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The Marketing Mix (Price (Skimming pricing (Prices start off quite high…
The Marketing Mix
Price
Competitor Pricing:
If a business is operating in a market where there is lots of choices and not much product differentiation then prices will be similar to other firms
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Skimming pricing
Prices start off quite high because it has a high desirability factor (novelty) which means that customers will want it when it's new.
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Penetration pricing:
This means that the setting prices start of very low for a new product or service to encourage sales.
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When customers like the product and start to repeat purchase, the business raises the price.
Cost-plus Pricing
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Cost-plus pricing is worked out by calculating the total cost to make the product and then profit is added on top
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Place
What is a retailer?
Disadvantages of being a retailer
- Has to pay for rent
- Inconvenient for consumer
- Not available 24/7
- Customers may have to wait in a queue
- Higher prices are charged for products
What is an independent retailer?
- Not part of a chain/franchise
- They may sell niche market products which are more unique so a higher price can be charged ( due to high quality)
- They are smaller retailers usually started by the business owner
What do retailers sell?
What do retailers sell?
- Furniture
- Food and drinks
- Clothes (soft goods)
- Artwork/books/musical instruments
- White and black good (fridge/ technology)
Examples of retailers:
- Argos
- Currys PC world
- Homebase
- JD sports
Advantages of being a retailer
- Products can be physically seen, smelt, touched (tangible)
- Consumers don't have to wait for delivery - it's instance
- Going shopping is an enjoyable experience for consumers
- A business that sell goods direct to the consumer
- The retailer will mark up the price of the goods, so they will be sold for more than they paid for them - this is how retailers make a profit
- The owner of the retail shop may have bought the goods from a wholesaler or manufacturer to sell to the consumer.
What is an e-tailer?
- This is a business which sells goods direct to a consumer via the internet
Examples of e-tailers
- Amazon
- Ebay
- Superdrug
- John Lewis
- JD sports
Advantages of being an e-tailer
- Products can be bought internationally rather than locally-higher target audience
- not rent to pay for the physical store (lower fixed costs)
- Starts very small and expands over time
- Convenient ( don't need to physically go to the store)
Disadvantages of being an e-tailer
- Customers have to wait for delivery
- Customers has to pay for delivery - late deliveries can lead to damaged reputation
- Not everyone has the internet
- Requires lots of suppliers
- Complaints are public
- Hard to establish trust (between the customer and the business
- Security and fraud for online transactions are an issue
Promotion
Product sampling
- Sample of products that are tested by customers before selling it in store.
- It gives the business customer opinions so they know what to improve an keep the same
- They are carried out to avoid expensive mistakes
Special offers
- This includes BOGOF, buy one get the other half price, or you can get a free item ( a drink free when you buy a meal)
- This encourages customers to make a purchase (which gets rid of stock that;'s about to get out of date/fashion)
Sponsorship
- Sponsorship is when a company will sponsor some event or organisation
- This creates an association in the customers head with another event or organisation which customers should understand
Branding
- A characteristic name or symbol that distinguishes one product from another supplier
- Consumers will be brand loyal and businesses can use this loyalty to promote their products and charge premium pricing
Advantages of advertising on social media
- To say up do date with what's trending
- Easy to navocate
- Free to use
- Easy to reach target market
- Having accountability: dealing with customer complaints
- More people can see it: very popular
- can show good customer service with a quick response
- Increases customer engagement with the brand
- Customers can be kept informed about new products or services (discounts)
Product
The design mix-
- Function - The function of the products is what it's supposed to do, does it solve customer problems
- Aesthetics - This is the appearance of the product so that it's appealing to the customer based on the age of the business's target audience e.g how it feels, tastes,sounds
- Cost - This is the price of the product so that it's suitable for the brand. businesses need to consider how much it costs them to actually make the product from raw materials ( is it profitable)
The product life cycle
Introduction - The product/service phase will involve high costs in research and development, sales will be low as customers may not yet be aware of the product
Growth - The product/service has been recognised by customers and it will be experiencing a rapid growth in sales, starts to become a profit. Most lucrative (profitable) stage
Maturity - The product/service has reached maximum sales and it's well recognised by customers. Extension strategy such as, new flavours, may be used so it can avoid the decline stage. It would start to reduce it's peak due to high competition. Firms may reduce prices as profit start to fall
Decline - The product/service is no longer making sales but it's still worth selling in stores. The profit reduces. Businesses may want to diversify the product to spread their risk
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