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![ “It is offering just the right combination of
quality & good services at a fair price”.
During the past decade, there has been a shift in
consumer attitudes towards price & quality.
Many companies have noticed these changes &
modified their prices to bring them in line with
changing conditions of the consumers.
There are two types good value pricing
1. EDLP[Every Day Low Pricing]
2. High low pricing](https://image.slidesharecdn.com/final-mark-140430125145-phpapp02/85/Marketing-Decisions-19-320.jpg)
Uploaded byAnkit Porwal
Marketing Decisions
The document discusses various concepts related to product and pricing strategies. It defines key terms like product mix, product line, product portfolio, and explains strategies like product line stretching, pruning, modernization etc. It also defines price, discusses factors influencing pricing like value-based pricing, cost-based pricing and various price adjustment strategies.
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Marketing Decisions
- 1. Chetana BBA college,Bijapur
- 2. It isan integrated process through which companies build strong customer relationships and creates value for their customers and for themselves.
- 3. In marketing, aproduct is anything that can be offered to a market that might satisfy a want or need
- 4.
- 5. Consumer products Industrial products ◦ Materials and parts ◦ Capital items ◦ Supplies and services 8 - 5
- 6. 8 - 6 Unsought ProductsUnsoughtProducts New innovations Products consumers don’t want to think about these products Require much advertising & personal selling i.e Life insurance, blood donation Specialty ProductsSpecialty Products Special purchase efforts High price Unique characteristics Brand identification Few purchase locations i.e can be anything Shopping ProductsShopping Products Buy less frequently Higher price Fewer purchase locations Comparison shop i.e Clothing, appliances Convenience ProductsConvenience Products Buy frequently & immediately Low priced Mass advertising Many purchase locations i.e Candy, newspapers
- 7. –A group ofproducts that are closely related because they may: •function in a similar manner •be sold to the same customer groups, •be marketed through the same types of outlets •fall within given price ranges P&G has 100 types of toothpastes.
- 8. Fig, tentative ProductMix of HUL
- 9. A good honest scoop ofdaily pleasure. Lipton has a range of vitality teas that truly encompass the goodness of tea. India’s favorite cup of tea, the great taste of Red Label brings people closer together and strengthens relationships. Brooke Bond Taaza lifts me people unshackles the mind, allowing them to see and realize possibilities. Brooke Bond Taj Mahal is an exclusive selection of teas for the discerning consumer. Partnering with the mom in nurturing her dreams, Annapurna Atta is aimed at helping her provide wholesome tasty nutrition to her Playful banter, a little mischief, serious conversation… there’s no time for young couples like the time spent sharing a cup of 3 Roses. Ek cup Bru aur mood ban jae… With Kissan, good food is loved not shoved! Kissan Amaze Brainfood is speci - fically designed for the mental development of kids. Knorr helps families make meal times special, nutritious, tasty and healthy.
- 10. Active Wheel de "Mehnatse Aazadi" Freedom from painful & tiring laundry Cif- the best cleaner to let you shine. The world’s largest fabric conditioner brand. The sheer power of Domex bleach gives you the confidence you need, eradicating all known germs. Rin provides ‘best in class whiteness’ which is demonstrable. Sunlight is a color care brand Giving your kids the freedom to get dirty and experience life, safe in the knowledge that Surf Excel will remove those stains Created in 1885, the Vim brand is still innovating and using the magic of natural ingredients to create unbeatable results over a hundred years later.
- 11. Rexona gives you24 hour protection from sweat and body odour and therefore the confidence to handle whatever the day has in store. Dove stands for real beauty. All around the world, Dove is making complete therapy for your hair. Pears – the purest and most gentle way to skincare! Lux believes in passion for beauty. It continues to be a favorite with generations of users for a sensuous experience of luxury. Awaken, and enliven your senses with a Liril bath. Lifebuoy is available in multiple variants in soaps and specialist formats such as liquid hand wash, catering to the entire family. Holistic skin care experiences perfected over the ages to deliver healthy, beautiful skin Breeze, with the goodness of glycerine gives soft, fragrant and smooth skin.
- 12. New Clear withEssential Oils, guarantees Zero dandruff and leaves your hair feeling fabulous. Clinic Plus is India’s largest selling shampoo and has won the trust the millions of families across India. Freshness that brings you Closer Pepsodent India is committed to improve the overall Oral health of Indians. Sunsilk encourages young women in India to live for today. Sunsilk helps you transform the beauty of your hair instantly because LIFE CAN'T WAIT!! Dove stands for real beauty. All around the world, Dove is making complete therapy for your hair.
