Marketing Management

Module -3
Brands & Branding
 What is not branding?

Not just about the management of product image,

a supplementary task that an be isolated from the

main business of product management

 What is branding?
• A strategic point of view; not a select set of
activities
• Central to creating customer value, not just images
• Key tool for creating and maintaining competitive
advantages
• Brand strategies must be engineered into the
marketing mix
• Effective brand strategies should address four
distinct components of brand value
 Four components of brand value
• Reputation Value:
– Shaping perceived product quality
• Relationship Value:
– Communicates that firm can be trusted as a long term partner and
will flexibly respond to future customer needs
• Experiential Value
– Acts as a perceptual frame that highlight particular benefits
delivered by the product
• Symbolic Value
– Acts as symbols that express values and identities
– May act as powerful markers to express status, lifestyle, politics,
and a variety of aspirational social identities
– When symbolic value become conventionalized in a brand culture it
exerts powerful halo effects on other dimensions of brand value
 What is a brand?
• Brand is the product as it is experienced and valued
in everyday social life
• Branding refers to all of the activities that shapes
customer perceptions, particularly the firm
activities
• Brand can be considered as the culture of the
product
• Brand culture acts as a perceptual frame through
which customers, understand, value and
experience the product
 Four authors of a brand

• Customers

• Firm

• Popular Culture

• Influencers
 Steps in
Strategic Brand Management
• Identifying and establishing brand positioning

• Planning and implementing brand marketing

• Measuring and interpreting brand performance

• Growing and sustaining brand value

• What is a brand and how does branding work?

• What is brand equity?

• How is brand equity built, measured, and

managed?

• What are the important decisions in developing a

branding strategy?
• Why build a brand?

• Who creates a brand?

• How do you create brands?

 What is a Brand?

A brand is a name, term, sign, symbol or design, or

a combination of them, intended to identify the
goods or services of one seller or group of sellers
and to differentiate them from those of
competitors. (AMA – b)

Branding involves creating mental structures and

helping consumers organize their knowledge
about product and services in a way that clarifies
their decision making and in the process provide
value to the firm
 Why build brands?

Consumers
– Identification to the source of the product
– Assignment of responsibility to product maker
– Risk Reducer
– Search Cost reducer
– Promise, bond or pack with the maker
– Symbolic device
– Signal of Quality (Keller 2003)
 Why build brands?

Firms
– Identification to simplify handling or tracing
– To legally protect unique features
– Signal of quality level to satisfied customers
– Means of endowing products with unique associations
– Source of competitive advantage
– Source of financial returns (price premiums)
– Create barriers of entry
 Advantages of Strong Brands
• Improved perceptions of
product performance
• Greater loyalty
• Less vulnerability to
competitive marketing actions
• Less vulnerability to crises
• Larger margins
• More inelastic consumer
response
• Greater trade cooperation
• Increased marketing
communications effectiveness
• Possible licensing opportunities
• Brand Extension Opportunities
 What is Branding?

To brand refers to all of the activities

that shape customers perceptions
particularly the firms activities

Branding is endowing products and

services with the power of the brand.
 What is Brand Equity?

Brand equity is the added value endowed on

products and services, which may be reflected in
the way consumers, think, feel, and act with
respect to the brand.
Ingredients of brand equity
•Brand equity arises from differences in consumer
response (commodity vs a brand)
•Differences in response are a result of difference
in brand knowledge
 Brand Knowledge

Thoughts Feelings

Knowledge

Images
Beliefs
Experiences
 Brand Promise / Brand Essence
•A brand promise is the marketer’s vision of what the
brand must be and do for consumers.
•The Brand Essence is a single thought that captures the
“soul” of the brand
The Brand Essence should have several characteristics. It
should:
• Resonate with customers
• Drive the marketing programs
• Be ownable
• Provide differentiation from competitors that will persist through
time
• Be compelling enough to energize and inspire the employees and
partners of the organization.
•Strong Brand Essence statements usually have multiple
interpretations that make them more effective.
– For Nike® the Brand Essence might be "excelling," which could
encompass such diverse components of the Nike® Brand Character
as: technology, top athletes, aggressive personalities, the track shoe
heritage, and sub-brands like Air Jordan®, as well as customers who
strive to excel.
 Who creates a brand?

