Marketing Foundations Notes

Content: - The Role of Marketing - Strategic Marketing & Planning - Market Research - Customer Behavior - Market Segmentation, Targeting & Positioning - Products & Pricing - Distribution Channels & Placement - Integrated Marketing Communications & Electronic Marketing - International Marketing, Compliance & Ethics

Role Of Marketing
Lecture one FOCUS: Introduction to Marketing & The Marketing Environment TOPICS: - Marketing exchange - Value - The market - Ethics - Stakeholders - Marketing mix - Marketing environment - Situational analysis Definition: The Process of marketing refers to set of institutions and processes – aimed to communicate and deliver goods and services that have value and purpose for a range of customers, clients and overall society. Why study Marketing:
• • The exchange of a product is channeled and is produced through marketing. Marketing = offering = the way something Is marketed creates a total product offer i.e. prestige Companies that are marketing orientated – are more financially successful  marketing drives economic growth – play a role in stimulating consumer demand. Currently in societal market orientation  more environmentally aware e.g. low impact on society When a business is establishing its marketing plan, needs to distinguish between needs and wants  this is consumer behavior the difference between the need and want of a customer. Marketing is constantly evolving in sync to the changes to society, technology, trends, sociocultural influences -marketers need to be on the cutting edge.

• •

o In order to understand the changes that are affecting society and the
choices that influence their buyer behavior – marketers must undertake market research.

Marketing EXCHANGE: The mutually beneficial transfer of offerings of value between the buyer and seller. Successful Marketing Exchange: - Two or more businesses (parties)  each with something of value and is desired by the other party. - All parties must benefit from the transaction. - The exchange must meet both parties expectations e.g. quality or price VALUE: A customers overall assessment of the utility of an offering based on perceptions of what is received and what is given. o Utility is satisfaction – how much happiness the product gives the customer. o Value refers to the total offering – it evolves continually and is unique for each individual. o Value – quality/ prices – how much satisfaction per dollar. o Value goes to total offering The MARKET: A market is group of customers – with heterogeneous (different) needs and wants. o Customers – purchase goods and services for their own or other peoples use  the one who purchased it but it is not necessarily the person who will use the product. o Consumers – use the good or service  is the ultimate end user of the product. o Clients  are “customers” of the products of non-profit originations Ethics and corporate social responsibility Ethics, laws and regulatory bodies and corporate social responsibility. Ethics:  Set of moral principles, that guides attitudes & behavior. - Each company – are able to implement their own codes of conduct –, which can effectively guide – how they under go marketing practices. Laws: - Laws & regulatory bodies – govern the conduct of individuals & businesses – in order to ensure that their actions are beneficial or at least

organizations and other groups that have a rightful interest in the activities of a business e. which positively and negatively affect the organizations ability to serve the market.  Strengths and weaknesses are internal factors that positivity affects the organizations ability to compete in market place. Social responsibility: . MARKETING ENVIRONMENT: All the of internal and external forces that affect a marketers ability to create. mix etc. Product Price Promotion Place o Product.  The external environment – faces opportunities and threats . o Taking a need – and turning into a want – successful marketing of a product o The marketing mix is a interrelated chain -that ensures the success and profitability of a product. . deliver and exchange offerings of value. MARKETING MIX: Framework describing the different elements that marketers needs to consider  essential to a businesses successful implementation of a marketing plan. promotion. place  core structure of any marketing plan. employees.acceptable to society. which implementing practices that sustain the current an future societies. owners. communicate. Stakeholders Individuals. –they AIM to influence the external environment and there buying behavior towards the businesses desired product. External – outside the business  marketers can only seek to influence the external environment – but have no direct control of the people and behavior – THUS through the marketing strategies.g. Internal – within the company  things that the business has reasonable control over.Refers to the obligation that businesses have to act in the interest of the society. prices.

 Political forces – there are numerous political forces that influence our marketing decisions  the political forces can be on a local.  Competition between microenvironment  pure competition.. Marketing metrics: . martial status e.  Economic forces – e. the level of debt. race. aging population  marketing a supplement for the aging population – as it is taking up large proportions of the overall population in Australia. monopoly. beyond the businesses control  e.Microenvironment – industry level .Customer satisfaction . loyalty.Brand equity – awareness. Outsourcing – transferring an internal function to an external provider  blurs the line between internal and external environments.  Demographics  age.Return on investment.g. educational attainment. SITUATIONAL ANALYSIS: SA is used to identify the key factors  that will be the framework of the marketing plan.Market share .  Laws/ regulations  legislation  has direct influence on the framework of marketing plan – businesses and directors must adhere to the legislation in place for businesses. ethnicity. level of savings. culture and behaviors that influence a buyers choice – thus the company dose not have affect over these forces but must recognize them in order to cater to a certain groups of people.g. interest rates.  Technology  technology changes the expectation and behaviors of customers and clients and can have huge effects on how suppliers is not directly controllable by the organization – the microenvironment consists of customers. interest rates  economic forces directly affect how much the marketing budget can be  e.g. oligopoly. . clients. national or international level. gender. Macro – everything outside the industry – customers and clients – marketers must understand the current and future needs and wants of their target market  totally external. monopsony. partners and competitors.  Sociocultural forces  these are the forces such as beliefs. monopolistic competition.g. . Princes.

