Principles of Marketing Lecture-45. Summary of Lecture-44.

Principles of Marketing

Lecture-45

Summaryof

Lecture-44

Review-1

Today’s Topics

Review-2

Individual Product Decisions

Product Attributes

Branding

Packaging

Labeling

Product Support Services

New Product Development

IdeaGeneration

IdeaScreening

ConceptDevelopmentand Testing

MarketingStrategy

BusinessAnalysis

ProductDevelopment

TestMarketing

Commercialization

Product Life-Cycle (PLC)

Time

ProductDevelopment

Stage

Introduction

Profits

Sales

Growth Maturity Decline

Sales andProfits ($)

Sales and Profits Overthe Product’s Life FromInception to Demise

Price–The amount of money charged for a product or service, or the sum of the values that consumers exchange for the benefits of having or using the product or service.

Factors Affecting Price Decisions

Internal FactorsInternal Factors

PricingDecisionsPricing

Decisions

External FactorsExternal Factors

Target Market

Positioning Objectives

Costs

Total CostsSum of the Fixed and Variable Costs for a Given

Level of Production

Total CostsSum of the Fixed and Variable Costs for a Given

Level of Production

Variable Costs

Costs that do varydirectly with the

level of production.

Raw materials

Variable Costs

Costs that do varydirectly with the

level of production.

Raw materials

Fixed Costs(Overhead)

Costs that don’tvary with sales or production levels.

Executive SalariesRent

Fixed Costs(Overhead)

Costs that don’tvary with sales or production levels.

Executive SalariesRent

Fixed Costs Variable Costs

Raw materials

Component parts

Hourly wages

Packaging & freight

Sales commissions

Rent

Depreciation

Manager’s salaries

Property taxes

Insurance

Setting Pricing Policy

General Pricing Approaches

Cost-based Pricing

Value-based Pricing

Competition-based Pricing

Break-even…forDetermining Target

Return Price and Break-even Volume

Ru

pee

s (i

n t

ho

usa

nd

s)R

up

ees

(in

th

ou

san

ds)12001200

10001000

800800

600600

400400

200200

00

Total costTotal cost

Fixed costFixed cost

TargetTarget profitprofit

Total revenueTotal revenue

1010 2020 3030 4040 5050

Sales volume in units (thousands)Sales volume in units (thousands)

Break-even pointBreak-even point

New Product Pricing Strategies

•Market Skimming

•Market Penetration

Price - Quality Strategies

Premium Strategy

Overcharging Strategy

Overcharging Strategy

Good-Value Strategy

Good-Value Strategy

Economy Strategy

Economy Strategy

Price

Higher Lower

Higher

Lower

Qu

alit

y

Price-Adjustment Strategies

Discount and Allowance Pricing

Segmented Pricing

Psychological Pricing

Promotional Pricing

Geographical Pricing

International Pricing

Price Changes

Responding to price changes

Hold Current Price;Continue to MonitorCompetitor’s Price.

Hold Current Price;Continue to MonitorCompetitor’s Price.

Reduce PriceReduce Price

Raise PerceivedQuality

Raise PerceivedQuality

Improve Quality& Increase PriceImprove Quality& Increase Price

Launch Low-Price“Fighting Brand”

Launch Low-Price“Fighting Brand”

Has Competitor CutPrice?

Has Competitor CutPrice?

Will Lower Price Negatively Affect Our

Market Share & Profits?

Will Lower Price Negatively Affect Our

Market Share & Profits?

Can/ Should EffectiveAction be Taken?

Can/ Should EffectiveAction be Taken?

Yes

No

No

No

Place….Distribution Channel….Marketing Channel

20 Contacts

Manufacturer

Manufacturer

Manufacturer

Manufacturer

Manufacturer

Customer

Customer

Customer

Customer

9 Contacts

Manufacturer

Manufacturer

Manufacturer

Manufacturer

Manufacturer

Customer

Customer

Customer

Customer

Wholesaling Intermediary

ProducerAgent/Broker

Wholesaler Retailer Consumer

Producer Wholesaler Retailer Consumer

Producer Retailer Consumer

Producer Consumer

Channel Management Decisions

SelectingSelecting

FE

ED

BA

CK

MotivatingMotivating

TrainingTraining

EvaluatingEvaluating

Marketing Logistics and Supply Chain

Management

InventoryWhen to order?How much to order?Just-in-Time

Customer Service Concept

Right Product

Right Cost

Right Place

Right Condition

Right Time

Push Versus Pull Strategy

Producer End usersInterme-diaries

Marketingactivities Demand

Push Strategy

Demand

End usersInterme-diariesProducer

Demand Demand

Pull Strategy

Marketing activities

Retailing and

Wholesaling

Compete on value (not just price.)