• Four Authors ( Holt 2003)

– Companies
• Marketing Activities
– Popular Culture
• Used as props in films, magazines, t.v, books and internet
– Customer
• Experience and sharing of consumption stories
– Influencers
• Trade mag. reviews, opinions mavens & connoisseurs and retail sales
people
 Brand Equity Models
• Brand Asset Valuator

• BRANDZ

• Aaker Model

• Brand Resonance
 BAV Key Components
Five key components of brand equity
• Energy
• Differentiation
• Relevance
• Esteem
• Knowledge
 Brand Dynamics Pyramid

Strong Relationship

Nothing else beats it Bonding

Does it offer something

better than the others? Advantage

Can it deliver? Performance

Does it offer me something?

Relevance

Do I Know about it Presence

Weak Relationship
 Aaker Model

• Brand Identity

• Core Identity Elements

• Extended Identity Elements

• Brand Essence
Brand Resonance Pyramid
 Drivers of Brand Equity
• Creating the right brand knowledge structures with
the right consumers
• Brand elements
– Brand names, URL, logos, symbols, characters,
spokespeople, slogans, Jingles, Package and Signage
• Marketing Activities
– Product and service and all accompanying marketing
activities and supporting programs
• Meaning Transference
– Other associations; indirect transfers to the brand by
linking it some other person or thing]
 Brand Elements
Brand
names URLs

Slogans
Elements
Logos

Characters
Symbols
Brand Element Choice Criteria

• Memorable
• Meaningful
• Likeability
• Transferable
• Adaptable
• Protectable
 Internal Branding

• Choose the right moment

• Link internal and external marketing
• Bring the brand alive for employees
Secondary Sources of
Brand Knowledge
 Measuring Brand Equity:
Brand Value Chain

Marketing
Customer Brand Shareholder
Program
Mindset Performance Value
Investment

Awareness Price Premiums

Product Associations Stock Price
Communication Price Elasticity
Attitudes Market Share
Trade P/E Ratio
Attachment Expansion
Employee Activity Market Capitalization
Other Success
Cost Structure
Profitability

Programs Competitive Customer Market

Clarity Multiplier Reactions Multiplier
Relevance Multiplier
Channel
Distinctiveness Market Dynamics
Support
Consistency Growth Potential’
Customer size
Risk profile
and Profile
Brand Contribution
 Managing Brand Equity

• Brand Reinforcement

• Brand Revitalization

• Brand Crises
Interbrand’s Steps in Calculating Brand
Equity
• Market segmentation
• Financial analysis
• Role of branding
• Brand strength
• Brand value calculation
 Devising a Branding Strategy

• Develop new brand elements

• Apply existing brand elements

• Use a combination of old and new

 Branding Terms
• Brand line • Line extension
• Brand mix • Category extension
• Brand extension • Branded variants
• Sub-brand • Licensed product
• Parent brand • Brand dilution
• Family brand • Brand portfolio
 Brand Naming

• Individual names
• Blanket family names
• Separate family names
• Corporate name-individual name combo
 Reasons for Brand Portfolios

• Increasing shelf presence and retailer dependence

in the store
• Attracting consumers seeking variety
• Increasing internal competition within the firm
• Yielding economies of scale in advertising, sales,
merchandising, and distribution
Brand Roles in a Brand Portfolio

Flankers Cash Cows

Low-end High-end
Entry-level Prestige
Product Strategy
• What are the characteristics of products and how
do marketers classify products?

• How can companies differentiate products?

• How can a company build and manage its product

mix and product lines?
 What is a Product?