Its helps solve a problem (Target market – groups of customers with similar needs and wants. survey 3. attitudes. Collecting data 4. These are ways to measure the success of the product. Analyzing data & drawing conclusions 5. Through market research – its helps to understand and make decisions on the following influences/ factors. Presenting the results and making informed decisions & recommendations  offering actionable solutions Key thing – asking the right/ relevant questions  aim of MR is to offer actionable . Designing the research methodology how we address the research problem e. the business discovers vital information about the target market that allows the business to directly market their product to the target markets desires. • Outline the issues in research design.g. focus groups. Threats (External)  When undergoing SWOT analysis you must remember to relate to the 4PS – product. needs etc. - Market research is an ongoing process  as things are always changing  this is evident through technology. Defining the research problem 2. MARKET RESEARCH: Learning Objectives: • Define research problem • Discuss the importance of MR as a basis for marketing decision-making. Through market research. place. sociocultural influences etc. Gathering and discovering information – that is in in the interest of the business. and the subsequent reporting of market research findings to inform marketing decisions. o Market segmentation o Sales performance o Product o Distribution o Promotion o Pricing o Attitudes/ behaviors MR – involves 5 major components: 1. SWOT: Strength. price. Weaknesses (internal) – Opportunities. the role of primary and secondary data. . and the uses of quantitative and qualitative research • Understand the key principles of data collection and analysis.Market research  needs to be relevant . may share the same cultural beliefs. and promotion.) UNDERSTAND  CREATE  COMMUNICATE  DELIVER.

 Before undertaking MR – the following factors need to be considered: . the information required.Need for new information  if you are small – medium business and do no have a large funds directed to research – secondary information e. ABS .Cost benefit analysis. apple – hiring an external company – is extremely useful – in order to get an objective view.MR Brief: A set of instructions & requirements that generally states the research problem  e.  MR allows the business to identify trends and consumer trends.g. Research Methodology Exploratory Info Gathers more information about a loosely defined problem – .g.Relevance . . average income in a certain area. Ethics in market research Slugging  selling under the guise of research. specifies the time frame. Research design/ Data Collection & Analysis The detailed methodology created to guide the research project and answer the research question:  Hypothesis – a tentative explanation that can be tested  when as a mythology is a direct question. .Despite being a large company e.  With MR you want to look into the future – what might happen  key reason for conduction Fugging  fundraising under the guise of research The Research problem The research problem is a question that the market research project is intended to answer. . budget and other conditions of the project.Timing .g.Availability of resources .A clearly specified research problem ensure that the research will actually answer the question asked of It  need to address exactly what is happening.can be used to find data e. Typical MR brief includes:  Executive summary - Introduction  Background  Problem definition  Time and budget  Reporting schedule  Appendices .

Survey Pilot Sampling is very expensive  THUS businesses usually undertaken a survey pilot e. ANALYSIS. deep and detailed information about the attitudes and emotions that underlie the behaviors that quantities research identifies. The sample comes from a specified demographic / population e. surveys – is used for exploratory research.g.g.g.This process can be conducted In house OR outsourced . Mining Data Processing large data sets .Research Descriptive Research Casual Research focus groups. Where you are using a hypothesis  you can test a hypothesis. DATA COLLECTION. send out 50 surveys – in order to see that the targeted group responds well to the survey and thus they do not waste resources and funds. Research intended to obtain rich. REPORTING . Sampling Probability Sampling Non – Probability sampling WITH Non Prob sampling  no way of knowing the chance of particular member of the population being selected. Secondary Data Quantitative Data Qualitative Data You can utilize it – without the research.g. Other Types of DATA SETS Primary Data Data collected specifically for the cure MR project. EQUALS – Probability sampling e. which are not obvious or even discernible by observation  this is time effective – as there is so much data constantly going around – this is a time effective method to collect and analyze data that would otherwise go undetected. WITH Prob sampling  every member of specified demographic has a chance of being selected.  You have the data set. Numerical data  surveys are the most common quantitative research doing this you can identify patterns and trends. undergraduates. cost effective. suitable for small – medium businesses. Non – probability sampling only takes a certain group  e. When studies and surveys – are undertaken – samples are taken as the population is to large.  this types of research helps to identify behavioral patterns. 10/ 100 of Australian undergraduates. Solves a defined problem by clarifying the characteristics of certain phenomena.Data must be collected – according to the methods specified in the Research Design . Sydney undergraduates  dose not take a holistic approach to all undergraduates.