Save customers time and energy.

Make shopping fun.

Marketing Communications

Promotion and Its Goals

Builds Relationships

Persuades

Informs

Reminds

The Marketing Communications

Mix

AdvertisingAdvertising

Personal SellingPersonal Selling

Any Paid Form of Non-personal Presentation by an Identified Sponsor.

Any Paid Form of Non-personal Presentation by an Identified Sponsor.

Sales Promotion Short-term Incentives to Encourage Sales.

Public RelationsBuilding Good Relations with Various Publics by Obtaining Favorable Unpaid Publicity.

Direct Marketing Direct Communications With Individuals to Obtain an Immediate Response.

Personal Presentations by a Firm’s Sales Force.

Setting the Promotion Mix

AdvertisingA paid form of non-personal

communication about an organization and/or its

products to a target audience through a mass medium.

Personal selling

The direct presentation of a product to a prospective

customer by a representative of the selling organization.

Sales promotion

Demand-stimulating activity designed to supplement advertising and facilitate

personal selling.

Public relationsA planned communication effort by an organization to contribute to generally favorable attitudes

and opinions toward an organization and its products.

Direct Marketing

Direct connections with carefully targeted individual consumers

to obtain an immediate response and cultivate lasting

customer relationship

Steps in the Selling Process

Step 1. Prospecting and Qualifying

Step 1. Prospecting and Qualifying

Step 2. Preapproach Step 2. Preapproach

Step 3. Approach Step 3. Approach

Step 4. Presentation/ Demonstration

Step 4. Presentation/ Demonstration

Identifying and Screening For Qualified Potential Customers.

Learning As Much As Possible About a Prospective Customer Before Making a Sales Call.

Knowing How to Meet the Buyer to Get the Relationship Off to a Good Start.

Telling the Product “Story” to the Buyer, and Showing the Product Benefits.

Step 5. Handling Objections Step 5. Handling Objections

Step 6. Closing Step 6. Closing

Step 7. Follow-Up Step 7. Follow-Up

Seeking Out, Clarifying, and Overcoming Customer Objections to Buying.

Asking the Customer for the Order.

Following Up After the Sale to Ensure Customer Satisfaction and Repeat Business.

Managing the Sales force

Designing Sales force Strategy and StructureDesigning Sales force Strategy and Structure

Recruiting and Selecting SalespeopleRecruiting and Selecting Salespeople

Training SalespeopleTraining Salespeople

Compensating SalespeopleCompensating Salespeople

Supervising SalespeopleSupervising Salespeople

Evaluating SalespeopleEvaluating Salespeople

Competitive Strategies

Competitive Positions

Market Leader

Market Challenger

Market Follower

Market Nicher

Global Village

Global Marketplace

Global Marketing

Think Globally Act Locally

e-Marketing

New Tool to Reach Consumer

InternetInternet

Postal ServicePostal Service

TelevisionTelevision

TelephoneTelephone

RadioRadio

Marketing and Society

Current Issues in Marketing

• The current issues and marketing can be divided into two major subjects:

–Social responsibility

–Ethics

• The two concepts are very closely related

Summary – Marketing Management

TargetConsumers

Product

Place Price

Promotion

Mar

ketin

g

Im

plem

enta

tion

Marketing

Planning

Marketing

Control

Mar

ketin

g

Analys

is

Competitors

MarketingIntermediaries

PublicsSuppliers

Demographic-Economic

Environment

Technological-Natural

Environment

Political-Legal

Environment

Social-Cultural

Environment

Simple Marketing Simple Marketing SystemSystem

Producer/Seller Consumer

Communication

Product/Service

Money

Feedback

Marketing Process

The process of :

Analyzing marketing opportunities

Selecting target markets

Developing the market Mix

Managing the marketing effort

Marketing in Theory and Practice

????

Enough for Marketing. . .

Principles of Marketing

Lecture-45