Business GCSE topic 2.2 - Making Marketing Decisions

4PS

• Product

• Place

• Price

• Promotion

Product

Good that satisfies a want or need

4 elements of product

• Design

• Packaging

• Branding

• Product Life Cycle

Design mix

Combination of aesthetics, function, cost that are the combined design priorities of a product

Branding

Creating an identity for a product that clearly distinguishes it from its competitors

Benefits of branding

• Recognition → From logos, slogans, advertisements

• Desire → From high quality marketing, good reputation

• Brand loyalty → From high quality product, good reputation, good customer service

• Higher Prices → From customer loyalty, good quality, good customer service

Why products get packaged

• Protection

• Inform → Information of the product so people would know what it is and how to use it

• Aesthetics → Look appealing to encourage customers to buy it

Product Life Cycle

Theory of every product going through the same stages

4 stages of the product life cycle

• Introduction

• Growth

• Maturity

• Decline

Introduction stage

• Low sales

• High cost for customer

• Financial losses

• Few competitors (No competitors)

Growth stage

• Increasing sales

• Cost for customer falls

• Profits rise

• Increasing number of customers

• More competitors

Maturity stage

• Peak sales

• Cost for customer lowest

• Profits high

• Product in mass market

• Stable number of competitors

Decline stage

• Sales falls

• Cost for customer low

• Profits fall

• Customer base falls

• Number of competitors fall

Extending the product life cycle

An attempt to extend the sales of a product to avoid the decline phase

Ways of extending the product life cycle

• Introduce new variations of the product

• Sell into new markets

• Make small changes to product’s design, colour, packaging

• New advertising campaign

• Introduce a new and improved version of the product

These would all lead to an increase customer base → wider market share → Ahead of competitors → Increased sales revenue → Higher profitability

Price

How much a consumer pays for a product

Pricing strategies

• Skimming

• Penetration

• Competitive

• Cost-Plus

• Promotional

Skimming

Launching with a high price but reduce later. This is used to recoup research costs

Penetration

Starts at low price to build brand loyalty and then increases

Competitive

Charging similar prices as competitors

Cost-Plus

Adding a mark up to the cost to make a profit

Promotional

Temporarily reducing price to increase interest

Factors influencing pricing strategies

• Technology → Consumers can compare prices between two stores easily so it is important that business is competitively priced

• Competition → The fewer competitors a business has, the more they are able to set their own fare

• Market segments → Need to consider the income of their customers

• Cost of production

• Level of demand

Place

How the business products gets to the consumer and which other businesses it needs to pass through