Why should a business sell more than one product?
- To offer a range of goods to support the original product.
- To attract new customers by aiming at different target markets
- To diversify so that if sales of the original product decline, increasing sales of new products will replace it.
What are the dangers of having a large portfolio?
- More managers might be needed to supervise new products (which increases costs).
- Some products may fail if the company has not done sufficient research.
- The cost of developing and marketing so many products is high.
- Bad publicity of one product may harm the company's whole image.
What are the stages of the Product Life Cycle?
Stage 1 - Indroduction - The product is first launched and the business will advertise to make sure it gets off to a successul start.
Stage 2 - Growth - Sales show their most rapid growth, the product is still new and will still be in great demand
Stage 3 - Maturity & Saturation - The rate of growth is slowing down or have stopped growing, sales are sill quite high, the business may reduce the price or put offers on their product to keep sales high.
Stage 4 - Decline - Here sales are falling, consumers see the product as 'old' and go to other competitors, it s at this point when a successful business will have developed a new product to replace it.
What are the different types of Extension Strategi
- New advertising campaign - this remnds customers that the product is there, however this will only boost sales for a short while.
- Updated designs - improving features (e.g.Apple IPod), this requires a lot of money and research.
- Targeting new customers with existing products, selling in a different country or target market, new countries may have different needs/tastes.
- New brand image - image or use of the product can be changed (e.g.Lucozade), may require new packaging and expensive adverts to make people aware of the re-branding.
What are the factors that affect a business's pric
- The degree of competition - may need to reduce prices below those of competition to increase sales.
- Nature of the market - some charge high prices because of the image of that product.(e.g.fashion, electronics)
- Cost of production - a business needs to find out how much it will cost to produce and then add on 'mark-up'.
- Loss leading - they may decide to sell some of its portfolio for a loss in the hope that consumers will buy more products from their range.
What are all the different Pricing Strategies?
- Competitive Pricing - Setting a price for a product that is similar to what competition charge (e.g. Cadbury's).
- Price Skimming - Setting a price at a high level to create a high quality and exclusive image and then reducing it as the product matures (e.g Apple).
- Penetration Pricing - Setting a price at a low level to gain a greater market share and then increasing the price as the product matures (e.g. Maybelline).
- Cost-plus Pricing - Setting a price by adding a profit mark-up to the cost of producing a product (e.g. Buddies)
- Loss-leader Pricing - Setting products for less than it costs to produce in the hope of selling other items to the consumer at the same time (e.g. HP printers and printing ink.
What are the four main aims of promotion?
1. Inform consumers of new products.
2. Create a brand image and sense of identity for a business.
3. Inform customers about other marketing decisions, such as a reduction in prices.
4. Help a business to achieve more sales.
What are the methods of promoting a growing busine
- Advertising - Using the media to communicate with customers (e.g.TV, radio, internet, newspapers)
- Direct Marketing - The business personally contacts people to give them information (e.g. post, phone, email, face to face), this can be cheap and quick, however fsce to face is very time consuming.
- Sales Promotions - This involves changing what the customer offers for a period of time (e.g. price reductions, free gifts), this will gain new customers, however there is a short term loss of profit and can't guarentee repeat custom.
- Sponsership - A business pays money to something like an event or sports team to get its name publicised and endorsed, this will target a large market however, the event could fail and its very costly.