Statistics.g.Phycology . or more variables show trends. Process: 1. patters and help to support or refute the hypothesis.  Why they behave a certain way  Why they have preference to particular brands e. Data Analysis  Filtering & organizing collected data 2. two. buyer behavior – we seek to understand.g. 5. why individuals chose certain products. iPhones Central Question: How do consumers respond to various marketing stimuli (marketing mix)? Consumer behavior  Different motivations that are intrinsically linked to the marketing mix.- Time & financial resources are limited  so budgeting & scheduling need to be planned and managed – to ensure that the most benefit is derived from the research investment.Consumer. based on one. Conclusions  state what the data has shown. buying behavior process In comparison to MR – which sought to understand consumer. or time sensitive. Recommendations CONSUMER BUYER BEHAVIOUR . Qualitative analysis 4. 3.Motivation . Quantitative Analysis  the numerical data. might be price sensitive. E. . is useful tool to make educated decisions. in terms of the original research question/ suggest courses of action.

foods e. recognized e. TWO main SECTIONS: Cultural .Family . education.Physical  At a rugby game .g. E. and often by indicators such as: Income. . personal beliefs. religious beliefs.FACTOR Situational (In the present) INFLUENCES Why you purchase or not purchase. Three types: . within social hierarchy  it is defined by values. “Opinion leaders” – Group Set of Characteristics that link us to a particular faction of society. values and behaviors that distinguish themselves them from broader culture in which they are immersed. VS Tangible influences. Clothing.g. personable beliefs.Roles/ status .Subcultural .Member groups . Influences: Subculture: Group of individuals who share common attitudes.Cultural . ethics.Social interaction .Dissociative group Opinion Leader:  Reference group member. These elements are constantly evolving and slowly shifting  Which is IMPERATIVE for those studying C/B behavior – as the Target Market.Aspirational .g.Time  Running late VS time to ponder decisions.Time Available . Laws.Purchase motivation . SOCIAL INFLUENCES Reference group: any group to which an individual looks for guidance for. These influences can be divided into numerous components – that are imperative to affecting purchase behavior: .Mood  Tense/ Time Cultural: Cultural factors includes: Tangible factors: E. to accommodate these situational influences.  Once a marketer understands these influences – they can strategically place certain things. who provides relevant & influential advice about specific topic of interest to group members. lifestyles. This links to Diffusion of Innovations.Social  With family VS friends .Groups . which are easily. GOTHIC OR Intangible Elements: Such as Laws. Purchase Motivation: . are slowly shifting through intangible elements which are not easily recognized.Consumer mood Further Information Situational influences results in the circumstances a consumer finds themselves – when making purchasing decisions.g.Reference . This is a theory – explaining the way in which innovations are adapted.Social class Social . fashion trends.Physical .Social influences  Having a social drink VS aiming to get drink . Social Class: Similar rank.

g. Limited:  limited engagement. milk. routine. unfamiliar products.Explain the characteristics of different types of business markets . Cognitive: High-end purchases – thought making process = HIGH RISK  The Cognitive learning theory is directly related to the decision making process. As this dose NOT result in comparison-shopping – they are just automatically picking your product. it acts as critical element in the success of their product. Purchase 5.Cognitive Learning Theory Behavioral: Stresses the role of experience and reputation of behavior.  You want to retain customer and loyalty and repeat customers. and or/ infrequent. in business markets .Analyze business buyer behavior and decision-making. Business Markets: Individuals or organizations that purchase products for resale.Understand the major issues involved in marketing to business customers . Post purchase evaluation 6. Extended:  High engagement  high price. If CD occurs  need to reassure – the consumer has made the right decision. Cognitive Dissonance: This occurs when consumer – has second thoughts or doubts about original purchase. AIM: Marketers generally want habitual making process. Information search 3. Recognition of a need or want 2. MAKING PROCESS: 1. infrequently bought but familiar products. . high risk. low risk products. RELEVANT In: Low cost purchases e. Decision Making Process: Habitual:  Involving small. A marketer needs to manage cognitive dissonance  if businesses fail to manage this. DECISION. Cognitive Dissonance. use in the production of other products or for use in their daily business operations. every day times.Behavioral Learning Theory . Evaluation of options 4. CONSUMER. Business Buying Behavior Learning objectives: .LEARNING THEORIES There are two main learning theories: .Discuss the characteristics of demand.

