Business Studies O Levels Chapter 12 PDF

Business Studies Chapter – 12 The Marketing Mix: Product  Product: Luxury Price: Expensive Place: High-end shopping malls Promotion: Instagram, Magazines Product: Basic Price: Affordable, cheap Place: High street stores Promotion: Instagram, Facebook The Marketing Mix The marketing mix is a te...

Business Studies Chapter – 12 The Marketing Mix: Product  Product: Luxury Price: Expensive Place: High-end shopping malls Promotion: Instagram, Magazines Product: Basic Price: Affordable, cheap Place: High street stores Promotion: Instagram, Facebook The Marketing Mix The marketing mix is a term which is used to describe all the activities which go into marketing a product or service. These activities are often summarized as the four Ps- product, price, place and promotion. The producer might need to find out through market research what customers want from the product, then they may change the product to produce what customers want. Once this is achieved, the producer has to convince the consumers that their product is the one that they want and that it meets their needs better than any of their competitors’ product. Producer do this by branding their product. This involves giving a product a unique name and packaging. It is then advertised to make consumers believe that it is different to any of the competitors’ brand. The product also has to be sold in places that reinforce the brand image.  The Four Ps of the Marketing Mix Product – this applies to the product itself – its design and quality. How does the product compare with its competitors; products? What is the packaging like? Price – this is the price at which the product is sold. A comparison must be made with the prices of competitors product. Price should, in the long run, cover costs. Place – this refers to the channels of distribution that are selected. That is, what method of getting the product to the market is to be used? Will the manufacturer sell their product to shops who sell to the public, or to wholesalers, or direct to the customers? Promotion – this is how the product is advertised and promoted. What types of advertising media will be used? It includes discounts that may be offered or any other types of sales promotion, such as money off vouchers or free gifts. Types of Product There are several types of product. Some products are sold to consumers and some can be sold to other businesses. Products are usually grouped into the following types: Consumer goods – these are goods which are directly consumed by people, they can be goods that do not last long, such as food and cleaning materials. Some goods last a relatively long time and give enjoyment over along time, such as furniture and computers. Consumer services – these are services that are produced for people. Examples include repairing cars, hairdressing and education.  Types of Product Producer goods – these are goods that are produced for other businesses to use. They are bought to help with the production process. Examples include lorries, machinery and components. Producer services – these are services that are produced to help other businesses. Examples include accounting firms, insurance and advertising agencies.  Producing the Right Product Producing the right product at the right price is an important part of the marketing mix. The product needs to satisfy consumer wants and needs. If it does not, then it will not sell. The product also needs to be of the right quality, so the price is what consumers are willing to pay. The costs of production must enable a price to be set that will produce a reasonable profit. Design of the product is obviously very important. Not only does the quality need to be appropriate for the brand image but it also has to last a reasonable length of time. If  There are various benefits for the business when developing new products. The Costs These are as follows: and Benefits of USP (Unique Selling Point) will mean the business will be first into the market with the new product. Developing Diversification for the business, therefore giving it a broader range of New products to sell Products It allows the business to expand into new markets It may allow the business to expand into existing markets  The Costs However, there are also costs for the business when developing new products. These are as follows: and Benefits of The costs of carrying out market research and analyzing the findings. Developing The costs of producing trail products including the costs of wasted New materials Lack of sales if the target market is wrong Products Loss of company image if the new product fails to meet customer needs.  Selling a product directly to the customer makes it easy to inform the customer of the product’s qualities and good points. The salesperson The can persuade the customer to buy the product. This means that the producer’s unique features and the reasons for buying it must be Importance conveyed in a different way. This is done by creating a brand for the product. It will have a unique name, a brand name, and advertising will of Brand need to make consumers aware of the qualities of the product to try to persuade them to buy it. Branded products are normally sold as being of Image higher quality than unbranded products. It is the assurance of a standard quality that makes consumers confident in buying branded products. The Importance of Brand Image Businesses use brands for their products to encourage consumers to keep buying their products and not those of their competitors. Consumers may have brand loyalty, which means they will keep buying the same brand of a product instead of trying other similar products.  The Importance of Brand Image Brand image is important. The brand is more than just an assurance of guaranteed quality, it will have a whole image, which surrounds it and will be reinforced by advertising. Coca-Cola, for example, is sold throughout the world and has an image of being the superior quality cola drink which tastes better than its rivals’ drinks. Advertising shows people having fun when they drink it is a fashionable drink for young people.  The Role of Packaging Getting the packaging right is just as important as getting the other parts of the marketing mix right. The packaging has two functions to perform. It has to be suitable for the product to be put in. Packaging has to give protection to the product and not allow it to spoil. It also has to allow the product to be used easily. It is no good having good hair shampoo in a tin which will not allow the liquid to pour out easily. It has to be suitable for transporting the product from the factory to the shops, so preferably the packaging should not be too delicate or the product could easily get damaged.  The Role of Packaging Packaging is also used for promoting the product. It has to appeal to the consumer; therefore, the color and shape of the container is very important. It is the packaging that catches the customer’s eye, not usually the product inside! The brand image will be reinforced by the packaging in which the product is sold. An expensive product will have a luxurious-looking container, often a gold color. A low-cost product may have basic simple packaging with simple colors.  The Product Life Cycle The exact length of the life cycle, in terms of time, varies a great deal from product to product. Fashionable items will go out of fashion whereas food products may last a very long time. The life cycle of some very popular brands, such as Coca-Cola, is many years, whereas the life cycle of fashionable clothes is often less than a year.  How Stages of the Product Life Cycle Influence Marketing Decisions Knowing the stage of the life cycle that a product is in can help a business with pricing and promotion decisions. Prices are likely to be higher in the growth stage than in the saturation or decline stage, when the business will try to stop sales declining. Spending on promotion will be higher at the introduction stage than in other stages as the business has to inform consumers of the products, establishing a brand identity and encourage rapid increases sales. Advertising would probably be reduced in later stages.