- 13. Your skin is amazing.It deserves to be treated as such. Rexona gives you 24 hour protection from sweat and body odour and therefore the confidence to handle whatever the day has in store. Get the expert to look after your skin Lakme is an ally to the Indian Woman and inspires her to express her unique beauty and sensuality. Thus, enabling her to realize the potency of her beauty. More than 30 years ago, a unique brand was born. Wrapped within a humble lavender tube, it went on to become the World’s No.1 Fairness cream. Axe with Best Quality Fragrance LEVER Ayush aims to help a new generation of Indians rediscover everyday health and vitality through customized Ayurvedic solutions. Aviance enables women actualize their unique potential through expert customized beauty solutions. The new expansion of fairness cream for men
- 14. Line stretching: Upward Downward Combination Line filling LineModernization: Line pruning:
- 15. PRICE FACTORSIN PRICE SETTING VALUE BASED PRICING COST BASED PRICING OTHER INTERNAL & EXTERNAL CONSIDERATION INTERNAL FACTORS EXTERNAL CONSIDERATION PRICING IN DIFFERENT TYPES OF MARKET
- 16. PRICE: “Itis the amount of money charged for a product or service IN A BROADER SENSE: “It is the sum of all values that customers give up in order to gain the benefits of having or using a product or service”.
- 17. A pricethat the company charges falls some where between one that is too high & one that is too low to produce a profit Customers perception of the product value sets the ceiling for the prices, if the customer perceive that the price is greater than the product value. They will not buy the product.
- 18. “It isthe setting of prices based on buyer’s perceptions of value rather than on the seller’s cost”. THERE ARE TWO TYPES OF VALUE BASED PRICING 1.GOOD VALUE PRICING 2.VALUE ADDED PRICING
- 19. “It isoffering just the right combination of quality & good services at a fair price”. During the past decade, there has been a shift in consumer attitudes towards price & quality. Many companies have noticed these changes & modified their prices to bring them in line with changing conditions of the consumers. There are two types good value pricing 1. EDLP[Every Day Low Pricing] 2. High low pricing
- 20. “It isattaching value added features & services to differentiate a company offer & to support charging higher prices”. To increase their pricing power, many company adopt value added pricing , they attach value added features & service to differentiate their offers & thus support higher prices. To retain pricing power, a firm must retain or build the value of its marketing offering.
- 21. “Cost basedpricing is the setting of the prices based on the cost for producing, distributing & selling the product plus a fair rate of return for effort & risk”. Many companies work to lower their cost of production so that they could sell in large number & earn more profits. There are two types of costs i.e. FIXED COSTS & VARIABLE COSTS FIXED COSTS: are those costs that do not vary with production or sales level. VARIABLE COSTS: are those costs that vary directly with the level of production. TOTAL COSTS: are the sum of the fixed & variable costs for any given level of production.
- 22. If theproduction capacity is fixed & less the cost of production will be high as the units produced are only few. The fixed cost are spread over these units with each unit bearing a large share of fixed cost . If the production capacity is large or if a company builds a larger plant, the number of units produced will be more .The fixed cost gets spread over all these units thereby reducing the cost of production the long run average cost is low.
- 24. The dropin the average cost of production with accumulated production experience is called as the EXPERIENCE CURVE or LEARNING CURVE
- 25. “It isthe method of pricing where we add a standard mark up to the cost of product”.
- 26. “It isthe setting of prices to break even on the costs of making an marketing a product , or setting prices to make a target profit”. Formula:
- 28. Internal factorsare the companies over all marketing strategy, objectives & marketing mix. External factors are the 1. Nature of market 2. Nature of demand 3. Companies competitors strategies 4. Environmental factors
- 29. If thecompany has selected its target market & positioning carefully, then its marketing strategy will be straight forward.
- 31. a) PURE COMPETITION b)MONOPOLISTIC COMPETITION c) OLIGOPOLISTIC COMPETITION d) PURE MONOPOLY
- 32. No singlebuyer & seller has much effort on the on going market price. he cannot charge more than the on going price. Nor can he charge less as he can sell all they want at that price. In a pure competitive market product development, pricing , advertising & sales promotion has no rule.
