Marketing

Sales forecasting techniques

(1) judgements of the decision maker (2) surveys of knowledgeable groups (3) statistical methods

Selling price

(VC) + (Markup% on cost) * ( VC); [ use this when you know the markup on cost but not selling price or vc]

Contemporary Packaging and Labelling Challenges

1. connecting w/ customers: must be continually updated; create aesthetic and functional design features that attract customer attention and deliver value in use. 2. environmental concerns: recycling packaging material is a major thrust. 3. health, safety, and security issues 4. cost reduction: finding innovative ways to cut packaging costs while delivering value.

Purchase decision process

1. problem recognition 2. information search—scan for experiences (internal search), research data (external search) 3. alternative evaluation—evaluate objective attributes and subjective (i.e. brand prestige) 4. purchase decision 5. post purchase behaviour—compare w/ expectations

Forces

1. social 2. economic 3. technological 4. competitive 5. regulatory

marketing concept era

1960s marketing became motivating force among firms. Their philosophy was: we are in the business of satisfying needs and wants of consumer's, while trying to achieve the firm's goals. = marketing concept marketing concept: the idea that an org. should strive to satisfy the needs of consumers, while also trying to achieve org.'s goals.

Product mix:

# of product lines offered by a company.

When to segment markets?

3 specific situations 1. one product and multiple market segments: avoids extra costs of producing additional versions; movies running different TV commercials 2. multiple products and multiple market segments: worthwhile if serves customers' needs better, does not reduce quality or increase price, and adds to the sales revenue and profits; high-end and low-end products BR and Old Navy. 3. segments of one mass customization: Dell uses BTO (build to order); ultra-customization allows you to hand-pick your entertainment packages, design your own clothes, customize your Web site etc...

Situational Influences

5 situational influences can have impact on decision— purchase task, social surroundings, physical surroundings, temporal effects, and antecedent states.

Merchant Wholesalers

: independently owned firms that take title to the merchandise they handle; there's general (carries a broad assortment of merchandise) & speciality (narrow range of product)

customer experience management era:

CRM initiatives suffer b/c focus has been on getting CRM technology in place while neglecting just how to build customer relationships. To be more effective, CRM must include customer experience management (CEM).

Channel Relationships: Conflict, Cooperation, and Law

Conflict in Marketing Channels: conflicts arises horizontally and vertically. Vertical—occurs btw different levels. Horizontal—occurs btw intermediaries at the same level Cooperation in Marketing Channels: channel captains facilitate secure cooperation. They influence through economic, expertise, identification, legitimate right.

Breakeven

FC / P - VC; BE in $ = FC / 1 - (per unit VC / per unit price)

Classifying Retail Outlets

Forms: independent retailer: owned by an ind. corporate chain: multiple outlets under common ownership contractual system: independently owned stores that act like a chain Level of Service self service: ex. gas stations limited service: provide some services such as return of credit and merchandise. ex. Walmart full-service: specialty stores and some department stores Merchandise Line retail outlets vary by merchandise line. There's depth of product line (large assortment of related line items; ex. la senza) and breadth of product line ( variety of different items)

Direct Marketing Channels

allows consumers to buy products by interacting w/ various ad. media w/o face-to-face meeting. includes mail-order selling, direct-mail sales, catalogue sales, telemarketing, interactive media, and televised home shopping.

Competitive forces:

alternative firms that could provide a product to satisfy a specific market's needs 4 market structures oligopoly monopoly PC MC

Non-Store Retailing

automatic vending: expensive to maintain direct mail and catalogue: more efficient b/c it segments and targets customers. television home shopping: ex. Home Shopping Network online retailing: allows consumers to search, evaluate, and order online; huge impact on cross-border shopping. telemarketing: more efficient than direct mailing to target consumers. direct selling: door-to-door. Growth in markets with lack of effective distribution channels.

