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135 Cards in this Set
- Front
- Back
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Price
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Amount charged for a product or service sum of all values that a consumer gives us in exchange for an item
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Steps in setting Price
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1. Develop Pricing objectives
2. Estimate demand 3.Determine Costs 4. Evaluate pricing environment 5. Chose a pricing strategy 6. Develop pricing tactics |
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Price must be seen as
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providing value by the consumer
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1.Develop pricing objectives
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what is the firm trying to achieve with its pricing strategey
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Increase ssales or market shares
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Does not always lead to profits (b/c of sales/discounts)
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Long term profitability
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Resonable margins over time
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Short term Survival
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used for products ith high seasonality or in emergency situations
Just cover out of pocket costs |
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Enhancement of Image
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high prices to create status
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2. Estimate Demand
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How much of a product is the entire market willing to buy as the price goes up or down
In general, but not always, demand varies inversly, with price |
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Price elasticity of demand
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How sensitive consumers are to price
Percentage change in demand divided by the percentage change in price Does demand change more, the same or less than price? |
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Demand is price elastic if
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a change in price has a large change on dmeand- in the oposite direction
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Demand is price inelastic if
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a change in price has little change on demand
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Prestige items
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An increase in price increases demand
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Demand Curve
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graph of demand at various price points
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Psychological price point
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Price "Limit" for most consumers where the market evaporates
Price at which the majority of consumers drop out of the market |
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Demand curves are developed assuming that as price changes there is no change in
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Consumer income
Consumer tastes Availability of substitutes |
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3. Determine costs
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In general the price that is set must cover all costs of making and selling the product
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Fixed Costs
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costs of production that do not change with the number of units produced
Normally presented as "Total fixed Costs" |
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Variable COsts
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costs of production that are ties to and change with the number of units produced
Normally presented as "variable costs per unit" |
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Break even analysis
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Shows the point where all coats are covered by revenue
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Can be used to determine
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1. What quantity to produce given a predetermined selling price
2. What selling price to set tgiven an estimated demand |
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Look over Break even price caluculations
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And remember to cast your burdens on the Lord who loves you
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4. Evaluate the pricing environment
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The economy- business cycles will influence prices
Competition- generally price must be within normal range, will be influenced by structure of the competitive market |
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5. Choosing a pricing strategy
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can focus primarily on costs, demand, or environment
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Cost plus *
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add profit to cost
Works only if cost plus is below value |
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Demand based
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yield management- what makrte will bear at specific points in time (Football tickets, airline tickets)
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Target costing
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figure out what consumers will pay and then build to that
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COmpetitive based
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price leadership, prestige pricing
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6. Develop Pricing tactics
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Actions generally taken at the consumer level
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Product line pricing
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comapany produces myltiple versions at different quality levels of the same item (golf shirts at 19.99, 39.99, 59.99)
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Loss leader
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low price on one item to attract store traffic
Make money on other items Generally considered legal ( some states limit this if price is below costs) |
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Bundling
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Selling two or more different items for one price
Combo meals |
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Odd- even
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set small amount below even number
( 9.99, 5.99) |
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Price fixing
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conspiracy among firms to set prices
Illegal under the sherman act |
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Price discrimination
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Charging different customers different prices for the same product, when no cost differences exists
Illegal under the Robinson-Patman Act |
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Deceptive pricing
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pricing which misleads the consumers such as:
Bait and swith Inflating prices prior to a sale Comapring sale prices to never used "regular" prices |
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Predatory Pricing
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Charging a very low price with the intent of eliminating competition
Illegal under FTC Act and Sherman Act |
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Promotion
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Marketer's communication efforts to influence attitudes or behaviors
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The promotional mix included
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Advertising
Sales promotion Personal selling Public relations |
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Advertising
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nonpersonal communication paid for by the sponsor, generally using mass media
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sales promotion
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short term activities designed to encourage tuse or build interest
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Personal selling
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direct interaction and communication b/w a sales agent and a potential buyer
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Public relations
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communication activities designed to build good will and obtain relase of informations without payment
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Integrated MArketing Communications
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coordinates apporach using all of the elements of the promotional mix
Provided a "unifed voice" across all elements |
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Guerilla Marketing
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placing promotions in unexpected outlets
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Viral marketing
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(online) using incentives to get consumers to spread good about your product. Sometimes this is how buzz marketing starts (whether online or not)
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Before doing any promotion, the firms must
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Decide on a Target Market
Decide on Objectives (Generally want to move someone, from awareness, through Knowledge, desire, purchase to loyalty) Set or be aware of Budget |
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Volume of Advertising
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About 265 billion annually in the US
About 470 Billion worldwide |
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Product Advertising
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Designed to promote a specific item
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Pioneering/informational
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Purpose is to inform/educate
Usually for new items |
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Competitive/persuasive
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purpose is to persuade
Promotes features of a specific brand |
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reminder
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Purpose is to remind
Reinforces loyalty to a product |
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Institutional Advertising
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related to a company rather than a product
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Pioneering
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to introduce a new company
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Coroporate image
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promotes overall organization
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Corporate advocacy
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shows company's stand on social issues
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The advertising Process
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1. Identify the target market
2. Develop objectives 3. Design the advertisment 4. Pretest 5. Choose media and schedule 6. Evaluate (post test) |
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1. Identify the Target market
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first decide audience
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2. Develop objectives
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Budget objective- how much is to be spent
Message objective- what is to be acomplished ( inform-educate, persuade-convince, remind-keep in evoked set) Must be specific in target maket and time |
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3. Design the ads
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Creative stategy- what will be conveyed and how?
