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What is the design mix?
The design mix refers to the combination of elements that make up a product’s design.
What are the elements of the design mix?
Function.
Aesthetics.
Cost of manufacturing.
What are the factors of Function?
Will the product/service be fit for purpose?
What does the product/service do?
How well does it perform?
Ergonomics, usability, safety, reliability, functionality.
What are the factors of Aesthetics?
Through market research customers are asked: how it looks, tastes, feels.
How the senses respond to the product.
More stylish and beautiful products tend to sell better and can have a premium price charged.
What emotional attachment do customers have with the product/service?
What are the factors of Cost of Manufacturing?
What is the minimum cost that we can make this product for whilst retaining quality?
Can this product be made using productive capacity?
Can it be make efficiently?
Can it be produced for a lower cost than the competitors?
How does concerns to resource depletion (environmental consideration) require adaptations to the design mix of a product/ service?
Customers are becoming increasingly aware of the need to conserve natural resources and reduce waste.
The design mix may change to reflect waste minimisation (reduce, re-use, recycle).
Companies may choose to design products that use fewer materials, are more durable, and can be easily disassembled for recycling or repair.
How does concerts to ethical sourcing require adaptations to the design mix of a product?
Ethical sourcing means that products are produced with exploitation of workers or environmental damage.
Companies may change their product design mix to incorporate sustainable materials and production processes.
What is promotion?
Promotion draws attention to the good/service/business.
What are the two types of promotion?
Above-the-line
Below-the-line
What is above-the-line promotion?
Above-the-line promotion is advertising.
E.g. Tv, internet, print, radio, cinema, posters.
What is below-the-line promotion?
Below-the-line promotion is any promotion that is not advertising.
E.g. Sales promotion, public relations, merchandising and packaging, direct mailing, direct and personal selling, exhibition and trade fairs.
What are the factors that contribute to choosing a method of promotion?
Cost.
Market - local, national, global.
Product or service type.
Stage in the product lifecycle.
Competitors actions.
Legal factors.
What is branding?
Branding is a product, service or concept that is publicly distinguished from other products, services or concepts so that it can be easily communicated and usually marketed.
What are the three types of branding?
Corporate branding.
Manufacturers (product) brands.
Own-label brands.
What are the advantages of corporate branding?
Creates strong brand recognition and reputation.
Helps to build economies of scale by promoting multiple products at once.
What are the disadvantages of corporate branding?
If a companies reputation is damaged by a product it can have a negative effect on all of the products.
If the company faces unrest competition in one market it may effect the sales of all the other products.
What are the advantages of Manufacturing (product) branding?
Creates a distinct identity for the product.
Allows the company to market different products the different segments.
Can help build customer loyalty and trust by associating the product with a specific quality and benefits.
What are the disadvantages of manufacturing (product) branding?
The cost of creating and promoting a new brand/product is expensive.
Introducing new products under different brands is difficult as the business must build a new brand for each product.
What are the advantages of Own-label branding?
It can help retailers differentiate themselves from their competitors by offering unique products.
It allows retailers to offer products at a lower cost than branded products.
What are the disadvantages of own-label branding?
Own brand products may have lower perceived quality than branded products which can affect customer loyalty and trust.
What are the benefits of strong branding?
Adds value.
Ability to charge premium prices.
Reduced price elasticity of demand.
What are the four ways to build a brand?
USP.
Advertising.
Sponsorship.
Social media.
What is viral marketing? How does it change promotion and branding?
This is a buzzword which refers to brand awareness created through word of mouth.
The original message is posted via twitter, facebook, youtube.
Consumers then watch/experience/share the message with their friends.
The business does not have to pay for the distribution of the advert or message.
What is emotional branding? How does it change promotion and branding?
Emotional branding seeks to create a bond between the consumer and the product by provoking an emotional response to the advertising.
Long lasting attachment to a product is strong brand loyalty.
What are the six pricing strategies?
Cost-plus pricing.
Competitive pricing.
Price skimming.
Penetrative pricing.
Predatory pricing.
Psychological pricing.
What is cost-plus pricing?
Cost-plus pricing is where the cost to produce the products are worked out then the money is added on top (either by adding a profit margin or a percentage mark-up on top).
What is competitive pricing?
Competitive pricing is where some products or services are priced in line with competition.
What is price skimming?
Price skimming is where a product is priced high to begin with as it has a desirability factor that will mean customers will want it when it’s new.
What is penetrative pricing?
Penetrative pricing is where a business sets prices really low on a new product to encourage sales and to persuade customers to try the product.
What is predatory pricing?
Predatory pricing is where business may hold of the great of a new entrant by lowering their prices so that any competitor can’t make a profit.
What is psychological pricing?
Psychological pricing is where they price a product at a .99 instead of a whole number to seem cheaper.
What are the advantages and disadvantages of cost-plus pricing?
Always makes a profit.
Ignoring competitors and the market.
What are the advantages and disadvantages of competitive pricing?
Aligned with competitors (non-price competition).
Low profit margins.
Ignores costs.
What are the advantages and disadvantages of price skimming?
Higher revenue.
Negative reaction to price drops.
People wait.
What are the advantages and disadvantages of penetrative pricing?
Encourages sales.
Builds loyalty.
Higher prices.
Lose sales when higher price in the future.
What are the five factors that determine the most appropriate pricing strategy for a particular situation?
Number of USP’s/amount of differentiation.
Price elasticity of demand.
Level of competition.
Strength of brand.
Stage in the product life cycle.
What is manufacturer - consumer?
Two- stage.
Direct selling.
Products are sold directly from the manufacturer to the consumer.
What is manufacturer-retailer-consumer?
Three stage.
Most manufacturers like to sell into a retailer. As the retailers are spread all over the country it gives the manufacturer the distribution and volume of sales they are looking for.
What is manufacturer-wholesaler-retailer-consumer?
Four-stage.
Some manufacturers prefer to deal with just a few wholesalers and sell in larger quantities or they may sell to a wholesaler as well as many retailers.