A product is anything that can be offered to a

market to satisfy a want or need, including physical
goods, services, experiences, events, persons,
places, properties, organizations, information, and
ideas.
 Components of the Market Offering

Value-based prices

Attractiveness
of the market
offering

Product features Services mix &

& quality quality
Five Product Levels
 Five Levels
1. Core Benefit (product)
– Direct primary benefit (Hotel Room- Space to stay)
2. Basic product
– Hotel Room with Bed, bathroom etc
3. Expected Product
– Set of attributes buyers normally expect (clean bed, fresh towels etc.)
4. Augmented product
– Additional benefits that exceeds expectations (meets personal
preferences by documenting information)
5. Potential Product
– Encompasses al the possible augmentation and transformation the
product might undergo in the future
– Understand user’s consumption system
 Product Classification
• Durability
– Durable, nondurable
• Tangibility:
– Tangible goods and intangible goods (services)
• Nature of customers buying behavior
– Convenience , Shopping, Specialty and unsought
• Level of involvement in the purchase process
– Low and high
• Type of benefit
– Functional/utilitarian benefits vs emotional or ego
expressive need
• Industrial Goods
– Materials & parts, Capital Goods, Supplies, Business
services
 Product Differentiation
• Product form
• Features
• Customization
• Performance
• Conformance
• Durability
• Reliability
• Repairability
• Style
 Service Differentiation
• Ordering ease
• Delivery
• Installation
• Customer training
• Customer consulting
• Maintenance and repair
• Returns
 Developing products for rural markets
• Products should be designed keeping in mind the rural
conditions
• Packaging is one of the key drivers of success in rural
areas
Issue of transfer and storage: Rugged packing
The issue of affordability: small-unit packs
• Brand elements should be decided keeping in mind
rural consumers
The Product Hierarchy

Item

Product type

Product line
Product class
Product family
Need family
 Product Systems and Mixes
• Product system
– Group of diverse but related items that function in a compatible manner
(HPC)
• Product mix (Product assortment)
– Encompasses all product lines
– Set of all products and items offered for sale by a seller
• Product line: Group of item that serve a similar function
• Product Mix
– Width
• How many different product lines that the company carries?
– Depth
• No of version of each product in the product line
– Length
• No of items in a product line is length
– Consistency
• Extent to which product line share similar characteristics
 Product Mix of HUL
Product Mix Width (12)
Home and Personal Care (8) Foods (4)
Color Ice
Per. Skin Hair Oral Deode Ay. Tea Coffee Foods
Laundry Cosm Cream
Care Care Care rants PHC
Wash (8) (3) etics (2) (1) (3)
(3) (2) (2) (2) (1) (1)
(1)
Lux
(4 Surf Fair & Sunsil Kwality
Pepso. Axe Ayush Lakme BB-L BRU Kisaan
variants in Excel Lovely k Nat. Walls
two sizes)

Close- Rexon
Lifebuoy Rin Ponds Clinic Knorr-
up a

Prod Vaseli Annap

Liril Wheel
Line ne urna
Leng
(28) Hamam

Breeze

Dove

Pears

Rexona
 Product Line Decisions
• Product Line Analysis
– Core product; Staples; Specialties ;Convenience Items
• Line Stretching / Line Filling / Modernisation /
Featuring / Pruning
– Down market Stretch, Up market Stretch, Two way
Stretch
• Product-Mix Pricing
– Product-line pricing, Optional-feature pricing, Captive-
product pricing, Two-part pricing, By-product pricing,
Product-bundling pricing
• Co-Branding, Ingredient Branding
 New Products and Brands

New Additional Brand Diversification

Brand

Existing Line Extension Brand Extension

Existing New
Product category
 Product Item Contributions to a
Product Line’s Total Sales and Profits
 What is the Fifth P?

Packaging, sometimes called the fifth P, is all

the activities of designing and producing the
container for a product.
 Factors Contributing to the
Emphasis on Packaging
• Self-service

• Consumer affluence

• Company/brand image

• Innovation opportunity
Innovations in Packaging
 Packaging Objectives

• Identify the brand

• Convey descriptive and persuasive information
• Facilitate product transportation and protection
• Assist at-home storage
• Aid product consumption
Functions of Labels

Identifies

Grades

Describes

Promotes
Integrated Marketing
Communications
Designing and Managing
Integrated Marketing
Communications
• What is the role of marketing communications?

• How do marketing communications work?

• What are the major steps in developing effective

communications?

• What is the communications mix and how should it

be set?
What are Marketing Communications?

