Topics 9-13 (Products)

Question 1

Things a business may consider when designing a new product.

Answer 1

• Shape and appearance
• Intended need
• Cost effectiveness
• Dimensions and materials
• Whether it portrays a corporate identity

Question 2

Three parts of the design mix

Answer 2

1. Aesthetics
2. Function
3. Cost

Question 3

Advantages of focussing on cost

Answer 3

Lower unit costs, can increase their profit margins.

Question 4

Advantages of focussing on aesthetics

Answer 4

Better perceived by customers. Adds value, allows the firm to develop a strong brand image.

Question 5

Advantage of focussing on function

Answer 5

Adds value to the product as quality of use is higher. Can be associated with increased prices which will increase revenue.

Question 6

What is promotion and its aims?

Answer 6

Promotion is when businesses attract attention to their products. It aims to:

• Tell consumers of a new product
• Remind consumers of a product
• Reassure consumers of a product
• Show rivals are bad

Question 7

Methods of above the line advertising

Answer 7

Informative advertising
Persuasive advertising
Reassuring advertising

Question 8

Benefits of advertising

Answer 8

• Huge reach
• Seen repeatedly
• Can be targeted

Question 9

Drawbacks of advertising

Answer 9

• Expensive
• Short lived
• May annoy consumers by being repetitive

Question 10

Methods of below the line advertising

Answer 10

Free gifts, Coupons, Loyalty cards, BOGOF, deals etc.

Question 11

What are the benefits of strong branding?

Answer 11

• Added value
• Ability to charge premium prices
• Reduced PED

Question 12

What is cost plus pricing?

Answer 12

This is simply the business adding up the cost to make the product, plus a markup.

Question 13

What is price skimming?

Answer 13

Launching a product into a market charging a high price for a short period of time. The aim is to generate lots of revenue until competitors arrive.

Question 14

What is penetration pricing?

Answer 14

This is where busiesses introduce a new product into the market and charge a low price for a limited time. The aim is getting a foothold in the market.

Question 15

What is predatory pricing?

Answer 15

Predatory pricing is where firms charge a very low price for a period of time until one or more rivals leave the market. Can be illeagal.

Question 16

What is a distribution channel?

Answer 16

The route taken by a product from producer to consumer.

Question 17

What factors affect which distribution channel a firm will use?

Answer 17

• Nature of the product
• Cost of certain channels
• Control

Question 18

Name the 6 stages of the product life cycle

Answer 18

1. Development
2. Intorduction
3. Growth
4. Maturity
5. Saturation
6. Decline

Question 19

What are the two most common extention strategies?

Answer 19

1. Product adjustment
2. Promotion

Question 20

What are stars? (Boston Matrix)

Answer 20

Stars are high growith, high share. They are already profitable, but need investment to be able to cope with a growing market.

Question 21

What are cash cows? (Boston Matrix)

Answer 21

Cash cows are low growth, high share. They are likely to be profitable, and little investment is needed.

Question 22

What are question marks? (Boston Matrix)

Answer 22

Question marks are high growth, low share. These have uncertaincy on whether they will be profitable. It has potential to be a star.

Question 23

What are the 4 variables in the marketing mix?

Answer 23

1. Product
2. Price
3. Promotion
4. Place

Question 24

What are five ways to develop customer loyalty?

Answer 24

1. Communication
2. Customer service
3. Customer incentives
4. Personalisation
5. Preferential treatment