Brand Equity

brand name leads to brand equity which is the added value that a given brand name gives to a product; helps provide competitive advantage, and consumers willing to pay higher price. Creating Brand Equity 1. develop positive brand awareness and association w/ product class. 2. establish brands meaning in minds of consumer. 3. elicit proper response to brand's identity and meaning. 4. create consumer-brand resonance = active loyalty relationship btw consumer and brand. Valuing Brand Equity brand equity provides financial adv. for brand owners. direct and indirect measures used by marketers include communication investment in the brand and customer loyalty. brand licensing may occur: when one company allows its brand name, trademarks to be used w/ products /service by another company. ex. disney licensing. Winnie the Pooh.

Repositioning the Product

can change the position of a product by changing one of the 4 Ps. reacting to a competitor's position, reaching a new market, catch a rising trend, changing the value offered (trading-up = adding more value/features vs trading down = decrease features, quality, price)

Business portfolio analysis: The Boston Consulting Group's (BCG) business portfolio analysis

cash cows: low-growth, high-share businesses that require less investment to maintain market share stars: high-growth, high-share businesses that require heavy investment to finance their rapid growth. When growth slows, they become cash cows question marks: low-share business in high-growth market that require major investments to hold share. dogs: low-growth, low-share business. Generates enough cash to maintain but not grow. once SBU is classified, they must make a decision. One of four strategies can be pursued: invest more and build share invest enough to hold share harvest, milking it for short-term revenue divest the SBU

promotional mix

combo of one or more communication tool: advertising, personal selling, sales promotion, public relations, and direct marketing

Creating Customer value through packaging and labelling

communication benefits functional benefits: storage, convenience, protection, product quality. perceptual benefits: package and label shape, colour, and graphics distinguish one brand from another, and build brand equity.

Channel Design Considerations

consider 3 questions which channel and intermediaries will provide the best coverage of the target market? which channel and intermediaries will best satisfy the buying requirements of the target market? which channel and intermediaries will be the most profitable? target market coverage: intensive (as many places as possible), exclusive (one retailer only), selective (a few) satisfying buyer requirements: considering (1) info, (2) convenience (3) variety and (4) attendant services. profitability: determined by margins earned for each channel.

Defining marketing channels of distribution

consists of individuals and firms involved in the process of making a product. makes possible the flow of goods from producer to intermediaries to buyer.

How marketing discovers and satisfies consumer needs

consumers may not always know what they need /want. to discover what they need: 1) focus on what the customer benefit is, 2) learn from the past marketers should try to satisfy consumer needs & wants

Classification of Consumer Goods

convenience goods: items purchased frequently shopping goods are items which consumers compare several alternatives specialty goods are items consumers make special effort to seek unsought goods are items consumer either does not know about or does not initially want.

Value & Scope of Retailing

creates customer value and impact on the economy

What are new services?

differs from product innovation due to the labour and interactive services being part of customer experience, they require customers, and do not have a tangible product. 7 categories of new services: major service innovations, major process innovations, service-line extensions, process-line extensions, supplementary-service, basic service improvements, style changes.

Pricing in the Marketing Mix Step 6

discounts quantity discounts: to encourage to buy larger quantities seasonal discounts: encourage stock inventory earlier trade (functional) discount: reward wholesalers/retailers for marketing functions in future cash discounts encourage quick payment allowances—reductions from list or quoted prices to buyers for performing some activity trade in allowances reductions in the list price promotional allowances for undertaking certain ad. or selling activities to promote product. geographical adjustments—reflects cost of transport fob origin pricing sellers pays cost uniformed delivered pricing seller quotes all transport costs (FOB seller) legal and regulatory aspects of pricing price fixing when 2+ set prices (a.k.a horizontal price fixing). agreement btw independent buyers and sellers (vertical price fixing) price discrimination charging different prices to different buyers for goods deceptive pricing misleading consumers predatory pricing are extremely low prices n which they less competition.

benchmarking

discovering how others do something better than your own firm so that you can imitate or leapfrog competition.

