Business

• Marketing mix

  A combination of factors that help businesses sell its products. (Product, price, place, promotion.)
• Product portfolio


  The range of goods and services offered by an enterprise.
• Benefits of an enterprise extending its product portfolio

  1 - Attracts new/ more customers which increase sales/ revenue/ profit. 2 - Attracts a new target audience by meeting their needs.
• Drawbacks of an enterprise extending its product portfolio:

  1. Need to buy more stock (inventory) 2. May need to employ/ train new staff to make/ sell the product range.
• Product life cycle

  A model that describes the life of a product
• Product life cycle stages:

  Development, Introduction, growth, maturity, decline.
• Balanced portfolio


  When an enterprise has products at different stages of the product life cycle.
• Extension stage

  During the maturity stage, the business will extend the product to avoid the decline of sales.
• Extension strategies (product life cycle.)

  Advertising, price reduction, adding value, explore new markets, new packaging.
• Unique selling point

  A factor that separates a product from similar product.
• Brand personality


  Describing a brand with human characteristics.
• Why is branding important for a business?

  • Gives identity
  • Makes enterprise memorable and recognisable
  • Supports marketing and advertising
  • Creates loyalty
  • Competitive advantage
• Price 


  The amount a business charges its customers for its product or service.
• factors that influence price:

  • competition 
  • customer opinions 
  • brand image 
  • Availability
• Price skimming 


  Selling a product at a high price, sacrificing high sales in order to earn high profits.
• Advantages of price skimming

  provides higher upfront sales to cover research and development costs
• Disadvantages of price skimming

  Won't work if product is available a lot or if competitors are creating similar products.
• Penetration pricing

  setting an initial low price for a new product so that its attractive for customers. The price is then likely to be raised as the product gains market share.
• advantages of penetration pricing:

  • low prices = high demand
  • gains interest
  • sales boost
  • encourages customers - they know the product is worth it
• Disadvantages of penetration pricing:

  • poor brand image
  • low customer loyalty risk
  • sales may fall when the price increases
• Promotional pricing

  Brands temporarily reduce the price of a product/ service to attract prospects/ customers.
• Advantages of promotional pricing:

  • Convinces customers to buy products
  • Helps companies stay competitive
  • Attracts customers
• Disadvantages of promotional pricing:

  • Makes customers question the quality+
  • Can result in a business going bankrupt
• Cost plus pricing

  When enterprises work out how much the product has cost to make and then add on a percentages of profit. (restaurants.)
• Premium pricing 


  Keeping the price of one of the products artificially high in order to encourage favourable perceptions amongst buyers solely on price.
• Advantages of premium pricing:

  • High profit margins
  • Brand perception value
• Disadvantages of premium pricing:

  • People might not be able to afford it
  • Lower sales
• Psychological pricing

  Businesses use "tricks" to make customers believe they are paying for less. (eg £49.99)
• Advantages of Psychological pricing:

  • Boosts sales
  • Emotional appeal of purchasing
  • Competitive edge
• Disadvantages of psychological pricing:

  • Risk to reputation - deception
  • effectiveness varies
  • perceived quality - low price = low quality.
• Target market 


  The market an enterprise wants to sell its products to.
• Market segmentation 


  When the market is broken into similar characteristics.
• Examples of market segmentation:

  • Demographic
  • Psychographic
  • Behavioural
  • Geographic
• Demographic market segmentation:

  Based on: age, gender, income, family size or cultural background.
• Psychographic market segmentation:


  Based on: Social class, lifestyles, personality and attitude.
• Geographic market segmentation:

  Based on: Country, region or local area where you live.
• Behavioural market segmentation:

  Based on: Interests, needs and how people relate to a product.
• Benefits of market segmentation:

  • Enterprises are able to understand the characteristics/ needs of a customer better + gain a competitive advantage + more customers.
  • They can identify/ choose a target market to specialise in.
  • They can develop goods and services for a specific market segment, so the product is better suited to the segment.
• Types of market:

  • B2B - business to business
  • B2C - business to consumer
  • Niche markets
  • Mass markets
• Niche Markets 


  A smaller part of a large market, with products tailored to specific customer needs.