Business Studies - Marketing Mix Notes

Revision notes on marketing mix for AS Business Studies.

HideShow resource information
  • Created by: Emma Rudd
  • Created on: 25-03-08 16:29
Preview of Business Studies - Marketing Mix Notes

First 406 words of the document:

Business Studies Angela Emma Rudd BMA
Marketing Mix ­ The Price
The price of a product or service is important in whether people buy it or not. However the
relative importance of price is likely to vary according to the product and particular
circumstances. When considering the price it is important to place it in the context of the other
elements of the mix and the buyer's circumstances.
The Price of a Product will depend on a Range of Factors.
The Cost of Producing a Unit
Although in the short run a firm may sell an item at a loss to get it established in a market, in
the long run a product usually has to generate a profit. This means the price has to be greater
than the cost per unit.
The price a firm sets must take account of competitor's prices. If competitors are offering a
similar product or service and it is easy to switch from one to the other, firms are likely to set
similar prices. Wherever possible a firm will stress the particular benefits of what it is offering
so it can justify a higher price. If a customer believes a product provides better value for
money then he / she will may still buy it even if it is more expensive.
The Firm's Objectives
The price charged by a firm will be determined by its objectives. If a firm has a particular
profit target this will influence the price that is set per unit. If it wants to achieve £10000 profit
and it expects to sell 20000 units, it must make £0.50 profit per unit.
The Level of Demand
The price a firm can charge naturally depends on how much people are able and willing to
spend. If demand is high the firm may be able to charge a higher price. However demand
cannot also be estimated accurately in advance for this reason many firms base their pricing
on their costs.
The Stage in the Product Life Cycle
The price of a product is likely to be changed at different stages in the product life cycle. For
example when the price is at the maturity stage the price may need to be reduced to avoid
losing sales to competitors.

Other pages in this set

Page 2

Preview of page 2

Here's a taster:

Business Studies Angela Emma Rudd BMA
The Rest of the Mix
The price a firm charges depends on the other elements of the marketing mix. For example if
the product is heavily branded the firm may be able to charge a higher price.
Pricing Strategies for Product Launch
When a product is first launched into a market the firm will have to decide what price to
Options include:
Penetration pricing ­ Uses a low price to enter the market and gain market share.…read more

Page 3

Preview of page 3

Here's a taster:

Business Studies Angela Emma Rudd BMA
provided they can separate out the different markets (they have to prevent people
buying at the lower price and then reselling at the higher one).
Pricing Tactics
Pricing tactics are shortterm policies aimed at achieving a particular objective. These include:
Loss leaders ­ A loss leader is a product sold at a loss to generate business for other
(profitable) products sold by the firm.…read more

Page 4

Preview of page 4

Here's a taster:

Business Studies Angela Emma Rudd BMA
In a Zero Level Channel, the good or a service passes directly from the producers
to the consumer without and intermediaries. E.g. Dentists, Accountants and
A One Level Channel has one intermediary. For example a retailer buys the
product from the manufacturer and sells it to the consumer.
A Two Level Channel has two intermediaries. For example, a wholesaler buys the
product from the manufacturer and sells it onto retailers, who sell to the final
customers.…read more

Page 5

Preview of page 5

Here's a taster:

Business Studies Angela Emma Rudd BMA
The effective distribution of a product is essential to its success. After all, consumers cannot
buy a product or service if they cannot get hold of it. Companies such as and
Direct Line have turned the distribution of their services into a major competitive weapon. By
distributing directly to the customer, they have cut their own costs (enabling them to offer
better value) and provide a more convenient service for customers.…read more

Page 6

Preview of page 6

Page 7

Preview of page 7

Here's a taster:

Business Studies Angela Emma Rudd BMA
established, promotion might focus more on how products differ from the competition.
Thus, firms selling ISA's will promote the advantage of purchasing their particular
The nature of the product ­ Consumer durable products, such as televisions and
washing machines, are likely to be advertised to the final customer. Firms usually use
a sales team to deal with wholesalers and retailers but use advertising to get
customers to demand the product in stores.…read more


No comments have yet been made

Similar Business Studies resources:

See all Business Studies resources »See all resources »