1.3

design mix

Function, Aesthetics, Cost

function

what it's used for- ergonomics, usability, safety, reliability

aesthetic

what it looks, feels, tastes like

cost

aiming for minimum production cost whilst retaining quality, efficiency

changes in design mix to reflect social trends

* waste minimisation
* reuse
* recycle
* ethical sourcing

promotion

the process in which people are encouraged to buy a business' product or service

above the line advertising

advertising to mass media e.g TV or national newspapers

below the line advertising

direct, personal advertising to niche markets e.g leaflets, magazines

personal selling

direct communication between a trained sales person and a customer

public relations

the actions of a business that help to promote goodwill between the business and the public

direct mail

highly targeted mail based on customer's previous purchases

sponsorship

positive association between the product and a celebrity/sport

branding

a characteristic or symbol that distinguishes one product from another supplier

manufacturers brand

* created by the manufacturer
* brand loyalty
* can charge higher prices

own label brand

* created by the retailer
* value for money for customers
* ties consumer to the retailer
* high profits for retailer

benefits of strong branding

* added value
* ability to charge premium price
* reduced price elasticity of demand

ways to build a brand

* USP
* advertising
* sponsorship
* social media e.g hashtags, events

changes in branding and promotion to reflect social trends

* viral marketing
* brand awareness through word of mouth


* emotional branding- creates attachment

cost plus pricing

production unit costs plus a % mark up

competitive pricing

pricing in line with competitors so consumers have to judge the product on non price features

price skimming

product is priced high at launch then lowers once competitors enter the market

penetration pricing

setting a low initial price to encourage sales, then raising it in hopes of keeping the customers

predatory pricing

dropping prices very low (usually in monopolies or oligopolies) to push competitors out the market and deter new entrants

psychological pricing

pricing a product just below a round figure so that it appears cheaper

factors that determine appropriate pricing strategies

* number of USPs/ amount of differentiation
* price elasticity of demand
* level of competition
* strength of brand
* stage in product life cycle
* costs and the need to make profit

change in pricing to reflect social trends

* online sales
* price comparison sites = much easier to compare prices = must have stronger branding or lower prices to compete

distribution

the process of getting the right product/service to the right consumer

distribution channel

the chain of businesses through which a good or service passes until it reaches the end consumer.

two stage distribution channel

manufacturer to consumer
e.g holiday companies, solicitor

three stage distribution channel

manufacturer to retailer to consumer

four stage distribution channel

manufacturer to wholesaler to retailer to consumer

change in distribution to reflect social trends

* online distribution
* changing from product to service

benefits of online distribution

* can reach a wider audience
* low barriers to entry (low set up costs)
* greater geographically dispersed market

marketing

the process of identifying, anticipating and satisfying consumer demands for profit

product life cycle- development

high research and development costs and no sales \= cash outflows only

product life cycle- introduction

Starts when a new product is launched and starts gaining attention, sales and profits are low or negative

product life cycle- growth

rapid growth in sales and profits and could gain economies of scale
investment into promotion needed to maintain sales

product life cycle- maturity

The stage where sales begin to peak and slow down as competitors enter a market

product life cycle- decline

When sales fall rapidly and production is limited or completely stops

Boston matrix

a marketing portfolio analysis tool

Boston matrix- star

* high growth and high market share
* growth phase of product lifecycle
* maintain consistent production to harvest profits

Boston matrix- cash cow

* low growth and high market share
* product reaching maturity phase but still has customer loyalty
* continue production until sales start to decline

Boston matrix- question mark

* high growth and low market share
* may be in launch phase and building customer loyalty should be invested in while market share builds

Boston matrix- dog

* low growth and low market share
* declining sales = in decline phase
* product should be removed from sale

marketing strategy for mass markets

Tv, radio, mass media

marketing strategy for niche markets

specialist magazines, leaflets, trade fairs

marketing strategy for B2B

advertising needs to be informative

marketing strategy for B2C

* customer wants to know product benefits
* can create emotional connection