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Business GCSE > 2.2 - Making Marketing Decisions > Flashcards

2.2 - Making Marketing Decisions Flashcards

(59 cards)

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1
Q

What is differentiation?

A

Making your products or services distinctive in the market
USP
Through function, costs, aesthetics

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2
Q

What is a product life cycle?

A

length of time from a product first being introduced to consumers until it is removed from the market

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3
Q

How could the product life cycle be extended?

A

More features
New packaging
New markets
Changing advertisements
Lowering prices

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4
Q

What internal factors could affect pricing decisions?

A

If expensive machinery is used
What method of production is being used

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5
Q

What external factors could affect pricing decisions?

A

Competition
Market segments
Cost of raw materials

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6
Q

What is price penetration?

A

Firms charge at low price until a customer base is built, then prices increase

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7
Q

What is loss leader pricing?

A

Price of product is set below cost, but will make profit from accompanying products

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8
Q

What is price skimming?

A

Firms charge high, due to high demand
Makes brand seem more luxury

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9
Q

What is competitive pricing?

A

Firms charge similar prices to competitors

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10
Q

What are examples of promotional methods?

A

Good branding
Newspapers, magazines, posters, billboards
TV/internet Ads
Sponsorships
Special offers
Product trials

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11
Q

What is diffrentiation?

A

Making your products or services distinctive in the market
These differences should make consumers want to buy your products instead of competing ones

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12
Q

What will happen if there’s no differentiation?

A

Customers will think your products or services is identical to others

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13
Q

How can you differentiate products?

A

Give it a USP
This could be a special service of feature provided by the company

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14
Q

Giving a product a USP is one way of differentiating. What’s another way?

A

Changing price
Cheaper usually means more eppealing to a mass market
But can also mean less profit per unit sold
Really expensive product can make it seem more luxurious than competitors

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15
Q

What are the 3 main features of the design mix?

A

Function
Cost
Appearance

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16
Q

Why is function vital in the design mix?

A

Deisgn must be fit for its purpose
Unique features can also help

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17
Q

Why is cost vital in the design mix?

A

A good design will lead to low manufacturing costs
Higher profits

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18
Q

Why is appearance vital in the design mix?

A

A good product should look attractive and distinctive
Packaging helps a product to stand out and protect it until it reaches the customer

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19
Q

What is the first stage of a product life cycle?

A

Research and development

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20
Q

What is the second stage of a product life cycle?

A

Introduction

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21
Q

What is the third stage of a product life cycle?

A

Growth

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22
Q

What is the fourth stage of a product life cycle?

A

Maturity

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23
Q

What is the fifth stage of a product life cycle?

A

Decline

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24
Q

What is the development and research segment of a product life cycle?

Study These Flashcards
A

Used to develop an idea and turn it into a marketable product
Firm spends money on research and promotion
Sales of products are low
Loss?

