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Essentials of Marketing Management ppt

Essentials of Marketing Management ppt

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Think Marketing !

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You can download this brilliant presentation at:

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Visit www.studymarketing.org for more presentations on marketing management, branding and business strategy

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Contents
1. Marketing Mix and Key Marketing Activities 2. Developing Market Segmentation 3. Product Planning and Development 4. Promotion Mix : Advertising, Publicity, Personal Selling and Sales Promotion 5. Distribution Planning and Pricing Strategy

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Marketing Mix and Market Segmentation

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Marketing Credo

There is only one valid definition of business purpose : to create a customer
Peter Drucker

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Marketing Mix

Product

Price
Target Market

Place

Promotion

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Key Marketing Activities

Consumer Analysis

Product Planning

Distribution Planning Promotion Planning

Price Planning

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Key Marketing Activities
Consumer Analysis
Examination and evaluation of consumer characteristics, needs, and purchase processes Development and maintenance of products, product assortments, product positions, brands, packaging, options, and deletion of old products Outlines price ranges and levels, pricing techniques purchase terms, price adjustments, and the use of price as an active or passive factor
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Product Planning

Price Planning

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Key Marketing Activities
Distribution Planning
Establishment of channel relations, physical distribution, inventory management, warehousing, transportation, allocation of goods, and wholesaling

Promotion Planning

Combination of advertising, publicity, personal selling, and sales promotion to drive sales revenue

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Product/Market Matrix
Existing Products Market Penetration Market Development New Products Product Development Diversification

Existing Markets

New Markets

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Product/Market Matrix
Market Penetration
• The firm seeks to achieve growth with existing products in their current market segments, aiming to increase its market share Effective when the market is growing or not yet saturated The firm seeks growth by targeting its existing products to new market segments Effective when a local or regional business looks to wider its market, new market segments are emerging due to changes in consumer life-style/demographics, and innovative uses are discovered for a mature product 11

Market Development

• •

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Product/Market Matrix
Product Development
• • The firms develops new products targeted to its existing market segments Effective when the firm has a core of strong brands

Diversification

The firm seeks growth by targeting its existing products to new market segments Diversification is utilized so that the firm does not become overly dependent on one product line
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Market Segmentation
Market Segment The division of a market into different homogeneous groups of consumers

Should be: • measurable • accessible by communication and distribution channels • different in its response to a marketing mix • durable (not changing too quickly) • substantial enough to be profitable
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Types of Market Segmentation
Geographic Based on regional variables such as region, climate, population density, and population growth rate.

Demographic

Based on variables such as age, gender, ethnicity, education, occupation, income, and family status

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Types of Market Segmentation
Psychographic Based on variables such as values, attitudes, and lifestyle

Behavioral

Based on variables such as usage rate and patterns, price sensitivity, brand loyalty, and benefits sought

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Step in Planning A Segmentation Strategy
Determining characteristics and needs of consumers for the product category of the company Analyzing consumer similarities and differences Developing consumer group profiles

Selecting consumer segment (s)

Positioning company’s offering in relation to competition.

Establishing an appropriate marketing plan
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Product Planning and Development

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Products : Types of Goods
Convenience Goods

Types of Goods

Shopping Goods

Specialty Goods

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Convenience Goods

Convenience Goods

Those purchased with a minimum of effort, because the buyer has knowledge of product characteristics prior to shopping The consumer does not want to search for additional information (because the item has been bought before) and will accept a substitute rather than have to frequent more than one store

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Convenience Goods
Convenience Goods
• Staples are low-priced items that are routinely purchased on a regular basis, such as detergent, milk, and cereal Impulse goods are items that the consumer does not plan to buy on a specific trip to a store, such as candy, a magazine, and ice cream Emergency goods are items purchased out of urgent need, such as an umbrella during a rainstorm, a tire to replace a flat, or aspirin for a headache

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Shopping Goods
Shopping Goods • Those for which consumers lack sufficient information about product alternatives and their attributes, and therefore must acquire further knowledge in order to make a purchase decision

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Shopping Goods

Shopping Goods

For attribute-based shopping goods, consumers get information about and then evaluate product features, warranty, performance, options, and other factors. The goods with the best combination of attributes is purchased. Sony electronics and Calvin Klein clothes are marketed as attribute-based shopping goods For price-based shopping goods, consumers judge product attributes to be similar and look around for the least expensive item/store
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Specialty Goods

Specialty Goods

Those to which consumers are brand loyal. They are fully aware of these products and their attributes prior to making a purchase decision. They are willing to make a significant purchase effort to acquire the brand desired and will pay a higher price than competitive products, if necessary. For specialty goods, consumers will not make purchases if their brand is not available. Substitutes are not acceptable.

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Services
Rentedgoods Service

Type of Services

Owned-goods service

Non-goods

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Services
Rentedgoods Service
Involves the leasing of a good for a specified period of time. Examples include car, hotel room, apartment, and tuxedo rentals

Owned-goods service

Involves an alteration or repair of a good owned by the consumer. Examples include repair services (such as automobile, watch, and plumbing), lawn care, car wash, haircut, and dry cleaning Provides personal service on the pan of the seller; it does not involve a goods. Examples include accounting, legal, and consulting services
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Non-goods

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Characteristics of Services
• • • • The intangible nature of many services makes the consumer's choice more diffi-cult than with goods The producer and his or her services are often inseparable The perishability of services prevents storage and increases risks Service quality may be variable

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Product Life Cycle
Growth Maturity

Introduction

Decline

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Product Life Cycle
Characteristics Marketing objective Introduction Attract innovators and opinion leader to new product Increasing None or small Negative Innovators Growth Expand distribution and product line Rapidly increasing Some Increasing Affluent mass market

Industry sales Competition Industry profits Customers Product mix Distribution Pricing Promotion
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One or two basic models Expanding line Depends on product Depends on product Informative Rising number of outlets Greater range of prices Persuasive
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Product Life Cycle
Characteristics Marketing objective Maturity Maintain differential advantage as long as possible Stable Substantial Decreasing Mass market Full product line Greatest number of outlets Full line of prices Competitive Decline (a) cut back, (b) revive, (C) terminate Decreasing Limited Decreasing Laggards Best-sellers Decreasing number of outlets Selected prices Informative

Industry sales Competition Industry profits Customers Product mix Distribution Pricing Promotion

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New Product Planning
Idea Generation Product Screening Concept Testing Business Analysis

Product Development

Test Marketing

Commercialization

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New Product Planning
Idea Generation • • A continuous, systematic search for new product opportunities It involves delineating sources of new ideas and methods for generating them

• Product Screening •

After the firm identifies potential products, it must screen them Many companies use a new-product screening checklist for preliminary evaluation
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Screening Checklist
GENERAL CHARACTERISTICS OF NEW PRODUCTS Profit potential Existing competition Potential competition Size of market Level of investment Patentability Level of risk MARKETING CHARACTERISTICS OF NEW PRODUCTS Fit with marketing capabilities Effect on existing products (brands) Appeal to current consumer markets Potential length of product life cycle Existence of differential advantage Impact on image Resistance to seasonal factors PRODUCTION CHARACTERISTICS OF NEW PRODUCTS Fit with production capabilities Length of time to commercialization Ease of product manufacture Availability of labor and material resources Ability to produce at competitive prices

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New Product Planning

Concept Testing

Concept testing presents the consumer with a proposed product and measures attitudes and intentions at this early stage of development Concept testing is a quick and inexpensive way of measuring consumer enthusiasm Business analysis for the remaining product concepts is much more detailed than product screening Because the next step is expensive and timeconsuming product development, critical use of business analysis is essential to eliminate marginal items 33

Business Analysis

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Business Analysis Variables
Factors Demand projections Considerations Price/sales relationship; short- and long-run sales potential; speed of sales growth; rate of repurchases; channel intensity

Cost projectionsTotal and per unit costs; use of existing facilities and resources; startup vs. continuing costs; estimates of future raw materials and other costs; econo-mies of scale; channel needs; break-even point CompetitionShort-run and long-run market shares of company and competitors; strengths and weaknesses of competitors; potential competitors; likely competitive strategies in response to new product by firm Required investmentProduct planning (engineering, patent search, product development, testing); promotion; production; distribution ProfitabilityTime to recoup initial costs; short- and long-run total and perunit profits; control over price; return on investment (ROI) www.studyMarketing.org 34

New Product Planning
• Product Development • Product development converts a product idea into a physical form and identifies a basic marketing strategy It involves product construction, packaging, branding, product positioning, and attitude and usage testing. Test marketing involves placing a product for sale in one or more selected areas and observing its actual performance under the proposed marketing plan. The purpose is to evaluate the product and pretest marketing efforts in a real setting prior to a full-scale introduction

