Design Mix

Question 1

What are the 3 examples of Design Mix?

Answer 1

Aesthetics - How it looks, feels, tastes etc
Function - How well it performs
Economic Manufacture - How much it costs

Question 2

Benefit of prioritising aesthetics/function? (7)

Answer 2

1. Prioritising Aesthetics / Function will need significant investment into R&D or Market Research to find out trends
2. Differentiate from other competitors
3. Gain competitive advantage according to Porter
4. Become more price Inelastic
5. Able to increase price without fall in demand
6. Increase revenue + GP margins

Question 3

Drawback of Prioritising Function / Aesthetic? (6)

Answer 3

1. Prioritising Aesthetics / Function will require investment into market research or R&D
2. Therefore Increase Outflows on wages for researchers leading to a lower net cash flow
3. Reduced Cash Reserves
4. Poor Liquidity
5. Business can’t pay suppliers and therefore have to sell non current assets
6. Business Operations will fail

Question 4

Benefit of Economic Manufacture? (3)

Answer 4

1. Prioritising E.M will require less robust materials to therefore reduce the cost of sales
2. Can pursue cost leadership to Porter
3. This will gain a competitive advantage able to reduce the selling price
4. Leading to an increase in demand as product is price elastic
5. Increase Sales

Question 5

Drawback of Economic Manufacture? (3)

Answer 5

1. Prioritising E.M will use less robust materials perhaps leading to lower quality
2. This could damage the business reputation and consumers will switch to alternative brands
3. This will reduce demand leading to lower revenue and profit

Question 6

Benefit of Social Trends? (3)

Answer 6

1. Adapting to consumer trends will mean the product will meet wants and needs.
2. This will be able to increase loyalty and then increase price without fall in demand
3. Increase revenue + profits

Question 7

Drawback of Social Trends? (4)

Answer 7

1. Focusing on trends will result in investment into market research
2. This will require a large sample and needs specialist researchers
3. Increase Outflows on wages leading to lower net cash flow
4. Less cash for operations and bills