Wholesaler  sell to other intermediaries. Coles – High Volume  high volume purchases is common in the reseller market. buying raw materials. Ongoing relationships:  Close ongoing relationships provide a degree of security for both parties. not for profit organizations buy & sell products.g.  These market are subject to extensive rules and regulations – which are designed to ensure that government businesses are conducted ethically and legally. Producer markets: Markets in which business organizations purchase products for use in the production of other products or in their daily business operations. Institutional markets: Usually NGO’s  in which non-public. Business to Business: High value: Businesses purchasing decisions frequently involve very large sums of money  for high value products – or high volume purchases. Marketing to Business Customers: Two Types for. state (provincial) and local (municipal) governments for use in providing services for citizens. All the steps between the producer and the consumer are intermediaries. professional services. Government markets: The market fro selling products to national (commonwealth). There are often many intermediaries within the reseller markets. as price is open to negotiation based on purchase volumes – B to B – you have that incentive.g.g. distributional and promotion factors to compare relative S & W of alternatives. Number of buyers & sellers: there are far fewer buyer and seller in the business market – than in the consumer market. This makes long-term stable relationships crucial – and can possibly give some organizations enormous market power.TYPES OF Business Markets: Reseller markets e. retail – Coles. Supplier  Shelves. Relationships in B-to-B market – are extremely important – as there are so few buyer and sellers in the B-to-B market. price competition is intense. Retailers  DIRECT to consumers. E. Price Competition & Negotiation: In the business market. High volume e. office supply’s. Formal assessment of purchase alternatives: Business customers demand extensive product information  businesses use this information along with price. . Despite – being not for profit  they fundamentally have the same structure and require the same capital input to set up and run there non – profit business.

Derive demand has a knock on effect – at all levels of the value chain.Demand for Business Products: Ultimately it is the C (Consumer) in the overall market – where the demand comes from in the reseller market. Deals / purchases are done less often and infrequently in B-B market. agreements. (Overall  the demand is ultimately being determined and will be affected by change in the demand from the END consumer). supply. New Task Purchase: Never purchased something like this before  as a business. You want to target the business at the top e. Fluctuating Demand: Business customers make purchase decisions infrequently and based on expectations of: Long run demand  resulting in demand that fluctuates more so than in customer market.g. .Description – meet your technical specifications . Underlying aim for a new task purchase is to increase efficiency and PROFIT. The derive demand comes from the C in the B-to-B market.Negotiation – price. As Marketers you want to introduce something new to the market  in a specific market. Windows XP to windows 7. they are required to do a lot of research. In B-B market especially in manufacturing this is HUGE. Modified rebuy – the purchase of a product that is similar. If where B-to-B – (Microsoft to UTS) – have to modify and see how compatible the new windows is for C (Students). fast food market – you want to target McDonalds  as they are one leading the market and influencing the others. Business Buying Behavior: Straight rebuy – usually for little purchases – common goods that businesses need e. Pricing & Demand: Inelastic Demand  not price response / Elastic – price sensitive Inelastic Demand in B-B  is then passed onto consumer.g.g. volumes etc. paper  reliable source of income for suppliers. Derive Demand = C – B – B (Knock on effect) Derive demand = Demand in the business markets that is due to demand in consumer markets.Inspection – when description and specification are not enough . B-B-C. but not identical to one previously purchased after evaluating a small range of alternatives e. Joint Demand: Interdepend demand for products that are used together in the production of another product. Purchasing Decisions: They INVOLVE: . That the product is not ready – unless all these components are ready at the same time – for the product to be complete.

Purchase .Research / information search . External environmental factors:  include macro – environment – PESTAL: .- Sampling – a sample may be inspected or analyzed for quality (receiving inspection) Buying center – collective group of people that make purchase decisions in a company. Factors Include: . objectives.Individuals within the organization!! The individual buyers – are KEY to when wanting to target a business to purchase your product. targeting & positioning Objectives: Explain the broad concept of market Understand the target marketing concept Identify market segmentation.Sociocultural .Organization structure .Technological .Problem recognized by initiator .Evaluation for options .Political . ROLES include: o Initiators o Users o Influencers o Decides o Buyers o Gatekeepers Business Decision Process: . (B2B).Nature of organization – size. variables for consumer and business markets and develop market segment profiles Select specific target markets based on evaluation of potential market . In B-B purchasing  need to no who to target – when trying to sell your product to B. resources .Legal forces  These are not directly controllable by the organization Markets: Segmentation. larger the company.Economic .Post purchase evaluation Internal Environmental factors: . more complicated this structure gets.This helps to explain why each organizations makes different purchase decisions. location.