Test Marketing

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New Product Planning
• Commercialization After testing is completed, the firm is ready to introduce the product to its full target market. This is commercialization and corresponds to the introductory stage of the product life cycle Commercialization involves implementing a total marketing plan and full production

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Promotion Mix : Advertising, Publicity, Personal Selling and Sales Promotion

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Promotion Mix

Advertising

Publicity Target Market

Personal Selling

Sales Promotion

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Promotion Mix
Factor AudienceMass MessageUniform Advertising Mass Uniform Publicity Personal Selling Small (one-to-one) Specific Sales Promotion Varies Varies Moderate per customer

CostLow per viewer or reader None for media space High per customer and time; can be moderate costs for press releases and publicity materials SponsorCompany No formal sponsor in that Company media are not paid Low None High High High Moderate

Company

FlexibilityLow Control over contentHigh and placement CredibilityModerate

Moderate High Moderate

Major goalTo appeal to a mass To reach a mass audience at a reasonable audience with an cost, and create independently reported awareness and favorable message attitudes ExampleTelevision ad for a Kodak Newspaper article video camera reporting on the unique features of a Kodak video camera

To deal with individual To stimulate short-run consumers, to resolve sales, to increase questions, to close sales impulse purchases

Retail sales personnel A Kodak video camera explaining how a Kodak displayed at consumer video camera works photography shows

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Four Key Steps to Advertise
Determine message content and devise an ad Specify the location of an ad (media placement) Outline a promotion schedule Choose how many variations of a basic message to utilize
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Things to Consider in Advertising
Waste Waste is the portion of an audience that is not in a firm's target market. Because media appeal to mass audiences, waste is a significant factor in advertising. Reach refers to the number of viewers or Reach readers in the audience

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Things to Consider in Advertising
Frequency
Frequency is how often a medium can be used. It is greatest for newspapers, radio, and television, where ads may appear daily and advertising strategy may be easily changed

Message permanence

Message permanence refers to the number of exposures one advertisement gener-ates and how long it remains with the audience

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Things to Consider in Advertising
Persuasive impact
Persuasive impact is the ability of a medium to stimulate consumers. Television often has the highest persuasive impact because it is able to combine audio, video, color, animation, and other appeals. Clutter involves the number of ads that are contained in a single program, issue, etc. of a medium. Clutter is low when a limited number of ads is presented and high when many ads are presented.

Clutter

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Publicity : Poor and Good Response
Situation Poor Response Good Response Company spokesperson explains the cause of the fire and company precautions to avoid it and answers questions. Pre-introduction news releases, product samples, and testimonials are used. Company spokesperson states that tests are being conducted on products, describes procedure for handling defects, and answers questions. Extensive news releases, statistics, and spokespeople are made available to media to present company's competitive features. Profitability is explained, data (historical and current) are provided, uses of profits are detailed: research, community development. Fire breaks out in aRequests for information by company plantmedia are ignored. New productAdvertising is used without introducedpublicity News story aboutRequests for information by media product defectsare ignored, blanket denials are issued, hostility is exhibited toward reporter of story. CompetitorThe advertising campaign is introduces newstepped up. product High profitsProfits are rationalized and positive reportedeffects on the economy are cited.

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Overall view ofThere is an infrequent need for There is an ongoing need for publicity, strong publicitypublicity; crisis fighting is used when planning, and contingency plans for bad bad reports are circulated. reports.

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Developing a Publicity Plan
Setting objectives Outlining types of publicity Creating publicity messages Timing publicity messages

Selecting media

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Publicity Type
Publicity Type Example News publicityMacy's describes its decision to sell its stores in the Midwest. Business feature articleToyota explains its goals and objectives for the 2020. Service feature articleA trade association offers 10 tips on how to reduce home heating costs. Finance releaseGeneral Electric distributes quarterly financial data about the company. Product releaseIntel announces its new, fast-speed microprocessor Pictorial releaseApple distributes photos showing all of its personal computer products and related software Background editorialMc Kinsey presents a biography of its president and his rise through releasethe company. Emergency publicityThe Red Cross makes a request for aid to tornado victims.