Marketing communications are the means by

which firms attempt to inform, persuade, and
remind consumers, directly or indirectly, about the
products and brands they sell.
 Modes of Marketing Communications

• Advertising • Direct & Interactive

• Events and experiences marketing
• Sales promotion • Word-of-mouth marketing
• Public relations and • Personal selling
publicity
 Communication Tools
Advertising Sales Promotion
• Print and broadcast ads • Contests, games, sweepstakes
• Packaging inserts • Premiums
• Motion pictures • Sampling
• Brochures and booklets • Trade shows, exhibits
• Posters • Coupons
• Billboards • Rebates
• POP displays • Entertainment
• Logos • Continuity programs
• Videotapes
 Communication Tools
Events/ Experiences Public Relations
• Sports • Press kits
• Entertainment • Speeches
• Festivals • Seminars
• Annual reports
• Arts
• Charitable donations
• Causes
• Publications
• Factory tours • Community relations
• Company museums • Lobbying
• Street activities • Identity media
• Company magazine
 Communication Tools

Personal Selling Direct Marketing

• Sales presentations • Catalogs
• Sales meetings • Mailings
• Incentive programs • Telemarketing
• Electronic shopping
• Samples
• TV shopping
• Fairs and trade shows
• Fax mail
• E-mail
• Word of Mouth Marketing • Voice mail
• Person-to-person • Blogs
• Social media • Websites
• Blogs
Elements in the Communications Process
Response Hierarchy Models
 Steps in Developing Effective
Communication
• Identify Target Audience
• Determine Objectives
• Design Communications
• Select Channels
• Establish Budget
• Decide on media mix
• Measure Results
• Manage Integrated Marketing Communication
 Characteristics of
The Marketing Communications Mix
Advertising Sales Promotion
• Pervasiveness • Communication
• Amplified expressiveness • Incentive
• Impersonality • Invitation
 Characteristics of
the Marketing Communications Mix

Public Relations and Publicity Events and Experiences

• High credibility • Relevant
• Ability to catch buyers off • Involving
guard • Implicit
 Characteristics of
the Marketing Communications Mix

Direct Marketing Personal Selling

• Customized • Personal interaction
• Up-to-date • Cultivation
• Interactive • Response
Word-of-Mouth Marketing
• Credible
• Personal
• Timely
 Factors in Setting
Communications Mix

• Type of product market

• Buyer readiness stage

• Product life cycle stage

Advertising
 Advertising

Any paid form of nonpersonal presentation

and promotion of ideas, goods, or
services by an identified sponsor.
 The Five M’s of Advertising

• Mission
• Money
• Message
• Media
• Measurement
 Advertising Objectives

• Informative advertising
• Persuasive advertising
• Reminder advertising
• Reinforcement advertising
 Factors to Consider in Setting an
Advertising Budget

• Stage in the product life cycle

• Market share and consumer base
• Competition and clutter
• Advertising frequency
• Product substitutability
 Developing the Advertising Campaign

• Message generation and evaluation

• Creative development and execution
• Social responsibility review
 Creative Brief

• Positioning statement • Key brand benefits

• Key message • Brand promise
• Target market • Evidence of promise
• Objectives • Media
 Television
Advantages
• Reaches broad spectrum of
consumers
• Low cost per exposure
• Ability to demonstrate product
use
• Ability to portray image and
brand personality
Disadvantages
• Brief
• Clutter
• High cost of production
• High cost of placement
• Lack of attention by viewers
 Print Ads
Advantages Disadvantages
• Detailed product information • Passive medium
• Ability to communicate user • Clutter
imagery • Unable to demonstrate product
• Flexibility use
• Ability to segment
 Print Ad Evaluation Criteria

• Is the message clear at a glance?

