2.2

• What are the elements of the design mix?

  • function
  • aesthetic
  • cost
• How can a business differentiate itself from competitors?

  • branding
  • price of products / services
  • customer service
  • quality
  • ecological friendliness
  • wider product portfolio
• What are the phases of the product life cycle?

  • research and development
  • introduction
  • growth
  • maturity
  • decline
• In the product life cycle, when are sales at their peak?

  Maturity.
• What is an extension strategy?

  Extending he maturity phase of the product life cycle.
• Give examples of extension strategies?

  • rebranding / redesigning product
  • heavy promotion
  • targeting a new segment of the market
  • entering a new market
  • reduce prices of products / services
• Explain one extension strategy that a company can use to prolong its revenue for a particular product?

  One extension strategy is locating a new market for a particular product. This could be done via market research to see if any other unexpected audiences of people are interested in the product. This can allow a business to redirect their promotion towards a new market; allowing for maturity to continue.
• What is differentiation?

  When a business makes their product / service different from the competition.
• Explain one benefit to a business of producing a high quality product?

  One benefit is being able to charge a higher price for the product. As a result, there could be an increase in revenue. This may lead to an increase in market share for the business.
• What is price skimming?

  Company sets a high initial price for a new product and then gradually lowers it over time.
• What is penetration pricing?

  Product is initially sold at a low price to gain market share and attract customers.
• What are the pricing methods?

  • penetration
  • skimming
  • psychological
  • competitive
  • cost-plus
• What can influence pricing strategies?

  • technology
  • demand
  • competition
  • target market
  • product life cycle
  • economic climate
• Impacts of charging high prices?

  • can break-even quicker
  • limited target market
• What is the benefit of advertising?

  • can reach a large potential audience.
• What is the drawback of advertising?

  • can be expensive.
• What is sponsorship?

  A method of raising awareness of a business' brand name in return for financial support of events or public spaces.
• What is the benefit of sponsorship?

  • provides a lot of brand exposure
  • can target different market segments
• What is the drawback of sponsorship?

  • if even being sponsored gets bad publicity, brand image may suffer
  • can be expensive
• What is the drawback of special offers?

  Profit margins are reduced.
• Define retailer?

  Business that sells goods direct to a consumer through a ‘bricks & mortar‘ shop.
• Define e-tailer?

  Business that sells goods direct to a consumer via the internet.
• Advantages of being a retailer?

  • More control over customer service.
  • Lower risk of technological issues.
  • In-store advertising.
  • Footfall.
  • Can sell samples.
• Disadvantages of being a retailer?

  • Limited capacity of stock.
  • Rent.
  • Staff wages.
  • Long supply chain.
  • Shoplifting / vandalism.
  • Narrower target audience.
  • Limited working hours.
• Retailers and e-tailers

  Clicks & mortar
• What is a disadvantage of product trials?

  Can be costly to give away free samples.
• What is a drawback of branding?

  Can take a long time to develop a strong brand.
• Benefits of being an e-tailer?


  • Can sell to a global market.
  • Can sell 24/7.
  • Shorter supply chain.
  • No need for expensive retail locations.
• Drawbacks of being an e-tailer?

  • More competitors.
  • Consumers cannot sample products.
• Is the economic climate an influence of pricing strategies?

  Yes
• How can promotion impact price?


  • Use free promotion so can charge a lower price.
  • To portray a luxury image so can charge a higher price.
• How can price impact the product?

  If customers demand a lower price, quality may decrease
• If a business produces a technological product, how will that impact its price?

  Price will increase.
• How can the product give a business a competitive advantage?

  The product can have unique features and can be of superior quality.
• How can the price give a business a competitive advantage?

  The business may be able to produce their product at a lower cost and therefore can charge lower prices.
• How can promotion give a business a competitive advantage?

  Business may have a very eye- catching advertising campaign that goes viral and reaches a larger audience.
• How can place give a business a competitive advantage?

  May have a wide distribution network meaning that products are sold in more outlets than competitors.