3.3.4

• What are the elements of the marketing mix? (7Ps)


  Physical environment

  Process

  Price

  Product

  Promotion

  Place

  People
• what are the factors impacts on price charged?

  -competitors products and prices

  -cost of production, promotion etc

  -market conditions (e.g demand levels, market share, accepted prices)

  -state of economy and its impact on disposable incomes

  -location of business

  -brand image, reputation, customer loyalty

  -product quality and packaging

  -price elasticity of demand

  -bargaining power of customers in market (selling to consumers/businesses)
• pricing strategies: what is penetration pricing?


  starting prices low and increasing them to ‘penetrate the market’

  increase price after purchase
• give an example of penetration pricing?


  Jet 2 and easy jet- low prices at start

  e.g pure gym 50% off first 3 months then price increase
• what is economy pricing?


  products have low sales price to increase units sold
• give an example of economy pricing?


  own brand food from supermarkets
• pricing strategies- what is price skimming?


  Setting a high initial price before gradually lowering it over time.
• give an example of price skimming?


  games consoles
• What is psychological pricing?


  cost appears substantially cheaper
• give an example of psychological pricing?


  £114.99 (left digit effect)

  or £999 instead of £1000
• what is premium pricing?


  -uses high price to increase demand

  -High profit margins and selling price- psychologically supports perception products are of high quality

  -Usually have a competitive advantage
• give an example of premium pricing?


  canada goose coats
• What is competitor pricing?


  -prices based on what competitors charging

  -Common in competitive markets so products don’t have a sufficient USP

  -Business must differentiate to entice customers to shop with them
• what is an example of competitor pricing?


  papa jonhs vs pizza hut
• what is cost plus pricing?


  product cost + profit margin= selling price

  Uses minimal business resources and provides consistent, predictable returns

  BUT ineffective if used alone as doesn’t consider market or competitors
• give an example of cost plus pricing?


  selling a TV at £250 (instead of price bought for £200)- £50 profit margin
• what two pricing strategies are used when firms first launch into the market?


  penetration pricing

  price-skimming
• what are early adopters?


  -people who are willing to pay high prices to purchase products when they are first launched

  -common in technology markets
• What are loss leaders?


  short-term tactic where firms set lower prices than usual to attract customers who they hope will buy other full-priced products
• where are loss leaders common?


  supermarkets, mobile games (games is free but there are in-app purchases)
• what is price leadership?


  large market leading firms (market leaders) able to set price in a market as they have market power. they may have a strong USP, brand awareness or customer loyalty
• what is price taking?


  smaller rivals (price takers) don’t have much market power take the accepted price and follow
• What is seasonal pricing?


  different prices are charged depending on level of demand (peak seasons= higher prices)
• what is predator/destroyer pricing?


  firms set low prices to drive other firms out of the market
• what is markup?


  the % added to a product to ensure a profit is made
• what is price discrimination?


  higher prices charged to some customers for the same product/service (taxis, train fares)
• Promotion methods: What is advertising? What is a con?

  paying for a message to be shown via media (TV, radio, magazines etc), it can be expensive
• Promotion methods: what is sponsorship?


  providing financial support to an individual /event/organisation in return for exposure and advertising
• Promotion methods: sales promotion?


  short-term sales initiatives to boost sales (e.g offers like BOGOF, coupons, loyalty cards)
• promotion methods: public relations? examples?


  creating a favourable image of company without paying (e.g launch events, favourable reviews, celebrity endorsements)
• promotion methods: direct marketing? examples?


  sending messages directly to a known consumer often used alongside a database of customer details through methods (e.g letters, emails)
• promotion methods: personal selling?


  using specialist sales staff to speak directly to consumers
• promotion methods: merchandising?


  point-of-sale displays and products with the brand image on
• give the promotion methods?


  social media

  Sales promotion

  Sponsorship

  Advertising

  personal selling

  merchandising

  public relations

  websites, banners, pop-ups

  direct marketing
• what is branding?


  the process of building an image that helps differentiate a product from its competitors

  via a RECOGNISABLE name, sign, symbol, design, or slogan
• how long does it take to build a brand?


  firms may spend years at high expense building a brand
• What are the benefits of branding?


  -higher demand and sales

  -Helps to maintain a market share and stand out From competitors

  -charge higher prices and maximise profit margins

  -Customer loyalty and make products more inelastic

  -adds value to the business
• what is promotion?


  process of communicating with customers and potential customers to increase sales through various methods NOT JUST advertising
• what are the two main forms of promotion?

  informative and persuasive
• what is informative promotion?

  aims to give customers info about product to increase consumer awareness of product and its features