First 539 words of the document:
All consumers expect value for money; this means that price is always important. In many cases,
having a low price is crucial to achieving high sales, for instance when sell packet of butter and sugar.
At other times though being cheap may cause image problems. No one wants cheap baby food or cut
Most products are price makers or price takers. A price-maker has the market power to set that
other have to follow. This can be true of new product. E.g. innocent fruit juice for £2 for a small bottle.
Or of established ones. E.g. Channel no.5 for £75 for a small bottle. Consumers see both these
products as unique, and therefore are willing to pay a high price.
A price taker is a product or service that has to be priced with reference to others in the
marketplace. Perhaps it needs to be price below the price leader. E.g. Tesco baked beans compared
with Heinz. Or perhaps the whole market is full of similar products. E.g. esso petrol compared with BP
After careful market research, a firm should be able to design a product or service that will appeal to
a specific target audience. This is the heart of the mix, and the other three factors should revolve
around this. E.g. Kellogg's special k cereal has always been targeted at weightwatchers. Having the
right product to appeal to the audience is then backed up by:
The right price- more expensive than other cereal, to help confirm that it is worth paying for.
The right place-distributed in supermarkets and grocers, but also sold at breakfast bars in health
The right promotion- focusing on the TV advertising at women, with a voice-over emphasising health.
This is where and how is distributed, so that customers can get it when they want it. Mass market
products usually seek as much distribution as possible. Coca cola uses the phase `an arm's length from
desire' in other words they want such good distribution that customers should only need to stretch
out an arm to get a coca- cola. Coca-cola wants this because they know that the more people see
coca the more they buy.
For other products, the same doesn't apply. Channel hates cut price retailers such as super drug
selling its perfumes; its manager's worry that cutting prices may damage the image of the brand.
This is the way a firm can promote sales of its products. It lumps together methods of promoting the
long term image and sales of the business , using methods such as TV or cinema advertising, and
short term methods such as sales promotion e.g. buy one get one free.
Most large firms are keen to use every £ spend on advertising to promote the long term image of
the product. Short term boosts to sales can be at the expense of the brand image. Few firms would
want to take such a risk.