2.2- making marketing decisions

Question 1

what are the four elements of the marketing mix?

Answer 1

Product
Price
Promotion
Place

Question 2

what are the elements of the design mix?

Answer 2

Function-the design must be fit for its purpose and unique features would help
Cost -a good design will lead to low manufacturing costs meaning higher profits
Aesthetics -should look distinctive and can make the product stand out

Question 3

what are the phases of the product life-cycle?

Answer 3

Research and development
Introduction
Growth
Maturity
Decline

Question 4

What is the research and development phase of the product life-cycle?

Answer 4

It’s the first stage of the product life-cycle and is used to develop an idea and turn it into a marketable product

One aim during product development is to find the most cost-effective material and methods to use

Question 5

what is the introduction phase of the product life cycle?

Answer 5

The product is launched and put on sale for the first time

Usually backed up with lots of advertising and sales promotions

Question 6

what is the growth phase of the product life-cycle?

Answer 6

This is when demand increases until the product becomes established

Question 7

What is the maturity phase of the product life-cycle?

Answer 7

as the products popularity grows, businesses will try to make the product more widely available, but towards the end of the phase the market becomes saturated and there’s no more room to expand

Question 8

What is the decline phase of the product life-cycle?

Answer 8

eventually, demand starts to fall as rival products take over

The firm will probably spend less money supporting the product and our sales for it will begin to make a loss unless it stops making the product

Question 9

How can businesses extend a products life-cycle through extension strategies?

Answer 9

adding more or different features- increases demand for product by making it more useful or more appealing to customers

using new packaging -more eye catching so customers are more likely to see it and choose it over competitors products

Targeting New market -e.g. a different age group or country- can then target the promotional material at the New market to extend the life of their product

Changing advertisements -makes people more aware of the product or more appealing

Lowering price

Question 10

What is the importance to a business of differentiating a product/service?

Answer 10

without differentiation customers will think your product is identical to others

You can differentiate a product by giving a USP, promoting it in a way that makes it seem different or changing the price

Question 11

how can technology influence pricing decisions?

Answer 11

If expensive machinery is needed to make the product, then it may increase the price it needs to be sold out in order to make a profit

However, in the long-term machinery may lead to reduce costs as processes may be more efficient or fewer employees may be needed

Question 12

How might methods of production impact pricing decisions?

Answer 12

Flow production may require expensive machinery

Question 13

how might product life-cycle impact pricing decisions?

Answer 13

In the introduction and growth phases of firm may charge a very low or very high price to encourage people to buy it

In the maturity phase of firm may need to bring its price in line with competitors prices

In the decline phase, the firm may need to reduce the price in order to increase demand for the product again

Question 14

how might competition influence pricing decisions?

Answer 14

If the firm puts its prices too high customers will just choose a competitors products but if its prices are too low customers will query whether the qualities as good as its competitors

Question 15

How many market segments impact pricing decision decisions?

Answer 15

If the product is aimed at a segment with a high income, its price will be higher than a similar product aimed at a segment with a lower income

Question 16

what are the five pricing strategies a business can use?

Answer 16

Price penetration
Loss leader pricing
Price skimming
Competitive pricing
Cost plus pricing

Question 17

What is price penetration?

Answer 17

when a firm charges a very low price when a product is new to get lots of people to try it

Once the product becomes established, the firm increases its price

Question 18

What is loss leader pricing?

Answer 18

when the price of a product is set below cost
The firm doesn’t make a profit on it, but the idea is that the customers will buy other products as well

For example, game consoles are often priced below cost but firms make profit on games that go with them

Question 19

what is price skimming?

Answer 19

when firms charge a high price to begin with(usually when they know there’ll be a high demand for the product)
It often works for established firms as they’ll have loyal customers who will be willing to pay.
Once the product is established, the from lowest the price to help it become a mass market product

Question 20

what is competitive pricing?

Answer 20

When the firm has to charge similar prices to other firms

Question 21

what is cost plus pricing?

Answer 21

When the firm works out the total cost of making the product and then adds on a certain amount depending on how much profit they want to make while still having reasonable demand

Question 22

what are the two main ways that cost plus pricing can be done?

Answer 22

Using a mark up- work out how much the product costs and then add a percentage markup
Using a profit margin -work out how much the product costs and increase it to get the profit margin you want

Question 23

What is promotion?

Answer 23

Promotion is when firms enhance a product so that customers notice it and want to buy it.

Question 24

Why is good branding important?

Answer 24

A firm’s brand image is the impression that customers have of the firm or its products.

Question 25

What can a strong brand image lead to?

Answer 25

Products with a strong brand image are easily recognised and liked by customers.

Question 26

How is a strong brand image built?

Answer 26

A strong brand image is usually built up over a number of years.

Question 27

What should align to build the right brand image?

Answer 27

A firm's products, prices, methods of promotion, and the places they sell in should all align.

Question 28

Can a firm create different brand images for different products?

Answer 28

Yes, a firm may create different brand images for different products to target different market segments. ## Footnote E.g. a skincare company may market some products to women and others to men.

