Making marketing decisions

• The design mix refers to the three factors a business will consider when designing a product.

  The three factors are:

  ● Function – the way the product works; product reliability

  ● Aesthetics – whether the product appeals to consumers in terms of how it looks and feels

  ● Cost – whether the product can be made and sold profitability; how much value is added during the production process
• The product life cycle describes the stages a product does through from when it was first through of until it is finally removed from the market.
• The Product life cycle

  • Introduction – research, developing and then launching the product
  • Growth – when sales are increasing at their fastest rate
  • Maturity – sales are near their highest, but the rate of growth is slowing down because new competitors are entering the market or the market has become saturated with different versions of the same product
  • Decline – when sales begin to fall and the product will be removed from the market
  • Extension strategies extend the life of the product before it goes into decline. Extension strategies include: advertising; price reduction; adding value – new features; exploring new or different markets; new packaging.
• Businesses must choose between two methods of pricing:

  ● Low price – to achieve high volume of sales but at a low profit margin

  ● High price – low volume of sales but at a high profit margin

  To determine the price of a product, a business must consider the cost of making the product, the quality, brand image and demand.
• Factors influencing pricing strategies include:

  ● Number of competitors – fewer competitors means a high price can be set.

  ● Where a product is in its product life cycle – during the ‘introduction’ stage, a product is new and there are few competitors so a high price can be set.

  ● Customers – how a market is segmented could influence the price. E.g. targeting wealthier customers means a high price can be set.

  ● The state of the economy – during a period of low consumer spending, luxury products might need to reduce their price.
• Promotions ensure that customers are aware of the existence and positioning of products. Promotions are used to persuade customers that one product is better than competing products.
• Promotion strategies for different market segments include:

  ● Advertising – this promotes the product to the target audience through different communication media such as TV, radio, cinema, billboards/posters, online and newspapers or magazines.

  ● Sponsorship – a business donates money to an event, team or individual, in return for their business name or logo being displayed. This is most frequently seen at football matches.

  ● Product trials – this when a free or reduced product is given to the target audience with the hope that consumers will then continue to buy the product in the future

  ● Special offers – this includes vouchers or temporary price reductions

  ● Branding – a brand is a product with a unique character or identity
• Technology in promotion:

  ● Targeting advertising online – this could involve email advertising, specifically tailored to customers

  ● Viral advertising via social media – this involves producing marketing materials that can be shared on social media to generate excitement about a product

  ● E-newsletters – electronic newsletter can be distributed via email so consumers can stay up to date with the latest products
• Place, or as it is more commonly known, distribution, is about how a business gets it products to the customer.
• A distribution channel is to provide a link between production and the consumer who will use the product.
• Distribution channels: