Marketing Mix Flashcards
What are the factors that affect price?
Demand
Cost of production
Need to make a profit
Competition
Price which the market could bear
Season of the year
Quantity of inventory in hand
What is demand?
Businesses have to estimate the demand for the product and price accordingly. Demand will determine how much consumers will pay.
Example of a goods in high and low demand and will have a high and low price
High demand - phone
Low demand - vegetables
What is cost of production?
The producer has to calculate the total incurred in manufacturing the goods. The price charged to the consumer has to be set at a level which would cover all the costs of production- fixed costs (rent) and variable costs (raw materials)
What is the need to make a profit?
As business owners aim to make a profit from the business it is important that the price set enables them to cover total costs and leaves profit margin for both the manufacturer and the retailer. Good profits will encourage others to invest in the business
What is competition in the market?
The aim in business is to set your price at a level which would encourage customers away from competitors. The price has to be slightly lower than that charged from competitors.
Examples of goods/services that are priced to the level of competition
Coffee
Restaurants
What is the price which the market could bear?
The business needs to be aware of the price that customers can afford and are willing to pay. It win also depend on the type of product
Examples of goods that would be sold in a well off and less well off area
Well off - sports cars
Less well off - fast food
What is the season of the year?
Demand for some goods are seasonal. Price charged can be at its highest level but will fall after the event
Examples of goods that will be priced according to the season of the year
- Christmas decorations
- Halloween costumes
- Gym memberships
What is the quantity of inventory in hand?
A surplus of inventory will result in a retailer holding a sale to reduce the levels of unsold inventory. When a good is scarce e.b. Nintendo wii a much higher price can be charged for it.
Advantages of social media promoting business activity
Allow for two way communication with consumers to market products.
Is an excellent marketing tool, enabling businesses to reach potential consumers directly.
Drives sales and is important in product promotion.
Gives the business a very up to date image
Disadvantages of social media promoting business activity
Dissatisfied consumers can protest strongly and possibly damage the image of the business.
Because social media is controversial, there must be someone online at all times
What are the Advertising standards authority’s (ASA) basic principles?
Legal, decent, honest and truthful
Prepared with a sense of responsibility to consumers and society
In line with the principles of fair competition