with common needs and wants – within these common characteristics – there is the development of market segments.Identifying .- segments Understand how to effectively position an offering to a target market in relation to competitors and develop an appropriate marketing mix. Market: A group of buyers – who have the opportunity. Target Marketing: Refers to the approach of marketing – that is based on: .Understanding .Consumer markets .Developing  an offering for the particular segments. This refers to the subgroups within the total market – that have relatively similar characteristics. This include: . .Business markets o Reseller markets o Producer markets o Government markets o Institutional markets TARGET MARKETING: Markets have a variety of characteristics. willingness and ability to purchase a product or products.

customized offering to meet individual needs.Market Segmentation  FORMS BASIS OF TARGET MARKETING.Example – hair dressing. at a low cost  achieve economies of scale and capture large % of market = high profitability. . Product – Marketing efforts are concentrated on Market offering a single product to a single market specializatio segment.g. Targeting • Evaluate potential segments • Select target markets 3. . requires. B. STAGE Market Segmentat PROCESS Characteristics that buyers have in common and that might be closely INFO Geographic Segmentation Based on variables of geography . Nikon  pure focus on cameras.A marketing strategy that involves developing different marketing mix for each TM segment. C • Determine the marketing mix for each segment. n - TARGET MARKETING PROCESS: The TM process is fundamental component of the marketing strategy for any organization.More restricted market  higher unit costs .g. The process involves three main stages: 1. higher retail prices – high market share and strong customer loyalty.Strategy Mass Marketing Buyers have common wants. . Provides a unique. . Product Market efforts are concentrated on offering a Specializatio single product range to a number of market n segments e. A. Positioning • Determine positioning for each segment e. - One to One marketing Differentiated targeting strategy Product and Market Specialization Small organizations – with limited financial resources. Production: Large volumes.Production: entails high costs  to achieve high profit. Segmentation • Identify segmentation variables • Profile market segments 2. Market Marketing efforts are focus on meeting wide Specializatio range of needs within a particular market n segment. usually adopt one of the following specialized approach to target marketing. needs and demands A single product will meet the needs of the majority – with an undifferentiated product.The one to one marketing approach  forms basis of niche strategy. .

suburbs. local population. market density.These variables – are the most the purchase of product in question. Variables include: . . it is based on ACTUAL PURCHASE / and or consumption behavior. .Price sensitivity . age. .g.  Therefore better indicator on market segments and their purchasing behavior – in comparison to generalized consumer characteristics. education and income. . “customized” or “one to one”  marketing is a good approach to use. region. which are the vital Effective Segmentation = choosing social characteristics of the variables that are easy to measure & populations e. Demographic Segmentation Based on variables.Brand loyalty . Physiographic Segmentation: Based on the psychographic variables of lifestyle. Combines Demographic & geographic areas to profile – a very small area e.Behavioral - Climate.Volume usage Segmenting Business Markets (Continued from Segmentation) As a business markets – are often characterized by a small number of buyers who might display a very close relationship with the seller.g. The variables for consumer markets fall into 4 broad categories: .This is reflected in hobbies or choice of entertainment.ion elated to there purchasing behavior. Behavioral: In contras to the above variables  this segment is NOT based on consumer characteristics. commonly used variables for market segmentation.This segmentation based on the NEED to understand not who you are but HOW you live your life.. urban/ suburban/ rural footprint.Benefit expectations .Demographic .In contrast to demographics alone  this variable seeks to understand consumers by identifying their mindsets – and how this is expressed in their lifestyles.Psychographic . motives and personality attributes. readily available  linked closely to .Occasion .Geographic .