Content (What is conveyed) Appeal( How it is conveyed)"Theme" Factual- what is different about the product Emotional- fear, humor, sex Celebrity Endorsement Slice of life- Testimonials Demonstration- i.e. agents in area of disaster |
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4. Pretest the Ad
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Are consumers likey to respond positively to the ad?
DO they understand its content? Portfolio Tests- used for print ads, proposed ad is inserted in a sample magazine Theater test- Ad inserted in Test TV program, viewer is much more likely to watch adds as they would at home Focus groups |
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5. Choose media and schedule
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What method of communication will be used? Determine media and specidic outlet
Media= TV, newspaper Outlet= Apprentice, Red and Black |
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The following note cards are
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things a marketer should consider when selecting media and determining schedule
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Reach
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Percentage of the Target Market that will be exposed to ad at least one time
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Frequency
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Number of times a person in the Target mgroup will be exposed to the advertisement during the ad campaign
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Gross Rating Point
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Reach versus Frequency
Allows comparison across different media and different outlets Rating- percentage of household w/ a TV that are watching the program |
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Qualitative Selectivity
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How Homogeneous the audience is
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Cost per thousand
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cost of reaching 1000 individuals with the ad
To calculate: (cost of the ad/ reach in number) X 1000 |
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TV
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large audience, low CPM, multiple senses, can be creative, can demonstrate, High absolute cost, short exposure time. Networks collabortate and put on the same commercial at the same time. Audiences is becoming increasingly fragmented
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Radio
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Low cost, can be placed qucikly. Short exposure time, split attention, no visuals
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MAgazines
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Long life, can handle complexity, high qualitative selectivity. Long lead time to place, fairly high cost, fragmentation, not a lot of flexibility
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Newspapers
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Low cost, excellent local coverage, can place quickly, Can target specifically, short life span, limited flexibility, not high with young people
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Direct Mail
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can convey large volume of information, flexible, creative, can be tracked, high postal costs, junk mail problems
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Outdoor
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Includes billboards, transit ads, good local coverage, good frequency. May be subject to environmental regulations. Message must be short, low selectivity
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Internet
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Can link ads to online purchases, multiple senses, w/ cookies can track actions, consumer resentment, low "click through" (less than 5% of people)
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Other
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Movie theaters, renatal tapes, hot air ballons, plane trailers, ski lifts, less competitions but some resentment
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Advertorial/ Infomercial
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Magazine/TV advertisemtnes that resembles editorial content or news. Includes "non-advertising" content
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Product Placement
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Having your product featured or used in a program or movie
Marketer pays a fee or provides items free or charge |
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Decide on a scheduling strategy
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Continuous- steady stream of ads through out a year
Pusing- ads are focused in a few time periods throughout the year |
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Schedule and run advertisment
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can usually specify a time slot for TV, radio and issues of print
Can not always control exact placement |
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6. Evaluate the effectiveness
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Post test- to see if meeting objective
recall tests- with help ( aided) or without help (unaided) consumers are asked to discuss an ad they have seen. Attitude test- survey to see if awareness/attitudes about a product have changed. Sales Test-sales are measured before and after the campaign |
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Ethical issues with advertising
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Does advertising misrepresent the Truth?
