Marketing

Cost-based pricing

setting prices based on the costs for producing, distributing, and selling the products plus a fair rate of return for effort and risk

Product line pricing

setting the price steps between various products in a product in a product line based on cost differences between the products, customer evaluation of different features, and competitors prices.

Break even (target return) pricing

setting to break even on the costs of making and marketing a product, or setting price to make a target return.

Intensive distribution

stocking the product in as many outlets as possible

Total costs

sum of the fixed and variable costs for any given level of production

Products life cycle

the course of a products sales and profits over its lifetime

New product development

the development of original products, products improvements, product modifications, and new brands through the firm's own products development efforts

Width

the number of different products lines the company carries

Length

the number of items within a product line

Depth

the number of versions offered of each product in the line

Selective distribution

the use of more than one but fewer than all of the intermediaries who are willing to carry the company products.

Variable costs

vary directly with the level of production

Fixed costs

vary with production or sales level

Product mix

- the set of all product lines and items that a particular seller offers for sale.

Sales and Profits Over the Product's Life From Inception to Decline

: Product development begins when the company finds and develops a new product idea. During product development, sales are zero, and the company's investment costs mount. Introduction is a period of slow sales growth as the product is introduced in the market. Profits are non-existent in this stage because of the heavy expenses of product introduction. Growth is a period of rapid market acceptance and increasing profits. Maturity is a period of slowdown in sales growth because the product has achieved acceptance by most potential buyers. Profits level off or decline because of increased marketing outlays to defend the product against competition. Decline is the period when sales fall off and profits drop.

Target Market

A set of buyers sharing common needs or characteristics that the company decides to serve

Four Service Characteristics

Although services are "products" in a general sense, they have special characteristics and marketing needs. The biggest differences come from the fact that services are essentially intangible and that they are created through direct interactions with customers. Think about your experiences with an airline versus Nike or Apple

Positioning

Arranging for a market offering to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers

Major Brand Strategy Decisions

Branding poses challenging decisions to the marketer. The major brand strategy decisions involve brand positioning, brand name selection, brand sponsorship, and brand development.

Choosing the Right Competitive Advantages

Choose whether to promote a single benefit or multiple benefits. Promote differences that are: Important | Distinctive | Superior | Communicable | Pre-emptive | Affordable | Profitable.

Convenience products

consumer products that customers usually buy frequently, immediately and with minimal comparison and buying effort.

Shopping products -

consumer products that the customer, in the process of selecting and purchasing, usually compare on such attributes as suitability, quality, price, and style.

Specialty products

consumer products with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort.

New brands

creates for a new product category, or when interest in existing brands, decreases.

Line extension

extending a existing brand name to new forms, colors, sizes, ingredients, or flavors within a product category

Brand extension

extending an existing brand name to new products categories

Consistency

how closely related various lines are in end use

Line stretching

lengthening the product line beyond the current range.

Supply chain management

managing upstream and downstream value added flows of materials, final goods, and related information among suppliers, the company, resellers, and final consumers.

Multi-brands

marketing many different brands name to new products categories

Major Stages in New Product Development

new product development starts with idea generation—the systematic search for new product ideas. Major sources of new product ideas include internal sources and external sources such as customers, competitors, distributors and suppliers, and others. A company typically generates hundreds—even thousands—of ideas to find a few good ones. The remaining steps reduce the number of ideas and develop only the best ones into profitable products.

Good value pricing

offering the right combination of quality and good service at a fair price

Marketing logistics

planning, implementing, and controlling the physical flow of materials, final goods, and related information from points of origin to points of consumption to meet customer requirements at a profit.

Optional product pricing

pricing of optional or accessory products along with a main products.

Supply chain and value delivery network

producing and making products available to buyers requires building relationships with upstream and downstream supply chin partners

Industrial products

products brought by individuals and organizations for further processing or for use in conducting a business

Marketing channels

set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business users

Market skimming pricing

setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price.

Market penetration pricing

setting a low price for a new product to attract a large number of buyers and large market share.

By product pricing

setting a price for byproducts to make the main products price more competitive.

Captive product pricing

setting a price for products that must be used along with a main product

Customer value based pricing

setting price based on buyers perceptions of value rather than on the sellers cost.

Customer-Driven Marketing Strategy

(1) Which customers will we serve? and (2) How will we serve them? Of course, the tough part is coming up with good answers to these simple-sounding yet difficult questions. The goal is to create more value for the customers we serve than competitors do.

