2.2 - making marketing decisions

• What are the four elements of the marketing mix?

  Product, price, promotion, and place
• How can a business gain a competitive advantage?

  By having the right combination of marketing mix elements
• What is a potential compromise a business might face with the marketing mix?

  Charging a high price for high-quality products
• How does the method of distribution affect pricing and promotion?

  Online products are usually cheaper than in-store
• What might a business emphasize in promotion for a low-quality, cheap product?

  Price may be emphasized in promotional material
• What are the three main ingredients of the design mix?

  Function, cost, and aesthetics
• What is differentiation in marketing?

  • Making products or services distinctive
  • Changing elements of the marketing mix
  • Attracting customers to choose your product
• What is a unique selling point (USP)?

  A distinctive feature that attracts customers
• How can changing the price of a product affect its market appeal?

  A higher price can make it appear luxurious
• Why is product design important for differentiation?

  It helps make the product attractive and useful
• What happens during the research and development (R&D) stage of a product's life cycle?

  Ideas are developed into marketable products
• What is the first stage of a product's life cycle?

  Research and development (R&D)
• What occurs during the introduction stage of a product's life cycle?

  The product is launched with advertising support
• What happens during the growth stage of a product's life cycle?

  Demand for the product increases
• What characterizes the maturity stage of a product's life cycle?

  Demand reaches its peak
• What happens during the decline stage of a product's life cycle?

  Demand for the product starts to fall
• What are the stages of the product life cycle?

  1. Research and Development (R&D)
  2. Introduction
  3. Growth
  4. Maturity
  5. Decline
• How does the product life cycle affect a firm's cash flow?

  It influences sales and profit over time
• What is an extension strategy?

  Actions taken to prolong a product's life
• What might firms do during the decline phase of a product's life cycle?

  Implement extension strategies to prolong sales
• What are some types of extension strategies?

  • Adding new features
  • Using new packaging
  • Targeting new markets
  • Changing advertisements
  • Lowering price
• How can changing packaging help extend a product's life?

  It can attract new target markets
• What is the impact of competition on pricing decisions?

  It influences how firms set their prices
• How does the product life cycle affect pricing strategies?

  Pricing may change based on the life cycle stage
• What internal factor can influence a product's price?

  Technology used in production processes
• How can economies of scale affect pricing decisions?

  They can lower the average cost of production
• What is the relationship between price and demand?

  As price rises, demand tends to fall
• What should businesses consider when setting prices?

  Both internal and external factors
• What is the goal of most businesses regarding pricing?

  To make a profit above costs
• How can a business's reputation affect its pricing strategy?

  It may allow for higher prices without losing demand
• What is the effect of high-quality raw materials on pricing?

  They lead to higher costs and prices
• What happens to pricing decisions as a business grows?

  They are likely to change based on reputation
• What is the relationship between price and profit?

  Higher prices can lead to higher profits
• How can businesses evaluate the effectiveness of different pricing strategies?

  By assessing their impact on sales and demand
• How does the target market segment affect product pricing?

  Higher income segments lead to higher prices
• What impact do raw material costs have on product pricing?

  High quality raw materials increase product prices
• How might a business's pricing decisions change as it grows?

  It may increase prices with loyal customers
• What is economies of scale in relation to pricing?

  Average cost per product decreases as production increases
• What are the five pricing strategies businesses can use?

  1. Price Penetration
  2. Loss Leader Pricing
  3. Price Skimming
  4. Competitive Pricing
  5. Cost-Plus Pricing
• What is price penetration?

  Charging a low price to gain market share