Marketing

 Promotion- communicating info between seller and buyer in the channel

to influence attitudes & behavior

PROMOTION METHODS
 PERSONAL SELLING- direct spoken communication
 MASS SELLING- communicating with large numbers of customers at the
same time
 ADVERTISING- any paid form of non personal presentation of ideas by an
identified sponsors. it includes use of traditional media as well as new
media.
 SALES PROMOTION- promotion activities that simulate interest, trial or
purchase by final customers.
 PUBLICITY- unpaid form of non personal presentation of ideas, goods or
services.

 PROMOTION OBJECTIVES
 INFORMING- can show that the product's features meets consumer
needs better than other products.
 PERSUADING- the firm will try to develop a favorable set of attitudes so
customers will buy, and keep buying its products.
 REMINDING- reminding them or their past satisfaction may keep them
from shifting to a competitor.
 HOW TYPICAL PROMOTION PLANS ARE BLENDED & INTEGRATED

 pushing- using normal promotion efforts to help sell the whole

marketing mix to possible channel members.
 pulling- getting customers to ask intermediaries for the product.

 PROMOTION BLENDS VARY OVER THE LIFE CYCLE

 MARKET INTRODUCTION STAGE

-"this new idea is good"
-basic promotion objective: informing
-the promotion must build primary demand that is demand for the
general product idea not just for the company's own brand.

 MARKET GROWTH STAGE

-"our brand is best"
- more competitors enter the market & promotion emphasis shift from
primary demand to selective demand-- demand for the company's own
brand

 MARKET MATURITY STAGE

-"our brand is better, really"
- business products may require more aggressive personal selling -
perhaps supplemented by more advertising

 SALES DECLINE STAGE

-"let's tell those who still want our product"

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 - the total amount step in promotion decreases as firms try to cut costs
to remain profitable.

 PRICING CONCEPT

 PRICE
 - amount of money changed for a product/service
 - sum of all values that customers give up to gain benefits of having or
using a product/service
 - is the single element in the marketing mix that produces revenue, all
other elements represent cost.

 THE PURPOSE OF PRICING STRATEGIES
 1. Positioning- the price of the product/service should correspond w/
how these product/services are positioned in the target customer's
mind.
 2. Marketing Mix- the price of the product/service must be aligned with
the chosen marketing mix.
 3. Goals/Objective- price support the purpose the business was
established in the first place.
 4. Income- make sure that the business can generate income to cover
operational costs and generate healthy profit.

 PRICE DETERMINANTS

 INTERNAL FACTORS

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 1. Marketing Strategy- company must settle on its overall marketing
strategy for the product/service.
 2. Objectives- firm can set prices to draw new customers or profitably
keep existing ones.
 3. Marketing Mix- price choices must be harmonized with product
begins, distribution and promotion decisions to structure a reliable and
valuable marketing programs.
4. Other Organizational Considerations- management must fix on who
within the organization should set prices.

 EXTERNAL FACTORS
 1. Nature of the Market- the marketer should know the relationship
between price and demand for company's product.

 Pure competition/perfect competition- market that has a broad range of

competitors who are selling same products. ex. milk, canned goods

 Monopolistic Competition- imperfect competition such that many

producers sell products that are differenciated from one another and are
not perfect subtitutes.

 Oligopolistic Competition- dominated by only few large firms. they dont

prefer to compete via price wars & they compete in various other ways
such as advertising, product differentiation & barriers. ex. cola industry

 Pure Monopoly- market structure where one company is single source

for a product & there are no close substitutes for the product available.
- relatively rare

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 - in order to maintain pure monopoly, there must be barriers preventing
competitors from entering the market. ex. utilities

 2. Demand- buyers are less conscious when the product is high in quality,
prestige or exclusiveness.
 3. Economy- economic factors affect pricing decisions.
4. Other Environmental Factors- company must set prices that offer
resselers a reasonable profit.

 NEW PRODUCT PRICING

 Market-Skimming Pricing- companies that create new products set high
initial prices to skim revenues layer by layer from the market.

 Market-Penetration Pricing- companies set a low preliminary price to

break in the market fast and deeply to draw a large number of buyers
quickly and gain huge market share.

 GENERAL MARKET APPROACHES

 Demand-Oriented Approaches- consider the taste/preferences of
customers more heavily than cost, profit & competition

 1.skimming
 2.penetration
 3.prestige- physiological pricing strategy that sets prices of luxury
products to the expectations of niche class of customers who associate
higher prices w/ superior quality.

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 4.price lining/product line pricing- products/services within a specific grp
are set at different price points.
 5.oddeven- psychological pricing where the price is set based on
customer's perception of a significant difference in cost between
products priced at a whole number value & products priced slightly
below this whole number.
 6.target- identifying the price at which a product will be competitive in
the market place
 7.bundle- companies sell package for a lower price than they would
charge if they buy it separately
 8.yield management- understanding & influencing consumer behavior to
maximize yield or profits from a fixed, perishable resource.

 Cost Oriented Approaches- price is set using the production & marketing
costs and the adding to cover direct expenses

 1. cost plus pricing- adding percentage to cost in order to fix the price
 2. break even pricing- firm determines level of sales needed to cover all
the relevant fixed & variable cost
 3. experience curve- most experienced producer benefits from having
lower cost than its competitors

 Profit Oriented Approaches- setting prices for products that will

guarantee to make money on each sales

 1. target profit- seller sets prices with the purpose to make certain
amount of money

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 2. target return on sale- setting typical prices that will give profit that is a
specified percentage
 3. target return on investment- a way of considering profits in relation to
the capital invested

 Competition Oriented Approaches- setting prices based on competitor's

strategies, costs, prices & market offering.

 1. customary- standardized channel of distribution, other competitive

factors dictate the price.
 2. above, at, or below- subjective feel for competitor's price or market
price using benchmark.
3. loss leader- sells a product below its customary price to attract
attention to it.

 DISCOUNT AND ALLOWANCE PRICING

 DISCOUNTS- companies adjust their basic price to reward customers

 TYPES OF DISCOUNTS

 Cash Discount- price reduction to buyers who pay their bills promptly

 Quantity/Volume Discount- price reduction to buyers who buy large

volumes

 Seasonal Discount- who buy merchandise or services out of season

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 ALLOWANCE- reduction, but bcoz the goods are faulty or not fit for
purpose

 TYPES OF ALLOWANCES

 Trade In Allowances- turning in old item when buying new one

 Promotional Allowances- payments/price reduction to reward dealers

for participating in advertising and sales support programs

 SEGMENTED PRICING- adjusting prices to allow for differences in

products/locations

 Customer Segment Pricing- different customers pay different prices for

same product/service

 Product Form Pricing- different versions of product are priced differently

although the difference is not due to cost differences

 Location Based Pricing- different prices for different locations

 PSYCHOLOGICAL PRICING- considers psychology of pricing not only

economics, adjusting prices for psychological effect

 GEOGRAPHIC PRICING- adjusting prices for geographic location of

customers

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 DYNAMIC PRICING- adjusting prices continually to meet the needs of
customers
 INTERNATIONAL PRICING- the price that a company should charge in a
country depends