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1.3 Marketing mix and strategy - Coggle Diagram
1.3 Marketing mix and strategy
1.3.1 Product service and design
The design mix
Function - How effectively the product works, all of the products functions should work how they are advertised
Aesthetics - This is how the product looks, smells and feels to use and interact with. Niche products aim more aesthetically when designing products
Cost - The costs involved in the manufacturer and production of the product. Cheaper production helps businesses profit from sales from customers
Changes in the design mix
Social trends - The cultural trends of customers which can be long or short term
Concern over resource depletion - Certain materials will become obsolete over time so businesses must adapt and change their products so they still function without those materials
Designing for waste management - The design mix must be constantly focusing on reducing raw materials, energy and human resources into production to result in cheaper production
Re-use and Recycling - Used to add value to the product and make it distinct from others, differentiation
Ethical sourcing - Reducing the environmental impact of the creation of the product
1.3.4 Distribution
Distribution channels are ways to getting finished products to customers
Distribution Channels
Producer - wholesaler - retailer - customer: Where the wholesaler buys the products in bulk to then sell to retailers
Producer - retailer - customer: The producer sells products directly to the retailer, missing out the wholesaler but has to buy in huge bulk
Producer - customer: The producer of the product sells directly to the customer allowing the producer to retain all profits from the sales of it's products
Choosing the best distribution channel
Customer choice or convenience - Businesses may choose a number of distribution methods to maximise the number of customers they sell too
The image the business wishes to create - Different products are better suited that some environments to others
Social trends - Customers buying habits change like buying shopping online rather than in-store
Online distribution - The move from e-commerce to m-commerce is threatening the existence of high-street shops
Changing product to a service - Where the business technology means that customers no longer buy something phyical e.g a DVD or CD and pay for a service like Spotify
1.3.2 Branding and promotion
Promotion is the way a business makes it's products known to existing and potential new customers
Types of Promotion
Advertising - Done through TV, newspapers and social media
Viral marketing - Advertising products to a large audience
Emotional marketing - To show how a product can enhance self-esteem or happiness
Public Relations (PR) - This could be paying a celebrity or sports team to sponsor your product
Types of branding
Product branding - Where the item has a unique logo or packaging so the user is familiar with the product e.g Apple
Personal branding - Where the product is advertised by celebrities and athletes to display a positive outcome
Corporate branding - Where the business advertising a broad range of good and positive images about itself to enhance it's reputation about it's products
Benefits of strong branding
Added value - Enhancing the cost between production cost and selling price
Ability to charge premium prices - A stronger brand images results in the ability to charge a premium price
Reduced elasticity of demand - Demand will not be affected as much as the brand grows stronger
1.3.3 Pricing strategies
Types of pricing strategy
Cost-plus pricing - Where the business adds on the cost of making the product to the original price
Price skimming - When the business sets a high price before competitors come into the market, or when the product is believed to be superior than rivals
Penetration pricing - When the business sets a relatively low starting price to attract new customers to gain market share quickly
Predatory pricing - When prices are set deliberately low to try and drive rivals out of business
Competitive pricing - The business must accept the going market price and stick with it, taking into account supply and demand with similar products in the market
Psychological pricing - When a business sets a product for 99p, rather than £10.30 for example, makes people believe the product is cheaper than it really is
Factors that determine the most appropriate pricing strategy
USP - A product with a USP is differentiated from others and has a clear competitive advantage
Price elasticity of demand
Levels of competition - if there are many rivals then business may need to price competitively
Strength of brand - If the business is well established then it can afford to charge a premium price
Stage in the product life cycle - If the product is new then it may use price skimming to gain profit quickly
Costs and the need to make a profit - If the mission for the business is to make a profit then it may adapt the cost-plus pricing strategy
Online sales - Customers can easily check competitors prices online, therefore businesses may need to price products competitively
1.3.5 Marketing strategy
The product lifecycle
Introduction - The RND process and the launch of the product
Growth - When sales are increasing at their most rapid rate
Maturity - When sales have peaked but growth is slowing down
Decline - The final stage where sales begin to fall
Extension strategies
Reformulating the product so it appeals to a different audience and market
Changing the promotional focus so products can be used for more than one task
The Boston Matrix
Rising stars - Have strong share of a high-growth market
Cash cows - Low growth products with high market share, need little investment
Problem child - Low market share operating in a high growth market so have potential
Dogs - products with low market share in low growth markets, no investment
Marketing strategies
Niche marketing - Aims to market the product to a small group of the larger market. Results in differentiated products from others
Mass marketing - Aims to market the product to a larger part of the market. The product will lack differentiation, but products will be available to a wide audience
Business-to-business (B2B) - Where a business is selling to another business rather than an ordinary householder
Business-to-consumer (B2C) - Selling the product to the general public, marketing is emphasised on branding and image
