, persons, ideas, or a mix of these entities.
6
Q
How are marketers traditionally classified products?
A
Marketers have traditionally classified products on the basis of tangibility and use
(consumer or industrial).
7
Q
What are tangible products classified as?
A
Goods
8
Q
What are intangible products classified as?
A
Services
9
Q
How are goods further sub-divided?
A
Goods are further sub-divided according to their durability.
10
Q
What are non-durable goods?
A
Non-durable goods are tangible goods normally consumed in one or a few uses, such as soft
drinks and shower foam.
11
Q
Why will business provide durable goods?
A
Businesses providing durable goods typically use more personal selling, charge a higher margin and provide seller guarantees such as warranty period or a refund policy.
11
Q
How do businesses make non-durable goods?
A
As these goods are consumed quickly and purchased frequently,
businesses tend to make them available in many locations, make a small profit margin, and
advertise heavily to influence purchasing decision.
12
Q
What are durable goods?
A
Durable goods are tangible goods that usually last many uses.
13
Q
What are examples of durable goods?
A
Examples include
refrigerators, machinery and clothing.
14
Q
What are services? [2]
A
- Services are intangible, inseparable, variable and perishable products.
- As a result, they
normally require tighter quality control, supplier credibility and adaptability.
15
Q
What are examples of services?
A
Examples of
services include haircuts, legal advice and maintainance of electrical appliances.
16
Q
What are consumer products?
A
Consumer products are products and services purchased by end-consumers for personal
consumption.
16
Q
How will marketers typically classify consumer products?
A
Marketers typically classify consumer products based on how customers go
about buying them.
17
Q
What are the types of consumer products? [3]
A
- Convenience products
- Shopping products
- Specialty products
18
Q
What are convenience products? [3]
A
- These are goods and services that customers purchase frequently, immediately and with minimal comparison and buying effort.
- Examples include soap, sweets, newspapers and fast food.
- Convenience products are usually low-priced, and businesses place them in many locations to make them readily available when customers want to purchase them.
19
Q
What are shopping products? [4]
A
- These are less frequently purchased consumer goods and services that customers make comparisons on suitability, quality, price and style.
- When buying
shopping products, customers spend time and effort to gather information and make
comparisons. - Examples include furniture, mobile phones, cars, hotel and airline services.
- Businesses usually distribute shopping products through fewer outlets but provide better sales support to help customers in making comparisons.
20
Q
What are specialty products? [3]
A
- These are consumer goods and services with unique characteristics
or branding for which customers are willing to make a special purchase effort. - Examples include antiques, designer bags, high-end super cars, and the services of medical or legal
specialists. - Customers usually do not compare specialty products, but invest only the time and effort to reach businesses selling them.
21
Q
What are industrial products?
A
Industrial products are goods and services purchased for further processing or for use in
business operations.
22
Q
What is the difference between a consumer product and an industrial product? [3]
A
- Hence, the difference between a consumer product and an industrial product is based on how the product is used.
- If a customer buys a digital camera for his
hobby, the digital camera is a consumer product. - If the same customer buys the same digital
camera for use in a photography business, it becomes an industrial product.
23
How can industrial products be grouped? [3]
1. Materials and parts
2. Capital items
3. Supplies and services
24
What are materials and parts? [4]
- These include raw materials and manufactured materials and parts.
- Raw materials can consist of farm products (wheat, livestock, fruits) and natural products (fish, timber, crude oil).
- Manufactured materials and parts consist of component materials (cement, wires) and component parts (microprocessor, tyres).
- Most materials and parts are sold directly to the business market.
25
What are capital items? [4]
- These are industrial products that aid in the customers’ production or operations, including installations and accessory equipment.
- Installations consist of
major purchases such as buildings (factories, offices) and fixed equipment (generators,
elevators).
- Accessory equipment includes portable factory equipment and tools (hand tools, forklifts) and office equipment (computers, printers).
- Accessory equipment
typically have a shorter lifespan than installations and simply aid in business operations.
26
What are supplies and services? [4]
- These include operating supplies (lubricants, paper, stationery) and repair and maintenance items (paint, nails, brooms).
- Supplies are convenience
products of the business market because they are usually purchased with minimal effort
or comparison.
- Business services include maintainance and repair services (window cleaning, aircon maintainance) and business advisory services (legal, consultancy).
- Such services are usually supplied under contract.
27
What does developing a product involves?