• Is the benefit in the headline?
• Des the illustration support the headline?
• Does the first line of the copy support or explain
the headline and illustration?
• Is the ad easy to read and follow?
• Is the product easily identified?
• Is the brand or sponsor clearly identified?
 Media Selection
• Reach (R)
•No of people/household exposed to a particular media schedule at
least once during a specified period
• Frequency
•The number of times within the specific period an average person /
household is exposed to the message
• Impact
•Qualitative value of an exposure through a given medium
• Total No of Exposures (E)
•E= R*F (Gross rating points)
•GRP: one exposure to 1% of the target population
•80% of homes with freq 3- 240 GRP
 Choosing Among Major Media Types

• Target audience and media habits

• Product characteristics
• Message characteristics
• Cost
 Major Media Types
• Newspapers • Outdoor
• Television • Yellow pages
• Direct mail • Newsletters
• Radio • Brochures
• Magazines • Telephone
• Internet
 Place Advertising

• Billboards
• Public spaces
• Product placement
• Point-of-purchase
 Measures of Audience Size

• Circulation
• Audience
• Effective audience
• Effective ad-exposed audience
 Factors Affecting Timing Patterns

• Buyer turnover
• Purchase frequency
• Forgetting rate
 Media Schedule Patterns
• Continuity
• Concentration
• Flighting
• Pulsing
Evaluating Advertising Effectiveness
• Communication Effect Research
– Consumer feedback method
– Portfolio tests
– Laboratory tests

• Sales-Effect Research
 Evaluating Ads with decision filters
• Brand Filters
– BENEFITS : Is the framing of brand benefits compelling?
– SYMBOLISM : Is expression of brand symbolism apt?
– RESONANCE : Will the ad resonate with the target
cultures?
• Communication Filters
– STORY: Engaging, Simple, Original & Creative?
– PRODUCT INTEGRATION: Integrates Product into the
story
• Campaign Filter
– CAMPAIGN EXTENSION: Effective extension of campaign
equities
Sales Promotion
 Sales Promotion

Collection of incentive tools, mostly short term,

designed to stimulate quicker or greater purchase
of particular products or services by consumers or
the trade.
 Sales Promotion Tactics
Consumer-directed Trade Sales Force-directed
• Samples • Price offs
• Coupons • Allowances
• Cash refund offers • Free goods
• Price offs
• Sales contests
• Premiums
• Trade shows
• Prizes
• Patronage rewards • Specialty advertising
• Free trials
• Tie-in promotions
 Using Sales Promotions
• Establish objectives

• Select tools

• Develop program

• Pretest

• Implement and control

• Evaluate results
 Why Sponsor Events?
• To identify with a particular target market or life style
• To increase brand awareness
• To create or reinforce consumer perceptions of key brand
image associations
• To enhance corporate image
• To create experiences and evoke feelings
• To express commitment to community
• To entertain key clients or reward employees
• To permit merchandising or promotional opportunities
 Using Sponsored Events

• Establish objectives
• Choose event opportunities
• Design program
• Implement and control
• Measure effectiveness
 Ideal Events

• Audience closely matches target market

• Event generates media attention

• Event is unique with few sponsors

• Event lends itself to ancillary activities

• Event reflects or enhances brand image of sponsor

 Public Relations Functions

• Press relations
• Product publicity
• Corporate communications
• Lobbying
• Counseling
 Marketing Public Relations Functions

• Assist in product launches

• Assist in repositioning mature products

• Build interest in a product category

• Influence specific target groups

• Defend products

• Build corporate image

 Major Tools in Marketing PR

• Publications
• Events
• Sponsorships
• News
• Speeches
• Public Service Activities
• Identity Media
 Steps in Marketing PR
• Establish objectives

• Choose messages

• Choose vehicles

• Implement and control

• Measure effectiveness
Direct Marketing
 What is Direct Marketing?

Direct marketing is the use of consumer-direct

channels to reach and deliver goods and services
to customers without using market middlemen.
 Direct Marketing

• Direct Mail
• Catalog marketing
• Interactive Marketing
• Personal Selling
 Types of Sales Representatives

• Deliverer
• Order taker
• Missionary
• Technician
• Demand creator
• Solution vendor
 Sales Tasks

• Prospecting
• Targeting
• Communicating
• Selling
• Servicing
• Information gathering
• Allocating
 Managing the sales force

• Recruiting, selecting
• Training
• Supervising
• Motivating
• Evaluating
 Steps in Effective Selling

• Prospecting/Qualifying
• Preapproach
• Approach
• Presentation
• Overcoming objections
• Closing
• Follow-up
 Prospecting Funnel
Key Definitions

• Leads are names of possible clients that managers

generate from databases.