25
What is the introduction segment of a product life cycle?
Product is launched and put on sale Backed with lots of advertising and promotions
26
What is the growth segment of a product life cycle?
Demand increases until product is established
27
What is the maturity segment of a product life cycle?
Demand reaches its peak Promotion becomes less important Towards the end of this phase, the market becomes saturated and there’s no more room to expand Business will hope to pay initial investments and make a profit
28
What is the decline segment of a product life cycle?
Demand starts to fall as rival products take over Firm spending less money, starts making a loss UNLESS it completely stops manufacturing the product
29
What can firms do if their product is going into decline?
They can take action to extend their life If the extension workds, the product will make product for longer
30
What are the disadvantages of extending a product life cycle?
Takes cash away from other parts of the business Firms would have to make a balance between investing money on old products and designing new ones
31
What are the ways a firm can extend the product life cycle of a product?
Adding more/different features Using new packaging Targeting new markets Changing advertisments Lowering price
32
What internal factors affect pricing decisions for a business?
Technology Method of production Product life cycle
33
What external factors affect pricing decisions for a business?
Competition Market segments Cost of raw materials
34
How does technology influence pricing decisions for a business?
If expensive machinery is needed to make the product, firms may increase the price that it needs to be sold at in order to make a profit
35
How can long term machinery be beneficial for a business?
May reduce costs since processing is more efficient and fewer employees needed
36
What are internal factors of a business?
Controlled by the business
37
What are external factors of a business?
Not controlled by the business
38
How does method of production influence pricing decisions for a business?
Flow production might require more expensive machinery but will also be more likely to benefit from economies of sale compared to job production - products may be cheaper
39
How does product life cycle influence pricing decisions for a business?
Introduction section - may be very low or very high to encourage consumers to buy Maturity phase - firm may need to bring price in line with competitors Decline phase - reduce price in order to increase demand for product again
40
How does competition influence pricing decisions for a business?
If a firm puts its prices too high, customers will choose competitors product If firm puts price too low, consumers will question if the quality is as good as the competitors
41
How does market segments influence pricing decisions for a business?
If the product is aimed at consumers with a high income, the price will be higher than a similar product targetted at consumers with a low income
42
How does cost of raw materials influence pricing decisions for a business?
Affect the cost of each unit High quality —> high unit costs High prices would be needed to make a profit from high unit costs products
43
What are the 5 pricing strategiess a business can use?
Price penetration Loss leader pricing Price skimming Competitive pricing Cost-plus pricing
44
What is price penetration method of pricing?
Firm charges a very low price when its new to get lots of people to try it Product will make very little profit, but once established, the firm increases the price
45
What is loss leader pricing method of pricing?
When the price of a product is set below vost Firm doesn’t make a profit Customers will buy other products as well which it does make a profit on (Example: game consoles are usually priced below costs but firms will make a profit on the games that go with them)
46
What is price skimming method of pricing?
Firms charge a high price to begin with - they do this when they know for certain that there will be a high demand for the product Works for established firms with loyal customers More desirable for high income consumers Aid with brand image and status Once product is established, firm lowers the price to help it become a mass-market product
47
What is competitive pricing method of pricing?
Firm has to charge similar pricing to other firms Happens when there is a lot of choice and not much differentiation Firm may make little profit and have to find ways other than price to attract customers
48
What is cost plus pricing method of pricing?
The firm uses this if they’re not in price competition with other firms Firm works out total cost of making the product and then adds a certain amount depending on how much profit they want to make, while still having reasonable demand
49
What are the 2 ways of cost plus pricing and explain them?
Using a mark-up: work out how much the product costs and then add a percentage mark-up If product costs 2£ to make, and you want a 25% markup, you’d sell it for £2 + 25% = £2.50 Using a profit margin: work out how much the product sosts and increase it to get the profit margin you want.
50
What is the firms brand image?
The impression that customers have of the firm or products sold by the firm A firm may have a reputation for high quality, luxury products May also be a recognisable logo that customers associate with the firm
51
Why is a strong brand image important?
Makes the firm easily recognised and liked by customers A strong brand image is usually built up over a number of years
52
What are the disadvantages of developing a brand image?
Promoting products and developing a brand image for products is expensive The business sshould have planned this
53
What is advertising?
Any message that a firm pays for which promotes the firm or its products.
54
What are methods of advertising?
Newspapers Magazines Posters and billboards Leaflets Television Internet
55
What is a sponsorship?
Firms give money to organisations and events Their name is then displayed by the organisation or at the event
56
What are the 2 types of sale promotions?
Special offers - business may offer a discount on the product, or 2 for the price of 1 Product trials - cafe’s may offer free samples of new food or drink to get customers interested and to persuade them to buy from the firm in the future
57
What are pros of sales promotion?
Encourage new customers to try a product Boost sales in short but also long term if customers like the product and continue to buy it once promotion has ended
58
What are cons of sales promotion?
Customers get used to seeing products on promotion and may be reluctant to buy them at other times Using regular sales promotion may not be suitable for certain market segments
59
How can firms use technology for promotion?
Firms can create social media accounts to advertise their products and improve brand image An individuals search history and location could be used to create target advertising and work out what the individual is actually interested in Individuals might decide to be part of a firms mailing list. They will receive e-newsletters from the business about promotions and offers

Business GCSE (11 decks)

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