2.2 Making marketing decisions

State and explain the 3 elements of the design mix

1\. Function: How well the product does its job

2\. Aesthetics: The look, feel and visual appeal of a product

3\. Cost: How much it costs to product the product. In order to be viable the product needs to be produced at a costs that allows a business to make a profit

These three elements need to be balanced in order to make a successful product

 

State the product life cycle

* introduction
* growth
* maturity
* decline

Describe what happens in the introduction stage ?

* costs are high
* low level of sales
* small scale distribution
* high promotional spending
* negative cash flow
* high/low initial price

Describe what happens in the growth stage ?

* expanding market
* market grows, profit rises
* ast growing sales
* product becomes known
* positive cash flow
* wider distibution
* advertising

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Describe the maturity stage

* slower sales growth due to increased competion
* high profits and market share
* strong positive cash flow
* weak competitors leave market
* persuasvie advertising

Describe what happens in the decline stage

* falling sakes
* makert saturation
* more competitors leave
* products withdrawn from production
* weaker cash flows
* remaining products sold at discount

Why do businesses enter the decline sentence ?

* technological advance
* changes in customer wants and needs

What are some extention stategies to prevent the decline stage ?

1\. Lowering prices

2\. Increasing advertising

3\. going abroad

4\. brand collaboration

What are 5 ways a business can differenciate

1\. Have unique functions

2\. Have a unique style or design

3\. Create a distinctive brand

4\. Provide excellent customer service

5\. Ensure product is high quality

 

What is high-volume pricing strategy ?

Producing a lot of products at low costs

this allows businesses to reduce production costs and therefore its selling price. It is very common for standardised products. this is also called **penetration pricing**

What is high - margin pricing strategy ?

Adding as much value by maximising the difference between cost and selling price.

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This means lower amounts would be sold but high profit margins. usually thi s is for products that are exclusive. This is also knwing as **price skimming**

What are the 5 factors that effect pricing

1. costs - a business sets a price based on unit costs
2. product life cylce - at different stages there are different prices
3. market segments - mass products will be low but niche will be high
4. technology - production is efficient so costs fall
5. competition - lots of competitors so keep at similar price

What are the benefits of retailling

1\. Allows face to face support

2\. Customers can trial the product

3\. Promotes the business through its location and window displays

4\. Some customers deem businesses with physical premises as more trustworthy

 5. no delivery time

What are the drawbacks of retailling

1\. Expensive to own premises

2\. Suppliers selling to retailers will have lower profit margins as the retailer also needs to make a profit

 3.must pay workers

4\. only open in the day

Hat are the benefits of e-tailing

1\. Gives access to more customers

2\. More convenient to customers as access is 24/7

3\. Lower fixed costs as not paying for premises

 

What are the drawbacks of e-tailling ?

1\. Customers can be worried about buying online as they cant check quality

2\. Some people concerned about fake websites

3\. Needs lots of money spent on marketing campaigns to ensure people visit the website

4\. pay for shipping

5\.more competitors

What are 5 promotion strategies ?

1\. Advertising

2\. Sponsorship

3\. Product trials

4\. Special offers

5\. Branding

 

How can technolgy be used in promotion ?

1\. Targeted advertising online:  for example side adverts on websites

2\. Viral advertising via social media: where a message or video is shared among a lot of people of social networks

3\. E-newsletters: Sent to existing customers so can be personalised and helps maintain relationships with customers. Will include info about new products

 

How does product effect price,place and promotion

price - if the product is expensive the price will be higher

place - if it needs to be tried on it will be successful in a shope

promotion - a new product may need more promotion than a mature product

how does price effect product,place and promotion

product - if its rare or in high demand the price would be changed accordingly

place - tranport costs would add to the price

promotion - heavy promotion to allow high prices

How does place effect product,price and promotion ?

product - the type of product determines where it can be sold

price - dictates what type of shops it can be sold at

promotion - more promotion means more retaillers nationwide will sell it

How does promotion effect product, price and place

product - old products need more promotion or discounts to boost sales or clear stock

price - shops expect products to have a large amount of promotion as they are discounters

place - hogh priced products in nice markets may benefit from pr reviews in magazines

How can a business use its marketing mix to gain a competive advantage

**Product:** Sell a product that is better than competitors. E.g. in design, quality, functionality, customer service

**Promotion:** If an advertising campaign is unique and memorable it may go viral

**Promotion:**  Create a strong brand image through promotional activities

**Price:** By ensuring businesses maintain lower costs, prices and be kept low which can maintain a competitive advantage

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