Branding

- a name, term, sign, symbol, or design, or a combination of these, that identifies the products or services of one seller or group of sellers and differentiates them from those of competitors

Differentiation

Differentiating the market offering to create superior customer value

Age and Life-Cycle

Dividing a market into different age and life-cycle groups. Marketers must guard against using stereotypes

Geographic Segmentation

Dividing a market into different geographical units, such as nations, states, regions, counties, or cities. Companies are localizing their products, advertising, promotion, and sales efforts to fit the needs of individual regions

Psychographic Segmentation

Dividing a market into different segments based on social class, lifestyle, or personality characteristics. The products people buy reflect their lifestyles

Behavioral Segmentation

Dividing a market into segments based on consumer knowledge, attitudes, uses, or responses to a product.

Market segmentation

Dividing a market into smaller segments of buyers with distinct needs, characteristics, or behaviours that might require separate marketing strategies or mixes

Demographic Segmentation

Dividing the market into segments based on variables such as age, life-cycle stage, gender, income, occupation, education, religion, ethnicity, and generation

Choosing a Targeting Strategy

Factors to consider: Company resources | Market variability | Product's life-cycle stage | Market variability | Competitors' marketing strategies

Brand Development Strategies:

Line extensions involve some risks. An overextended brand name might lose some of its specific meaning. Or heavily extended brands can cause consumer confusion or frustration. A brand extension strategy also involves some risk. The extension may confuse the image of the main brand. A major drawback of multibranding is that each brand might obtain only a small market share, and none may be very profitable segments, lock up more reseller shelf space, and capture a larger market share. As with multibranding, offering too many new brands can result in a company spreading its resources too thin.

Value delivery network

Network composed of the company, suppliers, distributors, and ultimately customers who partner to help the entire system deliver better customer value

Micromarketing

Tailoring products and marketing programs to the needs and wants of specific individuals and local customer segments

Value-Based Pricing vs. Cost-Based Pricing

The figure compares value-based pricing with cost-based pricing. Although costs are an important consideration in setting prices, cost-based pricing is often product driven. The company designs what it considers to be a good product, adds up the costs of making the product, and sets a price that covers costs plus a target profit. Value-based pricing reverses this process. The company first assesses customer needs and value perceptions. It then sets its target price based on customer perceptions of value.

Considerations in Setting Price

The figure summarizes the major considerations in setting price. Customer perceptions of the product's value set the ceiling for prices. If customers perceive that the product's price is greater than its value, they will not buy the product. Likewise, product costs set the floor for prices. If the company prices the product below its costs, the company's profits will suffer. In setting its price between these two extremes, the company must consider several external and internal factors, including competitors' strategies and prices, the overall marketing strategy and mix, and the nature of the market and demand.

Value Proposition

The full positioning of a brand—the full mix of benefits on which it is positioned

Market targeting

The process of evaluating each market segment's attractiveness and selecting one or more segments to enter

Market targeting Strategies

Using an undifferentiated marketing (or mass marketing) strategy, a firm might decide to ignore market segment differences and target the whole market with one offer. Such a strategy focuses on what is common in the needs of consumers rather than on what is different. The company designs a product and a marketing program that will appeal to the largest number of buyers. Using a differentiated marketing (or segmented marketing ) strategy, a firm decides to target several market segments and designs separate offers for each. This figure covers a broad range of targeting strategies, from mass marketing (virtually no targeting) to individual marketing (customizing products and programs to individual customers).

Product bundle pricing

combine several products and offering the bundle at a reduced price.

Conventional distribution channel

a channel consisting one or more independent producers, wholesalers, and retailers, each a separate business seeking to maximize its own profits, perhaps even at the expense of profits for the system as a whole.

Vertical marketing system (VMS)

a channel structure in which producers, wholesalers, and retailers act as a unified system. One channel manager owns the others, has contracts with them or has so much power that they all cooperate.

The market and demand

a firm's flexibility in setting prices varies depending on the nature of the market

Product line

a group of products that are closely relates because they function in similar manner, are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price ranges.

Channel level

a layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer

Indirect marketing channel

a marketing channel containing one or more intermediary levels.

Direct marketing channel

a marketing channel that has no intermediary level

Consumer products

a product bought by final consumers for personal consumption

Cost-plus pricing

adding a standard markup to the cost of the product

Line filling

adding more items within the present range of the line.

Price

amount of money charged for a product or service

Service

an activity, benefit, or satisfaction offered for sale that is essentially intangible and does not result in the ownership of anything.

Product

anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need

Value added pricing

attaching value- added features and services to differentiate a company's offers while charging higher prices.