Mark101

Price elasticity

-If demand is not sensitive to price, then the elasticity of demand is low. E.g. If a 10% reduction in price results in a 3% increase in demand: ED = 3/-10 = -0.3. -If demand is proportionally sensitive to price, then the elasticity of demand is unitary (whole). E.g. If a 10% reduction in price results in a 10% increase in demand: ED = 10/-10 = -1. -If demand is very sensitive to price, then the elasticity of demand is high (< -1). E.g. If a 10% reduction in price results in a 16% increase in demand: ED = 16/-10 = -1.6. ED = % change in demand/% change in price

Factors affecting pricing decisions and objectives

-Organisational and marketing objectives: marketers should set prices that are consistent with the organisations goals and mission and marketing objectives. -Types of pricing objectives: setting prices below competitors to increase market share, temporary price reductions to to gain market share and raise cash quickly (sales, discounts). -Costs: a company may temporarily sell products below cost to match competition, generate cash flow or increase market share, but in the long run it cannot survive doing this. To maintain market share many marketers have concentrated on reducing costs. -Other marketing mix variables (other than 'p' for price): buyers associate better product quality with high price. Premium priced products are often marketed through selective or exclusive distribution. Lower priced products in the same product category may be sold through intensive distribution. Price may determine how a product is promoted e.g. bargain prices -Customer interpretations of, and responses to, a price: How will customers interpret prices and respond to them? -Customer perceptions of the product: customers perceptions of a product relative to competing products may allow the company to set a price that differs significantly from rivals prices. Strong brand loyalty sometimes provides the opportunity to charge a premium price, however, if buyers view a product less than favourably a lower price may generate sales. -Demand: before a particular price point can be decided on, demand for a product at various potential price points also has to be established. For most products, the quantity demanded goes up as the price goes down, and as the price goes up, the quantity demanded goes down.

Expanded marketing mix

-Product -Price -Place/distribution -Promotion -Physical evidence -Partnerships -Processes -People

Cognitive dissonance

A buyers doubts shortly after a purchase about whether the decisions was the right one. Also known as 'post purchase dissonance' and 'buyer's remorse'.

What is a product?

A good, a service or an idea received in an exchange. Tangible or intangible. products can be classified as consumer products or business products. Consumer products are products that are purchased to satisfy personal and family needs. Business products are products that are bought to use in an organisation's operations, to resell or to make other products.

Product line and product mix

A product line is a group of closely related product items that are considered to be a unit because of marketing, technical or end-use considerations. A product mix is the composite, or total, group of products that an organisation makes available to customers.

Connecting the marketing mix and brands

Brands and pricing: Consumers will pay more for strong brands than for weaker brands. Branding and promotion: Successful promotional campaigns can have powerful, profitable and long term effects, including the generation of strong brand equity. Branding and products: In todays world it seems as if people are consuming not just products, but brands.

Direct marketing

Catalogue marketing Direct response marketing - type of marketing that occurs when a retailer advertises a product and makes it available through mail or telephone orders Telemarketing - the performance of marketing-related activities by telephone Television home shopping Online retailing Direct selling - marketing of products to ultimate consumers through face to face sales presentations at home or in the workplace

Comparative advertising and reminder advertising

Comparative advertising compares a sponsored brand with one or more identified brands on the basis of one or more product characteristics. Reminder advertising reminds customers about an established brand's uses, characteristics and benefits.

Four categories of consumer products

Convenience products Shopping products Specialty products Unsought products

Consumer sales promotion methods

Coupons and cents-off offers Refunds and rebates Frequent-user incentives Point of purchase materials and demonstrations (signs window displays) Free samples and premiums Consumer games, contests and sweepstakes

Product differentiation

Creating and designing products so that customers perceive them as different from competing products

Setting prices

Development of pricing objectives Assessment of target market's evaluation of price Evaluation of competitor's price Selection of a basis for pricing Selection of a pricing strategy Determination of a specific price

Types of marketing channels

Direct marketing channel - combines all stages of the marketing channel, from producers to consumers, under a single owner, to serve a target market segment Indirect marketing channel - comprised of several independently owned channel members who work together to serve a target market segment Multiple marketing channels - a combination of direct and indirect channels whereby each channel is used to reach a different target target market segment Hybrid marketing channels - a combination of direct and indirect channels whereby different channels are used to reach the same target market segment

Evaluation of alternatives

Evoked set: A group of brands that a buyer views as alternatives for possible purchase. Consumers assigns greater value to a brand they have heard of before to one they have not. Evaluative criteria: Characteristics that are important to a buyer - e.g. size, weight and dimensions of a laptop.

