1.3

• Product and service (design mix):

  Design mix - functions, aesthetics and cost

  Changes in the elements of the design mix to reflect social trends:

  • concern over resource depletion
  • designing for waste minimalization, re-use and recycling
  • ethical sourcing
• Design mix - Function:

  How it works?

  How is it used?

  material

  safety

  USP

  How it feels?

  warranties

  fit for purpose

  quality
• Design mix - Aesthetics:

  will add value

  shape

  design

  the attractiveness of the product

  colours

  size

  basic model
• Design mix - Cost:

  how much it costs to make?

  price must be affordable

  allow enough profit margin

  electric cars compared to petrol

  are costs comparable with competitors?
• Branding and promotion

  A brand is a product that is easily distinguished from other products so that it can be easily communicated and effectively marketed.

  Benefits: adds value - can charge higher prices + demand is more price inelastic. Builds customer loyalty and aspiration.

  Brand extension - business uses its brand name when bringing out a new product could be called a spin-off.

  Brand stretching - brand is used for a diverse range of products, not connected.
• Branding and promotion

  Main aims of promotion: ensure customers are aware of the existence and positioning of products. Also used to persuade customers that the product is better then competing products and to remind customers about why they want to buy it.

  Above the line promotion: Involves advertising in the media

  • Reassuring - chose us and you will be doing the right thing - bank account.
  • Persuasive - appeal to people emotions - Evian water
• Branding and promotion

  Below the line promotion - refers to promotion that does not involve advertising (all other methods). E.g. sales promotion, PR, promotion.

  Merchandising - all about point of sale. E.g. window displays
• Branding and promotion

  Uses of promotion: increase sales, attract new customers, encourage customer loyalty, encourage trial, create awareness, inform, remind potential customers, change attitudes, create an image, launch new product etc.

  Influences - a business will carry out different types of promotion at different times.

  Influences - target market, price of the product, time of year, marketing objectives, budget, how is it sold (where as well), competition, product/service being sold.
• Pricing strategies

  Why are pricing strategies important?

  • pricing can create a USP
  • can help to build profits
  • to be competitive
  • to fight off competition
  • to also increase market share
  • creates a brand
  • attracts customers
• Quantitative skills:

  Pricing that reflects social trends:

  • dynamic pricing
  • personalised pricing
  • subscription pricing
  • price comparison sites

  Economies of scale - as production increases unit sales fall
• Quantitative skills

  Differentiation and USP: businesses can generally charge a higher price if its products has a USP/differentiated. Because customers are prepared to pay more for products with some individuality or additional features.

  Price elasticity of demand: PED of a product - 8 cause increase price by 10% and see a fall of 8%. PED influences price because if a product is price inelastic, may not be affected by prices increases.

  Competition: if there is little competition in the market, a business can charge higher prices.
• Distribution - place(marketing mix)

  Main objectives of distribution to make products available in the right place at the right time in the right quantities.

  Factors influencing type of distribution: Type of product - perishable needs to get to the customer quickly. E.g. bread. Luxury/gift items - needs to be displayed nicely and attract customers, point of scale and merchandising important. E.g. shopping centres. Products in a dynamic market - ned to be accessed quickly as products are constantly updated. E.g. music - Spotify.
• A distribution channel moves product through the stages from production to final consumption. Wholesalers-break bulk, buy in large quantities from producers, break into smaller quantities to sell to retailers. Advan: reduce producers transport costs, retailers order in smaller amounts, wholesalers buy at lower price from producer, adding a profit onto one. Retailers-final step in the chain, directly with customer. Advan: convenient for customers as they can try products out, customers can access information through a store, retailer holds stock, retailers arrange stock, after sales support.
• Distribution

  Direct distribution - channel where a producer and consumer deal directly with each other without involvement of an intermediary.

  Indirect distribution - involves the use of intermediaries between the producer and consumer.

  Multi-channel distribution - involves a business using more than one type of distribution channel.

  if a business sells directly to customer they may use a website, sell from a catalogue, sell door to door or through direct mail.
• Product lifecycle and portfolio

  Product portfolio analysis - product portfolio analysis assess the position of each product or brand in a firms portfolio to help determine the right marketing strategy for each.

  Boston matrix - it is used to identify marketing strategies that the business should use for its various products based on market conditions and the product performance in that market. It examines the products based on market share and market growth.