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Specific Personal Selling Objectives
Type of Objective Demand-Oriented Information Illustrations To fully explain all good and service attributes To answer any questions To probe for any further questions To clearly distinguish good or service attributes from those of competitors To maximize the number of sales as a per cent of presentations To convert undecided consumers into buyers To sell complementary items, e.g., film with a camera To placate dissatisfied customers RemindingTo ensure delivery, installation, etc. To follow up after a good or service has been purchased To follow up when a repurchase is near To reassure previous customers when making a new purchase Image-Oriented Industry and company To maintain a good appearance by all personnel in contact with consumers To follow acceptable sales practices

Persuasion

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Personal Selling Process
Prospecting
(blind, lead)

Approach

Customer Wants

Sales Presentation

Answering Questions
(questions and objections)

Close

Follow up
(satisfaction, referrals, repurchase)

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Types of Sales Promotion
Type Characteristics Illustration P&G mails consumers a 25-cents-off coupon for Sure deodorant, which can be redeemed at any supermarket. CouponsManufacturers or retailers advertise special discounts for customers who redeem coupons.

Refund orA consumer submits proof-of-purchase First Alert home fire alarms provides rebate(usually to the manufacturer) and $5 rebates to consumers submitting receives an extra discount. proof of purchase.

SamplesFree merchandise or services are given consumers, generally for new items.

When Sunlight dishwashing liquid was introduced, free samples were mailed to consumers.

Contests orConsumers compete for prizes by Publishers Clearinghouse sponsors sweepstakesanswering questions (contests) or annual sweepstakes and awards filling out forms for random drawings of automobiles, houses, and other prices (sweepstakes). prices. www.studyMarketing.org 49

Types of Sales Promotion
Type Characteristics Illustration Bonus orConsumers receive discounts for Some stores run I-cent sales, multipackspurchasing in quantity whereby the consumer buys one item and gets a second one for a penny. Point-of-In-store displays remind Chewing gum sales in supermarkets purchasecustomers and generate impulse are high because displays arc placed displayspurchases. at checkout counters. SpecialManufacturers or retailers eventssponsor celebrity appearances, fashion shows, and other activities. Virtually every major league baseball team has an annual "Old Timers' Day," which attracts large crowds.

GiftsConsumers are given gifts for Savings banks offer a range of gifts making a purchase or opening a for consumers opening new new account. accounts or expanding existing ones.

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Sales Promotion Advantages
• • • It helps attract customer traffic and maintain brand or store loyalty Quick results can be achieved Some forms of sales promotion (calendars, t-shirts. Pens, etc) provide value to the consumer and are retained by them; and these forms can provide a reminder function Impulse purchases can be increased through in-store displays

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Sales Promotion Disadvantages
• The image of the firm may be lessened if it continuously runs promotions. Consumers may view discounts as representing a decline in product quality and believe the firm could not sell its offerings without them. When coupons, rebates, or other special deals are used frequently, consumers may not make purchases if the items are sold at regular prices. Instead, they will stock up each time there is a promotion.

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Sales Promotion Disadvantages
• Sometimes sales promotions shift the focus away from the product onto secondary factors. Consumers may be attracted by calendars, coupons, or sweepstakes instead of by product quality, functions, and durability. In the short run this generates consumer enthusiasm. In the long run this may have adverse effects on a brand's image and on sales, because a productrelated differential advantage has not been developed.

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Distribution Planning and Pricing Strategy

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Distribution Planning
• Distribution planning is systematic decision making regarding the physical movement and transfer of ownership of a product from producer to consumer. It includes transportation, storage, and customer transactions. Distribution functions are carried out through a channel of distribution, which is comprised of all the organizations or people involved in the process. These organizations or people are known as channel members or middlemen.
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• •

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Intensity of Channel Coverage
Characteristics Exclusive Distribution Selective Distribution Intensive Distribution ObjectivesPrestige image, Objectives channel control and loyalty, price stability and high profit margins Moderate market Widespread market coverage, solid image,coverage, channel some channel control acceptance, sales and loyalty, good volume and profits sales and profits

Channel

Few in number, well- Moderate in number, Many in number, all membersestablished reputable well-established, types stores better stores of outlets Few in number, trend Moderate in number, Many in number, setters, willing to brand conscious, conveniencetravel to store, brand somewhat willing to oriented loyal travel to store

Customers

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Intensity of Channel Coverage
Characteristics Exclusive Distribution Selective Distribution Intensive Distribution

MarketingPersonal selling, Promotional mix, Mass advertising, Emphasis pleasant pleasant shopping nearby location, shopping conditions, conditions, good items in stock good service service Major Limited sales Disadvantagespotential ExamplesAutomobiles, Examples designer clothes, caviar May be difficult to carve out a niche Limited channel control

