Making marketing decisions

Question 1

What are the three key factors to consider when designing a product?

Answer 1

Function: What the product should do (e.g., a washing machine should wash clothes).
Cost: How cost-effective it is to manufacture (e.g., should be made and sold profitably).
Aesthetics: How the product looks, feels, or smells (e.g., the design and appeal to consumers).

Question 2

What is the design mix?

Answer 2

The design mix is a combination of the three design factors (function, cost, aesthetics) that businesses use to appeal to different target markets. It can be represented as a triangle, with each factor forming one corner.

Question 3

Why do product life cycles vary from one product to another?

Answer 3

Market dynamics: Some products, like tech, become outdated quickly due to new advancements.
Brand image: Products from well-known brands tend to have longer life cycles than those from unknown brands.

Question 3

How might the design mix differ for different products?

Answer 3

Different products prioritize design factors in different ways:

High-end sports cars: Focus more on aesthetics (looks, performance) and are expensive to manufacture.
Family cars: Prioritize function (safety, size, eco-friendliness).
Economical small cars: Focus on cost (affordable price and efficiency).

Question 4

What are the four phases of the product life cycle?

Answer 4

Introduction: The product is launched, and sales are low as customers are not yet aware of it.
Growth: Sales increase rapidly as more customers become aware and like the product.
Maturity: Sales peak, and the product is well-established in the market.
Decline: Sales fall as the product loses popularity and customers switch to alternatives.

Question 5

What determines where a product is in its life cycle?

Answer 5

The product’s sales level determines its phase. A line graph can show sales over time, illustrating which phase the product is in.

Question 6

Why do businesses use extension strategies for their products?

Answer 6

Businesses use extension strategies to prevent a product from entering decline, keeping it in the market for a longer period to increase sales and profitability.

Question 7

What factors influence how a business sets the price of a product?

Answer 7

Cost of Making the Product: The price must cover the cost of production and leave a profit.
Quality of the Product: High-quality products can be priced higher, as consumers expect to pay more for better quality.
Brand Image: Branded products often cost more because maintaining the brand and quality requires investment.
Demand and Supply: High demand means consumers may pay more

Question 8

What are some ways businesses extend the life cycle of a product?

Answer 8

Product Differentiation: Make the product stand out from competitors by highlighting its unique features.
Reducing the Price: Lower the price to stay competitive and attract more customers.
Rebranding: Refresh the product’s packaging or branding to appeal to new or past customers.

Question 9

What are the two main pricing strategies businesses use?

Answer 9

Low Price, High Volume: Set a low price to sell many units, typically used for generic products.
High Price, Low Volume: Set a high price for fewer sales but with higher profit margins, usually for luxury or unique products.

Question 10

What are the four factors that affect how businesses set their prices?

Answer 10

Changes in Technology: New technology leads to new pricing models, It also means businesses must adjust prices more often.
Number of Competitors: In competitive markets, businesses often lower prices to stay competitive.
Market Segments: Businesses target different market segments with different pricing,
Product Life Cycle: Prices change as a product moves through its life cycle: high price at introduction, lower price during maturity and decline.

Question 11

How does new technology influence the way businesses set prices?

Answer 11

Freemium Pricing: Basic versions are free, with paid add-ons.
Flexible Pricing: Technology lets businesses monitor demand and adjust prices frequently due to easy access to pricing info via smartphones and price comparison websites.

Question 11

How does targeting different market segments affect pricing?

Answer 11

Niche Market: Higher prices for fewer sales
Mass Market: Lower prices for high-volume sale

Question 12

How do competitors influence a business’s pricing decisions?

Answer 12

In competitive markets, businesses often reduce prices to stay ahead, especially when their products are similar to others in the market, like in the supermarket industry.

Question 13

How do different stages of the product life cycle impact pricing?

Answer 13

Introduction: High price, low volume.
Growth: Price stays low initially, then may increase.
Maturity: Price remains steady or decreases due to competition.
Decline: Price decreases further to maintain sales.

Question 14

What are the three main goals of promotion?

Answer 14

Inform consumers about a new product or service.
Persuade consumers to buy the product or service.
Remind consumers about the benefits of the product or service.

Question 15

What are the common methods businesses use for promotion?

Answer 15

Advertising: Paid messages to influence consumer purchases.
Sponsorships: Financial support for events or people.
Product Trials: Free or discounted trials to encourage purchase.
Special Offers: Sales promotions like discounts or competitions.
Branding: Using brand image to promote products

Question 16

What is advertising and how does it work?

