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Extended Marketing Mix - Coggle Diagram

- - - - How will the cost of making the product be reflected in its price?
    - - How much money should a business try to make compared to the cost of each individual product?
    - - Does the product refect its price?
    - - Should a business follow the lead of its competitors when it comes to pricing or adopt its own pricing strategy?
    - - In what ways will the price of a product affect a customer's perception of it?
    - - New products may use market skimming or penetration pricing while mature products might require discounts
    - - If demand is price-sensitive (elastic), higher prices may reduce sales; if demand is inelastic, prices can be higher without significantly reducing sales
  - - - A price lower than its competitors is set to tempt customers away from competition. Once the product becomes popular the price will be raised in line with competitors
        
        Adv:
        
        Increases market share
        
        Higher profits in the long term
        
        DisAdv
        
        Can mean lower profits at beginning
        
        Can be difficult to raise price in a competitive market
    - - An initial high price is charged for the product. As competition in the market increases, the price will fall to be in line with competitors
        
        Adv:
        
        Gives product luxurious image
        
        Can increase profits in the long term
        
        DisAdv:
        
        Can slow down market growth in the long term
        
        Gives competition chance to develop new products at lower prices
    - - Calculate the cost of producing the item and then add on the percentage profit requited by the company
        
        Adv:
        
        Easy to work out price to be charged
        
        Profits can be calculated easily
        
        DisAdv:
        
        Product could be be sold at a higher price and make more profit
    - - Customers may have to pay different prices for the same product or service depending on locations, times of day/year and customers.
        
        Adv:
        
        Can maximise profits as high prices charged
        
        Equalises demand and makes it easier for businesses to cope at busy times
        
        DisAdv:
        
        Customers may object to being charged different prices than others
    - - Prices are lowered in order to force competitors to lower their prices or out of the market completely. Prices will then return to the normal level or even increase to a higher level
        
        Adv:
        
        Eliminates the competition
        
        Increases sales in the short term
        
        DisAdv:
        
        Customers may object when prices are raised again and may go back to competition
    - - A range of products are advertised at a low, unprofitable price to attract customers into the organisation in the hope they will buy full priced products
        
        Adv:
        
        Increases sales and profits when loss leaders are a true attraction for customers
        
        Can attract new groups of customers
        
        DisAdv:
        
        Customers may only be attracted to the loss leader and ignore other products for sale
        
        May sell out quickly meaning some miss out
    - - Prices are reduced for a short period of time
        
        Adv:
        
        Attracts new customers to the product on promotion
        
        Increased sales during promotional period
        
        DisAdv:
        
        Some customers may only be interested in the promotion and not return
        
        Bargain hunters may reduce the value of the promotion overall
    - - This pricing strategy is used to make customers perceive the price of a product as lower than it is.
        
        Adv:
        
        Customers think they are getting a bargain and might buy more
        
        Increased sales and profits
        
        DisAdv:
        
        Customers expect this level of pricing all the time
        
        Customers think there is something wrong with products