POP - Exam Review

Common Pricing Strategies:

1. Competition-Based Pricing Strategy 2. Cost-Plus Pricing Strategy 3. Dynamic Pricing Strategy 4. Freemium Pricing Strategy 5. High-Low Pricing Strategy 6. Hourly Pricing Strategy 7. Skimming Pricing Strategy 8. Penetration Pricing Strategy 9. Premium Pricing Strategy 10. Project-Based Pricing Strategy 11. Value-Based Pricing Strategy

Product Life Cycle:

1. Introduction 2. Growth 3. Maturity 4. Decline

Product Lifecycle:

1. Nature of the Product 2. The Allocated and Available Budget 3. Cultural Sensitivity 4. Target Market Composition 5. Competitor Actions

Price Discounting Types:

1. Trade Discounts 2. Quantity Discounts 3. Cash Discounts 4. Seasonal Discounts

Market Identification Process

1. identify business opportunities 2. evaluate existing and potential competition 3. guide the choice of who they should target 4. indicate the customer requirements that will be satisfied by their marketing position

Cash Discounts

A cash discount, or "price reduction," given to a buyer for paying promptly or in cash.

Decline

A downward sales as the product is no longer fulfilling a need or there are better options.

Exclusive Distribution

A higher priced item may be sold at a single outlet.

Maturity

A period of slowdown in sales or even stop sales.

Selective Distribution

A product may be sold at a selective number or outlets.

Seasonal Discounts

A seasonal discount is a price reduction given to buyers buying goods or services out of season.

Pricing for Business Markets

A. Price Discounting B. Geographic Pricing C. Transfer Pricing

Actual

Additional benefits added on the product to differentiate and highlight its USP. Ex: Any additional features or strong branding on cameras can make it a better product.

Main promotional tools in marketing:

Advertising Sales Promotion or Merchandising Events and Experiences Personal Sale Direct Marketing Public relations

4 Main Types of Intermediaries:

Agents Wholesalers Distributors Retailers

Pull Strategies

An attempt to pull customers towards the brand or product.

Augmented

Benefits that can be offered to the customer to ensure a loyal purchasing customer. Ex: sales service, extended warranties or product support blogs.

Industrial Product

Bought by businesses for further processing or for use in doing the business.

Supply Chain Management (SCM)

Broad range of activities required to plan, control and execute a product's flow from materials to production to distribution in the most economical way possible.

Why do we need to use promotional activities?

Building Awareness Creating Interest Providing Information Stimulate Demand Differentiate product Reinforce the Brand

Inventory Management

By focusing on providing the optimum product mix for your customers, you'll be able to weed out slow sellers and make room for more appealing items.

10. Project-Based Pricing Strategy

Charges a flat fee per project instead of a direct exchange of money for time.

Other Companies

Communicating with other companies may open opportunities to collaborate on joint ventures.

Pricing Strategies

Consider factors like revenue goals, marketing objectives, target audience, brand positioning, and product attributes.

Tangible and Intangible Goods and Services can be divided into:

Consumer Goods Consumer Services Producer Goods Producer Services

Classification of Products:

Consumer Product Industrial Product

The main components of communication process are as follows:

Context Sender/Encoder Message Medium Recipient/Decoder Feedback

Consumer Product Types:

Convenience Products Shopping Products Specialty Products Unsought Products

Promotion

Convince customers to buy your product, you need to explain what it is, how to use it, and why they should buy.

Product Levels

Core Actual Augmented

Product Strategies

Cost Leadership Differentiation

The Actual Audience

Current customers of the product as well as former customers and any potential new customers.

Why is Product Mix important?

Customer Needs Business Image Providing Focus Inventory Management

Business Image

Determining the image of your business and brand, as it helps you to maintain consistency in the eyes of your target market.

Direct Channel

Directly provides the product to the consumer.

Quantity Discounts

Discounts deductions from list price that reflect the economies of purchasing in large quantities.

Trade Discounts

Discounts reductions off the list price given by a producer to an intermediary for performing certain functions. Ex: selling, transporting, storing, final processing, and providing credit services.

Intensive Distribution

Distribute lower prices products that may be impulse purchases.

6. Hourly Pricing Strategy

Essentially trading time for money. (Commonly used by consultants, freelancers, contractors, and other individuals who provide business services).

Growth

Fast growth phase once the product is established

Cost Leadership

Firms work to achieve the lowest production and distribution costs so they can underprice competitors and win market share.

Capital items

Help in production or operation and include installations like factories, offices, fixed equipment like generators, computer systems, elevators and accessory equipment like tools office equipment.

Specialty Products

High priced branded product and services with unique features (distributed through one or few exclusive outlets).

Shopping Products

High priced, less frequently purchased products and services. Quality, features, style and suitability.

Wholesalers

Independent entities, they purchase goods from a producer in bulk and store them in warehouses.

Agents

Independent entity who acts as an extension of the producer by representing them to the user.

People

Individual employees or workers who are directly involved in the production, marketing, and sale of the product or service.

Distribution Strategies

Intensive Distribution Selective Distribution Exclusive Distribution

Services

It is a process that creates benefits for customers. Ex: transportation, cleaning, traveling,

Place

It is how your product is bought and where it is bought. Ex: traditional, physical store where customers make purchases in person or sell goods and services over the Internet.