Electronic Marketing Channels

electric commerce have made interactive electronic marketing channels possible. - Producer -> Agent -> Business Distributor -> Business User unique feature is that they combine electronic and traditional intermediaries. electronic intermediaries can perform transactional and facilitating functions effectively and cheaply.

Factors Affecting Channel Choice and Management

environmental factors changing environment. Moving from door-door-selling to catalogues and telemarketing. consumer factors who are potential customers? here do they buy? when? how? what? experience they seek? product factors highly sophisticated products are distributed directly to buyers unsophisticated, standard products through indirect channels product stage in life cycles also affects marketing channel company factors financial, human, or technological capabilities affect channels. ex. if unable to employ salesforce might use selling agents.

Socio-Cultural influences on consumer behaviour

evolve from formal and informal relationships w/ others. Includes personal influence, reference groups, family, social class, culture and subculture.

Product Warranty (a statement indicating the liability of the manufacturer for product deficiencies)

express warranties: written statements of liabilities. limited-coverage warranty: specifically states the bounds of coverage, non-coverage full warranty has no limits of non-coverage. implied warranties: assign responsibility for product deficiencies to manufacturer.

sales era:

firms began to produce more than buyers could consume = competition growth. So, more salespeople were hired to find more buyers.

market orientation era:

firms transitioned to a market orientated focus 1) continuously collecting info about customers' needs and competitors' capabilities 2) sharing this info throughout the org. 3) using info the create value, ensure customers satisfaction, and develop customer relationships.

Social force

forces of the environment that include the demographic characteristics of the population and its values; demographics culture

Family Influence

from 3 sources 1. consumer socialization: acquire skills, knowledge, and attitude from adults or own purchasing experiences. 2. family life cycle: phases that a family progresses through from formation to retirement; each phase bringing identifiable purchase behaviours. ex. singles prefer nondurable, prepared items. Middle-aged couples w/o children buy better home furnishings, status automobiles, and financial services. 3. family decision making: dif. products can be influenced more by spouses, children, preteens, teens.

production era

goods were scarce in early days, so buyers were willing to accept virtually any goods that were produced. So, the major concern of firms was production, not marketing.

Product line:

group of products that are closely related. i.e. Nike: shoes and clothing. within each product line is the product item. A different sized product is a different product item.

Reasons New-Products Fail

insignificant point of difference incomplete market and product definition too little market attractiveness poor execution of marketing mix poor product quality on critical factors bad timing no economical access to buyers

technological forces

inventions or innovations from applied science or engineering research. Intranet —private Internet/Web-based network used within boundaries of an organization Extranet—Internet-based tech that permits communication btw company and its suppliers, distributors, and other partners. e-business: electronic-based company activities, both within and outside firm. e-commerce involves specific buying and selling processes on the Internet. e-marketing: marketing component of e-commerce.

What is market segmentation?

involves aggregating prospective buyers into groups that have common needs, and will respond similar to marketing action. relatively homogenous groups of prospective buyers different market segments cause firms to use product differentiation—using dif. marketing mix activities, to help consumers perceive the product as being different (i.e. image, price). use market-product grids to group ppl to products.

Branding

is an activity in which an org. uses a name, phrase, design, symbol, to identify its products and distinguish themselves brand name is any word to distinguish a good/service. trade names a commercial, legal name under which company does business. trademark identifies that a firm has legally registered its brand name/trade name.

Four Dimensions of the Product Life Cycle:

length of product life cycle: each product has a different length. the shape of the product life cycle: not all products have the same shape. Shapes are defined by the high/low-learning, fashion and fad curves. the product level: class and form: class is the whole industry/category and form is variations within the class. i.e. video game consoles and video games. life cycle and consumers: innovators, early adopters, early/late majority, laggards. Markets try to use warranties, money-back guarantees, demos, and free samples to stimulate initial trial.

