Alevel business 1.3

Designing products to meet social trends -

• products designed for waste minimisation

• products designed for reuse

• products sourced ethically

Above the line

Involves any form of advertising through the media

• radio

• Internet

• Direct marketing

Below the line

Includes all other forms of promotion that are not advertising

• merchandising and packaging

• Personal selling

Importance of strong brands

• allows a premium price to be charged

• Makes a product recognisable

• adds value to a product

Types of brands

• manufacturers brands

• own label brands - brands associated with retailer eg Sainsbury’s crisps

• Generic brands - no particular brand association

What influences price

• Costs - profit margins the business is trying to receive

• The PED

• Product life cycle - stage of the life cycle the product is in.

Predatory pricing

Where the business sets a low price in order to price competitors out of the market.

Business may make a loss until the competitor fails

Competitive pricing

• The business sets prices based on the nearest competitor

Psycological pricing

The business sets the price below the next whole number to trick consumers into thinking the price is lower.

Price skimming

The business sets an initially high price for a new product when it is in high demand

Cost plus pricing

Bases a price on the unit cost and then adds a percentage as a mark up

Adapting price to reflect social changes

• Personalised pricing - online databases collect customer information and allow businesses to target them with a personalised price

• Price comparison sites - makes it easy for consumers to compare prices and choose the best deal

Parties in the distribution network

• Agents - link buyers and sellers together and operate in industries such as insurance

• Retailers - provide customers with specialist service

• Wholesalers - take bulk quantities from manufacturers

• Direct selling - online sales and e commerce websites.

What influences distribution

• Nature of the product perishable goods (e.g., fresh food) need short distribution channels so they reach consumers quickly.

• High-value or complex products (e.g., machinery, luxury goods) are often sold directly to customers to provide advice and maintain quality.

• If customers are spread out geographically, firms may use intermediaries like wholesalers and retailers.

• If the target market is small or specialised, firms may sell directly to customers.

Value of digital marketing and e commerce

• targets specific segments

• Builds relationships through a more personal service

• Opportunities for personalisation and involving customers in the design of products

Benefits of online distribution for businessses

• Do not have to meet the costs of operating retail stores

• Lower start up costs - easier for small businesses to launch

• Businesses can take sales 24-7

Benefits of online distribution for customers

• Customers can benefit from lower prices as e trailers pass on lower costs

• Customers can shop 24/7

• Comparison between brands is easier

Product life cycle

Boston matrix

• stars (high market share high growth) leading brand in the market

• Question marks (low market share market growth) fast growing market but not yet an established product. Usually requires heavy investment to develop and ensure success. Lots of competition from rival brands

• Dogs - (low market share low growth) - business should revitalise or discontinue the product

• Cash cows (high growth low market share) successful products in mature markets. Generates high revenue that could be invested in other areas

Outbound marketing

Any strategy that involves pushing a message out of customers

Inbound marketing

Any technique that attracts potential customers to a website when they are looking for a particular service.