- 33. A rangeof prices occurs because sellers can differentiate there offers to their buyers . Buyers see the differences & pay different prices . The prices vary on account of product features ,style,design,or the services rendered..
- 34. The productcould be uniform .ex; steel, cars & computers. There are few sellers because it is difficult for others to enter the market.
- 35. Here, themarket consist of one company or seller . The seller may be a Govt monopoly ex. Postal service or regulated monopoly like power company a HESCOM, Railway.
- 36. Each pricea company might charge will lead to a different level of demand In a normal case, price & demand are inversely related i.e. higher the price, lower the demand. The company sells less if the price is more & sells more if the price is less.
- 37. “It themajor of the sensitivity of demand to changes in price”. If the demand for the product changes to a relative increase in price of the product this is called ELASTIC. If the demand hardly changes with a small change in price we call it as IN-ELASTIC.
- 38. In settingits prices, the company must also consider competitors costs, prices & marketing offerings. The company needs to ask many questions as to how the consumers perceive its product vice- versa other products if they perceive it as of higher value then it can charge high prices. No matter what price you charge high low or medium we should give customers superior value for that price.
- 39. While settingprices, other factors too needed to be considered like economic condition like weather there is a boom or recession. It should also look in to Govt regulations & special concerns.
- 40. NEW PRODUCT PRODUCT MIX PRICE ADJUSTMENT SKIMMING PRICING Productline Discount & allowance PENETRATING PRICING Optional pricing Segmented pricing Captive pricing Psychological pricing By- products Reference pricing
- 41. As wehave observed the pricing changes as the product passes through its Life Cycle . Firms bringing out new products face the challenge of setting the prices for the 1st time. They need to decide whether to set a very high price or a low price. It depends on the company strategy as to what it intends achieving a quick return on its investment or a large customer base. The company can choose between two broad strategies 1)MARKET SKIMMING PRICING 2)PENETRATING PRICING
- 42. 1. MARKET SKIMMING PRICING 2.PENETRATION PRICING
- 43. It isa setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay high price Here, the company makes fewer but more profitable sales.
- 44. “It issetting a low price for a new product in order to attract a large number of buyers and a large market share”
- 45. a) Product LinePricing b) Optional Product Pricing c) Captive Product Pricing d) By-Product pricing e) Product Bundling Pricing
- 46. “ Itis the setting the price steps between various products in a product line based on cost difference between the products, customers evaluation of different features & competitive prices”.
- 47. ◦ “It isthe pricing of optimal or accessory products along with the main product”.
- 48. “IT issetting the price for product that must be used along with main product”.
- 49. “It issetting a price for by – product in order to make the main products price more competitive”.
- 50. “It iscombining several products & offering the bundle at a reduced price”.
- 51. Companies usuallyadjust the basic prices to account for various customer differences & changing conditions. There eight price adjustment strategies 1. Discount & Allowance Pricing 2. Segmented Pricing 3. Psychological Pricing 4. Reference pricing 5. promotional Pricing 6. Geographical pricing 7. Dynamic Pricing 8. International pricing
- 52. “It isa straight reduction in price on purchase during a stated period of time”. Most companies adjust their basic price to reward customers for certain responses such as early payment or bills, volume purchases, off season buying etc… ALLOWANCE :are another type of reduction from the list price. There are basically promotional money paid by manufactures to retailer’s for an agreement. to feature the manufacture product in some way.
- 53. “It isselling a product or service at two or more prices, where the difference in prices is not based on difference in costs”. Companies often adjust their basic prices to allow for differences in customers , products & locations segmented pricing takes various forms… 1. Customer segment pricing 2. Product form pricing 3. Location pricing 4. Time pricing
- 54. “It isa pricing approach that considers the psychological of prices & not simply the economics the price is used to say something about the product”. Customer usually perceive the quality of a product is linked to high price, it means higher the price, the higher quality of the product.
- 55. “It anotheraspect of psychological pricing. it is the prices that buyers carry in their minds & refer it when looking at a given product. the reference price might be formed by noting current prices, remembering past prices or assessing the buying situations”.
- 56. “It isa pricing of the product temporarily below the list price & some times even below its cost of production to increase short run sales”. Super markets Dept stores resort to such pricing & price a few products as loss leaders to attract customers to the stores with a hope that they will buy other items at normal markup’s. Sellers at time give cash debts if product is brought from the dealers within a specified time or use special event pricing in certain seasons to draw more customers.
