TOPIC 2.2 Making marketing decisions Flashcards
The design mix
The range of features that are important when designing a product
Function, aesthetics, cost
Product life cycle
introduction, growth, maturity, decline
Introduction stage
Introduction stage
Growth stage
expanding market, faster sales, profit rises product becomes known, use of advertising
Maturity stage
slower sales growth, strong positive cash flow, weaker competitors leave, use of more advertising
Decline stage
falling sales & profits, increasing price competition, market saturation, lowering prices
Price reduction product strategy
To boost short term sales, sell off remaining stock
Uses of the Product Life Cycle
Analyse and forecast sales, manage product portfolio, target marketing
Price skimming
Initial introduction set at high price
Advantages of price skimming
- potential for high profits
- can help establish a product as being good quality.
Disadvantages of price skimming
- cannot last long
- may not encourage repeat purchases
Price penetration
Initial introduction set at a low price
Advantages of price penetration
- develops customer loyalty and usage
- develops long term profitability
Disadvantages of price penetration
- lower short term profits
- difficulty raising prices in the future
Cost plus pricing
adding a fixed percentage to the cost of the product
