Unit 3 – Decision making to improve marketing performance
                      Learning outcomes
     Making marketing decisions: Using the marketing 
     mix
     What you need to know:
     • The elements of the marketing mix (7Ps)
     • The influences on and effects of the changes in the 
        elements of the marketing mix
     • Pricing decisions
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            Unit 3 – Decision making to improve marketing performance
     Making marketing decisions: Using the marketing mix: 
                                 Product
                                PhysicalP reondvuiroctnment
                                    Process Price
                                    PPeroomopletion
                                     Place
      AQA A-level Business © Hodder & Stoughton Limited 2015          3
            Unit 3 – Decision making to improve marketing performance
                            Starter discussion:
                                       
 What factors may determine how much a firm charges for its products?
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            Unit 3 – Decision making to improve marketing performance
         Factors impacting on price charged
 (explain in 1 sentence why each of these impact price)
   There are several factors a business needs to consider in setting the price:
   •  Competitors’ products and prices
   •  Costs of production, promotion, etc.
   •  Market conditions, for example, demand levels, accepted prices, market share, 
      etc.
   •  The state of the economy and its impact on consumers’ disposable income
   •  The bargaining power of customers in the target market – Do they sell to 
      consumers or businesses?
   •  Location of the business
   •  Brand image, reputation and customer loyalty 
   •  Product quality and packaging
   •  Price elasticity of demand – Is the product elastic or inelastic?
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            Unit 3 – Decision making to improve marketing performance
                       Pricing strategies
   • There are two pricing strategies that can be used by firms when they are first 
    launched into the market:
   1. Penetration pricing: Low prices are charged to help attract customers; to gain a 
     foothold in the market and establish market share. It is commonly used with new 
     food products.
   2. Price skimming: High price are charged to gain a high profit margin from early 
     adopters.  It  is  commonly  used  when  the  business  has  already  established  a 
     strong brand image and has a loyal customer base, for example, Apple.
   Early adopters are people who are willing to pay high prices to purchase products 
   when they are first launched. Very common in technology markets such as games 
   consoles and phones.
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