Effective Segmentation involves ensuring: . assuming a specific level f marketing activity.How it.e. The selection of target markets  MARKET resulting from a evaluation of TARGETING identified market segments.Market segments must be different from each other  for a distinctive offer to be created for each segment. 2. Company Sales potential: An estimate of the maximum sales revenue and market share that an organization can expect to achieve for a specific product.  Maximum possible sales in the total market of the product category. The potential is influenced by the market potential  Level of marketing activity.Stability  segment stays stable & long enough for the marketing strategy to produce results.Business marketers  isolate business customers by using commercial/ industrial directories – that contain detailed information on companies.Measurability  abstract variables can be difficult to measure . its products and its brands in relation to Organization can peruse positioning for following reasons: . the competitive situation and cost structure. and the effectiveness of org’s promotional spending.Substantiality  the segment must be sufficient size to allow profitability . POSTIONIN G Refers to way to in which the market perceives an organization. . Market Potential: The total sales of a product category – which all organizations in the industry are expected to sell – in a period of time. . the common variables shared by members of the MS and how the variables differ between segments). Evaluating Potential Segments: Involves analysis of sales potential. 3. The total Vol of sales is determined by market share.Practicability  segments are only of use if they can be identified and serviced . Sales Revenue: Total Vol of Sales X the average selling price. as whole perceived  In - . Market Segment Profile: Market Segment profile refers to the description of the typical potential customer in the market segment (i. Segmentation  Targeting (evaluate segments then select)  Positioning.Otherwise this will create overlapping segments  or send confusing images and messages  do not want to confuse the consumer. Market Share: The proportion of the total market held by an organization.Accessibility  through distribution and communication channels .

positioning of our brand  the final step with the TM process – it to determine appropriate marketing mix for each target market segment. Between Mac Books . Good  Tangible Service  Intangible Idea  concept / Philosophy Total Product Concept: Describes the CORE product Four layers: .  The crucial fact is how the potential buyers see the brand – this requires the organization to undertake qualitative and quantitative research to obtain an accurate understanding of the position it occupies in the mid of (Look at picture) its target customers.competing offerings.Explain how the value of branding and the major issues involve in brand management .Describe the functional and marketing roles of packaging . new product development and the product adoption process .How its brand are seen  focusing on distinguishing brand attributes e.Explain key aspects of product management and positioning through the product life cycle.How the market distinguishes it’s offering firm those closely competitive brands.  Correlates b/w high-perceived quality and status.Core – basic function . .  When the knowledge of the optimal practicable. Brand positioning: A positioning strategy – designed to create a market perception of a particular brand.Outline how an organization can differentiate its product to obtain a competitive advantage .Define product and understand different ways to view and analyze products . PRODUCT Objectives: . related to extensive personalized services.  The organization must determine how offer is “positioned” in the mind of each of it target market segments  and develop its marketing mix accordingly.Describe the product lifecycle.  Low perceived quality and status linked to limited service and less personal. relation to competitor. A good service or idea offered to the market for exchange. usually based on product attributes.g.

- Expect – expected result  the simple expectations/ result of the product Augmented – something that you might get. Once you get down to the augmented and potential product differentiation starts to come into play.Equipment  Capital equipment and accessory equipment used in the product of the businesses products. Specialty products . target market. Ferrari Unsought products e.g. TYPES: .Part and Materials  B2B products that form part of the purchasing business products .g. raw materials. however not expected  this is a positive Potential – things that might be in the future release – however not in the present. such as end use.Low involvement  High frequency e. milk  There are substitutes of these products Specialty products e.  Bigger spectrum: Product Mix¨: The set of all products that an organization makes available to customers. convenience products Business 2 Business product Those products purchased by individuals and organizations for use in the production of other products or for use in their daily business operations.Introduction . Consumer Product: Those products purchased by individuals and households for their own private consumption.g. emergency situation Depending on the type of product – the frequency of purchase behavior changes: .Supplies and services  B2B products that are essential to business operations  do not directly form part of the production process. .g. PRODUCT LIFE CYCLE: Refers to the typical stages a product progresses through: . They are all a subset of one another within the product mix.New Product Development .High involvement  Low Frequency e.g. Product: Product item: particular version of a product Generalize that to  Product line: A set of product items that are related by characteristics.g. washing machine Convenience products (fast moving consumer goods) e. Types: - Shopping products e.

it consists of symbols or designs. influence the decisions that individuals make in such a way that innovations are adopted by the market in a predictable pattern over time. The part of the brand NOT made up by words. ISSUE: If you differentiate your product to much  the consumer becomes confused. this starts to take place at the augmented and potential layer of the product. slogans.New - Growth Maturity Decline product Development: Idea generation Screening Concept Evaluation Marketing Strategy Business Analysis  Here the product is killable Product Development Test marketing Commercialization - PRODUCT ADOPTION PROCESS - Awareness  With the explosion of mass media.5%  Innovators 13. letters. 2. it now commonly used to create interest and buzz about products. Which forces them to look at the price attribute of the marketing mix – and purchase what eve is cheapest. and numbers. Brand Name Brand Mark Part of the brand that be spoke.5%  early adaptors 34%  Early Majority 34%  late majority 16%  Laggards PRODUCT DIFFERENTIATION The creation of products and product attributes that distinguish one product from another. . Which is intended to create an image in customers mind. BRANDING The collection of logos. including words. Brand Image The set of beliefs that a consumer has regarding a particular brand. and design. This is a NEGATIVE. Interest Evaluation Trial Adoption Diffusion of Innovations  This is the theory that social groups. that differentiates their product from the competing market.  These are used in the PA process – to gain momentum for the product.

