Making marketing decisions

What three factors are considered in product design?

Function, cost, and aesthetics

What is the function of a product?

What the product should do and how well it does it

What is the cost factor in product design?

How cost-effective the product is to manufacture and sell profitably

What is the aesthetics factor in product design?

How the product looks, feels, or appeals to consumers

What is the design mix?

The combination of function, cost, and aesthetics used to appeal to a target market

How might a high-end sports car use the design mix?

It prioritises aesthetics and driving experience, with high production cost

How might a family car use the design mix?

It prioritises function such as safety, size, and environmental features

How might a small car use the design mix?

It prioritises cost, being affordable to make and economical to run

What is the product life cycle?

The four phases a product goes through: introduction, growth, maturity, and decline

What happens in the introduction stage of a product?

Sales are low because few customers are aware of the product

What happens in the growth stage of a product?

Sales rise rapidly as awareness and popularity increase

What happens in the maturity stage of a product?

Sales peak as the product becomes established and a regular purchase

What happens in the decline stage of a product?

Sales fall as the product loses popularity and may be withdrawn

What factors affect the length of a product life cycle?

Market dynamism and strength of the product’s brand image

What is an extension strategy?

A method to extend a product’s life cycle and delay decline

What is product differentiation?

Making a product stand out from competitors, often through a unique selling point (USP)

How can reducing price extend a product’s life cycle?

Lower prices keep existing customers and attract competitors’ customers

What is rebranding?

Refreshing a product’s branding and packaging to attract or re-attract customers

What is repositioning a product?

Finding new markets, uses, or audiences to revive sales

How can marketing activity extend a product’s life?

New advertising or promotions attract new and previous customers

What factors influence product pricing?

Cost of production, quality, brand image, and demand versus supply

Why do consumers pay more for high-quality products?

They understand higher quality often costs more to make and signals value

How does brand image affect price?

Strong brands can charge higher prices due to reputation and marketing

How does demand and supply affect price?

High demand or low competition allows for higher pricing, while competition lowers prices

What is a low-price, high-volume pricing strategy?

Selling at a low profit margin to achieve high sales volume, often for generic products

What is a high-price, low-volume pricing strategy?

Selling fewer products at high profit margins, often for luxury or USP-driven products

What four factors influence pricing strategies?

Changes in technology, number of competitors, market segments, and product life cycle stage

What is the freemium pricing model?

A model where a basic product is free, but additional features must be paid for

How has technology affected pricing decisions?

It gives consumers instant price comparisons and allows businesses to adjust prices more frequently

How does technology benefit businesses in pricing?

It helps monitor customer demand and identify opportunities to increase prices

How does the number of competitors affect pricing?

More competition often leads to lower prices, especially for similar products

What is an example of price competition in the UK?

Supermarkets lowering prices to compete with discount chains

How do market segments affect pricing?

Niche markets allow higher prices with lower volume, while mass markets require lower prices with higher volume

Why can a high-end watch be sold at a higher price?

It targets a niche market with fewer competitors and higher perceived value

How does a product’s life cycle affect pricing?

Prices are high at introduction, may drop at maturity due to competition, and are often lowered in decline to maintain sales

What pricing strategy is often used for generic products?

Low price with high volume but low profit margin

How do prices typically change during a product’s growth stage?

They may start low to attract customers and rise as the product becomes established

How are prices managed during a product’s decline?

They are often reduced with special offers or high-volume, low-price strategies to maintain sales

What are the three main purposes of promotion?

To inform, persuade, and remind consumers about a product or service

What is advertising?

A paid-for message designed to influence consumer purchases using emotive language

What are common types of advertising media?

Television, radio, print, social media, websites, billboards, and posters

What is sponsorship?

Providing financial support or free products to an event, person, or organisation in exchange for brand visibility

Where is sponsorship commonly used?

Sporting events, conferences, exhibitions, and charity events

What are product trials?

Opportunities for consumers to try a product for free or at a reduced cost

What are examples of product trials?

Free samples, free streaming trials, and trial offers like money-back guarantees

What are special offers?

Sales promotions that give incentives for purchases

What are examples of special offers?

Discounts, competitions, buy-one-get-one-free, free gifts, money-off vouchers, and loyalty cards

What is branding?

Creating a positive brand image that encourages customers to buy products under a known brand name

Why is brand image important for new products?

Consumers are more likely to purchase products from brands they already trust

What is a promotional strategy?

A combination of promotional methods designed to reach a target audience

What factors affect a business’s promotional strategy?

Business size, promotional budget, and target market segments

What is an example of a good promotional strategy for a small local gardening business?

Using leaflets and offering introductory discounts to target local customers

Why is national TV advertising a poor strategy for a small local business?

It is very expensive and does not effectively target local customers

What is viral marketing?

Marketing content designed to be shared widely on social media to promote a product or campaign

What is targeted online advertising?

Using cookies to track consumer activity and show personalised product adverts online

How do apps help businesses promote products?

They personalise offers, allow customer interaction, and use push notifications for updates

What can customers do using business apps?

View products, track orders, find special offers, and book appointments

What are e-newsletters?

Emails sent to consumers who sign up, keeping them informed about products and offers

What does “place” refer to in the marketing mix?

How goods and services reach customers, including distribution methods

What are channels of distribution?

The routes through which products move from producers to customers

What is a direct channel of distribution?

When producers sell products directly to customers without intermediaries

What is an advantage of selling directly to customers?

The producer controls distribution and pricing

What is a disadvantage of selling directly to customers?

It becomes difficult to sell to a large number of customers

What is an indirect channel of distribution?

When intermediaries like retailers or e-tailers help distribute products to customers

What are the benefits of intermediaries for producers?

They make distribution easier and more efficient

What are the benefits of intermediaries for customers?

They make buying products more convenient and accessible

What impact has the internet had on distribution channels?

Significant impact, with many goods now distributed digitally

How have consumer goods traditionally been sold?

Through retailers

What is changing about how people shop?

More people are shopping online

What is important to recognise about retailers, e-tailers, and e-commerce?

The differences between them

What is a retailer?

A business with a physical shop where customers visit to purchase products

How do e-commerce and e-tailers sell products?

Using an online store where customers visit a website

What is a common distribution channel involving retailers?

Producers distribute products to retailers who then sell to customers

What advantage do physical shops provide to customers?

Ability to see and feel the quality of products

What specialist help might retailers offer?

Specialist advice on particular types of products

What is a disadvantage of retailers?

Require expensive physical premises often located on high streets

Name three types of retailer.

Small independent traders, supermarkets, department stores

What is an e-tailer?

A retailer that sells products and services online through a website

Do e-tailers need physical shops?

No, although some choose to have them

How do e-tailers receive products?

Producers distribute products to e-tailers who then sell online

How do customers receive products from e-tailers?

Products are delivered to the customer

Name two examples of e-tailers.

Alibaba and Amazon

What is one advantage of e-tailers related to product range?

They can offer a wide range of products not limited by shop size

How do e-tailers help small producers?

Allow them to sell through their website for a fee

Why are e-tailers often able to offer lower prices?

They do not have to pay for physical shops

When can customers shop with e-tailers?

24 hours a day, 7 days a week

What is a requirement for customers to shop with e-tailers?

They must have internet access

Why can’t customers pay cash with e-tailers?

Because transactions are online

What must customers be willing to do when buying from e-tailers?

Wait for delivery of goods

What limitation do customers face when shopping with e-tailers?

Cannot see items in person before purchasing

What does e-commerce refer to?

Buying and selling of goods and services online

What transactions does e-commerce include?

Any transactions between businesses carried out online

How does e-commerce compare to e-tailers?

E-commerce covers a wider range of online transactions; e-tailers only sell to the public

What is the marketing mix used for?

To gain a competitive advantage over other businesses

How can a business gain a competitive advantage?

By offering lower prices or adding value to products

Why might businesses highlight added value instead of just price?

Not all products can compete on lowest price alone

Name four elements of the marketing mix.

Product, price, place, promotion

What might a business highlight about a product to add value?

How it is better or has a unique selling point (USP)

How can price be used to add value?

Charging a price that reflects quality or lowest possible price

What choices can be made about place in marketing?

Whether a product is widely available or sold in fewer outlets