Developing a product involves defining the benefits that it will offer.
28
What are the benefits of developing a product? [4]
These benefits are communicated and delivered by product attributes
1. Quality
2. Durability
3. Features
4. Appearance
29
What is product quality?
Product quality refers to the characteristics of a good or service that is able to satisfy the
needs of customers.
30
What is effect on product performance due to quality?
Quality has a direct impact on product performance; hence it is closely related to value creation and customer satisfaction.
31
What are the two aspects of quality?
1. Performance quality
2. Conformance quality
32
What is performance quality? [4]
- This refers to the ability of a product to perform its functions.
- For example, a Rolls-Royce as compared to a Nissan, offers a smoother and more
comfortable ride.
- Businesses seldom try to offer the highest possible performance
quality, as few customers want or can afford the high levels of quality offered in
products such as a Rolls-Royce or a Rolex watch.
- Instead, businesses choose a quality
level that matches the target market needs and quality levels of competitors.
33
What is conformance quality? [3]
- This means that the product is consistently able to deliver a target
level of performance and is free from defects.
- All businesses should aim for high levels
of conformance quality. - For example, although a Nissan may not perform as well as a
Rolls-Royce, it can have just as much quality by consistently delivering what customers
expect and pay for.
34
What are the types of ways appearance be classified? [3]
1. Form
2. Style
3. Packaging
34
What is durability? [4]
- Durability is a measure of the product’s expected operating life under natural or stressful
conditions.
- It is a valued attribute for products such as vehicles or kitchen appliances.
- Consumers are not expected to pay excessively more for durability.
- In addition, the product must not be subjected to rapid technological obsolescence, such as in the case of personal
computers or mobile phones.
35
How will business offer various features? [4]
- A business usually starts off with a basic
model and creates higher-end models by adding more features.
- Features are competitive tool for differentiating the product of the business from competitors’ products.
- A business
should periodically conduct market research on customers to find out about features important to them, and new features they would prefer.
- The business should then assess if the new features important to customers is worth the additional costs of adding these
features.
36
What is form? [2]
- Many products can be differentiated in form, such as size, shape or physical structure of a product.
- For example, aspirin which is a common medication used to treat pain, fever or inflammation, can be differentiated by dosage, size, shape, colour, coating
or action time.
37
What is style? [3]
- Style describes a product’s look and feel to customers.
- Increasingly, customers
are interested in and willing to pay more for aesthetic products; those with an attractive
look, touch, feel and attention to detail.
- Aesthetics play a key role in brands such as
Apple computers, Montblanc pens, and Harley Davidson motorcycles.
38
What is packaging? [3]
- Packaging involves designing and producing the container or wrapper for a
product.
- Traditionally, the main function of the package is to hold and protect the product.
- However, with increased competition and the lack of space in retail store shelves, packaging must now perform multiple roles, from attracting attention, to describing the product, to making the sale.
39
What is product life cycle? [3]
- After launching a new product, the business would want sales of the product to last as long
as possible.
- Although the product is not expected to sell forever, the business would want to earn a decent profit to cover the risk and effort that went into launching the product.
- Businesses should be aware that each product has a life cycle, although the exact shape and length is not known in advance.
40
What are the four key stages of a product life cycle? [4]
1. Introduction
2. Growth
3. Maturity
4. Decline
40
What is an example of introduction stage?
For example, when Toshiba first launched
its non-glasses 3D television, it came only in two versions, 12 and 20 inch, and prices are
high at $1,400 and $2,800 respectively.
40
What is growth stage? [7]
1. If the new product satisfies the market, it will enter a growth stage, in which sales will start to increase quickly.
2. The early customers (innovators) will continue to buy, and later customers (early adopters) will follow their lead, especially if they come across good reviews or favourable word of mouth.
3. Attracted by the opportunities
for profits, new competitors will enter the market.
4. They will introduce new product
features, and the market will expand.
5. The increase in competition will lead to an increase in the number of distribution outlets, and sales will increase as distributors
build on their inventories.
6. Businesses will continue to spend the same amount of money on promotion, or even increase their promotion spending. 7. While creating awareness
remains a goal, the business must now also meet the competition.
41
What is introduction stage? [5]
1. The introduction stage starts when the product is first launched.
2. In this stage, profits are negative or low because of the low sales and high distribution and
promotion expenses.
