1.3

• Promotion

  Techniques used to inform / persuade customers to buy a product or service

  • Raises awareness
  • Increase sales
  • Encourage brand loyalty
  • Enhance reputation
• Above the line

  Promotion using mass media e.g. tv

  Split into three categories:

  • Informative advertising – designed to improve awareness
  • Persuasive advertising – designed to put pressure on consumers e.g. emotional ads
  • Reassuring advertising – aimed at existing customers, comfort them that they are buying the right product
• Below the line

  Promotion by targeting customers that are more likely to be interested and generally would not use advertising e.g. :

  • Sales promotions – encouraging to buy
  • Public relations –communicating with stakeholders to improve image
  • Merchandising and packaging  - placing certain products at the point of sales to encourage sales
  • Direct selling – sales reps / telephone callers
  • Exhibitions / trade fairs – stands at an exhibition or show that that sell products that attendees are likely to be interested in .
• Choosing promotion methods:

  • Cost
  • Market type
  • Product type
  •  Stage in life cycle of product
  • Competitors promotions
  •  Legal factors
• Types of branding

  • Manufacturer brands – created by the producers oof goods and services. They have the producers name on e.g. Kelloggs
  • Own labelled brands – products made for retailers by other businesses e.g. a producers selling baked beans to Tesco which Tesco brands their product and sells off
  • Generic brands – unbranded products without a companies name on e.g. singular bananas
• Product uses the design mix to create a product that meets the needs of the customer.
• Design mix - Cost

  • Keeping unit price at an acceptable level
  • A well-designed product should be produced and sold with a profit
• Design mix - Aesthetic

  • How a product appeals to the senses
  • Think about materials used
  • Leather seats because of the smell
• Design mix - Function

  • A product should be fit for purpose that it is meant for
  • Should be convenient and ergonomic
  • Ergonomic – objects which you can interact with safely and with minimal effort
• Product life cycle includes the stages of introduction, growth, maturity, and decline.
• Product life cycle

  Introduction

  • The first time the customers see the new product
  • Focus on making customers aware
  • Often little to no competition
• Product life cycle

  Growth stage

  • Characterised as a growth in demand
  • Products become more recognisable
  • Product faces huge competition
  • Higher sales revenue
• Product life cycle

  Maturity stage

  • Most profitable stage
  • Cost and production declines
  • Company comp is higher
• Product life cycle

  Decline stage

  • Continues to emulate success
  • May loose market share
  • Due to a drop in saturation
• Factors determining pricing strategies

  • Different USP
  • Price elasticity of demand
  • Amount of competition
  • Strength of branding
  • Stage of product lifestyle
  • Costs needed to make profit
• Penetration pricing

  • New product with a low price
  • Encourages market share
  • Could be selling at a loss at first
  • Special introductory offers
• Skimming

  • Launch at high price which is brought down overtime
  • Higher revenue at first
  • Can price many customers out of the market
  • e.g. ps5, Iphone
• Predatory pricing

  • Selling at a low price with the aim of removing competitors  from the market 
  • Reduces competition
  • Could be illegal (attract CMA)
  • For established businesses
• Competitive pricing

  • Pricing products based on competitor prices
  • Always will remain competitive
  • Could enter a price war
  • Doesn't take into account brand loyalty
  • For elastic products
  • e.g. supermarket produce
• Psychological pricing

  • Pricing tiny amounts lower than a whole number
  • Encourages customers to buy as if it looks like a better deal
  • Some people aren't drawn in to buy it
  • Can affect product margins for products that are already priced low
• Cost-plus pricing

  • Adding a fixed percentage onto the unit price (markup)
  • Guarenteed profit per item
  • May become less competitve
  • e.g. coffee shops like costa
  • For inelastic products
• • Online sales
  • Dynamic pricing – quick changes in pricing (flexible prices)
  • Auction sites – get rid of out of trend stock
  • Personalised pricing – quotes on personalised items
  • Subscription pricing – paying for stable goods to use often
• • Price comparison sites
  • For cars
  • Businesses pay to be on comparison sites but a stake is taken from the profit
  • Quotes from different providers
• What determines distribution channels

  • Nature of the product
  • Fast moving consumer goods cannot be sold directly
  • High quality products will choose their outlet carefully
  • Cost
  • Choose cheapest distribution channel
  • Intermediaries will take a share of the profit
  • Bulk buying costs less
  • The market
  • Mass markets use intermediaries
  • Smaller markets target directly
  • Control
  • Exclusive products don’t want to be seen selling downmarket
  • Deal with customers directly to keep up image
• Types of retail outlet

  • Independants – mainly small shops e.g. newsagents
  • Supermarkets – large chain stores
  • Department stores – divided into departments
  • Multiples -  chain stores selling common  goods e.g. WHSmiths
  • Online retailers e.g. amazon
  • Superstores – large stores selling goods cheaply
  • Kiosks – small outlets
  • Market traders – market stalls
• Direct selling

  Marketing directly to customers, they may  :

  • Use marketing agents who go door to door (this is on decline )
  • sell through the internet
  •  use direct mail sent through the post to potential customers
  •  use shopping parties held by representatives
  • Use direct response adverts (freelance workers / cleaners)
  • Telephone call
  • Business to consumers
• Changes in distribution to reflect social trends

  • Way things are sold may change
  • Online shopping is growing
  • More shopping malls are being built
  • Call centres
  • Supermarkets extending closing times and expanding range of products
  • Shopping becoming more of a leisure activity
  • More shopping channels
• Online distribution

  • For consumers
  • Cheaper
  • Can shop 24/7
  • More choice
  • Shop anywhere you want
  • For businesses
  • More convenience means they don’t have to price match
  • Lower start-up cost
  • Less documentation
  • Payments received online
  • Bigger B2C market
  • Can serve 24/7
  • More choice in operations location 
• Stars

  • Have high market share
  • In a rapidly growing market
  • Makes the company the most profit
  • Most valuable product

  
• Cash cows

  • High market share
  • In a steady market with low growth
  • Makes a lot of stable company inflows

  
• Question marks

  • Low market share
  • Rapidly growing market
  • High demands means product still makes good profits

  
• Dogs

  • Low market share
  • In a market with little to no growth
  • Companies want to avoid these
  • Make products obsolete
  • Products may be upgraded or improved In an effort to make them into cow products