Three levels of consumer decision making/problem solving

Extended problem solving: Consumers have not established criteria for evaluating product, used when purchasing unfamiliar, expensive or infrequently purchased products. Limited problem solving: Consumers have established criteria for evaluating product, have not fully established preferences, used when purchasing products occasionally or when they need information about unfamiliar brands in familiar product categories. Routine response behaviour/habitual decision making: Consumers have some experience with product category, have a well established set of criteria. Used when frequently buying frequently purchased, low-cost items.

New development process

Idea generation - internal or external Screening - choosing the most promising ideas for further review Concept testing - seeking potential buyers' responses to a product idea Business analysis - evaluating the potential contribution of a product idea to the company's sales, costs and profits Product development - determining if producing a product is technically feasible and cost effective Test marketing - introducing a product on a limited basis to measure the extent to which potential customers will actually buy it Commercialisation - deciding on full-scale manufacturing and marketing plans and preparing budgets

Developing an advertising campaign

Identify and analyse target audience Define advertising objectives Create advertising platform Determine advertising appropriation Develop media plan Create advertising message Execute campaign Evaluate advertising effectiveness

Intangibility and inseparability

Intangibility is an aspect that is not physical an cannot be touched, inseparability is an aspect that is produced and consumed at the same time (airline services)

Intensive, selective, exlusive distribution

Intensive distribution aims to provide saturation coverage of the market by using all available outlets (soft drinks). Selective distribution involves a producer using a limited number of outlets in a geographical area to sell products (Dolce and Gahanna, Urban Decay, Mac). Exclusive distribution is, essentially, an extreme modification of selective distribution (Rolls Royce).

Problem recognition

Occurs when a buyer becomes aware of a difference between a desired start and an actual state

Price and non-price competition

Price competition - emphasising price and matching or beating competitors' prices. Non-price competition - emphasising factors other than price to distinguish a product from competing brands

Factors that affect the choice of marketing communications mix elements

Promotional resources, objectives and policies Target market characteristics Product characteristics Costs and availability of promotional methods

Situational influences on the buying decision process

Result from the circumstances, time and location that affect the consumer buying decision process. Physical surroundings, social surroundings, time dimension, purchase reason, mood of consumers

Value of branding

Sellers benefit from branding because the brand identifies their products, which makes repeat purchasing easier. Branding helps a company to introduce a new product that carries the name of one or more existing products because buyers are already familiar with the company's existing brands. Customer/brand loyalty.

Target market

Target audience instead of target market

Marketing channels

The aggregate of all individuals and organisations that direct the flow of products from producers to customers, marketing channels are referred to as 'place' in the marketing mix. Supply chain, operations management (resources to products), channel management (right quantities to the right locations at the right time), marketing intermediaries (the middlemen between producers and customers in a marketing channel linking producers to customers)

Perishability

The inability of unused service capacity to be stored for future use

Brand equity

The marketing and financial value associated with a brand's strength in a market. Brand equity: -Brand loyalty -Perceived brand quality -Brand name awareness -Brand associations

Product life cycle

The progression of a product through four stages: introduction, growth, maturity and decline. Graph. Introduction - initial price might have to be very high to regain expensive marketing research or development costs. Growth - during the growth phase, sales volume increases and efficiencies in production may result in lower costs, thus providing an opportunity for lower prices. As sales increase, promotion costs should drop. Advertising discount vouchers and samples may be used to increase market share. Maturity - Advertising and dealer-oriented promotions are typical during this stage of the PLC. Marketers of mature products sometimes expand distribution into global markets. To increase sales of mature products, marketers may suggest new uses for them. Some companies strive to maintain their market share through aggressive promotions and new-product introductions. Strong price competition is likely and may ignite price wars. Large promotion expenditures. Prices may have to be increased if distribution and production costs rise. Decline - Promotion efforts may be cut and plan to phase out the product. Marketers must to determine whether to eliminate the product or try to reposition it to extend its life. Sales promotions.

Product adoption process

The stages buyers go through in accepting a product. Awareness. Interest. Evaluation. Trial. Adoption.

Product placement

The strategic location of products or product promotions within tv program (or other entertainment media) content to reach the products target audience.

Discounts/price reductions

Trade discounts Quantity discounts Cash discounts Seasonal discounts Allowances Special event pricing Periodic discounts Random discounts

Heterogeneity

Variation in quality

Push and pull policy

With a push policy producers promote products only to the next institution down the marketing channel (producers promote to wholesalers). A pull policy promotes directly to consumers to develop strong consumer demand for its products (producer to consumer).