Topics 9-13 (Products) Flashcards
Things a business may consider when designing a new product.
- Shape and appearance
- Intended need
- Cost effectiveness
- Dimensions and materials
- Whether it portrays a corporate identity
Three parts of the design mix
- Aesthetics
- Function
- Cost
Advantages of focussing on cost
Lower unit costs, can increase their profit margins.
Advantages of focussing on aesthetics
Better perceived by customers. Adds value, allows the firm to develop a strong brand image.
Advantage of focussing on function
Adds value to the product as quality of use is higher. Can be associated with increased prices which will increase revenue.
What is promotion and its aims?
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
Methods of above the line advertising
Informative advertising
Persuasive advertising
Reassuring advertising
Benefits of advertising
- Huge reach
- Seen repeatedly
- Can be targeted
Drawbacks of advertising
- Expensive
- Short lived
- May annoy consumers by being repetitive
Methods of below the line advertising
Free gifts, Coupons, Loyalty cards, BOGOF, deals etc.
What are the benefits of strong branding?
- Added value
- Ability to charge premium prices
- Reduced PED
What is cost plus pricing?
This is simply the business adding up the cost to make the product, plus a markup.
What is price skimming?
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.
What is penetration pricing?
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.
What is predatory pricing?
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.
What is a distribution channel?
The route taken by a product from producer to consumer.
What factors affect which distribution channel a firm will use?
- Nature of the product
- Cost of certain channels
- Control
Name the 6 stages of the product life cycle
- Development
- Intorduction
- Growth
- Maturity
- Saturation
- Decline
What are the two most common extention strategies?
- Product adjustment
- Promotion
What are stars? (Boston Matrix)
Stars are high growith, high share. They are already profitable, but need investment to be able to cope with a growing market.
What are cash cows? (Boston Matrix)
Cash cows are low growth, high share. They are likely to be profitable, and little investment is needed.
What are question marks? (Boston Matrix)
Question marks are high growth, low share. These have uncertaincy on whether they will be profitable. It has potential to be a star.
What are the 4 variables in the marketing mix?
- Product
- Price
- Promotion
- Place
What are five ways to develop customer loyalty?
- Communication
- Customer service
- Customer incentives
- Personalisation
- Preferential treatment
