Advantages: save on advertising, promote all products under one name, brand loyalty, trusted, coherant, recognisable. Disadvantages: one failed product affects all, brand confusion
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Importance of branding
Persuade, add value, gain interest, notify, make people switch, brand loyalty, expand ranges, differentitate products, aid recognition, gain price flexibility
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Why segment a market?
Target particular groups with suited products, save money and time, avoid advertising losses, gain greater customer knowledge, differentiate products
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Market share equation
sales of the business ÷ total market sales x 100
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Market growth equation
increase in sales ÷ starting sales x 100
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Market segmentation
Advantages: match customer needs, save time and money, increase sales, growth, avoid advertising losses. Disadvantages: if you do it wrong you make losses, narrows down options, labelling may restrict growth
encourage increased usage e.g. doritos, find new users e.g. blackberries, find new uses e.g. converses, change the product e.g. Ipod
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Contribution equation
selling price - direct costs
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Contribution benefits
less successful and new products can be competitively priced, luxury products are less affected my price changes, successful products can be priced to make large contributions, new products can make a loss to grow long term
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Price/Income elasticity equation (PED/IED)
% change in quantity demanded ÷ % change in price/income
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% change equation
difference ÷ original x 100
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What determines PED?
Number and closeness of substitutes, buyers knowledge of alternatives, luxury or necessity, switching costs
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Examples of promotion
Above the line: Television adverts, newspaper, radio, internet, direct marketing, sponsorship. Below the line: personal selling, sales promotion, public relations
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What determines the importance of promotion to a business?
Stage in product life cycle, competition, extent to which it is normal to promote in the market e.g. perfume is promoted a lot, market segment, how differentitated the product is
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What is the difference between market share and market growth?
market share refers to the businesss proportion of the market where as market growth refers to the markets growth as a whole
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3 types of distribution channels
Traditional, modern and direct
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Factors affecting distribution channels
Nature of the product, the market, the company, legal issues
Advantages: save on advertising, promote all products under one name, brand loyalty, trusted, coherant, recognisable. Disadvantages: one failed product affects all, brand confusion
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