• Inquiries are customer-initiated business contacts with a

supplier firm.

• Prospects are leads and inquiries that the supplier firm

has qualified as having significant sales and profit
potential.
 Prospecting Funnel
Target Market Segments

Leads

Inquiries

Prospects

New
Customers

Established
Accounts

Loyal and Profitable Customer Base

 Prospecting Funnel
Intensive Growth Strategies

Current New
Offerings Offerings

Current Market Product

Markets Penetration Development

New
Markets Market
Diversification
Development
(Based on Ansoff 1957)
Transactional, Consultative, and Enterprise
Selling
• Transactional Selling focuses on gaining the immediate order as quickly as
possible.

• Consultative Selling entails gaining an in-depth understanding of customer

requirements and operations, contributing analytical expertise to resolve
pressing problems, and becoming a long-term, value-adding resource.

• Enterprise Selling requires senior managers to convincingly elaborate the

benefits of combining and sharing complementary competencies and
capabilities across firms to form a strategic alliance.

(Rackham and DeVincentis 1999)

 Transactional Selling
1) Call Preparation and Planning
2) Opening (Complement, mystify, intrigue buyer; Opening
Statement)
3) Selling Benefits (personalise)
4) Handling Objections
5) Managing the Presentation
6) Closing
Gain the order as quickly as possible
 Consultative Selling
The SPIN Selling Approach
1) Preliminaries
2) Investigating
3) Demonstrating Capabilities
4) Obtaining Commitment
SR a long term trusted value added resource

(Rackham 1988)
 Consultative Selling

SPIN sequence of questions:

1) Situation Questions -- data gathering questions about facts
and background.
2) Problem Questions -- explore problems, difficulties, and
dissatisfaction areas which may be exploited.
3) Implication Questions -- examine the consequences of
customer problems.
4) Need-Payoff Questions -- get the customer to tell you the
benefits your product could offer.
The purpose of questions in the larger sale is to uncover Implied Needs and to develop them
into Explicit Needs.

(Rackham 1988)
 Consultative Selling
Obtaining Commitment

Types of Sales Commitments:

1) Orders -- Where the customer makes a firm commitment
to buy
2) Advances -- Where an event takes place, either in the call
or after it, that moves the sale forward toward a decision
3) Continuations -- Where the sale will continue but where
no specific action has been agreed upon by the customer
to move it forward
4) No-Sales -- Where the customer actively refuses a
commitment

(Rackham 1988)
Pricing
• How do consumers process and evaluate prices?
• How should a company set prices initially for
products or services?
• How should a company adapt prices to meet
varying circumstances and opportunities?
• When should a company initiate a price change?
• How should a company respond to a competitor’s
price challenge?
 Synonyms for Price

• Rent • Special assessment

• Tuition • Bribe
• Fee • Dues
• Fare • Salary
• Rate • Commission
• Toll • Wage
• Premium • Tax
• Honorarium
 Common Pricing Mistakes

• Determine costs and take traditional industry margins

• Failure to revise price to capitalize on market changes

• Setting price independently of the rest of the marketing mix

• Failure to vary price by product item, market segment,

distribution channels, and purchase occasion
 Consumer Psychology & Pricing

• Reference Prices

• Price-quality inferences

• Price endings

• Price cues
 Possible Consumer Reference Prices

• “Fair price” • Lower-bound price

• Typical price • Competitor prices
• Last price paid • Expected future price
• Upper-bound price • Usual discounted price
 Price Cues

• “Left to right” pricing (Rs.1299 vs. Rs.1300)

• Odd number discount perceptions
• Even number value perceptions
• Ending prices with 0 or 5
• “Sale” written next to price
 When to Use Price Cues

• Customers purchase item

infrequently
• Customers are new
• Product designs vary over
time
• Prices vary seasonally
• Quality or sizes vary across
stores
 Steps in Setting Price

