Marketing

Product Life Cycle
1. 1) Development
  1. Market, Scientific Research etc.
2. 2) Introduction
  1. Launched, advertising, sales promotion
3. 3) Growth
  1. When sales and profitability increase until the product becomes established
4. 4) Maturity
  1. Sales at their peak, promotion less important, try to make it more widely available, end of the phase market becomes saturated and there's no more room to expand
5. 5) Decline
  1. Sales fall as rival products takeover, product becomes obsolete
Product - Product portfolios
1. Range of different products that a business sells
  1. Most businesses will have these at different stages of the product life cycle giving them a balanced portfolio
2. Extension strategies
  1. Making changes to the design or offering discounts on the price
    1. make profit for longer
    2. Takes away cash from other parts of the business
3. May broaden portfolios to grow
  1. Adding products to an existing range
    1. e.g. Drinks company - new flavoured drink
  2. Increasing range of products
    1. e.g. Drinks company - launch an ice lolly
4. Designing and producing more products is known as Diversification
  1. Reduces risk in decline of product meaning theres less threat on a firms prod
Price - Pricing Strategies
1. Market-led pricing
  1. Used if the price of the product helps decide whether to buy it
2. Penetration Pricing
  1. Firm charges a very low price when the product is new to get lots of people interested
3. Loss leader pricing
  1. Price is set below cost - once established will increase
    1. Happens with new consumer products where existing products have brand loyalty e.g. Magazines
4. Price Skimming
  1. opposite of penetration
  2. Makes the product more desirable to people with large incomes
  3. When established, firm will lower price to help it become a mass-market product
5. Competitive Pricing
  1. Where the firm has to charge similar prices to other firms
  2. Happens when there's a lot of choice and not much product differentiation e.g. Petrol
6. Cost-Plus Pricing
  1. used if not in in price competition with other producers
  2. Mark-up
    1. Work out how much the product costs and then add a percentage mark-up
      1. If the product costs £2 to make, and you want a 25% mark-up, you'd sell it for £2+25%=£2.50
  3. Profit margin
    1. Work out how much the product costs and increase by the required profit margin
      1. If the product costs £2 to make, and you want a 20% profit margin, this means that £2 is 80% of your required selling price
        80%=200p, 1%=200/80=2.5p, 100%=2.5px100=250p, So you'd sell it for £2.50
Promotion
1. Sales promotion
  1. Discounts
  2. Product trials
    1. Invite people to test out products for free
  3. Free gifts
  4. By 1 Get 1 Free
  5. Point of sale
    1. Front row of shelves, window displays etc.
  6. Use of credit
    1. Buy now, pay later
  7. Competitons
2. Direct marketing
  1. 1) The business contacts the potential customer directly
    1. e.g. mail out vouchers
  2. 2) The customer is invited to make a direct response
    1. e.g. use voucher when next shopping
  3. 3) benefit is that the business can measure its success
  4. 4) The problem is that it creates junk mail and spam
    1. Some people can't stand this
3. Sponsorship
  1. 1) Sport
    1. Brand name on competitions
  2. 2) TV
    1. Shows sponsored by brands
  3. 3) The Arts
    1. Some short of money - businesses step in making them look classy
  4. Create a high profile
    1. Thing sponsoring gets bad publicity - looks bad on the business
Place
1. Distribution channels can be direct or indirect
2. 1) MANUFACTURER - WHOLESALER - CONSUMER
3. 2) MANUFACTURER - WHOLESALER - RETAILER - CONSUMER
  1. Good for manufacturer as they can buy in bulk and the wholesaler takes on the cost of storing them and risk of not selling them
4. 3) MANUFACTURER - RETAILER - CONSUMER
  1. Faster than dealing with retailers through wholesalers and manufacturer gets better consumer feedback - harder for small retailers to avoid holding onto lots of stock
5. 4) MANUFACTURER - CONSUMER
  1. Fastest and often cheapest for the consumer - Customer service level may not be as good

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