1. “The aim of marketing is to know and understand the customer so well the product or service fits him and sells itself.” DrukerThe aim of marketing is to know and understand the customer so well the product or service fits him and sells itself. Thought for the day:

2. L/O: Identify and explain the elements of the marketing mix Show knowledge and awareness of the four main elements of the marketing mix [product, price, place and promotion]

3. To see how much you know already Pre-Quiz – you are NOT expected to get these all right! http://www.bbc.co.uk/schools/gcsebitesize/b usiness/marketing/ http://www.bbc.co.uk/schools/gcsebitesize/b usiness/marketing/ Do each of the tests –Product, Price, Place, Promotion only When marking indicate which you go correct or incorrect on the handout Hand in to teacher with your name

5. A company needs to consider the marketing mix in order to meet their consumers' needs effectively. Elements of the marketing mix The marketing mix is the combination of product, price, place and promotion for any business venture.

6. Marketing mix· The marketing mix is probably the most famous marketing term. Its elements are the basic, tactical components of a marketing plan.

7. No one element of the marketing mix is more important than another – each element ideally supports the others. Firms modify each element in the marketing mix to establish an overall brand image and unique selling point that makes their products stand out from the competition.

8. Marketing mix· Product Place Price Promotion

9. PRODUCT

10. Demonstrate an understanding of the product life cycle Knowledge and understanding of the importance of packaging Awareness of the concept of a brand name in influencing sales Knowledge of the stages of a product life cycle Draw and interpret a product life cycle diagram Understanding of the significance of the four main stages of the product life cycle Show awareness of extension strategies

11. What is a product? A business can adjust the features, appearance and packaging of a product to create competitive advantage. Brands use packaging and logos to create a brand image A product is a good or a service that is sold to customers or other businesses. Customers buy a product to meet a need. This means the firm must concentrate on making products that best meet customer requirements. Pg 143 ‘Stages in creating a product’ A business needs to choose the function, appearance and cost most likely to make a product appeal to the target market and stand out from the competition. This is called product differentiation.

12. How product differentiation is created: Establishing a strong brand image (personality) for a good or service. Making clear the unique selling point (USP) of a good or service, for example, by using the tag line quality items for less than a pound for a chain of discount shops. Offering a better location, features, functions, design, appearance or selling price than rival products. Having a brand image helps products to stand out in a competitive market Packaging

13. How product differentiation is created: Firms face a dilemma if they choose to launch a premium brand. Improving the quality or appearance of a product adds to the cost of making it. In turn, this means that the business must charge higher prices if they are to make a profit. An alternative marketing strategy is to produce a budget brand. If a mobile phone has limited functions and a standard design then it can be manufactured cheaply. The low production costs allow for discount pricing.

14. -pg 143 Define branding What is the benefit? How does packaging help market and sell a product?

15. The Product Life-Cycle These are: Introduction (launch) Growth Maturity Saturation Decline Pg 144 In the launch and growth stages sales rise. In the maturity stage, revenues flatten out. Getting a product known beyond the launch stage usually requires costly promotion activity. At some point sales begin to decline and the business has to decide whether to withdraw the item or use an extension strategy to bolster sales. Extension strategies include updating packaging, adding extra features or lowering price.

16. The Product Life-Cycle Activity 25.2 pg 145

17. Boston Matrix Star products have a high market share in a fast growing market. Cash Cows have a high market share in a slow growing market. Question marks or problem children products have a low market share in fast growing markets. Dogs are products with a low market share in slow growing markets. Firms with just a few items in their product portfolio – or who have all their products at the same stage in the product life cycle – are in the dangerous position of having ‘all their eggs in one basket’. Such firms may prioritise broadening their product range. Not on syllabus, but useful

18. ACTIVITY TASK Describe the packaging of your product Describe your chocolate bar and the product life cycle Advantage of developing/having a brand (brand awareness/development/loyalty) L/O Apply the elements of the marketing mix to given situations.

19. QUIZ: http://www.bbc.co.uk/schools/gcsebitesize/b usiness/marketing/brandingandpackaging/qui z/q23590578/

20. PRICE Understand how pricing decisions are made Understand the main methods of pricing: cost plus, competitive, psychological, penetration, price skimming Show awareness of the implications of the methods

21. PRICE A business must take many factors into account before deciding on the price of a product. Pricing strategies Remember there is a big difference between costs and price. Costs are the expenses of a firm. Price is the amount customers are charged for items. Firms think very carefully about the price to charge for their products.