Logistics and Supply Chain Management

logistics management: the practice of organizing the cost-effective flow of raw materials, in-process inventory, finished goods, and related information from point of origin to point of consumption to satisfy customer requirements. Supply chain: is a sequence of firms that perform activities required to create a good. Includes suppliers who provide raw material inputs to manufacturers as well as wholesalers and retailers. Supplier network -> Manufacturer -> Marketing Channels -> Consumer to choose supply chain, we need to (1) understand customer (2) understand supply chain (3) harmonize supply chain w/ the marketing strategy.

Value created by intermediaries

makes selling goods/services more efficient b/c they minimize $ of sales contacts necessary. perform transactional function that involves buying/selling and risk taking. perform logistical function evident in gathering, storing, and dispersing of products. benefits consumers by having the goods/services when you want them, where, and the form you want them.

Agents and Brokers

manufacturer's agents work for several producers and act as a producer's sales arm in a territory. A selling agent is a single producer and are responsible for the entire marketing function of the producer. Brokers are independent firm/individuals brings sellers./buyers together to make sales; usually have no continuous relationship unlike agents.

Social marketing:

marketing designed to influence the behaviour of individuals in which the benefits of the behaviour accrue to those individuals or to the society in general and not to the marketer. i.e. anti smoking/ anti bullying campaigns

Product positioning using perceptual maps

means of displaying the location of products or brands in the minds of consumers, to see how consumers perceive competing products or brands relative to its own.

What is price?

money exchanged for ownership or use of a good/service. it is indicative of value

Multiple Channels and Strategic Alliances

multichannel distribution are an arrangement of employing 2- different types of marketing channels. ex. apple sells on its own website, through other retailers, and in its retail stores. strategic channel alliances is used to sell another firm's products. ie. Kraft Foods sells Starbucks coffee in supermarkets.

What is a new product?

newness can be compared w/ existing products, in legal terms, from the company's perspective, from the consumer's perspective.

Packaging and Labelling

packaging: refers to any container in which it is offered label: identifies the product or brand, who made it, where, when it was made, how to use and contents + ingredients.

Reference Groups

people who won an individual looks as basis for self-appraisal or as a source of personal std.

economic forces

pertains to the income, expenditures, and resources that affect the cost of running a business and household macroeconomic forces (inflation) consumer income

Regulatory forces:

provincial and federal laws placed on businesses. Competition Act: protect competition and consumers in Canada; designed to protect and to balance interests of competitors and consumers.

Global Dimensions of Marketing Channels

reflect traditions, customs, geography, and economic history. Asian countries require more channels b/c lack of storage space

Social Class

relatively permanent, homogenous divisions in a society into which people sharing similar values, lifestyles, interests, and behaviour can be grouped. lower, middle, and upper classes. lower class have more short-term time orientation; more emotional; concrete rather than abstract upper class focus on achievements, future, think in abstract terms.

The Retail Life Cycle

retail life cycle: the process of growth and decline that retail outlets experience. early growth is the stage of emergence of a retail outlet ->low profits accelerated development, profit achieve greatest growth rates maturity phase is when they try to maintain market share, and price discounting starts.

Culture and Subculture

subgroups within larger national culture are subcultures; identified by age, geography, ethnicity.

Consumer Behaviour:

the actions that a person takes in purchasing and using products and services, including the mental and social processes that precede and follow these actions

What is marketing?

the activity for creating, communicating, delivering, and exchanging offerings that benefit the organization, its stakeholders, and society at large. Requirements of marketing: 1) two or more parties w/ unsatisfied needs 2) desire and ability on their part to be satisfied 3) a way for parties to communicate 4) something to exchange

The Wheel of Retailing

the concept that describes how new retail outlets enter the market as low-status, low-margin stores and gradually increase status/prices.

What is product positioning?

the place an offering occupies in consumers' minds on important attributes relative to competitive products. (1) head to head positioning—competing directly on similar product in same target market (2) differentiation positioning—less competitive, smaller market niche, stressing unique aspects of product.

Reverse Logics

the process of reclaiming recyclable and reusable materials, returns, and reworks from the point of consumption or use for repair, remanufacturing, redistribution, or disposal.

