1.3 Flashcards
Design mix
Three aspects of design that companies need to consider when developing a product
- Function
- Aesthetics
- Cost
Methods of promotion
- Advertising.
- Public relations & sponsorship
- Personal selling
- Direct marketing
- Sales promotion
Types of branding
- Personal branding
- Product branding
- Service branding
- Retail branding
- Cultural and geographic branding
- Corporate branding
- Online branding
- Offline branding
How to build a brand
- Research your target audience and your competitors
- Pick your focus and personality
- Choose your business name
- Write your slogan
- Choose the look of your brand (colors and font)
- Design your brand logo
- Apply your branding across your business
Sponsorship
Provide financial support to an event/person/organisation, either through free products or services, or financial payment
Cost-plus pricing
Cost to produce product is calculated and money is then added on top of that
+ Simple/easy to calculate
+ Prices set can be justified
- Doesn’t think about competitors
- Ignores demand elasticity
- Sales lost if customers think price is too high
Penetration pricing
Price starts very low to encourage sales and persuade customers to buy it, price then increases once the product has built up some customer loyalty
+ Encourages sales and new customers
+ Builds customer loyalty
+ Long term profitability
- Could result in low profits being made
- Difficult to raise selling price
- Tends to be used by many companies
Price skimming
Produce is priced high to begin with as it has a desirable factor meaning customers will want it brand new and over-time it gradually gets cheaper
+ Receive profit straight away
+ Price implies good quality product
+ Pays back research and development
- Requires customer loyalty for success
- Not all customers will be willing to pay
- Requires strong brand reputation
Competitive pricing
Business will look at prices charged by competitors. used for strong competition
+ Research means justified prices
+ Can lead to change is rivals product prices
+ Prices should attract the customers
- Not useful if there isn’t much competition
- May still use other businesses
Psychological pricing
High value/status items may be priced higher to meet customers expectations. Price products to associate them with a standard of quality
+ Price indicates quality
+ Product matches customers expectations
+ Encourages purchases to target market
- Brand reputation may not be good enough
- Product might not actually match price
- Low price could be indicating bad quality
Predatory pricing
Aggressive price cutting used to push other businesses out the market (for monopolies) and lower their prices to prevent competitors making a profit and set barriers to discourage new competitors
+ High market control/power
+ Limits business competitors
+ Gains more customers/sales
- Reputation must be good enough
- Unethical
- Product may reflect the price set
Factors effecting pricing strategy
- Number of USP or amount of differentiation
- Price elasticity of demand
- Level of competition in the business environment
- Strength of brand
- Stage in the product lifecycle
- Costs and the need to make profit
Distribution
Delivery of goods from producers to consumers
Direct selling
Producers selling their products directly to the consumers.
* Internet
* Direct mail
* Door-to-door selling
* Mail order catalogues
* Direct response adverts
* Shopping parties
* Telephone selling
+ Intermediaries are not required.
+ They are able to generate more profit.
+ They cannot reach consumers to shop if they don’t like it
- Some methods makes consumers not seeing products physically
- Some people object to direct mail and unwanted telephone calls.
Retailing
- They are businesses that buys goods and sells them to the general public and provide services.
- They buy large quantities from manufacturers/wholesalers. They sell these in small quantities to their consumers called breaking-bulk.
- It sells in location that are convenient to the consumers and they may add value to products by providing other services.
