unit 5

• 4 ps


  together they are called marketing mix

  product- firm identifies customer needs or wants, then come up with a product to fulfil these wants or needs

  price- customer must think price is good value

  promotion- product must be promoted so that potential customers are aware it exists

  place- must be sold in place customers will find convenient
• segmentation


  when people within a market are divided into different groups .

  helps business identify target market.

  examples of segmentation:

  age

  income

  location

  gender
• primary research


  questionaries , phone surveys, interviews
• secondary research


  looking at other peoples work
• quantitive and qualitative 


  quantitive- anything you can measure or reduce to a number

  qualitative- feelings and opinions
• product life cycle


  5 stages:

  1. research and development
  2. introduction- product launched and put on sale for first time
  3. growth- during this phase demands increase
  4. maturity- product reaches its peak
  5. decline- eventually products fall as rivals products take over
• extensions strategies 


  although sales will eventually decline, firms can take action to extend their life

  several types:

  1. adding more or different features
  2. using new packaging
  3. targeting new markets
  4. changing advertisements
  5. lowering price
• product portfolio 


  is the range of products that a business sells

  business aims to have balanced product portfolio

  so if one product fails they can depend on others
• boston matrix


  is a way for a firm to analyse its product portfolio. the market share of each product is considered, as well as how fast the market the product is growing.

  question markets- are new products. they have a small market share but high market growth

  dogs- low market share and low market growth

  cash cows- bring in good money. high market share but low market growth

  stars- high market share and high market growth- future cash cows
• boston matrix helps analyse a product portfolio

  balanced portfolio means that a business can use money from its cash cows to invest in question marks, so they can become stars
• developing new product has risks

  benefits:

  increase overall sales and may extend life cycle

  may appeal to new market segment

  business can charge higher prices for new products

  can be good for firms reputation

  risks:

  costly and time consuming

  business can end up wasting resources

  poor quality means bad reputation
• market driven and product driven 


  market drive firms will use market research to find out what the market wants

  product driven firms will design or invent new product and try to sell it.

  market driven is much better
• develop a brand image for the product

  products with strong brand image are easily recognised

  strong brand image usually built up over a number of years

  brand has to be constantly managed using marketing mix

  brand image can help to increase sales
• product differentiation 


  without it, customers think your identical to others.

  one way to achieve it is to give product unique selling point. this is some feature that makes it different to other competitions:
• internal factors affecting pricing decisions

  aims and objectives

  internal costs

  where product is in life cycle
• external factors affecting pricing decisions

  nature of there market that a Product is in

  if product Is sold in competitive market

  a business doesn't have control over all its costs
• 5 pricing strategies


  • Price penetration
  • Loss leader pricing
  • Price skimming
  • Competitive pricing
  • Cost plus pricing
• Price penetration


  Where a firm changes a very low price when a product is new to get people to try it
• Loss leader pricing


  Where the price of a product is set below cost. The firm doesn't make a profit on it, but the idea is that customers will buy other products as well
• Price skimming


  Where a firm charges a high price to begin with
• Competitive pricing


  Where a firm changes prices similar to other firms
• Cost plus pricing


  Firm works out total cost of making the product, and adds a certain amount depending on how much profit they want to make whilst having reasonable demand
• promotion is important for a business

  why do business promote:

  to inform customers about the product

  to persuade customers to buy the product

  to create or change the image of the product

  to create or increase sales
• firms promote their products by adverting 


  advertising is any message that a firm pays for which promotes the firm or its products:

  newspapers

  magazines

  posters and billboards

  leaflets, flyers, and businesses cards

  television

  internet
• businesses can sponsor organisations and events

  firms sometimes give money to organisations or events

  very popular through sport and television
• sales promotion 


  short term method used to boost sales.

  six methods:

  competitions

  2 for 1 offers

  free samples

  coupons

  point of sale display

  free gifts

  an advantage of sales promotion is it encourages customer to buy the product, a disadvantage is that sales promotion will make a product look less luxurious
• firms must choose best promotional mix


  firms use a combination of different promotional methods to promote a product, this is called promotional mix

  factors that might influence a firms promotional mix:

  finance available

  nature of product or service

  what competitors are doing

  target market
• selling to wholesalers


  manufactures sell products to a whole sales, then consumers or retailers buy the product from the wholesaler .

  selling to wholesalers means the manufacture gets bulk orders and doesn't have to store lots of stock
• selling directly to retailers 


  means the manufactures can provide retailer with product knowledge so the retailer can provide better customer service
• selling directly to customers

  can be done via telesales. cheapest channel of distribution. can be time consuming for firms to sell products to individual customers.
• channel of distribution 


  can include wholesalers ( these buy products in bulk and store them in a warehouse) retailers ( sell products to consumer ) telesales ( means selling products through the phone.
• reaching international markets


  e commerce and m commerce means international markets can be reached more easily
• e commerce and m commerce advantages

  can access Widder market

  growth of m commerce means business sales may increase further, as its becoming easier to buy products online

  businesses successful online may be able to close shops
• drawbacks to m commerce and e commerce

  firms may have to employ specialist website or app designers

  some customers are reluctant to buy online

  special equipment may have to be Brought or sold