2.2 Making Marketing Decisions

What’s the product life cycle?

What’s the product life cycle?

INTRODUCTION - design & development of the product

GROWTH - sales continue to grow as product gains more popularity & more people purchase

MATURITY - product is at its most popular it’s ever been - eg. McDonald’s and Coca Cola have not left this stage

DECLINE PHASE - sales of product fall - could lead to product being discontinued

What’s an extension strategy?

A strategy which prolongs the life cycle of a product.

How should you price a product/service?

Should be dependent on:

→ Raw materials

→ How much consumers are willing to pay

→ Competition (how much they’re pricing it)

→ Availability of the product/service (SCARCITY)

What is ‘pricing low’ (pricing penetration)??

Initially setting the starting price as something low to attract more customers away from the competition

eg. Netflix, that taxi company in China

What is cost-based pricing?

price is determined by adding a profit element on top of the cost to make the product

What is ‘pricing high’ (price skimming)?

setting high price initially & reducing it overtime

→product is initially high in demand then drops (as soon as new models drop out)

—→ eg. iphone, PS5

What is promotion?

~the main aim is for customers to be aware of the existence of the product

—>If a random person has heard of the business before, walking past one of their shops means they are more likely to be persuaded to buy something from that business

TYPES OF PROMOTION

SALES PROMOTION

→ special offers, product trials, loyalty points, coupons etc.

SPONSORSHIP

→ influencers promoting their product

ADVERTISING

→ social media, newsletters etc. (wide coverage but expensive and impersonal)

→ advantages: effective at achieving cheap boost in sales

→ disadvantages: sales effect is short term + customers may anticipate further promotions

What is the design mix?

AESTHETICS

• how product looks, feels and appeals to a customer

FUNCTION

• the way the product works

COST

• design allows to be made & sold profitably

What’s branding?

branding - a product with a unique character

—> eg, logo/design (NOT USP)

advantages

→ retailers wanting to stock top brands, inspiring customer loyalty

disadvantages

→ hard to change the perception of the br

What’s a distribution channel?

moves a product through the stages of production to final consumer

eg. producer → wholesaler → retailer → consumer

supplies goods & services sells to retailer (eg. costco) shop sells to goods & services to consumer

or

producer → consumer ( etc. )

What are some ADVANTAGES and DISADVANTAGES to distribution channels?

Advantages:

→ Have more access to a larger number of customers for producer if their products are sold through intermediaries

→ Saves costs (£) from distributing to different areas

Disadvantages:

→ Producer could lose control of product and how/where it’s sold (eg. christian cross sold in a sex toy shop )

→ Intermediary could display them in a bad image, which affects the producer’s reputation.