2.1

• Examples of ethical behaviour include

  Treating workers and suppliers fairly,

  being honest with customers

  ethical sourcing of materials

  investing in the community

  caring for the environment

  operating sustainability
• Pressure groups 


  Organisations that try to make businesses change their behaviour or operations. Pressure groups focus on issues such as animal rifhts, the enviroment and global poverty. Pressure groups can cause bad publicity for business that act unethically. This can damage there reputation
• Short term envirometal impracts


  Traffic congestion as a result of deliveries and csutomer

  Air, Noise and water pollution
• Design mix 


  Function - what a product does and how well it can do it

  Cost - How much is spent on producing the product? A product with lots of functions and appealing appearance is likely to be more expensive to produce

  Appearance - Aesthetics of the product, including style and finish
• Product lifecycle


  Research and development

  Introduction

  Growth

  Maturity and saturation

  Decline
• Research and development 


  This stage takes place before the product is on the market meaning there are no sales as the product is being designed. This can be expensive and time consuming stage for complex products
• Introduction 


  This is when the product is first launched. The product will be heavily advertised at this time to make the public aware of it. At this point sales would be slow at the beginning then rapidly increase but it is unlikely for a profit to be being made at this time
• Growth 


  Sales grow rapidly, most people know about the product, and lots of people start using the product. There is a degree of customer loyalty. Likely to be earning a profit
• Maturity and saturation 


  People keep using products, and sales maintained at the highest level. Becomes difficult to increase sales and competition is likely. Hard to find new customers
• Decline


  Sales start to fall and the product becomes unprofitable
• Extension strategies 


  Modifying product

  New marketing campaign

  Targeting new market

  Changing packaging
• Importance of differentiating a product/service

  This is crucial as it gives firms a USP. Allows businesses to stand out and gain a competitive advantage over their rivals as it allows customers to see that clearly that their needs are being met by one business more than another
• Methods of differentiation

  • Unique catchy product name
  • Quality
  • Design
  • Formulation or function
  • Packaging
  • customer service
  • Across the value chain (using different suppliers)
• Profit margins


  Be increased by reducing price/increasing costs. If the business raises prices and it succeeds the customers will expect high quality it does not succeed then they will loose sales
• Competitor pricing


  Price based on what the competition is selling
• Low trial Price


  A low price might be used by generic/non-branded products or to encourage product trials when a product is first launched
• High volume low margin pricing strategy

  Focuses on selling large quantities at a low price in order to do this businesses mist be able to keep costs low and produce and distributes large quantities
• Low Volume High margin pricing strategy

  Targets the premium end of the market and focuses on selling a small quantity at a higher price
• Influences on pricing strategies

  Technology - New technology can lower the costs of production and allow businesses to charge a lower more competitive price

  Branding - Products with a strong brand can charge a higher price

  Competition - a business has to consider the strength of their competition and the prices they are charging

  Market segment - different prices will be applied to different consumers with different characteristics
• Influences on pricing strategies (2)

  Costs - if costs increase, prices may have to rise if the business want to maintain profit margins. If costs fall the business could reduce prices to be more competitive or they could enjoy higher profit marginsStage in the product life cycle - firms may consider reconsidering reducing the price when a product reaches maturity/saturation
• Methods of promotion

  Advertising

  Sponsorship

  Product trials

  Special offers
• Advertising

  • TV
  • Radio
  • Cinema
  • Posters
  • Online
  • Leaflets
  • Magazines
  • Newspapers

  Can grasp attention, be expensive
• Sponsorship 


  Sponsoring events or good causes

  Can provide a lot of exposure and association but does communicate the features or benefits of products
• Product trials

  • Free samples
  • Product testing

  Encourages customers to try product but can be expensive for business to give away free products
• Special offers

  • BOGOF
  • Competitions
  • Discounts
  • Sales

  Can boost short-term sales and clear stock levels but not sustainable in long term
• Brand


  a named product which consumers see as being different from other products and which they can associate and identify withg
• Benefits of Branding


  Brand loyalty - where customers will repeat purchases because they like the look, taste, quality or image of products

  the name established with one product may encourage customers to purchase other products

  Customers can be sure about the quality of a product from branded goods and be more likely to trust it

  Premium prices - strong brand means you can charge more
• Benefits of branding (2)

  Greater consumer awareness - brands will be recognised and customers will know about product advantages

  Increased sales and market share - sales likely to be higher than non-branded products
• The use of technology in promotion


  Targeted Advertising online

  Viral advertising using social media

  E-newsletters
• When choosing business location business should consider

  Cost

  Accessibility

  Proximity to market

  Proximity to labour

  Proximity to resources

  Transport links

  Whether e-commerce is an option
• Benefits of retailing


  Customer can browse and try products

  Businesses can use displays

  Easier to provide help and advice to customers

  Many customer enjoy a physical shopping experience
• Beneifts of e-tailing


  Reduce costs as no high street shop needed

  24/7 shopping from anywhere increases convenience

  Can access market from around the world