3. Businesses would spend a lot of money to attract distributors and
build on their inventories.
4. Promotion spending is high to inform customers of the new
product and to get them to try it.
5. As the market is generally not ready for product refinements, businesses typically produce basic versions of the product, and focus on selling to those who are most ready to buy.
42
What is maturity stage? [7]
1. At some point, a product’s sales growth will slow down, and the product will enter a maturity stage.
2. The maturity stage usually lasts longer than the earlier
stages, and it poses strong challenges to marketers.
3. The slowdown in sales growth
results in greater competition.
4. Competitors would thus start to mark down prices, increase their advertising and sales promotions, and spend more on research and
development to build better versions of the product.
5. These measures would lead to a
drop in profits.
6. Some of the weaker competitors would start to drop out, and the market
would only contain well-established competitors.
7. Although many products in the
maturity stage appears to remain unchanged for long periods of time, the more successful ones typically evolve to meet changing consumer needs.
43
What is decline stage? [4]
1. The sales of most products will eventually dip, and the decline may be slow or rapid.
2. Sales decline for many reasons, including technological advancements,
change in consumer tastes and preferences and increased competitive offerings
3. As sales and profits decline, some businesses would withdraw from the market.
4. The remaining ones may reduce their product offerings, drop smaller market segments, reduce availability, cut promotion budgets or reduce prices further.
44
What are the uses of product life cycle? [3]
1. Identifies how cash flow might depend on the product life cycle.
2. Recognizes the need for a balanced product portfolio.
3. Assists with the planning of marketing mix decisions.
45
Why is cash flow critical?
Cash flow is critical to
business survival and ignoring therelationship between cash flow and product life cycle
could be detrimental to the business.
46
What is cash flow during development (pre-introduction) stage?
During development (pre-introduction stage) of the product, cash flow is negative as costs are high and the business has not produced
or sold anything yet.
47
What is the cash flow at the introduction stage? [2]
- At the introduction stage, although the business stop incurring
development costs, it is likely to spend heavily on promotion expenses which will continue into the growth stage.
- In addition, there is likely to be unused production
capacity which will place a further strain on costs.
48
What happens when sales increase?
As sales increase, cash flow is likely
to improve, although this will depends on the credit terms given to customers.
49
What happens to cash flow in maturity stage?
The maturity stage is likely to see the most positive cash flow, as sales are high, promotion costs are reduced, and production capacity is maximised.
50
What happens when a product reaches the decline stage?
As a product reaches the decline stage, price reduction and falling sales are likely to combine to reduce cash flow.
51
What is caused by severe cash flow problems?
Hence, if a business has too many of its products either at the introduction or decline
stage, it will face severe cash flow problems.
52
What will product life cycle inform? [2]
- The product life cycle helps inform
marketing managers of the characteristics of the market and aids them in the decision-making of the marketing mix strategies.
- This is due to the common relationship between the stages of the product life cycle and the nature of marketing mix decision taken by the business.
53
What happens when one product declines?
As one product declines, other
products should be developed and introduced to take its place.
54
When is cash flow should be reasonably balanced? [3]
- Cash flow should be
reasonably balanced, thus there are products at every stage and the positive cash flow
of the successful ones can be used to finance the cash deficits of others.
- Production
capacity should be kept at consistent levels as the declining output of some products is
replaced by the increasing demand for the recently introduced products.
- This is known
as a balanced product portfolio
55
What will final decisions depend on?
However, the final decisions will also depend on the actions of competitors, the economic condition and the marketing objectives of the business.
56
What is a product life cycle important tool? [7]
1. A product life cycle is an important tool to assess the performance of the current product
range of a business.
2. It helps to provide a regular check on the marketing strategy of a
business.
3. However, the product life cycle is based on past or current data, and it cannot be
used to predict the future.
4. The sales of a product might have grown over the last few
months, but this does not mean it will continue to grow until a long period of maturity is reached.
5. Sales could crash very quickly if consumers lose interest.
6. An example would be fad products like the fidget spinner.
7. In contrast, sales of some products could against predictions continue to grow and grow.
57
When is product life cycle really useful?
To be really useful, a product life cycle needs to be used together with sales forecasts and
the experience of the management to assist with effective product planning.
57
What is price?
Price is the amount paid by customers for a product.
58
When is price important?
Price is one of the most important elements in determining the market share and profitability of a business.
59
Why is determining an appropriate price for a good or service an important aspect of the marketing mix?
