2.2

• Design mix


  - Function - what the product should do and how well it does it, eg a washing machine should wash clothes

  - Cost - how cost-effective the product will be to manufacture, eg the product should be made and sold profitably

  - Aesthetics - how the product appeals to consumers, eg how the product looks, feels or smells
• Why is design mix used?


  To appeal to different target markets
• Phases of product life cycle

  1. Introduction - product launched, sales may be low

  2. Growth - More customers become aware, sales increase

  3. Maturity - Sales peak, product is established

  4. Decline - Sales fall, extension strategies may be used
• Dynamic markets


  Rate of change of the market
• Brad image


  How a business or product is perceived by others, including consumers.
• Extension stratergies


  - Product differentiation - This means making a product stand out from its market competitors, usually by highlighting the differences between it and the other products. Ensuring that a product has a unique selling point (USP)

  - Reducing the price of the product

  - Rebranding the product - Refreshing packaging can't appeal to new customers

  - Increasing market activity - new advertisements and campaigns to promote sales
• Businesses need to consider when setting prices

  - Cost of making the product

  - Quality of product (can charge higher prices)

  - Brand image of product (can charge higher price)

  - Demand and supply of a product (high demand, higher prices can be charged)
• Price penetration strategy


  A pricing strategy that is used to quickly gain market share by setting an initially low price to entice customers to purchase
• Price penetration advantages


  - faster growth

  - broad market potential

  - combat competitors

  - better for products without a USP
• Price skimming strategy


  Setting prices higher than the competition while providing better quality, service and brand image
• Advantages of price skimming

  - Firms recover R&D costs before competitors enter the market

  - Firms capture all consumer surplus

  - Good for products with a USP
• Factors influencing pricing strategies

  - Competitive environment, in competitive marked, businesses often compete on price

  - Actual cost

  - Consumer demand

  - Governmental influence

  - Where a product is in its life cycle

  - Market segments (niche vs mass)

  - Changes in technology (free basic version of the product/service)
• Businesses use promotion to

  - Inform consumers of a new product or service

  - Persuade consumers to buy a product or service

  - Remind consumers about the benefits of a product or service
• Media advertising


  - Television

  - Radio

  - Print, eg newspapers and leaflets

  - Social media

  - Websites

  - Billboards and posters, eg on buses and trains
• Sponsorships


  Sponsorships provide financial support to an event, person or organisation, either through free products or services, or through a financial payment.

  In return, the business, product or service is prominently displayed.
• Product trials


  Encourage consumers

  - Free samples, eg food products

  - Free trials, eg movie streaming services

  - Trial offers, eg money back on a purchase
• Special offers


  Sales promotions, incentives to persuade customers to purchase

  - Discounts

  - Competitions

  - Buy-one-get-one-free offers

  - Free gifts

  - Money-off vouchers

  - Loyalty cards
• Branding

  A brand image can be used as promotion, so businesses often want to establish a positive brand image.
• Viral marketing on social media


  This is a method of marketing where firms cause viewers of a promotion to share it with friends. This creates a campaign for the firm which might end up going viral via email, social media or text.

  
  

  Firms can use platforms such as Facebook and Twitter to promote their products, increase awareness of their brand and increase sales. This can also serve as a way to get feedback from customers for what a firm should do next in terms of improving their products. Other platforms, such as LinkedIn can be used as a way of creating contacts around the world.

  (Apps, e-newsletters)
• Targeted online advertising


  Website openers track online activity of consumeras who visit their sites by using cookies, they can use cookies to build a profile of consumers' interests and then serve ads suited to the individual.
• Place


  - Producers

  - Retailers

  - E-tailers
• Direct channels of distribution


  Producer sells directly to consumer
• Indirect channels of distribution

  Introduces an intermediary into distribution process, they:

  - Make it easier for producers to distribute products

  - Make it more convenient for consumers to buy products
• Retailers


  A business that sells goods to the public, often a physical shop

  - Small indépendant traders

  - Supermarkets

  - Department stores
• E-tailers


  Retailers who operate online to sell products to customers
• Advantages of e-tailers


  - Offer a wide range of products as they are not limited by the size of a store

  - May allow small producers to sell via there website for a fee

  - Prices are often lower as they do not have to pay for a physical shop

  - Customers can shop whenever they
• Disadvantages of e-trailers


  - Customers need internet access

  - Customers cannot pay with cash

  - Goods need to be delivered, customers must wait

  - Items cannot be seen before purchasing
• How does Product influence the marketing mix?

  - Price - If the product is expensive to produce, price needs to be higher

  - Place - If product has to be tried on, it may be most successful sold from a shop

  - Promotion - A new product may need more promotion than a mature one
• How does Price influence the marketing mix?

  - Product - If price needs to be low, quality may be compromised

  - Place - It would not be advisable to sell expensive products through discount retailers

  - Promotion - Expensive products may be best suited to being promoted with a free gift
• How does Promotion influence the marketing mix?

  - Product - A buy-one-get-one-free offer would not be suitable for an expensive product

  - Price - Promotions can be used to reduce the cost of products that have a high price

  - Place - A promotion campaign that used national media would require the product to be available nationall
• How does Place influence the marketing mix?

  - Product - A product sold in luxury outlets needs to be high quality

  - Price - A product that is sold cheaply may be sold in discount shops

  - Promotion - A product that is only sold online may need a different approach from one sold in shops, eg more information about the product
• Gaining competitive advantage using marketing mix

  - Offering products at lower prices than competitors

  - Ensuring that the product has added value to distinguish it from those of the business' competitors
• Added value


  Different between cost price and selling price