22. There are a number of factors to take into account when reaching a pricing decision: Customers. Price affects sales. Lowering the price of a product increases customer demand. However, too low a price may lead customers to think you are selling a low quality ‘budget product’. Competitors. A business takes into account the price charged by rival organisations, particularly in competitive markets. Competitive pricing occurs when a firm decides its own price based on that charged by rivals. Setting a price above that charged by the market leader can only work if your product has better features and appearance. Costs. A business can make a profit only if the price charged eventually covers the costs of making an item. One way to try to ensure a profit is to use cost plus pricing. For example, adding a 50% mark up to a sandwich that costs £2 to make means setting the price at £3. The drawback of cost plus pricing is that it may not be competitive. There are times when businesses are willing to set price below unit cost. They use this loss leader strategy to gain sales and market share. PRICE

23. Pricing new products Half price sales are an example of penetration pricing A business can choose between two pricing tactics when launching a new product: Penetration pricing means setting a relatively low price to boost sales. It is often used when a new product is launched, or if the firm’s main objective is growth. Price skimming means setting a relatively high price to boost profits. It is often used by well-known businesses launching new, high quality, premium products.

24. Some different pricing strategies Pg 148 - 149

25. ACTIVITY TASK decide on the pricing strategies for your product Justify your decisions by mentioning your aims and objectives, your research and target audience

26. PRICE Quiz: http://www.bbc.co.uk/schools/gcsebitesize/b usiness/marketing/productprice/quiz/q50352 165/ http://www.bbc.co.uk/schools/gcsebitesize/b usiness/marketing/productprice/quiz/q50352 165/ (Uses pounds – UK)

27. Understand how pricing decisions are made Understand the main methods of pricing: cost plus, competitive, psychological, penetration, price skimming Show awareness of the implications of the methods -pg 148

28. PLACE Appreciate the importance of distribution channels and the factors that determine the selection of them Knowledge and understanding of a distribution channel Recommend and justify an appropriate channel in a given situation

29. Place As part of its marketing strategy, a company needs to decide where best to distribute a product. What is place? Place is the point where products are made available to customers. A business has to decide on the most cost-effective way to make their products easily available to customers.

30. Wholesaler vs retailer -pg 152 Look at the different types of channel of distribution Note benefits & issues -pg 152 - 154 Channel of distribution

31. Typical marketing channels for consumer product

32. Channel of distribution This involves selecting the best channel of distribution. Potential methods include using: Retailers. Persuading shops to stock products means customers can buy items locally. However, using a middle man means lower profit margins for the producer. Producers can opt to distribute using a wholesaler who buys in bulk and resells smaller quantities to retailers or consumers. This again means lower profit margins for the manufacturer. Telesales and mail order. Direct communication allows a business to get products to customers without using a high street retailer. This is an example of direct selling. Internet selling or e-commerce. Online selling is an increasingly popular method of distribution and allows small firms a low cost method of marketing their products overseas. A business website can be both a method of distribution and promotion. Developing new or improved channels of distribution can increase sales and allow a firm to grow.

33. QUIZ: http://www.bbc.co.uk/schools/gcsebitesize/b usiness/marketing/productplace/quiz/q70135 071/

34. ACTIVITY TASK Explain which distribution channel is suitable for your product, and why L/O Apply the elements of the marketing mix to given situations.

35. Promotion L/O: Understand the role of promotion Understand the aims of promotion Identify, explain and give examples of different forms of promotions Understand how promotions influence sales Justify an appropriate method of promotion in a given situation

36. Promotion There is much more to promotion than advertising. Businesses use various methods to gain publicity. Customer awareness Promotion refers to the methods used by a business to make customers aware of its product. Advertising is just one of the means a business can use to create publicity.

37. Why do businesses promtote their products? -pg 157

38. How do business promote their products? Businesses create an overall promotional mix by putting together a combination of the following strategies: Promotional material on a high street in Shanghai Advertising, where a business pays for messages about itself in mass media such as television or newspapers. Advertising is non-personal and is also called above-the-line promotion. Sales promotions, which encourage customers to buy now rather than later. For example, point of sale displays, 2-for-1 offers, free gifts, samples, coupons or competitions. Personal selling using face-to-face communication, eg employing a sales person or agent to make direct contact with customers. Direct marketing takes place when firms make contact with individual consumers using tactics such as ‘junk’ mail shots and weekly ‘special offer’ emails.

39. Methods List the difference between ‘above’ and ‘Below’ the line. -pg 158 – 162 QUIZ: http://www.bbc.co.uk/schools/gcsebitesize/business /marketing/productlifecycle/quiz/q44385749/

40. ACTIVITY TASK Decide the Promotion Mix for your product. Make sure you justify your promotional decisions.