1.3 Marketing Mix & Strategy

Question 1

Functionality

Answer 1

The features and function of the product or service are important as customers will not purchase a product or service if it cannot be used for its intended purpose.
For example, in 2019, Samsung unveiled plans to introduce a smartphone with a foldable screen.
This was a new feature within the smartphone market and may increase Samsung’s market share.

Question 2

Aesthetics

Answer 2

The aesthetics of the product or service are important as customers are unlikely to purchase a product or service if its visual appearance (aesthetics) does not meet their needs and preferences.

Question 3

Price point

Answer 3

The cost of a product or service is important as the business must be able to set a selling price which customers are able to and willing to pay.
For example, budget supermarket chains compete on price and must, therefore, consider the importance of cost when manufacturing and sourcing products to resell.

Question 4

Priorities in the design mix

Answer 4

Different types of businesses will prioritise different elements of the design mix according to customers’ needs and preferences although the majority of business is likely to need to consider all elements to some extent.

Question 5

Waste

Answer 5

The design mix may be changed in order to minimise waste, encourage the reuse of materials or to increase recycling.
For example, Apple redesigned its iPhone in 2018 to increase the number of recycled resources used.
This change was the response to changes in social trends and customer expectations.

Question 6

Ethical materials

Answer 6

A business may also source raw materials from ethical suppliers to minimise the depletion of resources in response to changing social trends.
Fairtrade chocolate bars may be a good example of this.

Question 7

Advantages of behaving ethically

Answer 7

Behaving ethically can increase a brand’s reputation and provide a unique selling point which increases competitiveness.

Question 8

Disadvantages of behaving ethically

Answer 8

Behaving ethically can increase a business’s costs which reduces profitability or increases selling price and this can reduce competitiveness if customers do not value ethical businesses.

Question 9

Examples of promotional methods

Answer 9

Advertising, sponsorship, sales promotion, public relations, social media, product placements.

Question 10

Types of advertising platform

Answer 10

Advertising can happen through various platforms, such as Newspapers, Magazines, Television, Internet, Billboards or Social Media.
The platform that a business uses depends on the target market of the product or service.

Question 11

Choosing an advertising platform

Answer 11

The platform that businesses choose is important to make sure that they reach the right target market and have the maximum impact.
For example, social media or a TV programme may be a better way to reach young people than a broadsheet newspaper like The Times.

Question 12

The aim of public relations

Answer 12

PR involves managing the spread of information about the business.
The aim of PR is to make sure this information is as positive as possible and reaches the largest possible audience.

Question 13

Examples of PR

Answer 13

An example of PR is the use of newspaper editorials, where people in a business manage the business’ relationships with different newspapers, sending them articles to publish about the business.
Businesses do not pay the newspaper for this coverage like they would for advertising.

Question 14

Examples of sales promotion

Answer 14

Samples, point of sales displays, competitions, discount coupons, value for money offers and free gifts.

Question 15

Competition as a sales promotion tactic

Answer 15

Businesses are increasingly using competitions on social media.
For example, “like and share this post for a chance to win a free meal for two at Nandos.”

Question 16

Target market

Answer 16

A business’ target market for a product (or service) will affect the promotional method that they use because different types of people use different platforms more often.
A business wants to promote its product to its potential customers.
A business that produces women’s underwear will not usually want to promote their product to middle-aged men.

Question 17

The nature of the market

Answer 17

As a market matures, the rate of growth changes.
If a market is growing slowly, advertising may be less important.
If a market is growing quickly, then businesses will be battling for market share and are willing to spend more on advertising as it will affect sales by a larger amount.

Question 18

Finance available

Answer 18

Some businesses will have much more finance (money) available to spend on promotions.
Some promotional methods (e.g. TV advertising) are more expensive than others.
Smaller businesses with less finance are less likely to be able to afford TV advertising.

Question 19

The nature of the product or service

Answer 19

The type of product (or service) will influence which promotional method needs to be used.
A technical product like a laptop may want to give consumers more information about their product, whilst a simple product like orange juice (Tropicana juice for example) may not need to give info.
A fashion label like Hugo Boss does not have much information to communicate. How their products look is more important.