Price can have a great impact on the consumer demand for a product.
60
What happens when getting the price decision wrong? [2]
- Getting the pricing decision wrong could render the efforts of
market research and product development to be in vain.
- Hence, pricing decisions are some
of the most important issues marketing managers have to deal with.
61
Why are pricing decisions important to businesses and marketing managers? [3]
1. Determine the degree of value addedness
2. Impact on demand
3. Establish psychological image and identity of a product
62
What is determine the degree of value addedness? [4]
- The price set by the business must cover the costs of raw materials or components
purchased, as well as the costs of processing these raw materials or components.
- Thus the
price reflects the value the product delivers to consumers as well as the value it captures
for the business.
- When used correct, pricing strategies can maximise profits and help the business to take a commanding position.
- When used incorrectly, pricing strategies can limit revenue, profits and brand perceptions.
62
What is impact on demand? [4]
- Pricing strategies can influence the revenue and profit made by a business due to the impact on demand.
- A business can increase revenue by either selling more products or to sell at a
higher price.
- A business would have to reduce price in order to sell more; conversely, if a business is to sell at a higher price, demand would fall.
- As such, businesses must make a strategic trade-off between volume and price in order to maximise profits.
63
What is establish psychological image and identity of a product? [4]
- If a business decides to set a high price for a product, consumers will generally associate the
product to be of high quality.
- This is known as price-quality perception.
- Generally, brand-name products charge a price premium because of the perceived higher quality associated with the branding.
- The pricing effectively forms a psychological image and identity of the product in the minds of consumers.
64
What do the factors affect marketing managers?
The factors affecting how marketing managers decide on the pricing of products can be grouped into internal and external factors.
64
What are some types of internal factors? [2]
1. Costs of production
2. Business objectives
65
What are some types of external factors? [2]
1. Competition
2. Demand and external environment
66
What should the business aim of the price to make a profit?
If the business is to make a profit from the sale of a product, in the long term at least, the
price set must cover the entire costs of producing the product and bringing it to the market.
66
What are the types of costs? [2]
1. Variable costs
2. Fixed costs
67
What are variable costs?
Variable costs vary with the number of units produced, such as cost of raw materials.
68
What are fixed costs? [2]
- Fixed costs include rental, advertising and
promotion, and can be very substantial.
- Fixed costs do not vary directly with the number of
units produced and sold.
69
What is a market leader?
A business with high market share is often referred to as a market leader, and it is likely to
be a price setter, setting prices for other smaller businesses in the market to follow.
70
What if the aim of the business differs? [3]
- If the aim of the business is to become the market leader through mass marketing, the price
level set by the business will be different from one that is targeting a selected niche market.
- If the objective is to establish a premium branded product, the business will not succeed by
setting rock-bottom prices.
- Essentially, the price set must be aligned with the other
components of the marketing mix, based on the business and marketing objectives of the business.
71
What happens when the business is not the market leader?
Businesses that are not the market leader will find it difficult to set a price too different from
that of the market leader, unless true product differentiation or a unique selling proposition
can be established.
72
How can level of competition affect pricing decisions?
If a business operates in a monopoly or oligopoly, it will have more freedom in price setting as compared to a business operating in an environment where there are many competitors.
73
What is demand? [4]
- Demand for goods and services will have a great influence on the setting of price.
- In general,
the greater the demand for a product, the higher the business could price this product.
- Conversely, demand could also be influenced by price.
- A business could lower the price of a
product to increase demand.
73
What includes in external environment? [3]
1. Economic factors
2. Technological factors
3. Legal factors
74
What is economic factor? [4]
1. Economic conditions such as whether a country is experiencing a boom or recession would impact pricing decisions.
2. When China experienced an
economic slowdown beginning in 2011, both Chinese companies selling to other
countries and foreign businesses selling to Chinese customers were impacted in their
pricing strategy.
3. The slowdown forced US marketers to modify their prices to reach the
increasingly price sensitive Chinese shoppers.
4. For example, McDonald’s introduced a value meal starting at 15 yuan to combat declining sales.
74
What is technological factor? [6]
- Technology influences pricing decisions in a significant and
growing way.
- It has helped to shift the balance of power from businesses to customers, who are more well-informed about prices.
- The internet has made it possible for
customers to compare prices from around the world.
- In the past, pricing options for
customers were confined to brick-and-mortar retailers.
