2.2 Making Marketing Decisions

• What is the first stage of the product life cycle?

  Development
• What is the second stage of the product life cycle?

  Introduction
• What is the third stage in the product life cycle?

  Growth
• What is the forth step in the product life cycle?

  Maturity
• What is the fifth stage in the product life cycle?

  Decline
• What is the design mix?

  Three elements of design needed to make a product successful
• What are the three elements of the design mix?

  • Function
  • Costs
  • Aesthetics
• What are some examples of extension strategies?

  • Lowering prices
  • Increasing advertisement
  • Rebrand/modify the product
  • Introduce new varieties
• What are some drawbacks of competitive pricing?

  • Very little profits
  • Not much product differentiation
• What is the definition of cost plus pricing?

  When you work out the total cost of production and adds on another certain amount depending on how much profit the firm wants with a reasonable demand
• What is the definition of competitive pricing?

  When a business charges similar prices to other businesses
• What is the definition of loss leader pricing?

  When a firm charges less than the cost of production so no profits are made
• How can a business differentiate a product?

  • Unique function
  • Unique style/design
  • Distinctive brand
  • Excellent customer service
  • High quality products
• What are extension strategies?

  An action intended to extend the life of a product
• What is the product life cycle?

  The different stages that a product goes through over time
• What are some drawbacks of price skimming?

  • Need loyal customers who are willing to pay
  • Once prices are lowered, products could become less desirable
• What are some external influences on pricing decisions?

  • Competition
  • Market segments
  • Cost of raw materials
• Ways technology can be used in promotion?

  • Individuals internet search history
  • Creating social media accounts to advertise their products
  • Mailing lists
• What are some benefits of competitive pricing?

  • More appealing to customers
  • Increase in sales
• What are some benefits of cost plus pricing?

  • Saves time for a business due to easy calculations
  • Ensures a profits for the product/service
• What are some drawbacks for loss leader pricing?

  • No profits are made if only one product is bought
  • Can lead to price wars with competitors
• What are some benefits of loss leader pricing?

  • Customers will buy other products from the business
  • Encourages growth
• What are some drawbacks of price penetration?

  • Little profit at the start
  • Limited time frame to gain popularity
• What are some benefits of price penetration?

  • Good market share
  • As the firm increases the price, loyal customers will continue to repurchasing the product
• What is the definition of price skimming?

  When a business charges a high price to begin with, usually when there is a high demand
• What are some drawbacks of cost plus pricing?

  • Loss of revenue if customers are willing to pay more
  • Doesn't consider competitors prices
• What are some benefits of price skimming?

  • Helps increase revenue
  • Improves the firms image and status
• What are some internal influences on pricing decisions?

  • Technology
  • Methods of production
  • Product life cycle
• What are some influences on promotional strategies?

  • Good branding
  • Advertisement
  • Sponsors
• What is an e-tailer?

  A company that sells products/services online
• What is a retailer?

  A business that sells products to consumers
• How can the marketing mix build competitive advantage?

  By attracting and selling to more customers
• What are some examples of pricing strategies?

  • Price skimming
  • Price penetration
  • Competitive pricing
  • Loss leader pricing
  • Cost plus pricing
• What is the definition of price penetration?

  When a firm charges a very low price when a product is new to make people try it