1C

Question 1

Design mix triangle

Answer 1

Function, aesthetics, cost

Question 2

How is function important

Answer 2

A product must be fit for purpose which means it must be capable of doing the job that it is sold to do.

Question 3

How are aesthetics important

Answer 3

Products and services should provide sensory stimulation in addition to performing a function.- This can include size, appearance, shape, smell or taste.

Question 4

How are costs important

Answer 4

Designers need to choose materials and processes that minimize costs in order to reach profit.

Question 5

Types of brands

Answer 5

Individual-Marmite, brand family-Cadbury, cooperate brand-Nestle

Question 6

4 Benefits of strong branding

Answer 6

Added value, Charging premium price, reduced price elasticity and combatting discounters

Question 7

Benefits of added value

Answer 7

A strong brand can increase the value of the product or service in the eyes of the consumer- making it more competitive. Buying the product gives you the ‘power’ of the brand.

Question 8

Strong branding leads to charging a premium price

Answer 8

Customer loyalty builds up so businesses can increase prices without losing customers to competitors.

Question 9

Strong branding leading to reduced price elasticity

Answer 9

a strong brand has fewer close substitutes.

Question 10

USPs?

Answer 10

Improves product differentiation

Question 11

Advertising

Answer 11

Spreading the word about brand and product

Question 12

Sponsorship

Answer 12

The majority of sponsorship spending is in sport- it is used to create positive PR

Question 13

Digital media

Answer 13

Easy way to target customers through pocket.

Question 14

Changes to branding

Answer 14

Viral marketing- Encouraging people to pass on messages to others about a product electronically
Social media- increased funding spent on social media promotion
Emotional branding- to create a love affair between the customer and the product or service.- Christmas adverts

Question 15

Definition of pricing

Answer 15

The process is the choice of pricing strategy that a business makes when setting prices for their products and services.

Question 16

Pricing strategy depends on

Answer 16

The product or service itself
Competitors in the market
The aims and objectives of the business

Question 17

Cost plus pricing

Answer 17

Seeks to set a price for a product or service which covers the costs and provides a good profit margin.
The most logical approach to pricing is because it achieves the business objective of maximizing profits.

Question 18

+- of cost-plus pricing

Answer 18

+ Protects the profit margins
+ Easiest method of pricing to apply
+ Easy to estimate profit levels
-This method does not take into account the prices of competitors.

Question 19

Skimming pricing

Answer 19

Used when launching a new product. Price is set high creating high profits and can be used to pay back r&d costs. Usually used in technological or very innovative products which have few competitors.- As competitors enter market price is reduced.

Question 20

+- for Skimming pricing

Answer 20

+Upmarket image
+Early buyers pay premium, higher profits to pay for r&d
-Cheaper imitation of products can take away sales
-Risky strat as consumers may be put off by high price

Question 21

Competitive Pricing

Answer 21

Some products or services are priced in line with competitors- meaning customers will have to judge a product or service on nonprice factors such as quality of service or speed. Strat is usually used where products in a market are all very similar.

Question 22

+- of competitive pricing

Answer 22

+useful in a market where a brand is dominant, The other brands would need to discount and offer lower prices encouraging customers.
-Cant match competitive rates, smaller businesses can’t reach the same economies of scale as large ones.

Question 23

Penetration pricing

Answer 23

Setting prices really low on a new product to encourage sales and to persuade customers to try the product. Then when they like the product and have to keep buying it the business raises the prices.
Lower prices give business higher market share.

Question 24

+- of penetration pricing

Answer 24

+Works best with new products being launched to encourage consumers to try products.
-Consumers may have bought anyway even without low price-loss of profit.
Expensive as it eats into profit, reducing sales revenue.

Question 25

What is predatory pricing

Answer 25

In oligopolies(markets with few large businesses) Aggressive price cutting is used to deter competitors and drive them out of the market. Businesses may be able to carry on charging low prices.

Question 26

What is predatory pricing

Answer 26

In oligopolies(markets with few large businesses) Aggressive price cutting is used to deter competitors and drive them out of the market. Businesses may be able to carry on charging low prices.

Question 27

+- of predatory pricing

Answer 27

+discoruage competition
-depends on PED, if inelastic then wont make difference
-Very expensive and can take a long time

Question 28

What is psychological pricing

Answer 28

This means pricing the product at $1.99 rather than $2.00 to appear cheaper

Question 29

+- of psychological pricing

Answer 29

-Can be high risk if comparable to products at lower price.