Organization foundation: why does it exist?

there are three elements in its foundation: core values, mission and organizational culture core values: fundamental, passionate, and enduring principles that guide its conduct over time. Core values guide the organization's conduct. To be effective, core values must be communicated to and supported by top mgmt and employees. mission: statement of the organization's function in society, identifying its customers, markets, products, and technologies.A mission statement is clear, concise, meaningful, inspirational, and long-term. Recently, organizations have added a social element which is to solve society's problems.

5 Steps of Segmentation

Group potential buyers into segments the five main criteria in deciding to segment—potential for increased profit, similarity of needs of potential buyers within a segment, difference of needs of buyers among segments, potential of a marketing action to reach a segment, simplicity and cost of assigning potential buyers to segments. ways to segment—geographic segmentation, demographic segmentation (age, sex, income), psychographic segmentation (personalities, lifestyles), behavioural segmentation (benefits sought, usage rate). 2. Group products to be sold into categories 3. Develop a market-product grid and estimate size of markets 4. Select target markets too broad—may spread its efforts so thin that extra expenses too much too narrow—fail to reach volume of sales and profits criteria to use in choosing the target segments—market size, expected growth, competitive position, cost of reaching the segment, compatibility 5. Take marketing actions to reach target markets

Product Life Cycle

Introduction: slow sales growth, and profit is minimal; stage is to stimulate trial and awareness of the product. Growth Stage: rapid increase in sales; competitors appear in this stage; important to differentiate and expand distribution as much as possible. Maturity Stage: slowing of total industry sales; sales increase at a decreasing rate; marketing attention through further product differentiation and finding new buyers. Decline Stage: sales and profits drop; due to environmental and technological changes; product depletion is dropping product from company's product line; or harvesting, which is retaining product but reducing marketing support costs.

Psychological influences

Motivation and Personality : perceived risk plays a major role in purchase decision. (ex. can i afford it, is it safe etc...) Learning much consumer behaviour is learned; from repeated experience and thinking. behavioural learning: process of developing automatic responses through repeated exposure cognitive: through reasoning and mental problem solving brand loyalty: favourable attitude toward consistent purchase of a brand. Values, Beliefs, and Attitudes values are personally preferable modes of conduct. Marketers are concerned with mostly personal values beliefs are subjective perception of how well a product is; changed through experiences or advertising. attitudes is a learned predisposition to respond to an object in a consistent way. Lifestyle mode of living that is identified by how people spend their time and resources.

Branding Strategies

Multiproduct Branding- company uses one name for all its products in a product class. ex. Sony (its brand and trade names are identical). Advantages: good brand equity, makes line or brand extensions possible, lower advertising and promotion costs. Risks: sales of extension may come at expense of others. Multibranding- giving each product a distinct name. ex. P&G Camay soap for soft skin Safeguard for deodorant. Private Branding-private labelling or reseller brand; manufactures products but sellers them under brand name of a wholesaler. i.e. Loblaws' President's choice. Cohort Brand Management- bundling of one company's multiple brands into a single marketing effort aimed at a common group. ex. P&G's homemadesimple.com Mixed Branding-firm markets products under its own name(s) and that of a reseller b/c the segment attracted by the reseller is different from its own market. ex. Elizabeth Arden sells at department stores and its other brand skinsimple is sold at Walmart.

Markup % on selling price

P - VC / P

Markup % on cost

P - VC / VC

Market-Product Analysis

There are 4 market strategies: 1) market penetration—increasing sales of present products in existing market by selling more products, or by selling same amount at a higher price. 2) market development—selling existing products to new markets. 3) Product development—selling new products to existing markets. 4) Diversification—new products and selling them in new markets. (riskiest growth strategy) There are 2 types related and unrelated. Related occurs when new products and new markets have something in common w/ the firm's existing operations. Unrelated diversification means new products and new markets.