1. Select the price objective

2. Determine demand
3. Estimate costs
4. Analyze competitor price mix
5. Select pricing method
6. Select final price
Step 1: Selecting the Pricing Objective

• Survival
• Maximum current profit
• Maximum market share
• Maximum market skimming
• Product-quality leadership
 Step 2: Determining Demand

Price Sensitivity

Estimating
Demand Curves

Price Elasticity of
Demand
 Inelastic
and Elastic Demand
Factors Leading to Less Price Sensitivity
• The product is more distinctive
• Buyers are less aware of substitutes
• Buyers cannot easily compare the quality of substitutes
• The expenditure is a smaller part of buyer’s total income
• The expenditure is small compared to the total cost of the
end product
• Part of the cost is paid by another party
• The product is used with previously purchased assets
• The product is assumed to have high quality and prestige
• Buyers cannot store the product
Step 3: Estimating Costs

Types of Costs

Accumulated
Production
Activity-Based
Cost Accounting

Target Costing
 Cost Terms and Production

• Fixed costs
• Variable costs
• Total costs
• Average cost
• Cost at different levels
of production
Cost per Unit as a Function of Accumulated Production
Tata motors developed ‘Nano’its small
car with a target price
Step 5: Selecting a Pricing Method
• Markup pricing
• Target-return pricing
• Perceived-value pricing
• Value pricing
• Going-rate pricing
• Auction-type pricing
Break-Even Chart
 Step 6: Selecting the Final Price

• Impact of other marketing activities

• Company pricing policies
• Gain-and-risk sharing pricing
• Impact of price on other parties
 Price-Adaptation Strategies

Geographical Pricing

Discounts/Allowances

Promotional Pricing

Differentiated Pricing
 Price-Adaptation Strategies
Countertrade Discounts/ Allowances
• Barter • Cash discount
• Compensation deal • Quantity discount
• Buyback arrangement • Functional discount
• Offset • Seasonal discount
• Allowance
 Promotional Pricing Tactics

• Loss-leader pricing
• Special-event pricing
• Cash rebates
• Low-interest financing
• Longer payment terms
• Warranties and service contracts
• Psychological discounting
Differentiated Pricing

• Customer-segment pricing
• Product-form pricing
• Image pricing
• Channel pricing
• Location pricing
• Time pricing
• Yield pricing
 Increasing Prices
• Delayed quotation pricing
• Escalator clauses
• Unbundling
• Reduction of discounts
 Brand Leader Responses to
Competitive Price Cuts
• Maintain price
• Maintain price and add value
• Reduce price
• Increase price and improve quality
• Launch a low-price fighter line
Designing and Managing Integrated
Marketing Channels
 What is a Marketing Channel?

A marketing channel system is the particular set of

interdependent organizations involved in the
process of making a product or service available
for use or consumption.
 Channels and Marketing Decisions
• A push strategy uses the manufacturer’s sales force, trade
promotion money, and other means to induce
intermediaries to carry, promote, and sell the product to
end users.
– Appropriate low brand loyalty, brand choice is made in
the store, product is an impulse items, products benefits
well understood
• A pull strategy uses advertising, promotion, and other
forms of communication to persuade consumers to
demand the product from intermediaries.
– High brand loyalty and high involvement in the category,
able to perceive differences between brands, choice
made before going to the store
 Channel Member Functions

• Gather information
• Develop and disseminate persuasive
communications
• Reach agreements on price and terms
• Acquire funds to finance inventories
• Assume risks
• Provide for storage
• Provide for buyers’ payment of their bills
• Oversee actual transfer of ownership
Marketing Channel Flows
Designing a Marketing Channel System
Analyze customer needs
Lot size, Waiting and delivery time, spatial convenience, product
variety, service backup
Establish channel objectives
Targeted service output levels

Identify major channel alternatives

Types & no of intermediaries

Evaluate major channel alternatives

Economic criteria
Control and Adaptive Criterion
 Channel Management Decisions

• Selecting Channel Members

• Training and motivating channel members

– Power – Coercive, reward, legitimate, expert, referent

• Evaluating Channel Members

• Modifying Channel Design and Agreements

end of SRS –Module3