Compiled slides chap 14, 15, 16, 18

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DEVELOPING PRICING STRATEGIES AND PROGRAMS

Adjust or Perish…

Chapter 14


Pricing

• The one element in the Marketing Mix that produces revenue

• Easiest to adjust• Communicates the intended value

positioning of product or brand• Price premium


Concept 1

Pricing decisions take into account the company, the customers, the competition, and the marketing environment (p.383)

Kotler: Tiffany and Co.

Local: KFC Zinger Vs McDo McSpicy

RP medical application:Professional Fees


Concept 2

Changing Technological Environment (p.384)

Kotler: mySimon.com, PriceSCAN.com, Priceline.com

Local: Agoda.com, Lazada.com.ph, Zalora.com Cebupacific, Crownfunding, ebay.ph

RP medical application: Medical forums, online prices of where to find cheap equip, meds


Concept 3

Pricing should consider consumer psychology (p.386)

Kotler: Black T-shirt, Armani VS H&M and Gap

Local: Divisoria VS SM VS Rustans, Nescafe Vs Starbucks

RP medical application: Doctors offering the same service but for different PFs, Laboratory prices varry


Concept 4

Price-Quality inferences, the higher the price the better the quality(p.388)

Kotler: Black T-shirt, Armani VS H&M and Gap

Local: Divisoria VS SM VS Rustans

RP medical application: Doctors offering the same service but for different PFs, Laboratories


Setting the Price


Concept 5

Price Setting Method: Value Pricing, low cost without sacrificing value (p.3400)

Kotler: Ikea, Southwest airlines, Target

Local: Meal plans like Paleo or Fit Food

RP medical application: Generic Medicines, Going to doctors with fairly acceptable rates as long as there is good patient-doctor relationships


Concept 6

Price-setting methods: Going-rate pricing

• Going rate pricing – the firm bases its price largely on competitors’ prices– Example (Kotler): Gasoline companies– Example (local): Most service fees such as

manicure pedicure, haircut, etc.– Example (medical): PF of doctors


Concept 7

Geographical Pricing, different prices for different customers in different locations (p.404)

Kotler: Brazil aircraft manufacturer, Pepsi Co

Local: Differing gas prices in different regions

RP medical application: PF of a doctor in TMC main VS TMC satellite locations


Concept 8

Price Discounts and Allowances, lower prices for early payment, volume purchases, and off-season buying (p.404)

Kotler: Booking in advance for hotels, motels

Local: Cebupacific sales

RP medical application: Getting vaccines in bulk


Concept 9

Promotional Pricing, several techniques to stimulate early purchase (p.405)

Kotler: Back to school sales, exclusive discounts, cash rebates, no interest payments, warranties

Local: Megamall sales, Uniqlo sales

RP medical application: St Lukes promoting discounted elective health packages


Concept 10

Differentiated Pricing, companies adjust basic price to accommodate customer differences (p.406)

Kotler: Museums charging students less, restaurants charge less to early bird customers

Local: Senior citizen discounts, rush hour taxi differential

RP medical application: A doctor charging rich patients more and poor patients less


Concept 11

Initiating Price Increases/Decreases, (p.408)

Kotler: Hershey maintained candy bar price but trimmed the size

Local: Meralco’s incremental increases in price

RP medical application: Increasing Doctors PF, decreasing prices of older medicines


Concept 12

Responding to Competitors’ Price Changes, market leaders facing aggressive price cutting by smaller firms or vice versa (p.410)

Kotler: Fuji Vs Kodak, Schick Vs Gillette, AMD Vs Intel

Local: Mang Inasal Vs Jollibee, McSpicy Vs KFC Zinger

RP medical application: Clinics Vs Hospitals


DESIGNING AND INTEGRATING MARKETING CHANNELS

Chapter 15


1. Marketing Channels and Value Networks

Marketing channel– Interdependent organizations participating

in the process of making a product available

for use or consumption

Value Networks: Demand Chain Planning– Thinking of the target market and designing the supply

chain backward from that point– Company can estimate whether more money is made

upstream or downstream– Aware of disturbances anywhere in the supply chain– Can go online with their business partners


1A. Importance of Channels

PUSH vs. PULL marketing– Push: sales force, trade promotion money to

induce intermediaries to carry, promote, and sell product to end users • For low brand loyalty, brand choice made in the store,

product is an impulse item, and product benefits well understood

– Pull: advertising, promotion, and other forms of communication to persuade consumers to demand the product from intermediaries• High brand loyalty, high involvement in the category,

consumers are able to perceive the difference between brands, brand is chosen before going to the store


1B. Importance of Channels

Channels chosen affect all other marketing decisions– Sales force and advertising decisions dictate

training and motivation dealers need– Channel choices depend on company’s marketing

strategy with respect to segmentation, targeting, and positioning


KEY CONCEPT #1

Most producers do not sell their goods directly to final users. Between producers and final users stands one or more marketing channels, a host of marketing intermediaries performing a variety of functions. - Kotler example: Philips use of international retailers (Best

