Product/Service Design Topic 1.3 Marketing Mix
DESIGN MIX = AESTHETICS + FUNCTION + COST Price Distri
AESTHETICS – refers to the design, style, and appearance make
Price is a key factor in any product decision. It will not only determine the
of a product. It is about making products desirable. maxim
demand for a product, it will also determine the contribution of a product Parti
FUNCTION – refers to the benefits that a product or service and the overall profit margin for a firm. A
provides. It includes how well a product meets a need or Influences on price: o
solves the problem for which it was intended. Costs – what profit margin is the firm hoping to achieve? g
COST – encapsulates all production costs of a product. The PED – the potential for a firm to change the price, R
Specifically, the cost per unit. Competition – the level of competition and the price set by the market. c
Product life cycle – the stage of the life cycle the product is in. a
Branding – the perceptions customers have of the brand and how W
Promotion d
much value they place on it.
The methods used by a business to inform consumers about a b
Other elements of the marketing mix – the 7Ps must complement D
product, or to persuade them to buy it.
one another. o
ABOVE-THE-LINE – involves any form of advertising through
the media, such as TV, radio, internet, posters/billboards, i
cinema, and direct marketing.
Pricing Strategies
BELOW-THE-LINE – includes all other forms of promotion that PRICE SKIMMING – used to capitalise on people who are willing to pay
are not advertising, e.g. sales promotion (coupons), public Cont
relations, merchandising and packaging, direct selling, premium to be the first to own a product. The initial price is high so the webs
exhibitions, and trade fairs. profit in the marker can be ‘skimmed’. Suitable for established brands Expe
Influences on promotion: where anticipation for a new product is high. Particularly effective in via m
Promotion budget – the promotion budget will determine technology markets. Natu
which methods are available and the geographical reach of DYNAMIC PRICING – applied to products where price can fluctuate with chan
the campaign. the level of demand, such as hotel rooms. delic
The message – e.g. a sneak peak at a new product line PENETRATION PRICING – applied to a new product attempting to enter Scop
might be share via social media. throu
Technology – it can help a firm narrow down its promotion the market. Initial price is low in order to penetrate the market by comp
so that it only reaches the right people. undercutting competitors. Over time price may increase as demand grows
Target audience – a firm must choose the right method and reputation/popularity builds.
and channel to reach the right people. PREDATORY PRICING – this is where the firms sets a low price in order
The
to price competitors out of the market. The firm may make a loss for a
Branding period of time until the competitor fails.
A clear and obvious logo, name, or statement that COMPETITIVE PRICING – the firms sets prices based on the nearest
customers can recognise as being related to a certain competitor. This is used in very competitive markets and helps avoid price
product or firm. wars.
DESIGN MIX = AESTHETICS + FUNCTION + COST Price Distri
AESTHETICS – refers to the design, style, and appearance make
Price is a key factor in any product decision. It will not only determine the
of a product. It is about making products desirable. maxim
demand for a product, it will also determine the contribution of a product Parti
FUNCTION – refers to the benefits that a product or service and the overall profit margin for a firm. A
provides. It includes how well a product meets a need or Influences on price: o
solves the problem for which it was intended. Costs – what profit margin is the firm hoping to achieve? g
COST – encapsulates all production costs of a product. The PED – the potential for a firm to change the price, R
Specifically, the cost per unit. Competition – the level of competition and the price set by the market. c
Product life cycle – the stage of the life cycle the product is in. a
Branding – the perceptions customers have of the brand and how W
Promotion d
much value they place on it.
The methods used by a business to inform consumers about a b
Other elements of the marketing mix – the 7Ps must complement D
product, or to persuade them to buy it.
one another. o
ABOVE-THE-LINE – involves any form of advertising through
the media, such as TV, radio, internet, posters/billboards, i
cinema, and direct marketing.
Pricing Strategies
BELOW-THE-LINE – includes all other forms of promotion that PRICE SKIMMING – used to capitalise on people who are willing to pay
are not advertising, e.g. sales promotion (coupons), public Cont
relations, merchandising and packaging, direct selling, premium to be the first to own a product. The initial price is high so the webs
exhibitions, and trade fairs. profit in the marker can be ‘skimmed’. Suitable for established brands Expe
Influences on promotion: where anticipation for a new product is high. Particularly effective in via m
Promotion budget – the promotion budget will determine technology markets. Natu
which methods are available and the geographical reach of DYNAMIC PRICING – applied to products where price can fluctuate with chan
the campaign. the level of demand, such as hotel rooms. delic
The message – e.g. a sneak peak at a new product line PENETRATION PRICING – applied to a new product attempting to enter Scop
might be share via social media. throu
Technology – it can help a firm narrow down its promotion the market. Initial price is low in order to penetrate the market by comp
so that it only reaches the right people. undercutting competitors. Over time price may increase as demand grows
Target audience – a firm must choose the right method and reputation/popularity builds.
and channel to reach the right people. PREDATORY PRICING – this is where the firms sets a low price in order
The
to price competitors out of the market. The firm may make a loss for a
Branding period of time until the competitor fails.
A clear and obvious logo, name, or statement that COMPETITIVE PRICING – the firms sets prices based on the nearest
customers can recognise as being related to a certain competitor. This is used in very competitive markets and helps avoid price
product or firm. wars.