Phases to Marketing Plan

Planning Phase: Situation SWOT Analysis: taking stock of where the firm or product has been recently, where it is now, and where it is headed in terms of the organization's plans and the external factors and trends affecting it. SWOT is a shorthand summary of internal Strengths, Weaknesses, and its external Opportunities and Threats. The ultimate goal is to identify critical factors affecting the firm and build on strengths, correct weaknesses, exploit significant opportunities, and avoid disaster-laden threats. Market-Product Focus and Goal Setting: which product is directed to which consumer based on market segmentation—aggregating prospective buyers into segments that 1) have common needs and 2) will respond similarly to a marketing action. - points of difference : characteristics of a product that make it superior to competitive substitutes. Marketing program: developing its market mix and its budget. Product, Price, Promo, Place strategies. Implementation Phase: obtaining resources: gather investments and figure out how they should be funded. designing the marketing organization: this organization helps implement the plan. Developing Schedules determine specific deadlines for the creation and execution of marketing activities. Executing the Market Program marketing strategy is the means by which a marketing goal is to be achieved, usually characterized by a specified target market and a marketing program to reach it. marketing tactics are used to help implement marketing programs. These are detailed day-to-day operational decisions essential to the overall success of marketing strategies. Evaluation Phase compare the results of the marketing program w/ goals in written plans to identify deviations act on deviations—correcting negatives and exploiting positives.

Contribution Margin CM

Price per unit - VC per unit; divide by price per unit to get %

Marketing Channels for Business Goods and Services

Producer -> Agent -> Business Distributor -> Business User Distributor helps sell, stock, and deliver product assortment and financing. Agents serve as selling arms of producer and represents a producer to industrial users.

Marketing channels for consumer goods and services

Producer -> Agent -> Wholesaler -> Retailer -> Consumer Wholesaler is common for low-cost, low-unit-value items Agents help coordinate large supply of a product

Managing the Product Life Cycle

Product or brand manager manages product through life cycle. they can modify the product —by product mod. which is alternating quality, performance, appearance, features etc.. they can modify the market—by market mod. find new customers, increase a product's use among existing customers, or create new-use situations.

marketing mix:

Product: a good, service, or idea to satisfy the consumer's needs Price: what is exchanged for the product Promotion: a means of communication btw the seller and buyer Place: a means of getting the product into the consumer's hands

Classification of Business Goods

Production goods: items used in the manufacturing process that become part of the final product. support goods are items used to assist in producing other goods. i.e. supplies, accessory equipment.

There are also different types of goals

Profit: classic economic theory, firms seeks to maximize long-run profit Sales revenue: if profits are acceptable, a firm may elect to maintain or increase its sales lvl. Market share: ratio of sales revenue of firm to the total sales revenue of all firms in the industry. Unit sales: maintain or increase the number of units it sell b/c sometimes sales revenue may be deceiving due to inflation Quality: target highest quality products/service Customer satisfaction Employee welfare: recognize importance of its employees by having goals stating its commitment to provide good employment conditions and opportunities. Social responsibility: balancing conflicting goals of consumers, employees, and shareholders.

Retailing Mix

Retail Pricing must decide on markup, markdown, and timing for markdown. retailers decide on original market, and when its sold it ends up w/ maintained markup. markdown occurs when product doe not sell. usually markdowns when sales fall off to free up shelf space. everyday low pricing strategy eliminates most markdowns everyday fair pricing offers not the lowest price but creates value through service. must consider shrinkage (theft) off-price retailing is selling brand-name merchandise at lower than regular prices. off-price is merchandise bought by retailer w/ excess inventory at prices below wholesale. ex. warehouse club or outlets stores. Store location central business district is community's downtown area. regional shopping centre attract customers who live 8-16km away. community shopping centre are retail location that typically has one primary store. strip location is a cluster of stores power centre is huge shopping strip w/ multiple anchor stores, and a supermarket. lifestyle centre is an open-air cluster of specialty stores, along w/ theatres, restaurants etc... Retail Communication the way in which the store is defined in the shoppers mind is important. refers to price ranges, store layouts, breadth and depth of merchandise lines Merchandise managing the breadth and depth of product lines. a popular approach is category management—assigns a manager w/ the responsibility for selecting all products that consumers in a market segment might view as substitutes for each other, with the objective of maximizing sales and profits in the category.