- 57. “It isthe setting of prices for customers located in different parts of the country or world”. THERE ARE FIVE(5) STRATEGIES 1. FOB-ORIGIN PRICING 2. UNIFORM-DELIVERD PRICING 3. ZONE PRICING 4. BASING PRICING 5. FREIGHT ABSORPTION PRICING
- 58. FOB-ORIGIN PRICING:“A geographical pricing strategy in which goods are placed free on board carrier, the customer pays the freight from the factory to the destination”. UNIFORM-DELIVERD PRICING: “A geographical pricing strategy in which the company charges the same price plus freight to all customers, regardless of their location. ZONE PRICING: “A geographical pricing strategy in which the company sets up two or more zone. All the customers within the zone pay the same total price , the more distant the zone , the higher is the price. BASING POINT PRICING: “ A geographical pricing strategy in which the seller designates some city as a basing point & charges all customers freight cost from that city to the customer”. FREIGHT ABSORPTION PRICE : “ A geographical pricing strategy in which the seller absorbs all or part of the freight charges in order to get the desired business”
- 59. “It isadjusting prices continually to meet the characteristics and needs individual customers & situation” E.X: internet sellers such as amazon.com can mine their data base to gauge a shoppers desires, major his/her means instantaneously tailor products to fit the shoppers behavior & price products accordingly.
- 60. Companies thatmarket their products internationally must decide what price to charge in the different countries in which they operates.
- 61. A name, term,sign, symbol or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors.
- 62.
- 63. Step 1:Problem and Opportunity Recognition Step 2: Information Search Step 3: Evaluation of Choices Step 4: Behavior and Action Step 5: Review of Buying Decision 63
- 64.
- 65.
- 66.
- 67. Promotion is aform of corporate communication that uses various methods to reach a targeted audience with a certain message in order to achieve specific organizational objectives
- 68.
- 69. Consistent clear and compelling company& brand message Promotion mix Public relation Personnel selling Sales promotion Direct marketing advertising
- 70. Identify thetarget audience Determine the communication objectives ◦ Persuasive , Informative, reminder Design a message ◦ Rational, moral, emotional Choose the media ◦ Personal , non-personal Select the message source ◦ Credible, experts Collect feedback
- 71.
- 72. Promotion ObjectivesPromotion Objectives TargetMarket Characteristics Target Market Characteristics Funds AvailableFunds Available Nature of the MediaNature of the Media
- 73. MediaMedia 2008 spend. (billions) 2008 spend. (billions) % growth 2007 to 2008 % growth 2007 to 2008 AdvantagesAdvantagesDisadvantagesDisadvantages Television & cable Television & cable $70.0$70.0 5.7%5.7% Demonstrations, good attention, wide reach, cable targets Demonstrations, good attention, wide reach, cable targets Expensive in total, “clutter” Expensive in total, “clutter” Direct mail Direct mail $63.7$63.7 4.54.5 Selected audience, flexible, can personalize Selected audience, flexible, can personalize Relatively costly per contact, “junk mail,” hard to retain attention Relatively costly per contact, “junk mail,” hard to retain attention News- paper News- paper $42.1$42.1 - 1.8- 1.8 Flexible, timely, local market Flexible, timely, local market May be expensive, short life, no “pass along” May be expensive, short life, no “pass along” RadioRadio $18.6$18.6 0.20.2 Wide reach, low cost segmented audience Wide reach, low cost segmented audience Weak attention, many different rates, short exposure Weak attention, many different rates, short exposure
- 74. MediaMedia 2008 spend. (billions) 2008 spend. (billions) % growth 2007 to 2008 % growth 2007 to 2008 AdvantagesAdvantagesDisadvantagesDisadvantages Yellow pages Yellow pages $14.7$14.7 1.1%1.1% Reaches local customers seeking purchase info. Reaches local customers seeking purchase info. Many competitors listed in same place, hard to differentiate Many competitors listed in same place, hard to differentiate MagazineMagazine $14.1$14.1 3.03.0 Very targeted, good detail, good “pass along” Very targeted, good detail, good “pass along” Inflexible, long lead times Inflexible, long lead times InternetInternet $12.7$12.7 16.516.5 Ads link to more detailed site, some “pay for results,” easy to track results Ads link to more detailed site, some “pay for results,” easy to track results Hard to compare costs with other media Hard to compare costs with other media OutdoorOutdoor $6.6$6.6 6.16.1 Flexible, repeat exposure, inexpensive Flexible, repeat exposure, inexpensive “Mass market,” very short exposure “Mass market,” very short exposure