Answer 16

Advertising is a paid message to influence consumer decisions, often using emotive language to create emotions like excitement or fear. It can be delivered through TV, radio, social media, print, billboards, and websites.

Question 17

What is sponsorship in promotion?

Answer 17

Sponsorship involves a business providing financial support or products to events, people, or organizations in exchange for prominent display of their brand, common at sports events, conferences, and charity events.

Question 18

What are product trials and how do they work?

Answer 18

Product trials encourage consumers to try a product for free or at a reduced cost, e.g., free samples, free trials, or money-back offers.

Question 19

What are special offers and how do they help promotion?

Answer 19

Special offers are sales promotions that offer incentives like discounts, competitions, BOGOF offers, free gifts, and money-off vouchers to encourage purchases.

Question 20

How does branding work as a promotional method?

Answer 20

Branding promotes products by using a brand image. A well-known brand can encourage consumers to buy new products under the same name, as consumers trust the brand’s reputation.

Question 21

What is the main disadvantage of traditional promotion methods?

Answer 21

They can be expensive, require planning in advance, and may not always reach the intended audience.

Question 22

How does targeted online advertising work?

Answer 22

Website owners use cookies to track consumers’ online behavior, building a profile of their interests and serving tailored ads.

Question 22

What is viral marketing?

Answer 22

Viral marketing involves creating shareable content, often on social media, that encourages consumers to spread it.

Question 23

What are the advantages of using apps in marketing?

Answer 23

Apps allow businesses to personalize offers, improve customer convenience, and facilitate engagement through features like push notifications.

Question 24

How does a business’s brand image affect pricing?

Answer 24

Strong brand images often allow businesses to charge higher prices due to consumer perception of higher quality.

Question 25

How does the number of competitors affect a business’s pricing strategy?

Answer 25

In competitive markets, businesses may lower their prices to remain competitive, especially if there are many similar products.

Question 26

What pricing strategy might a business use for a luxury product?

Answer 26

A business might use a high pricing strategy, focusing on a low volume of sales but high profit margins, particularly for products with strong brand value.

Question 27

How does a product’s position in its life cycle affect its price?

Answer 27

in the introduction stage, a business may price high with low volume; during maturity, prices may be reduced due to competition; and in decline, offers or low prices might be used to maintain sales.

Question 28

What is a retailer?

Answer 28

A retailer is a business that sells goods directly to the public, often through a physical store.

Question 29

What are the advantages of retailers?

Answer 29

Customers can see and feel products, such as trying on shoes for fit and comfort, and receive specialist advice.

Question 30

What is a disadvantage of retailers?

Answer 30

Retailers require expensive premises, often located on high streets, which can be costly to maintain.

Question 31

What is an e-tailer?

Answer 31

An e- tailer is an online retailer that sells goods and services via a website, without needing a physical shop.

Question 32

What are the advantages of e-tailers?

Answer 32

E-tailers can offer a wider range of products, lower prices, and are open 24/7, providing convenience to customers.

Question 33

What are the disadvantages of e-tailers?

Answer 33

Customers need internet access, cannot pay by cash, and must wait for delivery. Products cannot be seen or touched before purchasing.

Question 34

How does e-commerce differ from e-tailers?

Answer 34

E-commerce includes all online transactions, while e-tailers specifically sell to the public online.

Question 35

What is a competitive advantage in business?

Answer 35

A competitive advantage is the ability of a business to offer products or services that are more appealing than those of its competitors, usually through the marketing mix.

Question 36

How can businesses gain a competitive advantage through the marketing mix?

Answer 36

By offering products at lower prices, ensuring the product has added value, or highlighting unique features like a unique selling point (USP).

Question 37

What might a business do to gain a competitive advantage through product in the marketing mix?

Answer 37

Highlight how the product is better than competitors’ products, especially if it has a unique selling point (USP).

Question 38

How can price be used to create a competitive advantage?

Answer 38

A business can either charge lower prices than competitors or charge a premium price to highlight the quality of the product.

Question 39

How does place contribute to competitive advantage?

Answer 39

A business may choose to make its product widely available or limit its distribution to specific outlets, depending on the strategy.

Question 40

What role does promotion play in gaining a competitive advantage?

Answer 40

Promotion helps ensure consistent messaging and reinforces the brand image, which differentiates the product from competitors.

Question 41

Why is it important for businesses to consider different elements of the marketing mix?

Answer 41

Some elements, such as product features or price, may be more important than others depending on the type of product, market, and competition.