Marketing

Marketing

1. Product Life Cycle

   • 1) Development
     • Market, Scientific Research etc.
   • 2) Introduction
     • Launched, advertising, sales promotion
   • 3) Growth
     • When sales and profitability increase until the product becomes established
   • 4) Maturity
     • Sales at their peak, promotion less important, try to make it more widely available, end of the phase market becomes saturated and there's no more room to expand
   • 5) Decline
     • Sales fall as rival products takeover, product becomes obsolete

2. Product - Product portfolios

   • Range of different products that a business sells
     • Most businesses will have these at different stages of the product life cycle giving them a balanced portfolio
   • Extension strategies
     • Making changes to the design or offering discounts on the price
       • make profit for longer
       • Takes away cash from other parts of the business
   • May broaden portfolios to grow
     • Adding products to an existing range
       • e.g. Drinks company - new flavoured drink
     • Increasing range of products
       • e.g. Drinks company - launch an ice lolly
   • Designing and producing more products is known as Diversification
     • Reduces risk in decline of product meaning theres less threat on a firms prod

3. Price - Pricing Strategies

   • Market-led pricing
     • Used if the price of the product helps decide whether to buy it
   • Penetration Pricing
     • Firm charges a very low price when the product is new to get lots of people interested
   • Loss leader pricing
     • Price is set below cost - once established will increase
       • Happens with new consumer products where existing products have brand loyalty e.g. Magazines
   • Price Skimming
     • opposite of penetration
     • Makes the product more desirable to people with large incomes
     • When established, firm will lower price to help it become a mass-market product
   • Competitive Pricing
     • Where the firm has to charge similar prices to other firms
     • Happens when there's a lot of choice and not much product differentiation e.g. Petrol
   • Cost-Plus Pricing
     • used if not in in price competition with other producers
     • Mark-up
       • Work out how much the product costs and then add a percentage mark-up
         • If the product costs £2 to make, and you want a 25% mark-up, you'd sell it for £2+25%=£2.50
     • Profit margin
       • Work out how much the product costs and increase by the required profit margin
         • If the product costs £2 to make, and you want a 20% profit margin, this means that £2 is 80% of your required selling price
           • 80%=200p, 1%=200/80=2.5p, 100%=2.5px100=250p, So you'd sell it for £2.50

4. Promotion

   • Sales promotion
     • Discounts
     • Product trials
       • Invite people to test out products for free
     • Free gifts
     • By 1 Get 1 Free
     • Point of sale
       • Front row of shelves, window displays etc.
     • Use of credit
       • Buy now, pay later
     • Competitons
   • Direct marketing
     • 1) The business contacts the potential customer directly
       • e.g. mail out vouchers
     • 2) The customer is invited to make a direct response
       • e.g. use voucher when next shopping
     • 3) benefit is that the business can measure its success
     • 4) The problem is that it creates junk mail and spam
       • Some people can't stand this
   • Sponsorship
     • 1) Sport
       • Brand name on competitions
     • 2) TV
       • Shows sponsored by brands
     • 3) The Arts
       • Some short of money - businesses step in making them look classy
     • Create a high profile
       • Thing sponsoring gets bad publicity - looks bad on the business

5. Place

   • Distribution channels can be direct or indirect
   • 1) MANUFACTURER - WHOLESALER - CONSUMER
   • 2) MANUFACTURER - WHOLESALER - RETAILER - CONSUMER
     • Good for manufacturer as they can buy in bulk and the wholesaler takes on the cost of storing them and risk of not selling them
   • 3) MANUFACTURER - RETAILER - CONSUMER
     • Faster than dealing with retailers through wholesalers and manufacturer gets better consumer feedback - harder for small retailers to avoid holding onto lots of stock
   • 4) MANUFACTURER - CONSUMER
     • Fastest and often cheapest for the consumer - Customer service level may not be as good

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