The marketing mix: product and price
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Para educadores: diapositivas de la lección, apuntes de repaso listos para usar sobre The marketing mix: product and price (Business Studies, Marketing) — úsalos en tu lección, o presenta el tema como una actividad interactiva de clase que tus aprendices juegan como un juego en vivo.
Apuntes de la lección
The 4Ps
- Product, price, place and promotion should support the same target and position. A high price is harder to sustain when the quality, service or accessibility conflicts with the intended offer.
- Evaluate a mix in context rather than declaring one price or feature universally best. Customer research, costs, available capacity and rival offers inform a coherent choice.
Product
- Product decisions cover features, quality, design, branding, packaging and after-sales support. The design mix balances function, aesthetics and cost; added features may increase cost without enough customer benefit.
- A USP is a distinctive selling benefit relevant to buyers. Brand identity and customer associations can support trust or loyalty, but performance matters. Packaging can protect, inform, aid use and promote; consider cost and environmental trade-offs.
Balance the design mix
Product life cycle
- The product life cycle is a descriptive model: development normally has no sales of the new product; introduction brings launch; growth has rising sales; maturity has slower or level sales; decline has falling sales. It does not fix durations, guarantee every stage or show profit directly.
- Extension strategies may change packaging or features, find new uses or markets, or alter promotion and price. Assess expected contribution and cost rather than assuming an update pays for itself. A product portfolio can balance offers at different stages, but the life cycle alone cannot decide the investment.
Life-cycle sales patterns
Price
- Cost-plus adds a mark-up to a stated unit cost; competitive pricing references rivals; skimming starts relatively high, penetration relatively low; psychological pricing aims to influence perceptions; promotional pricing is temporary; loss leaders aim to encourage additional purchases. Each approach has conditions and risks.
- Fictional full cost £10 plus 25% mark-up gives £12.50. The £2.50 surplus is 20% of the price. State which costs are included: an allocation based on expected output may not recover all costs if actual volume differs. Neither price nor unit mark-up guarantees overall profit.
A fictional cost-plus calculation
Factors affecting price
- Costs, competitor offers, customer willingness to pay, brand image, target market, life-cycle stage and economic conditions can affect price. Price must fit both the positioning and feasible demand, not simply copy the cheapest rival.
- For a differentiated new smartphone, skimming may work if enough buyers value the innovation; penetration may help trial but strain contribution. Research the audience and rival alternatives, compare expected volume and cost, and explain why the chosen strategy fits this case.
Evidence for a smartphone price
Price and demand
- Other factors unchanged, a higher price usually reduces quantity demanded. A price movement differs from a shift in demand caused by income, tastes or another factor. Revenue is price × quantity sold; a higher price need not raise revenue or profit.
- Extension where required: PED compares percentage quantity response with percentage price change. Price +10% with quantity −20% gives −2, elastic by magnitude; quantity −5% gives −0.5, inelastic. With price £10 → £11 and quantity 100 → 80, revenue £1,000 → £880; with quantity 95 it becomes £1,045. These are fictional teaching changes, not market estimates.
Price responses: fictional examples
Product portfolio: the Boston matrix
- The Boston matrix uses relative market share and market growth. High share/high growth is a star; high share/low growth a cash cow; low share/high growth a question mark; low share/low growth a dog. These categories differ from the sales-over-time stages of a life cycle.
- The model can structure discussion about investment, support or withdrawal, but category labels alone do not establish actual profit, cash generation or the right decision. Consider competition, costs, links between products and the value to customers. Check the required board terminology and coverage.
Boston matrix categories
Diapositivas
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Preguntas de práctica
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1.What does the marketing mix include?
Easy- Aproduct, price, place, promotion
- Bprofit, people, plan, policy
- Cpeople, power, pay, pace
- Dplace, plan, play, party
2.What is a brand?
Easy- Aa tax
- Ba bank loan
- Ca price
- Dan identifying identity and associated customer perceptions
3.What is a USP?
Easy- Aa loan
- Ba price
- Ca distinctive selling benefit or feature relevant to customers
- Da type of tax
4.What is packaging for?
Easy- Areduce sales
- Bprotection, information, convenience and promotion
- Creduce quality
- Dremove branding
5.What is after-sales service?
Easy- Asupport given after purchase
- Badvertising before purchase
- Cprice cuts
- Da loan
6.What is cost-plus pricing?
Easy- Aprice below cost
- Bprice matching
- Crandom pricing
- Dcost plus a percentage mark-up
7.What is price skimming?
Easy- Ano price
- Brandom price
- Ca relatively high initial price, often reduced later
- Dlow initial price
8.What is penetration pricing?
Easy- Afixed price
- Ba relatively low initial price aimed at gaining buyers and share
- Chigh initial price
- Dno price
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