- In present times, beyond retailers, consumers can compare prices in online marketplace such as Amazon and
Lazada.
- In addition to the internet, mobile applications and dynamic pricing are rapidly changing the nature of pricing.
75
What is legal factor? [3]
- In many countries, laws are passed to limit uncompetitive practices
between businesses.
- As a result, many businesses would end up competing on price to increase market share.
- For example, in Singapore, the government has deregulated the
electricity market to allow households and businesses to purchase electricity from 12
retailers, instead of buying solely from SP Group previously.
76
What are the types of new product pricing strategies? [2]
1. Penetration pricing
2. Price skimming
76
What are the types of existing product pricing strategies? [4]
1. Cost-based pricing
2. Break-even pricing
3. Perceived value pricing
4. Psychological pricing
77
Why do businesses use penetration pricing? [3]
- Businesses use penetration pricing by setting a relatively initial low price to penetrate the market; to attract a large number of customers quickly and achieve high volume of sales and win a large market share.
- This is usually supported by a strong promotion campaign.
- If the product gains a large market share, the business could then slowly increase the price.
78
What are the several conditions to be met for penetration pricing to work? [3]
The market must be highly price-sensitive so that a low price produces more market
growth.
Production and distribution costs must fall as sales volume increases.
The low price must help to keep out the competition, and the business must maintain
its low position. If not, the price advantage may be temporary.
78
What is an example of penetration pricing?
When Circles.Life first launched in Singapore, it uses penetration pricing in its attempt to
capture market share. Its base plan is $28 per month. Customers would have to pay a lot
more if they purchased a similar plan from an established telco.
79
What is price skimming? [3]
- Price skimming, also known as market skimming, refers to the setting of a high price for a new product when the business has a unique or highly differentiated product, and the target
customers are willing to pay the high price.
- The aims of price skimming are to maximise
short-term profits before competitors enter the market with similar products, and to project an exclusive image for the product.
- If competitors launch similar products, the business may
need to reduce the price of the product over a period of time.
79
What are the certain conditions of price skimming? [3]
The product’s quality and image must support its higher price, and enough customers
must want to buy the product at that price.
The costs of producing a smaller volume cannot be so high that they cancel out the
advantage of charging more.
Competitors should not be able to enter the market easily and undercut the high price.
80
What is cost-based pricing?
In cost-based pricing, the business will assess the costs of producing or supplying each unit
of product, and then add an amount on top of the calculated cost.
80
What is an example of price skimming?
When Apple introduced the first generation iPhone, the initial price was as high as $599 per
phone. Only customers who really wanted the sleek new device and could afford the high
price would purchase the iphone. Six months later, Apple reduced the price to $399 for the
8GB model and $499 for the 16GB model to attract new customers. Within a year, the prices
dropped further to $199 and $299 respectively.
81
What is mark-up pricing?
A common cost-based
pricing is mark-up pricing, which is to add a fixed mark-up for profit to the unit price of the product.
82
When is mark-up pricing commonly used? [2]
- Mark-up pricing is commonly used by retailers, which take the price paid to the producer or
wholesaler for the product, and simply add a percentage mark-up.
- The percentage of the
mark-up usually depends on the combination of the demand of the product, the number of
competitors and the stage of product life cycle.
83
Why is mark-up pricing often used?
Mark-up pricing is easy to apply, and is used by many wholesalers and retailers.
84
What is the limitation of mark-up pricing? [3]
- However, it
is difficult to determine an effective mark-up percentage.
- If the percentage is too high, the
product may be overpriced, and sales will be low.
- If it is too low, the business is effectively
losing profits that could be earned.
85
What is break even pricing?
Break even pricing is the practice of setting a price at which a business will earn zero profits on a sale.
86
What are the advantages of break-even pricing? [3]
1. Entry barrier
2. Reduces competition
3. Market dominance
86
What is the intention and usefulness of break even pricing? [4]
- The intention is to use low prices as a tool to gain market share and drive competitors out of the market.
- By doing so, a business may be able to increase its production volumes to such an extent that it can reduce costs and then earn a profit at what
had previously been the break-even price.
- Alternatively, once it has driven out competitors, the business can raise its prices sufficiently to earn a profit, but not so high that the
increased price is tempting for competitors.
- Break-even pricing is also useful for establishing
the lowest acceptable price, below which the seller will begin to lose money on a sale.