Question 29

What is the financial impact of developing a brand image and promoting products?

Answer 29

Developing a brand image and promoting products is expensive, but it should increase revenue through first-time and repeat purchases.

Question 30

What is advertising?

Answer 30

Advertising is any message that a firm pays for which promotes the firm or its products.

Question 31

What are some methods of advertising?

Answer 31

Methods of advertising include newspapers, magazines, posters, billboards, leaflets, flyers, business cards, television, and internet adverts.

Question 32

What are the advantages of newspaper advertising?

Answer 32

Local newspapers can reach specific market segments and are good for promoting temporary offers.

Question 33

What are the disadvantages of newspaper advertising?

Answer 33

The print quality is usually poor and the number of readers is declining.

Question 34

What are the advantages of magazine advertising?

Answer 34

Magazines are aimed at specific market segments and have better quality adverts.

Question 35

What are the disadvantages of magazine advertising?

Answer 35

Magazine adverts can be pricier than newspaper adverts.

Question 36

What are the advantages of posters and billboards?

Answer 36

They can be placed near a target audience and seen daily by many people.

Question 37

What are the disadvantages of posters and billboards?

Answer 37

People might not look at them for long, so messages need to be short.

Question 38

What are the advantages of leaflets, flyers, and business cards?

Answer 38

They are cheap to produce and can be targeted at specific areas.

Question 39

What are the disadvantages of leaflets, flyers, and business cards?

Answer 39

Many people see them as 'junk' and throw them away quickly.

Question 40

What are the advantages of television adverts?

Answer 40

They can be seen by a wide audience and include sounds and moving images.

Question 41

What are the disadvantages of television adverts?

Answer 41

They are very expensive.

Question 42

What are the advantages of internet adverts?

Answer 42

They can be seen at any time by a large, targeted audience.

Question 43

What are the disadvantages of internet adverts?

Answer 43

There are so many adverts online that people may stop paying attention or choose to block them.

Question 44

What is sponsorship?

Answer 44

Sponsorship is when firms give money to organisations and events in return for displaying their name.

Question 45

What is an example of sponsorship in sports?

Answer 45

A large firm might stamp its brand name all over an international competition.

Question 46

What is a risk of sponsorship?

Answer 46

If the thing you're sponsoring gets bad publicity, your company's image might suffer too.

Question 47

What are two examples of sales promotion?

Answer 47

1) Special offers — businesses may offer a discount on the product for a limited period of time, or two products for the price of one. 2) Product trials — e.g. cafés may offer free samples of new food or drink to get customers interested and to persuade them to buy the new products in the future.

Question 48

What is an advantage of sales promotion?

Answer 48

Sales promotion should encourage new customers to try a product, boosting sales in the short term and potentially increasing long-term sales if customers continue to buy the product.

Question 49

What is a disadvantage of sales promotion?

Answer 49

Sales promotion may not be suitable for certain market segments, e.g. it might make a product in a luxury market seem less luxurious, which could deter higher income customers.

Question 50

How can technology be used for promotion?

Answer 50

Firms can create social media accounts to advertise their products and improve brand image, and they can target specific market segments with separate accounts.

Question 51

How does targeted advertising work?

Answer 51

An individual's internet search history can be used to create targeted advertising, making adverts more relevant and effective based on past searches and location.

Question 52

What is viral advertising?

Answer 52

Viral advertising is when adverts are shared on social media and viewed many times in a short period, effectively targeting segments that frequently use social media, such as younger age groups.

Question 53

What is the purpose of a business's mailing list?

Answer 53

Individuals may join a business's mailing list to receive e-newsletters about promotions and offers.

Question 54

What factors influence the choice of distribution method?

Answer 54

Factors include where consumers are likely to shop, how many consumers the business wants to reach, how quickly the product needs to get to consumers, and the level of customer service required.

Question 55

What are retailers and e-tailers?

Answer 55

Retailers sell products to consumers from physical shops, while e-tailers sell products online through e-commerce.

Question 56

What are the advantages of e-tailers?

Answer 56

E-tailers can sell to a global market, have lower fixed costs than retailers, and may charge less for products.

Question 57

What are the four elements of marketing?

Answer 57

The four elements of marketing are product, price, promotion, and place.

Question 58

How can businesses use the marketing mix?

Answer 58

Businesses can use the different elements of the marketing mix to make decisions about the business.

Question 59

What is competitive advantage in marketing?

Answer 59

Competitive advantage is achieved by having the right combination of the four elements, allowing a business to attract and sell to more customers.

Question 60

How do the elements of the marketing mix affect each other?

Answer 60

The elements can affect each other, which may require a business to make compromises between them.

Question 61

How does distribution method affect pricing and promotion?

Answer 61

Products sold online are likely to be cheaper than those sold in stores due to lower fixed costs. High-street retailers may use displays, while online businesses may rely on online advertising.

Question 62

How do product quality and price influence promotion?

Answer 62

If a product is low quality but cheap, price may be emphasized in promotions. Conversely, higher quality or more expensive products may emphasize quality in promotional materials.