Buy, Costco, etc.) - Local & medical example: MSD or GSK with Mercury Drug


2. Channel-Design Decisions

Channels produce 5 service outputs– (1) Lot size, (2) waiting and delivery time, (3)

spatial convenience, (4) product variety, (5) service backup

Establishing objectives and constraints- Stated in terms of service output levels and

associated cost and support levels

Identifying Alternatives- Differ in 3 ways: the type of intermediaries, number needed, and terms and responsibilities of each


2a. Responsibilities

The main elements in the trade-relations mix– Price policy– Conditions of sale– Distributors territorial rights– Mutual services and responsibilities

Evaluating Major Channel Alternatives- Estimate how many sales each alternative will generate- Estimate the costs of selling different volumes through each

channel- Comparing sales and costs


KEY CONCEPT #2

Marketing channel decisions are among the most critical decisions facing management. The company’s chosen channel(s) profoundly affect all other marketing decisions. - Kotler example: Bowflex fitness equipment sold through the

phone- Local example: Internet selling by Zalora Marketplace- Medical example: OTC drugs being sold in the

supermarkets


3. Channel Management Decisions

Channel power– The ability to alter channel members’ behavior so they take

actions they would not have taken otherwise• Coercive power• Reward power• Legitimate power• Expert power• Referent power

Evaluating Channel Members- Counseling, retraining, motivating, or terminating

underperformers- Standards: Sales-quota attainment, average inventory levels,

etc.


4. Channel Integration SystemsVertical Marketing System– Conventional marketing channel – separate businesses

maximizing own profit– VMS – unified system

• Corporate VMS – successive stages of production and distribution under single ownership

• Administered VMS – successive stages of production and distribution through the size and power of one of the members

Horizontal Marketing System- 2 or more unrelated companies join resources to exploit

emerging opportunities


KEY CONCEPT #3

Companies use intermediaries when they lack the financial resources to carry out direct marketing, when direct marketing is not feasible. - Kotler example: Avon sales representatives sell cosmetics

door-to-door- Local: Promodizers selling cigarettes to customers in

bars/nightclubs- Medical: Drug representatives being sent to give samples to

doctors to encourage them to purchase from them


5. Conflict, cooperation, competition

Types of conflict and competition– Horizontal channel conflict – between channel members at the

same level– Vertical channel conflict – between different levels of the

channel– Multichannel conflict – 2 or more established channels that sell

to the market

Causes- Goal incompatibility - Unclear roles and rights- Differences in perception- Dependence of intermediaries’ on the manufacturer


KEY CONCEPT #4&5Effective channel management calls for selecting intermediaries and training and motivating them. - Kotler example: Calvin Klein and Tommy Hilfiger took a hit when they

sold too many of their products in discount channels.- Local & medical example: Training medical representatives well so that

they are knowledgeable in their products and motivated to sell them

Marketing channels are characterized by continuous and sometimes dramatic change. Important trends are the growth of vertical marketing, horizontal marketing, and multichannel marketing.


MANAGING, RETAILING, WHOLESALE, AND LOGISTICS

Chapter 16


Concept 1: Choosing the Target Market and Reaching Out to Them

• Target Market– Retailer cannot make consistent decisions about product

assortment, store décor, advertising messages and media, price, and service levels

– Very critical and can be costly– Kotler Example: Zales (market jeweler)

• Decided to chase upscale customers so they started purchasing more expensive jewelry, losing their traditional customers without penetrating the newly targeted market

– Local Example: Penshoppe’s target market is particularly for the adolescents and young adults

– Medical Example: Vicky Belo dermatologic services particularly for celebrities


Concept 1: Choosing the Target Market and Reaching Out to Them

• Channels– Means by which a company reaches out to its customers– Mostly choose multiple channels but these channels have to be

designed to work together effectively– Kotler Example: Victoria’s Secret

• Made use of retail stores, catalogs, and internet

– Local and Medical Example: HMOs reach out to their target market (usually large companies) by telemarketing, door-to-door visits, and by building websites.


Concept 2: Meeting the Expectations of the Target Market, Generating More Consumer Interest

• Product Assortment– Choosing the products that will match the shopping expectations of

the target market in terms of breadth and depth– Types

• Narrow and Shallow (e.g. Pizza Hut stall)• Narrow and Deep (e.g. Rita’s Italian Ice)• Broad and Shallow (e.g. Hospital Cafeterias or Food Courts)• Broad and Deep (e.g. Hotel Buffets, Vikings)

– Kotler Example: Aeropostale• Research on 11-18 year-olds in order to stay up-to-date with fashion trends; had

them be involved in programs on the internet to create new styles

– Local and Medical Example: Private tertiary hospitals mostly cater to patients from the higher socioeconomic class; hence, they need equipment and services that will match these expectations.