87
What is entry barrier?
If a business continues with its break-even pricing strategy, possible new
entrants to the market will be deterred by the low prices.
87
What are the disadvantages of break-even pricing? [2]
1. Perceived quality
2. Price war
88
What is reducing competition?
Financially weaker competitors will be driven out of the market.
89
What is market dominance?
It is possible to achieve a dominant market position with this
strategy, if the business increases production volumes and thereby reduces costs and
earn a profit.
89
What is price war?
Competitors may respond with even lower prices, so that the company does
not gain any market share.
89
What is perceived quality?
If a business reduces prices substantially, it creates a perception
among customers that the quality of the product is no longer as good, which may
interfere with any later actions to increase prices.
90
When is break even pricing useless?
It is a difficult approach for a smaller, resource-poor business that cannot survive for long with zero margins.
90
When is break-even pricing most useful?
Break-even pricing is most useful for businesses with sufficient resources to lower prices
and fight off attempts by competitors to undercut them.
91
What is perceived-value pricing? [2]
- An increasing number of businesses base their price on the customers’ perceived value,
which comprises of several elements such as customers’ image of the product’s
performance, customer support and warranty, reputation and trustworthiness of the brand etc.
- Businesses must deliver the value promised, and customers must perceive this value to
be delivered.
91
When is perceived-value pricing typically used? [2]
- Perceived-value pricing is typically used in markets where customers are less price-sensitive
and more willing to pay, such as for luxury goods.
- The more prestigious the brand name,
such as Rolex watches, the higher the perceived value and so the higher the price can be set.
91
How can a business deliver more value than competitors?
- To do this, a business would need to understand how customers make decisions.
- For example, Goodyear found it difficult to charge a price
premium for its more expensive new tyres despite innovations to extend tread life. This is
because consumers had no reference point to compare tyre prices, and they tended to
prefer the lowest price offerings. Goodyear’s solution was to price its tyres on expected
distance of wear, instead of their technical features, making product comparisons easier.
92
What is the key to perceived-value pricing?
The key to perceived-value pricing is to deliver more value than competitors, and to
demonstrate this to potential customers.
93
What is psychological pricing?
Psychological pricing is a pricing approach that considers the psychology of consumers; the
price set is used to provide a signal about the product.
94
What are the two aspects of psychological pricing? [2]
1. Very common for manufacturers and retailers to set prices just below key price levels in
order to make the price appear much lower than it is.
2. Requires the use of market research to avoid setting prices that consumers consider to be inappropriate for the style and quality of the product.
95
What is an example of inappropriate price setting?
A very low price for cosmetics or perfume, even though the costs of production may not be high, will not create the status and exclusive image that the business is trying to portray.
Potential consumers may be put off by the fact that too many people can now afford the product and the quality may not be as high as they originally believed. This is similar to perceived-value pricing.
96
What is an example of price signaling of a product?
For example, consider a laptop priced
at $899 instead of $900. Some consumers would see $899 in the $800 range instead of the
$900, and $899 would be viewed as a bargain price.
97
How are digits related to psychological pricing? [2]
- Finally, some psychologists argue that each digit has symbolic and visual qualities that
should be considered in pricing.
- For example, the number 8 is round and even, and creates
a soothing effect, whereas the number 7 is angular and creates a jarring effect. For the
Chinese, the digit 8 sounds like prosperity in Cantonese and Mandarin, and is used in pricing
to suggest good fortune for potential Chinese customers.
98
What is important for businesses in regard to pricing decisions? [3]
- It would be incorrect to assume that one business will use the same pricing method for all of its products.
- This would be unwise as the market conditions for the different products
could vary greatly.
- It would, therefore, be important for the business to apply different methods to its portfolio of products, depending on costs of production and competitive conditions within the market.
99
Why is level of price important?
The level of price can have such a powerful influence on consumer purchasing behaviour
that marketing managers should ensure that market research is used to test the impact of
different levels of price on potential demand.
100
What does good value mean?
Good value’ means that all aspects of the marketing mix are
combined and integrated together so that consumers accept the overall position of the product and agree that its image justifies the price charged for it.
101
What are other factors of a good value product? [2]
- The complete
brand image orlifestyle offered by the good is increasingly important in a world where many
consumers have so many choices and their incomes are rising.
- A low price for a prestige lifestyle product could easily destroy the image that the rest of the marketing mix is
attempting to establish.