Personal Influence

Two aspects of personal influence: 1. Opinion Leadership: knowledgeable users influence others' choices 2. word of mouth: influencing of people during conversations. Stimulating positive word of mouth is called buzz marketing; viral marketing is the online equivalent.

The New Product Process

Step 1: New-Product Strategy Development providing necessary focus, structure, approach, and guidelines for pursuing innovation Step 2: Idea Generation developing pool of concepts as candidates for new product. from customer and supplier suggestion R&D breakthroughs Comparison w/ competition Looking for visionaries in universities, investors, small tech firms. Step 3: Screening and Evaluation internal and external evaluations of new-product ideas. Internal: evaluate technical feasibility of proposal. External: testing w/ consumers Stage 4: Business Analysis involves specifying product features and marketing strategy and making financial projections needed to commercialize a product Stage 5: Development building a prototype. product must be able to be manufactured at reasonable cost w/ the required quality. Stage 6: Market Testing exposing products to consumers under realistic purchase conditions to see if they will buy. using test markets like simulated test markets (small-scale mall tests), virtual reality market test (online surveys). Stage 7: Commercialization involves positioning and launching a new product in full-scale production and sales. b/c time to market is correlated to new-product success, high-tech products have overlapped sequence of stages so that they can introduce new-products faster.

Pricing in the Marketing Mix Step 1

Step 1: identifying pricing constraints and objectives identify price constraints (factors that limit the price a firm may set) demand for the product class, product, the brand newness of the product; its stage in the product life cycle—newer = pricier single product vs product line = uniqueness in product; only one on market? cost of producing and marketing the product; price cannot go below price floor cost of changing prices and time period they apply types of competitive markets; monopoly, oligopoly have more pricing freedom, while monopolistic competition and pure competition have less. competitors' prices; anticipate pricers of present/potential competitors identifying pricing objectives expectations that specify the role of price in an org.'s marketing and strategic plans. profit; managing for long run profits; maximizing current profit; target return (setting pretax ROI). sales; increase sales revenue market share unit volume: quantity produced or sold survival: promo and low prices to survive social responsibility: obligations to customers and society.

Pricing in the Marketing Mix Step 2

Step 2: Estimating the Demand and Revenue fundamentals of estimating demand demand curve shows max consumers at a given price. Factors that affect demand are consumer taste, price and availability of other products, consumer income. movement along versus shift of a demand curve price elasticity of demand: indicates sensitivity of demand curve. fundamental sof estimating revenue: TR=PQ

Pricing in the Marketing Mix Step 3

Step 3: Estimating Cost, Volume, and Profit Relationships importance of controlling cost: FC+ VC = TC break-even analysis: the break-even point (BEP) is the qty at which TR=TC. - how to calculate break-even point BEPquantity= fixed cost / unit price - unit variable cost