Brands owned by resellers.Coordinated promotional activity .Functionality . Added value that a brand gives to a product.Reduced risks and effort. VB pale Ale In contrast to: Brand expansion: Where you are moving into a new product category  you do this when you want to invigorate the brand. Line extensions  Taking existing product/ item.  used to differentiate product. The main are: .Brand loyalty A branding approach in which each product is branded separately  Most popular. fresh packaging. Home brand Products that only indicate the product category.Provides identifying. E. Agreement to use an establish business model.Brand attributes . Labeling . A branding approach that uses the same brand for several of the organizations products. Brands owned by producers and clearly identified with the product at the point of sale. Benefits: . placing a new twist on it e. innovative. E. Customer’s highly favorable attitude and purchasing behavior towards a brand.Stock price analysis . Arnotts Giving an existing brand name to new product in a different category e. legal and other information. EXISTING PRODUCT EXPANSION: A brand name/mark that has been registered  secure exclusive use of brand.g.Trade Mark Brand equity Brand Loyalty Brand Metrics: Individual Branding Family Branding Brand Extension Manufacturer Brands Private Label Brands Generic Brands Licensing Franchising Co-Branding PACKAGING Packaging of a product can be essential to create free promotion  creating awareness through people having stylish. promotional. Measure the value of brands and include: . Use of two or more brand names on the same product.Brand assets . Product Modifications: Changes to the characteristics of a product – that results in a product that supersedes the original. such as wholesalers or retailers and not identified with the manufacturer. .g. BMW making 4WD.Part of the package .g.g. The brand owner permits another party to use the brand on its product.Quality .Replacement cost .working off price  target hose who are price sensitive – look at price.

Buyer Benefit  Satisfaction derived from the consumption or ownership of the product. new product. different pricing across different geographical locations e.  Businesses do not want to get stuck on this. Pricing  how you manage the price  e. It is directly related to profitability.g.Specific . higher price. . Seller Benefit  The revenue the sale derives. Price = value that the buyer gives in exchange for the product in a marketing transaction. new price.> however this is not always true e. new promotion. - PRICE Understand the objectives that guide pricing strategies Analyze demand to inform the development of an appropriate pricing strategy Describe the principles of pricing based on costs Explain the role of competitive analyze in determining pricing Appreciate the issues involved in pricing for business markets Understand how to manage prices as part of the marketing mix.Aesthetics.Actionable .g. Prices must exceed costs. POSITIONING Product positioning  is achieved through altering the product and overall marketing mix e.g. - When a product is regarded as homogenous – the only thing you can compete on is pricing.g. Price  most flexible out of all components  It is the most important. It is the major determinant of sales volume. out of the marketing mix.Measurable . higher value. City VS the suburbs.Reasonable . PRICING Price  can be indicative of the true quality of the product -. PRICING OBJECTIVES Determining price objectives Should be: .  Want Return on investment.Timetabled Profits  Generated when total rev exceed total costs.

Comparability and clarity of pricing.Long term Prosperity . . Not for Profit Pricing: .Price Discrimination  B2C Market  this is legal  Price Discrimination is not allowed in B2B market – it is illegal. . .Objectives: Tend to focus on the following issues. The legal Environment – includes areas subject to legal restrictions: .g. .  Trade Practices Act (Australia) and Fair Trading Act (NZ)  Prohibit deceptive advertising. .g. medical care).Misleading and deceptive conduct  Bait and Switch (Come in for a cheap product. . Australia Water.Prices need to appeal to target customers. . in which prices are set based on the level of .Market Share . intervene in markets to control prices (e. Demand Based Pricing:  Have to look at the pricing through each segment.There OBJECTIVES INCLUDE: o Generating enough funds to sustain activities o Make products/ activities appealing to TM. DEMAND CONSIDERATIONS Demand = The relationship between the price of a particular product and the quantity of the product that consumers are willing to buy. .While not for profit pricing organizations do not seek to make profits  they do seek a return on their activities and many charge for their products. .Pricing needs to consider INTERNAL AND EXTERNAL factors.Essential services  these are regulated e. o Encouraging a change in attitude or behavior among a TM. Selling the Pricing Method: Pricing decisions should be based on an understanding of the customer and should reflect the value of the product to the customer.Positioning o Prestige pricing  Very important for positioning – charging an artificial higher price – create prestige around the product – only certain sections of society can afford it.g. and switch it for more expensive product  they really never intended to sell you the cheap car  this is illegal.Price Collusion  When companies get together to set the prices  act as a monopoly so then they set the price within the market = illegal. This is an approach to pricing. This is not driven by the forces of supply and demand – they are targeting those can afford this higher artificial price. Monopoly  monitored by Government e.Profitability  Profit VS Profitability  this is referring to the long-term  price in such a way that ensures long run profitability – not just a short-term profit.  Government sometimes.

