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Business > 1.3 > Flashcards

1.3 Flashcards

1
Q

The Design Mix

A

The three fundamental elements of product or service design:

  • Aesthetics
  • Function
  • Cost
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2
Q

Function in the Design Mix

A

The product or service has to be able to fulfil the primary purpose for which the consumer purchased it.
May also be additional functions to add value.

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3
Q

Aesthetics

A

The look and feel of the product, how our senses respond to the product.

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4
Q

Cost

A

Whether or not it is possible to provide the good within a budget or at a cost point in order to make profit.

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5
Q

Renewable resources

A

Infinite resources

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6
Q

Non-renewable

A

Finite resources

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7
Q

Changes made to the design mix to reflect social trends.

A
  • Designing for waste minimisation e.g. recyclable packaging

- Ethical sourcing

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8
Q

What is promotion?

A

The activities designed to communicate with the market increasing visibility and sales.

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9
Q

What is the promotional mix?

A

The combination of promotional activities that a firm uses in order to create consumer awareness and generate sales.

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10
Q

What influences promotional decisions?

A
  • Market segmentation and positioning
  • Internal constraints e.g. budgets
  • External influences e.g. competitors
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11
Q

Promotional methods

A
  • Public relations: communicating with the media
  • Merchandising
  • Sales promotions
  • Advertising
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12
Q

Branding

A

A promotional method that involves the creation of an identity for the business distinguishing the firm from competitors.
Adds value and leads to brand loyalty.

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13
Q

Benefits of a strong brand

A
  • Added value
  • Ability to charge premium prices
  • Reduces PED
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14
Q

Ways to build a brand

A
  • USP / Differentiation
  • Advertising
  • Sponsorship
  • Social Media
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15
Q

Viral marketing

A

Use of social media to increase brand awareness

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16
Q

Emotional branding

A

Building a brand that taps into consumer feelings.

Brands that sell a status or lifestyle choice.

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17
Q

Price

A

The amount of money customers have to pay to receive a good or service.

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18
Q

Cost plus pricing

A

A percentage mark up is added to the cost of production to calculate the price.
Costs + % mark up

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19
Q

Price Skimming

A

Setting a high initial price when a new product is released to cover initial costs such as R&D.
Once the market is “skimmed off”, prices will be lowered.

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20
Q

Price penetration

A

Setting a low initial price for a new product to gain initial market share and customer base.
Typically used in a mass market and price elastic products.

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21
Q

Predatory Pricing

A

Prices are set low for a short period of time to force competitors out a market.
Prices are raised after competitors leave.
Usually used by dominant firms - monopolies.

22
Q

Competitive pricing

A

Prices are based on competitors prices. The same or slightly lower. Firms compete in non-price factors in the marketing mix.

23
Q

Price leaders

A

Firms that dominate the market set prices for other firms in the market to follow.

24
Q

Price takers

A

Smaller firms in a market set prices based on the market price.
Smaller firms lowering prices can cause a price war which they couldn’t win due to economies of scale.

25
Q

Psychological pricing

A

When a firm sets a price for the product in order to entice the customer into making a purchase by making it sound cheaper
e.g. 99p

26
Q

Factors determining pricing strategy

A
  • Number of USPs / amount of differentiation
  • PED
  • Level of competition
  • Strengthen of brand
  • Stage in the product life cycle
  • Costs and need to make a profit.
27
Q

Impact of social trends to pricing

A
  • Online sales led to dynamic pricing in response to demand.

- Price comparison websites.

28
Q

Place

A

The physical location where the product is available and the distribution channel it takes to get from the manufacturer to the customer.
Can be a physical market or online.
Firms are starting to adopt multi-channel approaches.

29
Q

Distribution

A

The process of getting the firms product to the market.

30
Q

Distribution channels

A

The routes to the market that a product takes from a produce to the final customer.

31
Q

Short distribution channels

A

Where the producer sells directly to the customer through a retailer

32
Q

Long distribution channels

A

Where there are more than one intermediary (middle person) between the producer and customer.

33
Q

Wholesalers

A

Buy large quantities from producers and sell them in small quantities.

34
Q

Multi-channel distribution

A

When a firm chooses to use a combination of methods.

e.g. wholesalers / ecommerce

35
Q

What influences distribution decisions?

A
  • Type of product
  • Market
  • Quantity and Frequency
  • Geographical location
  • Cost
  • Degree of control
36
Q

How social trends influence distribution

A
  • Online distribution is easier

- Changing from product to service

37
Q

Product

A

The goods and services a firm provides.

Businesses tend to have a range of products in their portfolio.

38
Q

Product portfolio analysis

A

Looks at the range of products and brands that a firm has under its control.
Helps firms identify where products are positioned in a market.

39
Q

Product life cycle

A

A technique used to track the stages a product goes through during its life.
Tracks sales over time through R&D until it is removed from the market.

40
Q

The stages of the product life cycle (6)

A

1) Development (negative cash flow due to R&D)
2) Introduction
3) Growth
4) Maturity
5) Decline
6) Extension strategies

41
Q

Boston Matrix

A

Used to analyse a business’ product portfolio

42
Q

4 Quadrants in the boston matrix

A
  • Rising star
    ( High market growth & High market share)
  • Problem child
    ( High market growth & Low market share)
  • Cash cow
    ( Low market growth & High market share)
  • Dog
    ( Low market growth & Low market share)
43
Q

Cash cow

A

High market share in a low growth market.

Established products.
With low market growth, competition is likely to be lower. High profits which can be used to finance other products such as rising stars.

44
Q

Rising Star

A

High market share in a high growth market.

Increasing sales revenue.
Other firms are entering the market as it grows increasing competition.
Heavy promotional spending

45
Q

Problem Child

A

Low market share, high growth market

A product with low sales in a highly competitive and growing market.
Needs development and promotion.

46
Q

Dogs

A

Low market share, low growth market

Unlikely to be kept by a company. Not likely to grow or generate profits.

47
Q

Niche marketing

A

When a firm targets a small subsection or previously unexploited gap in a larger market.

48
Q

Mass marketing

A

When a firm targets the whole market.

49
Q

Industrial markets

A

Where businesses sell to other businesses.

50
Q

Consumer markets

A

Where businesses sell to consumers

51
Q

How firms build customer loyalty

A
  • Customer service
  • Physical environment e.g. facilities
  • Loyalty schemes

Business (11 decks)

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