Does advertising lead to higher prices? Does Advertising "brainwash" consumers? Does advertising stereotype consumers? Does advertising ignore good taste? |
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Public relations strategies
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Publicity- unpaid information that appaears in a media outlet, often a result of a press relase
. Very creditable, but you can control Sponsorships- company provides funding in return for acknowledgement Company tours and speakers |
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Sales promotion
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Short term activities designed to encourage use or build interest
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Trade
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aimed at channel members
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Consumer
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aimed at us
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General Objectives of sales promotion
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get people to try a new item
Get boost in sales Neutralize competitive actions |
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Trade sale promotions aimed at intermediaries
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encourage them to load up on the product ( push strategy) can be aimed at the channel member company or employees of the channel member
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Cooperative adveertising
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Manufacturer shared advertising expenses
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Point of purchase displays
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provided by mfg to retailer
end of isle display- display box |
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Trade allowances
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a discount or deal to encourage retailer participation in stocking or advertising product
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Trade shows
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Periodic event showcasing products
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Contests
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salesperson who sells the most wins, prizes, cahs, trips. Setup and managed by the mfg not the retailer
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Push money
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Manufacturer pays retail employeee a bonus everytime a specific item is sold- Called spiffs
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Issues with Trade sales Promotions
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Those aimed at employees of channel members can create conflict
All promotions must be provided on a proportional basis to similar channel members |
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Consumer sale promotions
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desidned to get consuers to demand the product ( a pull stategy)
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Types of consumer sale promotion
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coupons, rebates
Price/bonus packs- ( more product for same price) Advertising specialities, sampes- "choke sign" Sweepstakes, contests, games Pure chance- cannot be required to buy something or it is gambling Continuity programs |
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Personal Selling
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Direct interation and communication b/w a sales agent and a potential buyer
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When personal selling makes the most sense
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Selling to a company rather than an individual
Product is expensive/ complex Product is a new product category for buyer |
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Personal selling process
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1. Prospecting and qualifyinf
2. Preapproach 3. Approach 4. Sales presentation 5. Handling objections 6. Close 7. Follow up |
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1. Prospecting and qualifying
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Identifying and developing a list of potential and qualified customers
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Prospects should be :
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resonalbly acessible
able to afford willing to consider the purchase |
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2. Preapproach
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Learning more about the prospect and planning the sales interview
"doing homework" FOr organizational Buyers: websites, business publications and directories FOr individual buyers: information from customer datd base, review of previous purchases, phone or web |
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3. Approach
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Intitial contact
Establish rapport, build interest, set stage for rest of sales call, try to determine specific needs |
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4. Sales presentations
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making the sales "pitch"
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Formula selling
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a step by step approach
usually a canned presentation ( memorized speech) |
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Stimulus response
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If the sales rep provides the right stimulus , the ustomer will provide the right response
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Successive commitment
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a series of questions designed to result in a yes anser (frog in the pot)
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Needs satifaction
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Salesperson encourages customer to do most of the talking and then responds to ideas/ questions or customers
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5. Handling objectionos
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Be prepared for them- anticipate
Address them before they are raised by the consumer |
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6. Close
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"clinch" the sale
Common closing techniques: not here tomorrow, special inducement, assumptive close, ask about options |
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7. Follow-up
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Make sure the customer is satisfied after the sale, provide any needed after sale support to get repeat business, to get good "word of mouth"
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Supply chain
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All of the fifrms invilved in any part of creating and getting a product to a final consumer. Supply chaini Management includes not only physical movement but measurement, marketing relationships, etc. Sometimes refered to as demaand chain, to put emphasis on the fact that you should start with the consumer
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Channel of distribution
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firms involved in moving and selling a finished product from the manufacturer to the consumer
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Direct Channel
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Item is cold fromm manufaturer directly to final consumer. Most often used for: services, complex expensive items, products sold to organizations
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Indirect Channel
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One or more intermediaries exist between the manufactureer and the consumer
Most commonly used for consumer goods, inexpensive, standard items |
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Intermediaries reduce the cost of each transaction
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Through economies of scale_ purchasse and distribution in volume. Breaking bulk-buying in large amounts, break up sale
Through specialization of labor-Gaining expertise in "selling" |
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INtermediaries reduce the number of
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transactions
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INtermediaries provide utility and fuctionaliry
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Utility-time, place, assortment, pocession
Preform marketing functions- contracting customers, promotion, negortiation, risk taking, physical movement (distribution), Financing |
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All functions myst be preformed by someone
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If not preformed by and intermediary, the funtions must be preformed by either the manyfacturer or the consumer
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Disintermediation
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Elimination or reduction in the number of intermediaried used ( layers in the channel) Being facilitated by the internet
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Manufacturer owned wholesalers
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sales branches for manufacturer that sell to organizational customers
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Merchant wholesalers
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Independent firms that take title to the product
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Agents or brokers
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Wholesalers who help arrange a slae but do not take title to the product
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Julia
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Clarke
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You are
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Beautiful
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The Sovereign Lord
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Wil wipe away
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The tears
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from all the faces
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He will
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remove
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the disgrace
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of his people
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from all
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the earth
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The Lord
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Has spoken
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Isaiah
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25:8
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Come to me all you who are weary and burdened and I will give you rest
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Take my yoke upon you and learn from me for I am gentle and humble in heart and you will find rest for your souls
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For my yoke is easy and my burden is light
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Matthew 11:28-30
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