Furniture, clothing, Groceries, watches household products, magazines

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Methods of Channel Cooperation
Factor New-product introduction Manufacturer Action Channel Member Action Thorough testing, adequate promotional Good shelf location and support space, enthusiasm for product, assistance in test marketing Prompt filling of orders, adherence to scheduled dates Proper time allowed for delivery, shipments immediately checked for accuracy Attractive in-store displays, knowledgeable salespeople, participation in cooperative programs Proper installation and servicing of products

Delivery

Promotion

Sales force training, sales force incentives, development of national advertising campaign, cooperative programs

Product quality Product guarantees

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Pushing and Pulling Strategy
Pushing Strategy Manufacturer Pulling Strategy Manufacturer

Channel members

Channel members

Consumers

Consumers

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Price Planning A Price
Represents the value of a good or service for both the seller and the buyer

Price Planning
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Systematic decision making by an organization regarding all aspects of pricing

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Factors Affecting Pricing Decisions

Consumers

Competitors

Cost

Channel Members

Government Total Effects on Price Decisions

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Consumers and Price Decisions
• The relationship between price and consumer purchases and perceptions is explained by two economic principles — the law of demand and price elasticity of demand The law of demand states that consumers usually purchase more units at a low price than at a high price The price elasticity of demand defines the sensitivity of buyers to price changes in terms of the quantities they will purchase

Consumers

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Consumers and Price Decisions
Elastic Demand
• • • Elastic demand occurs if relatively small changes in price result in large changes in quantity demanded Numerically, price elasticity is greater than 1 With elastic demand, total revenue goes up when prices are decreased and goes down when prices rise

In-elastic Demand

• • •

Inelastic demand takes place if price changes have little impact on quantity demanded Price elasticity is less than 1 With inelastic demand, total revenue goes up when prices are raised and goes down when prices decline
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Consumers and Price Decisions
Unitary Demand
• Unitary demand exists if changes in price are exactly offset by changes in quantity demanded, so that total sales revenue remains constant. Price elasticity is 1

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Competitors and Price Decisions
• Competitors Another element contributing to the degree of control a firm has over prices is the competitive environment within which it operates

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Competitors and Price Decisions
Marketcontrolled price environment • Characterized by a high level of competition, similar goods and services, and little control over price by individual companies

Companycontrolled priced environment
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Characterized by moderate competi-tion, well-differentiated goods and services, and strong control over price by individual firms

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Competitors and Price Decisions
Governmentcontrolled price environment • Characterized by prices set by the government. Examples are public utilities, buses, taxis, and state universities

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Channel Members and Price Decisions
• A wholesaler or retailer can gain stronger control over price by stressing its importance as a customer to the manufacturer, refusing to carry unprofitable product, stocking competitive items, and developing strong dealer brands so that consumers are loyal to the seller and not the manufacturer • Sometimes retailers engage in selling against the brand, whereby they stock merchandise, place high prices on it, and then sell other brands for lower prices. This is often done to increase the sales of their own brands
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Channel Members

Channel Members and Price Decisions
• To ensure channel member cooperation with price decisions, the manufacturer needs to consider four factors: channel member profit margins, price guarantees, special deals, and the impact of price increases

Channel Members

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Government and Price Decisions

Price fixing regulations

Government

Prohibitions against price discrimination among channel members

Unfair sales acts : predatory pricing
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Cost and Price Decisions
Cost of raw materials and supplies Labor cost Advertising Cost Distribution Cost Pricing Decisions

Cost

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Price Strategy
Cost-based Price Strategy

Price Strategy

Demand-based Price Strategy

Competitionbased Price Strategy
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Price Strategy
Cost-based Price Strategy
With a cost-based price strategy, the marketer sets prices by computing merchandise, service, and overhead costs, and then adding the desired profit to these figures

Demand-based Price Strategy

The marketer sets prices after researching con-sumer desires and ascertaining the range of prices acceptable to the target market

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Price Strategy
Competitionbased Price Strategy
• • The marketer sets prices in accordance with competitors Prices may be below the market, at the market, or above the mar-ket, depending on customer loyalty, services provided, image, real or perceived differences between brands or stores, and the competitive environment

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Reference/Recommended Further Reading
• Joel Evans and Barry Berman, Marketing in The 21st Century, Prentice Hall. You can obtain this excellent book at this link:

http://www.amazon.com/Marketing-21st-Century-Ninth/dp/159260143X/ref=sr_1_1?ie=UTF8&s=bo

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