Business theme 2: 2.2

  • Created by: Eiman.123
  • Created on: 28-12-20 12:12

Marketing mix

Different elements of marketing mix AFFECT EACH OTHER

PRODUCT: product =high quality, business can charge PREMIUM PRICE as customers will be willing to buy as it will last longer as well as business conmpensating for raised costs due to improving quality, High quality product can also affect PROMOTION, business would heavily focus on quality when promoting to attract customers

PRICE: If price is high=customers may not buy the PRODUCT and go to competitors

PLACE: If a PRODUCT is sold via e-commerce, to buy the PRODUCT would be more convenient, but selling online affects PRICE, their could be additional shipping costs

PROMOTION: If a PRODUCT =high quality, that would be focused on when promoting, if a product=cheap, that may be emphasised. Some products may be promoted via social media whilst others through magazines

1 of 10


'Differntiation'-making product/service distinctive within a market

How businesses use differentiation:

Adding a USP which is a product/service's specal feature, Fore example, long lasting or fast delivery

Price-charing lower price could attract customers who buy same product from other competitors but also lowers profit per unit

Designing a product also is a way to differentiate a product. E.g-designing a product heavily but aesthetically could make a business seem more sophisticated 


FUNCTION: Design has to be fit for purpose,                                                                               

COST: If the design is simple but good, low manufacturing costs, increased profit:                     

AESTHETICS: If a product is designed attractively, it could attract customers

2 of 10

Product life cycle

Product life cycle => from the name it is evident that this shows the journey a product goes through when first introduced til it is removed from market (sometimes it continues to grow)


2)INTRODUCTION-the product is launched. It should be obvious that at this stage, a business won't be making much of profit here as revenue will be low. At this stage, the business heavily promotes the product-eg-the new iPhone every year is heavily promoted with ads, sale offers

3)GROWTH-here demand increases, until the product is established

4)MATURITY-here the business promoted less and demand goes down, business will try making this product widely avaiable to try gain sales but isn't as focused on it

5)DECLINE-here the product becomes less important as rivals/other products take over

But, sometimes the business uses EXTENSION STRATEGIES-this means the product isn't over in the decline stage-but continuosly sold using a number of strategies

3 of 10

Extension strategies

A business can use extension strategies to extend the life-cycle of a product-this means it can still be sold-generating revenue but raises costs for them to spend on trying to keep it selling. Types of strategies:

ADDING MORE/DIFFERENT FEATURES: Could make the product more convenient and useful E.g-moisturizers with SPF are more likely to be brought than separate moisturizer and separate sunscreen as there is less hassle and it's cost-effective

TARGETING NEW MARKETS: To try and gain market share in other markets, a business may do this, for example it may start targeting international markets, this provides a wider market to sell to and increases the chance of the product being brought

NEW PACKAGING: Attractive packaging could make the business be seen in a new light by customers and they would fee more inclined to buy from it

CHANGING ADVERTISMENTS: E.g-instead of on magazines, they could use social media as it is more popular and could help them gain publicity for their products

LOWERING PRICE: We all know this is very successful, as many people-without even knowing the business would purchase if price is low. But this means low profit per unit

4 of 10

Pricing decisions

A firm needs to think about how price will affect demand of a product. Obviously, high price=lower demand, but business' costs also need to be considered

Internal factors influencing pricing decisions:

TECHNOLOGY: Efficient tech=products manufactured faster, delivered to customers faster=revenue gained sooner, also less employees=less wages, but expensive machinery=costly, needs to be managed, business may raise price to compensate for this, but could lose customers

METHOD OF PRODUCTION: Flow production (lots of identical products continuosly) means business can benefit from economies of scale so can afford lowering price, this outweighs fact that it requires expensive machinery. Job production (unique, individual)=costly compared to flow

PRODUCT LIFE CYCLE:Introductory stage-may lower price to attract customers but alot of money would've been used for research and development, growth stage=increases price, could lose customers, but loyal customers would stay. Decline=lowers price to attract customers again

5 of 10

Pricing decisions pt 2

External factors influencing pricing decisions:

COMPETITION: This is a big factor that both customers and business' consider. If business' charge high=customers would go to competitors, but if business charges TOO LOW=customers would question quality of the products as how can business afford this?