regardless of price. it cannot maintain this approach.  Not responding to the product/ price = inelastic – this occur to needed common goods e.  In relation to the product life cycle  the price will change within different stages. as it is too common.Price Floor o “Price floor”  Cannot go below a certain price. o While a business may sell at a loss for a short time. allowing them to charge low price.Variable Costs o Do not vary with changes in output.Shared Costs o Costs shared across products. Shelling out money VS how much is coming in. . Elastic  Very responsive to price changes  Luxury goods  This is very important – when businesses can’t cover costs – generally respond through increasing prices – if they Elastic – they could further alienate their consumer base  the right decision could be to lower the price – to increase consumer base.demand within the market.  Peoples response to different prices – create segments within the market = price sensitive = elasticity. o However this is not even..Fixed costs o Do not vary with changes in output . Mature Stage – sales and profits are beginning to decline –prices will need to be lowered in order to keep sales – this is when outsourcing comes into play – in order to reduce manufacturing costs.  SUCCESS depends on orgs ability to predict fluctuations in demand. Low prices may generate high sales volume.  When price is low with prestige products – the prices go low. water/ toothpaste  you are going to purchase it.g. . o A minimum price that must be charged to cover cots. Inelastic  Not really responding the product is inelastic to changes of the price within the market – happens with / specialized and common goods. COST CONSIDERATIONS: The cost mix include: . .  Increasing price  goes along the curve  if the curve shifts  changing other P’s. . but may conflict with high quality – differentiated positioning.Marginal Costs o Additional or one more. o Variable costs expressed in cost per extra unit of production. The demand schedule and demand curve:  LOOK AT SLIDE  Insert notes  Demand Curve = the other three P’s are still embedded in  However the demand curve only reflects the price in relation to quantity.

o Trying to get you in. Look at Slides TYPES OF PRICING Pricing can be based upon: .Costs  including profits and margins . demand and costs and the link to profits. E. . cereal – which could be priced higher then.Price Leader o A high volume product priced NEAR cost to attract customers into the store.Demand .Mark Up Pricing - - . WHY: Because in general  people buy bundles of goods – thus they use these pricing strategies in order to get people into the store at the first place – then attract people to other normally priced or higher priced products. to cover total costs. . o An analysis designed to estimate the volume of unit sales required. Can be: . Where it is expected they will buy other normally priced products.Loss Leader o High volume product priced BELOW cost to attract customers into the store. Evaluating cost structure requires a detailed understanding of relationships between price. normally priced. normal with the milk being a loss leader. o Important to test price and volume sensitivity. product. product at the back – so they have to walk through the store.Cost Plus Pricing .  THEY DO this through PLACEMENT / LOCATION– put it at the back of the store –advertisement at the front.Competition Cost Based Pricing: An approach to pricing in which a % or dollar amount is added to the cost of the product in order to determine its selling price. How many do they need to sell to even break even. where it is expected they will buy other.g.Marginal Analysis o An Analysis designed to determine the effect on costs and revenue when an organization produces and sells one more unit of the product. . o Not making any profit – not losing.Contribution Margin o Different between the price and the variable cost per unit. Break Even Analysis o Need to find out – before they go to produce the product – that will they even make enough to cover all costs  they need to do this through market research. leading you in with the milk  as they assume you are going to buy complementary products e.g.

You really want to differentiate your product in terms of promotion.  This is the worst possible scenario for businesses – as businesses are cutting prices all the way to floor – where costs are not being covered. COMPETITON CONSIDERATIONS Oligopoly Where the market is dominated by a small number of large suppliers.Economies of scale  as the amount of units produced increases  the cost to produce each unit decrease. which arises through: .Low cost production .In Developed countries long term price competitors can create oligopolies.g.  This is undesirable unless seller has cost advantage.Price competition can result in Price Volatility e. This can ultimately force weaker competitors form the market. As you can easily change price  however it is much harder for other. for the rest.“Price Wars” – can break out  as Competitors try to match low prices. place. Petrol Retailing .  Look at slide. product. . .Competition Based Pricing: An approach to pricing based on prices charged by competitors or on the likely response of competitors to the organizations prices. .  You don’t want to make pricing the fundamental way of your marketing strategy  marketing of last resort.

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