3.5.4 Flashcards
main features of a product
-reliability
-quality
-value for money
-design
-image
when developing a new product what must a business consider?
-design
-price
-expected sales
-cost of development of production
why is it important to produce new products?
-customers needs and wants evolve
-to add to their existing products or to replace them altogether
-it’s an investment that involves quite high risks, as many new products do not succeed
unique selling point
what makes a product special or different
what is the marketing mix?
to meet customers needs a business must develop products to satisfy them, change the right price, get the goods to the right place and it must make the existence of the product known through promotion
what are the features of the marketing mix?
-product: the features and appearances of the goods and services
-price: how much customers pay for a product
-promotion: how customers are informed about products
-place: the point where products are made available to customers
what factors influence the marketing mix?
-the product itself
-competitors products
-target customers
-business approach
what are the main factors to consider when designing a new product?
-materials
-price
-competitors
-target market
what is a brand?
a named product which:
-customers see as being different from other products
-is easily recognised
-builds its image through the use of a recognisable name, logo and packaging
branding
imagery a company uses to make us identify them and pick they out of the competition
advantages of branding
-increases loyalty
-can launch complimentary products in same brand name
-can charge higher prices
-successful bran names can be linked to the product e.g. hoover
disadvantages of branding
-could get a bad name if quality is not kept up
-cost of developing and establishing it
-can be copied
what are the stages of the product lifecycle?
- development
- introduction
- growth
- maturity
- decline
describe the stage development
-idea for a product is developed and tested
-during the development stage businesses spend money but have no money coming in
describe the stage introduction
-when the product is launched and the sales begin
-can involve a lot of expenditure on promotion
describe the stage growth
-when the product starts to sell faster
-may need to find more outlets for production
-people are beginning to buy more of it and it’s becoming more successful
describe the stage maturity
-sales rate begins to slow down
-a business should consider introducing some different versions of the product to keep sales up
describe the stage decline
-when sales start to fall
-need to make more difficult decisions at this stage
-should the product be taken off the market?
-should sales be boosted again by spending money on marketing?
extension strategy
techniques used to try to delay the decline stage of the product lifecycle
examples of extension strategies
-find new uses for the product
-change of name or packaging
-provide a USP
product portfolio
the products that a company produces
boston matrix
means of analysing the product portfolio and informing decision making about possible marketing strategies
what are the different components of the boston matrix?
-problem child
-stars
-dogs
-cash cows
describe stars
-products experiencing high growth rates and high market share
-potential for revenue growth
describe cash cows
-products experiencing high market share but low market growth
-low costs, high cash revenue–> positive cash flow
describe dogs
-products experiencing low market share and low market growth
-associated with negative cash flow
describe problem child
-products experiencing a low market share in a high growth market
-need money spent to develop them
advantage of the boston matrix
useful tool for analysing product portfolio decisions
disadvantages of the boston matrix
-only a snapshot of the current position
-does not take account of environmental factors
-product lifecycle varies
what are the different pricing methods?
-cost plus pricing
-price skimming
-price penetration
-competitive pricing
-loss leader
cost plus pricing
this means that they calculate the cost of providing the product and add a percentage to this to decide the price
price skimming
setting a high price for a product when it first enters the market
price penetration
setting a low price to achieve fast sales
competitive pricing
prices that match competitors
loss leaders
products sold at loss in the hope that the customer will buy other items that will make a profit
factors affecting price
-cost
-demand
-nature of the market
-competitors pricing
promotion
ways of communicating about the business and its products
reasons that businesses use promotion
-inform customers about the business
-try to persuade customers to buy a product
-increase sales
factors influencing the promotional mix
-finance
-target audience
-competitors actions
-nature of the market
methods of promotion
-advertising
-sales promotions
-public relations
-personal selling
examples of advertising
-newspapers
-magazines
-billboards
advantage of advertising
effectively spreads your business
disadvantage of advertising
have to pay
examples of sales promotions
-discounts
-buy one get one free
-coupons
advantage of sales promotions
encourages customers to buy your product
disadvantage of sales promotion
could lose profit
examples of public relations
-big shows to gain media coverage
-controversial things to gain media coverage
advantage of public relations
free media coverage
disadvantage of public relations
can not control what will be said by the media
example of personal selling
sales force to help promote products
advantage of personal selling
they are informed about new offers and new products
disadvantage of personal selling
have to employ a sales force
distribution channel
how the ownership of a product passes from the producer to the final customer
wholesaler
they buy in large quantities from a producer and sell to retailers
retailers
shops that sell direct to the customer
intermediary
a link in the distribution chain between the producer and the customer
tradition channel of distribution
manufacturer –> wholesaler –> retailer –> consumer
modern channel of distribution
manufacturer –> retailer –> consumer
direct channel of distribution
manufacturer –> consumer
factors to take into consideration when choosing a channel of distribution
-costs
-lack of control
-the product
e-commerce
the act of buying/selling a product using an electronic system such as the internet
m-commerce
the buying/selling of products through wireless handheld devices such as smartphones
advantages of e-commerce
-customers can order any time
-customers can order from home
-more variety of products
disadvantages of e-commerce
-need to be able to distribute wider range of destinations
-worldwide competition
-problems of delivering goods and accepting returns