MARKET SEGMENTS: A business will target a specific segment and price would be determined via this, if a business targets those with high income=it would obviously increase price. But if it targets those with lower income, it would lower price too (loweing proft per unit)

COST OF RAW MATERIALS: Obviously, if high quality raw materials are supplied and at the right time, a business will obviously have to pay proportional to this, this increases unit costs and so a business would have to increase the price of products to compensate for it (risk losing customers) 

6 of 10

Pricing strategies

PRICE PENETRATION: New product=business charges LOW PRICE, to attract customers. Excellent if business operates in competitive market. Once product is established, then business=raise price. This isn't as risky as loyal customers would still buy the product

LOSS LEADER PRICING: Business sells a product below cost (at a loss to business) to attract customers, they won't make much of a profit, but the PURPOSE is for customers to buy other products that are normally priced so a business doesn't lose out and can still make a profit

PRICE SKIMMING: Business charges HIGH PRICE at beginning-especially if it's high demand product, established firms benefit more as customers recognise and buy other products, so would buy this. This means sales revenue is higher. Business can then later lower cost

COMPETITIVE PRICING: If a business sells products similar to competitors=prices will need to be similar to them (e.g-bread). Even if a busienss does this=sn't guaranteed that customers will buy, so business will have to try differentiate it's product using other methods

COST-PLUS PRICING: Business works out toal cost of making product, and add on an amount depending on desired profit whilst ensuring there is reasonable demand

7 of 10

Methods of promotion

Brand image: customer's impression of business/business' products. Good brand image => important as it could keep loyal customers, avoid them going to competitors/increase sales. Advertising methods:

NEWSPAPERS: Local newspapers can reach a market segment in a specific area, whilst national ones reach wider audience. But newspapers are becoming obsolete

POSTERS AND BILLBOARDS: Can be seen daily by lots of people, e.g-people travelling, will stop by and see. But obviously they won't look for long/get bored-so messages need to be short/interesting

TV ADVERTS: Many people watch TV, and some adverts are really good, so this interests customers.But their very expensive

MAGAZINES: Aimed at particular market segment, are popular but used less nowadays

LEAFLETS, FLYERS & BUSINESS CARDS: Cheap, can be distributed widely, but people might not be bothered to read them and could chuck them away

INTERNET ADS: HUGE target audience, shared exponentially, but people=might be annoyed

8 of 10

More methods of promotion

SPONSORSHIP: Business gives money to events etc and they are displayed by the event. E.g-TV, this could interest customers and provide publicity for business

Sales promotion: short-term method to boost sales. E.g:

-SPECIAL OFFERS: Limited offers, discounts e.g-buy 3 lucozades for £1

-PRODUCT TRIALS: New products/business' may allow FREE trials for customers to try out products, this attracts customers, but if they like it, they could continue buying it long-term

Using technology for promotion:

-CREATING SOCIAL MEDIA ACCOUNTS: very common, customers follow them-alert

-VIRAL ADVERTISING: adverts are shared on social media, viewed MANY times, boosts business' popularity, people want to go to business 

-Business also send EMAILS about offers/events to let customers know about them

9 of 10


Place where a product is sold has to be suitable:

-Busienss has to consider proximity to customers, proximity to suppliers, how quickly they want product to get to customer, compeition within area etc

Methods of distibuting products includes:

-RETAILERS: Sell products to consumers (shops)

-E-TAILERS: Sell products online

Retailers-customers can ask about products, if excellent customer service offered, customer may want to buy from business. Advantage over e-tailers, if customers want to ask, it's more difficult as face-to-face communication isn't provided and if product hasn't come on time/unhappy with it, it may be a long process for this to ge sorted out

But for e-tailers, cost lowered as no fixed premise needed. They also have access to global market and so more potential customers=higher sales compared to retailers

10 of 10


No comments have yet been made

Similar Business Studies resources:

See all Business Studies resources »See all Marketing mix resources »