Concept 2: Meeting the Expectations of the Target Market, Generating More Consumer Interest

• Product Differentiation Strategy– Generates more consumer interest– Some Local and Medical examples:

• SM got Forever 21 and other international brands so that customers would rather go to SM malls compared to others. (gaining exclusive rights over merchandise not available in the regular market)

• Folded and Hung generated sales by selling Marvel and Star Wars apparel. (blockbuster distinctive merchandise)

• Doctors specializing in their field (offer a highly targeted assortment)


Concept 3: Procurement of Products and Setting Prices

• Procurement– Establishing merchandise sources, policies, and practices– Involves tracking inventory, computing economic order quantities, order

goods, and analyze dollars spent on vendors and products– Local and Medical Example: Hospitals looking for suppliers for

equipment needed.


Concept 3: Procurement of Products and Setting Prices

• Prices– Key positioning factor; must be set in relationship to the target market,

product-and-service assortment mix, and competition– High mark-up, low volume vs. Low mark-up, high volume– Everyday Low Pricing

• Can sometimes be beneficial to the company in terms of lowering advertising costs, greater pricing stability, a stronger image of fairness and reliability, and higher retail profits

– Local and Medical Example: The Medical City and St. Luke’s Hospital both have the same target market so prices for available services should be comparable.


Concept 4: Giving Importance to Services Made Available

• Services– Prepurchase, Postpurchase, Ancillary

• Example: Fitting a dress, Having it altered, Going to the restroom while waiting• Medical Example: Waiting Area has forms of leisure and entertainment, Falling in

Line for Payment, Available restrooms in the area

– Most important: Customer Service• Medical Example: The secretaries / executive assistants of doctors who are first-

line in greeting patients when they come in for a check-up.


Concept 5: Setting the Store Atmosphere, Communications, and Location

• Store Atmosphere– Appealing to all 5 senses of the customer, depending on the target

market– Local Example: Bayo

• Appeals to the more laid back fashion / personality compared to professional attire• Stores have very white, bright, or pastel colors; Music is usually pop or acoustic

but never heavy on the ears; The shelves used are very smooth and also white in color, etc.

– Medical Example: Pediatric Clinics• Pediatric clinics should be filled with color, toys, and candy so that the children will

feel comfortable and at home.



• Communications– Use of ads, coupons, fliers, social media, magazines, etc. to promote

the brand, product, or service– Local Example: Penshoppe

• Using newspaper and magazine ads, making use of popular international celebrities to represent their clothesline, having an instagram and facebook account, etc.

– Medical Example: Vicky Belo• Using newspaper and magazine ads, making use of popular local celebrities as

well as their testimonies to market her services.



• Location– Consider accessibility, traffic, parking availability, and consumer

shopping habits– Local and Medical Example: St. Luke’s Hospital strategically placing

themselves in the Fort, BGC to cater to those who live in the Makati and Taguig area.


Managing Mass Communications: Advertising, Sales Promotions, Events and Experiences, and Public Relations

Chapter 18


1. Through development of an advertising campaign2. Using advertisements to rebuild or transform a brand3. Through television – the most powerful advertising

medium4. Through radio – main advantage of flexibility5. With no false claims6. Through the use of public spaces7. Using Product Placement8. Marketing at the Point of Purchase9. Avoiding consumer backlash10. Through events and experiences

How do you market your product through mass communications?


1. TV ads as the most powerful advertising medium

Kotler Example

Aflac

Local Example

Karen and Gina McDonald’s commercial

Medical Example

“No tooth decay” Colgate commercials


2. Through use of public spaces

Kotler Example

Snaxi (Snickers advertisements on yellow taxis)

Local Example

BGC art in the city

Medical Example

St. Luke’s Global City makes use of art displays to promote National Kidney Cancer Month


3. Using Product placement

Kotler Example

Nike: does not pay to be in movies but often supplies shoes, jackets, bags, and so on. Increasingly, products and brands are being woven directly into the story.

Local Example

Pinoy love teams in movies – what is hyped about the movie is the love team, not the storyline

Medical Example

Celebrity X-deals (celebrities thank their doctors publicly for their service)


4. Marketing at the Point of Purchase

Kotler Example

Walmart jingle plays in store while consumers are shopping

Local Example

Jollibee offers to upsize or add dessert to your order as you pay

Medical Example

Dentist checks your teeth, recommends a certain toothbrush that you can purchase at clinic


5. Through events and experiences

Kotler Example

GE Profile washer and dryer machines

Local Example

WeRunManilaNike women 10k run

Medical Example

Gandang Vicki Belo

Compiled slides chap 14, 15, 16, 18

Documents

comv65asmphmarkma concept

example medical

value pricing

different prices

rate pricing

medical forums

gap local

price discounts