Producer Goods

Items that act as part of another company's operations such as machinery or parts.

Consumer Goods

Items that are used directly by the end user such as food, clothing, cars, etc,

3. Dynamic Pricing Strategy

Known as surge pricing, demand pricing, or time-based pricing. It is a flexible pricing strategy where prices fluctuate based on market and customer demand.

Convenience Products

Low priced, easily available, frequently bought, without any buying effort.

Supplies

Lubricants, coal, paper, pencils and repair maintenance like paint, nails brooms.

Services

Maintenance and repair services like computer repair services, legal services, consultancy services, and advertising services.

Providing Focus

Making use of a product-mix concept helps you stay focused on your core business.

Industrial Product Types:

Material and Parts Capital items Supplies Services

Reverse Channels

Non tradition channel allows for the consumer to send a product to the producer.

Noncumulative discounts

One-time reductions in prices based on the number of units purchased, the dollar value of the order, or the product mix purchased.

Distributors

Only carry products from a single brand or company.

Influencers

People or organizations that have their own influence over the target audience.

Product

Physical item, a service or a virtual Offering.

Consumer Product

Products that are bought and used by customers for final consumption.

Unsought Products

Products that the consumer either does not know about or does not normally think of buying. Ex: cemetery plots, blood donation, umbilical cord stem cell

Customer Needs

Proper assortment of products provides you the best opportunity of meeting your customers' needs.

Packaging Functions Serves:

Protection: Information Transmission Convenience: Security:

Price Discounting

Provide intermediaries with discounts, or reductions, from list prices.

Types of Promotional Strategies:

Push Strategies Pull Strategies

Cumulative discounts

Quantity discounts that are aggregated over a stated time period.

Material and Parts

Raw material like agricultural products, crude petroleum, iron ore Manufactured materials include iron, yarn, cement, wires and component parts include small motors, tires, and castings.

STP

Segmentation, Targeting, and Positioning

Consumer Services

Services that are for the benefit of end users directly such as education, courier services, grooming services, etc.

Producer Services

Services that support another company's operations such as accounting, human resource, etc.

Introduction

Slow growth period following product launch

All products can be classified into 3 main categories:

Tangible products: These are items with an actual physical presence such as a car, an electronic device, and an item of clothing or a consumer good. Intangible products: These are items that has no physical presence but can be felt indirectly. An insurance policy is an example of this. Online items such as software, applications or even music and video files are also intangible products. Services: Services are also intangible products, but they are the result of an economic activity that does not result in ownership. It is a process that creates benefits for customers. Services depend highly on who is performing them and remain difficult to reproduce exactly.

Marketing Mix

The 4 P's of Marketing: Product, Price, Place And Promotion.

Major Targets of Promotional Campaigns

The Actual Audience Influencers Distribution Channel Members Other Companies

Distribution Channels

The activities and processes required to move a product from the producer to the consumer.

Differentiation

The business concentrates on achieving superior performance in an important customer benefit area valued by a large part of the market.

Packaging

The outer appearance of the product is the first thing a potential customer will see.

Distribution Channel Members

The product is handled and provided to the customer through this channel making them an important category of targets.

Tangible products

These are items with an actual physical presence Ex: car, electronic device, clothing or consumer good.

Intangible products

These are items/products that has no physical presence but can be felt indirectly. Ex: items such as software, applications or music and video files

Retailers

They stock the goods and sell them to the ultimate end user at a profit.

Positioning

To the place occupied by the product in the minds of the consumers.

Product Mix

Total number of product lines that a company offers to its customers.

Dual Distribution

Use a combination of direct and indirect in selling.

Indirect Channel

Use an intermediary to sell a product to the consumer.

Price Elasticity of Demand

Used to determine how a change in price affects consumer demand.

1. Competition-Based Pricing Strategy

Uses the competitors' prices as a benchmark. You price your products slightly below your competition.

2. Cost-Plus Pricing Strategy

Uses the strategy "mark-up" their products based on how much they would like to profit.

Price

Value paid for a product in marketing exchange.

Core

What is the main benefit that a product offers to its consumers? (This is the first level to be defined and explored). Ex: Camera, they can capture memories forever

5. High-Low Pricing Strategy

When a company initially sells a product at a high price but lowers that price when the product drops in novelty or relevance. Ex: Discounts, clearance sections, or year-end sales

7. Skimming Pricing Strategy

When companies charge the highest possible price for a new product and then lower the price over time as the product becomes less and less popular.

8. Penetration Pricing Strategy

When companies enter the market with an extremely low price, effectively drawing attention (and revenue) away from higher-priced competitors.

4. Freemium Pricing Strategy

When companies offer a basic version of their product hoping that users will eventually pay to upgrade or access more features.

9. Premium Pricing Strategy

When companies price their products high to present the image that their products are high-value, luxury, or premium.

11. Value-Based Pricing Strategy

When companies price their products or services based on what the customer is willing to pay.

Push Strategies

When the product is taken to the customer by the company.

2. Quantity Discounts

a) Cumulative discounts b) Noncumulative discounts