Pricing in the Marketing Mix Step 4

Step 4: Selecting an Approx. Price Level key for setting final price is to find an approx. price level. 4 common approaches to finding approx. price level. (1) demand oriented approaches: skimming price; highest initial price that customers desiring a product are willing to pay; effective when customers are willing to buy immediately, will not attract competitors, lowering price has minor effect on sales, customers interpret high quality w/ high price. penetration pricing setting a low initial price on a new product to appeal immediately to the mass market; favourable when market is sensitive, low initial price discourages competitors, unit production and marketing falls when production increases. prestige pricing is setting a high price on a product to attract quality-or-status-conscious consumers. price lining is pricing line of products at a number of different specific pricing points odd-even pricing is setting prices a few dollars or cents under an event number target pricing is adjusting the composition and features of a product to achieve target price to consumers bundle pricing is marketing of 2+ products in a single "package" price yield management pricing is charging different prices to maximize revenue for a set amount of capacity at any given time; (2) cost-oriented approaches: standard markup pricing is adding a fixed % to the cost of all items cost-plus pricing is summing the total unit cost of product and adding a specific amount to the cost; commonly used to set business products. ex. legal fees. experience curve pricing is based on product experience, the unit cost of many products and services declines by 10 to 30 % each time a firm's experience at producing and selling them doubles. (3) profit-oriented approaches target profit pricing baed on annual target of a specific dollar volume of profit. target return-on-sales pricing setting typical prices that will give a firm a profit that is specific %. target return-on-investment pricing setting prices to achieve ROI targets. (4) competition-oriented approaches customary pricing is setting prices dictated by tradition, standardized channels of distribution, or other competitive factors. above-,at-, or below-market pricing setting prices based on pricing of similar products in the market. loss leader pricing selling products below their customary prices to attract attention.

Pricing in the Marketing Mix Step 5

Step 5: Setting the List or Quoted Price one-price policy versus flexible-price policy one-price policy is setting one price for all buyers flexible-price setts different products depending on buyers and purchase situations. company, customers, and competitive effects company effects: must consider prices of other items in its product mix; price differentials should reflect differences in the perceived values of the products offered. customer effects: weigh factors that satisfy the perceptions or expectations of customers competitive effects: anticipate potential price responses from competitors

Selling price

VC / 100% - markup on selling price ( use this when you don't know the selling price or vc)

Brand Personality

a characteristic associated w/ a brand name.

Key logistics functions in a supply chain

transportation: rail, truck, air, pipeline, or water? consider the cost, time, capability, dependability, accessibility, and frequency. warehousing and materials handling storage warehouse or distribution centres (designed to facilitate timely movement of goods)? order processing order is received, prepares order. If item is currently out of stock, a backorder is created. inventory management a primary responsibility of supply chain reasons for inventory: (1) offer a buffer against variations (2) provide better service for those to be served on demand (3) to promote production efficiency (4) to provide hedge against price increases by suppliers (5) promote purchasing and transport discounts (6) to protect the firm from strikes and shortages. inventory cost: (1) capital costs (2) inventory service cost (3) storage costs (4) risk costs supply chain inventory strategies JIT just-in-time concept where there's very low inventory and requires fast delivery. electronic data interchange allow vendor-managed inventory (VMI) which is when supplier determines the product amount a customer needs and automatically delivers the items.

social media marketing era:

two distinct dimensions 1) social media marketing is about consumer-generated online-marketing efforts to promote brands and companies for which they are fans 2) is the use by marketers of online tools and platforms to promote their brands/org. (e.g., Facebook, Twitter, YouTube)

Costs

unit price - VC = contribution margin - FC = profit margin

Vertical Marketing Systems and Channel Partnerships

vertical marketing systems (VMS) are professionally managed and centrally coordinated marketing channels designed to achieve channel economics and max. marketing impact. corporate systems combination of successive stages of production and distribution under a single ownership. ex: producer owns the intermediary at the next level in the channel. contractual systems independent production and distribution firms integrate their efforts on a contractual basis to obtain greater functional economies. three variations exist (1) wholesaler-sponsored voluntary chains: wholesaler develops contractual relationship w/ small retailers (2) retailer-sponsored cooperatives: where small independent retailers form an org. that operates a wholesale facility cooperatively (3) franchising administered systems administered vertical marketing systems achieve coordination at successive stages of production and distribution by the size and influence of one channel member rather than through ownership.

Manufacturers' Branches and Offices:

wholly owned extensions of producer. Carries producers' inventory and performs functions of a full-service wholesaler.

Market Share

your brand $ (or unit) sales / total segment $ (or unit) sales. use the step down approach

Price Elasticity

∆Q/ ∆P ; new - old / old. <-1 elastic , >-1 inelastic

Cross Price Elasticity

∆Qa/ ∆Pb ; (-) are complements