Question 20

Competitor actions

Answer 20

The promotional mix of competitors might influence a business because they may want to reach consumers using the same channel as rivals.

Question 21

Promotions used to create or increase sales

Answer 21

Informing consumers that are not aware of a business’ products can ‘create’ new sales.
By constantly reminding existing customers about a product (or service) and its benefits, businesses can increase the sales from each customer.
This is more likely to happen during the periods before short “sales windows” like Easter and Christmas.

Question 22

Promotions used to persuade customers to buy the product

Answer 22

Promotions are often used to advertise the benefits of using a product and to explain why you should buy it.
These are attempts to persuade the customer that this is the best product for them.

Question 23

Promotions used to inform/remind customers about the product

Answer 23

A business cannot sell a product (or service) if no consumers know about it.
Businesses must be able to inform their target market about their product (or service) and remind people, at the right time, in the hope that they will buy it.
Reminding customers at the right time is key. There is not much point in promoting Christmas baubles on the 26th December.

Question 24

Promotions used to create or change the image of a product (or service)

Answer 24

A promotion can have a large impact on how customers see a product. If a celebrity uses the product, a business can give the product a fun, luxury or innovative image.
UnderArmour sponsored golfers like Jordan Spieth to create a youthful and cool image after they launched their golf and sporting wear ranges.
A promotion can help to change customers’ perception of a product.

Question 25

Influence of social trends

Answer 25

Businesses may change or adapt their approaches to branding and promotion to reflect changing viral trends. In 2018, Nike launched a campaign starring Colin Kaepernick, which was a response to social trends and issues in the United States.

Question 26

Viral marketing

Answer 26

Viral marketing refers to a business using its existing social networks to promote a product or service. Dollar Shave Club, which was a business bought by Unilever is a famous example of good viral marketing.

Question 27

Social media

Answer 27

Social media use refers to businesses using digital platforms to create and share content socially.

Question 28

Emotional branding

Answer 28

Emotional branding refers to a business developing a brand that appeals directly to a customer’s emotional state. Nike's 2018 Kaepernick campaign was also an example of emotional branding.

Question 29

How costs affect pricing

Answer 29

Costs influence business' pricing decisions because businesses usually aim to make a profit. A business' price and costs determine how much profit the business will make. Businesses cannot afford to set a price lower than their costs forever.

Question 30

How the product life cycle affects pricing

Answer 30

Where a product is in the product life cycle determines whether the business will charge a high or low price for the product. When a new product is launched, businesses may charge higher prices to take advantage of exclusivity. When Apple launches new iPhones (like the iPhone X), they charge higher prices. The iPhone X cost $1,000 in Autumn 2017, but this price fell to $850 by February 2018.

Question 31

How the nature of the product affects pricing

Answer 31

The nature of a product affects pricing in 2 key ways: Whether a good is a luxury good will affect how much a business charges. Whether the good is hard to differentiate from competitors affects how much a business can charge. If it is similar (homogenous), then businesses usually price at a similar level to competitors. For example, in the crude oil market, oil is the same no matter who produces it. This means that there is a uniform price (same price for all businesses and customers) in the market.

Question 32

How the degree of competition affects pricing

Answer 32

The degree of competition affects the pricing decision of businesses because the more competition a business faces, the more options customers have. When customers have lots of options for similar products, businesses must compete to attract customers using a lower price.

Question 33

How price skimming maximises revenue

Answer 33

Price skimming is used to try and maximise revenue. Consumers who buy early on are willing to pay a higher price but the business can still attract other customers who can pay a lower price later on in the product’s lifecycle.

Question 34

How price skimming covers fixed costs

Answer 34

Price skimming can help to recover the costs of research and development, which can be expensive for technology products. For example, the Apple iPhone X reportedly cost over $1bn in research and development costs.

Question 35

Disadvantages to price skimming

Answer 35

A disadvantage of price skimming is that it can slow down the growth of a product and this can give competitors more time to launch a competing product or service. A business does not maximise the number of sales at the start so competitors can get more of a chance to enter the market.