- 77. Upstream Downstream Value delivery network Nature ◦ Direct marketing ◦ Pricing ◦ Sales force
- 78. Information Promotion Contact Matching Negotiation Physical distribution Financing Risk taking
- 79. Customer Customer CustomerCustomer producer producer producer producer Retailer Retailer Wholesaler Sales branch Business disributor Industrial
- 80. Vertical Horizontal Knownas VMS Known as HMS Multi channel distributionMulti channel distribution
- 81. Analyzing consumerneeds Setting channel objectives Identifying major alternatives ◦ Types of intermediaries Company sales force Manufacturer’s agency Industrial distributors Number of intermediaries ◦ Intensive ◦ Exclusive ◦ Selective ◦ Responsibilities
- 82. Evaluating majoralternatives ◦ Economic criteria ◦ Control criteria ◦ Adoptive criteria
- 83. Selecting channelmembers Managing and motivating channel members Evaluating channel members
- 84. Pull versus Push PromotionalStrategy Vs. Promotion Through the Channel
- 85. Hindustan Lever Limited (HUL) has two types of channel selling ‐ i. Regular (traditional) retail channel, ii.Direct Selling Channel in the name of Hindustan Lever Network (HLN).
- 86. Redistribution stockists:- Sales Margin: 4.76% which includes cash discount, unloading expenses from depot, distribution expenses to retailers, incentive schemes & other incidental expenses. Modes of transport used: Rickshaw, tempo. Incentive schemes: Before 2000 holiday packages and tours but after 2000 no non‐monetary incentive for RS. Software systems and Information System: UNIFY 8.3 (Developed by IBM & CMC). This software needs to be synchronized daily and the system updates any information/ incentive schemes / sales figures etc to and from the common shared platform. Areas of Operations: Marked for each of the RS. Selling Operations: RSs sells the goods to ‐ o Wholesaler (gets 1.5 % max. discount from RS) o Retailers (gets 1.0% max. discount from RS)
- 87. Based on the QOC various awards are distributed to the field persons at the end of every month. These awards are also known as ‘MOC Star’ awards. If QOC score > 4.5 - The person is eligible for 7 star award If QOC score > 4 - The person is eligible for 5 star award If QOC score > 3.5 -The person is eligible for 3 star award
Editor's Notes
- #73 Summary Overview There is no simple answer to the question, “Which is the “best” advertising medium?” Key Issues Choosing an advertising medium depends on: 1. The organization’s promotion objectives. 2. The characteristics of the target market. 3. The funds available for advertising. 4. The nature of the media—who is reached, with what frequency, with what impact, and at what cost. Before choosing the medium, the marketer must have specific promotion objectives. Some media are better than others at delivering a specific objective. The marketer must match the market with the media: specify the characteristics of the target market in order to select media that they hear, read, or see. Most major media do research to develop audience profiles. Profiles should include segmenting dimensions besides demographics. Discussion Question: Thinking back to Chapter 4 on market segmentation, what other segmenting dimensions are there besides demographics? Marketers should do their best to select media that attract a high percentage of the desired target market. Ad exposure to non-targeted consumers is wasteful. Some media help zero in on specific target markets.
- #74 Summary Overview This exhibit compares the characteristics of several types of media. Note how their advantages and disadvantages vary. Key Issues Television provides a way to demonstrate products and is a good medium for getting attention. Television also offers wide reach, and cable can be selective. Disadvantages include expense, competition among lots of ads--“clutter.” Direct mail is very flexible, can be personalized, and is very selective. Disadvantages include expense per contact, “junk mail” image, and difficulty retaining attention. Newspapers offer flexibility, timely placement, and good local market coverage. Some disadvantages are expense (for some markets), short life, and no “pass along” readership. Radio offers wide reach, low cost, and it appeals to highly segmented audiences. Disadvantages include weak attention, short exposure, and varying rates.
- #75 Summary Overview This exhibit compares the characteristics of several types of media. Note how their advantages and disadvantages vary. Key Issues Yellow Pages reach local customers who are seeking purchase information. However, competitors are also listed there and differentiation is difficult. Magazines are very targeted, provide good detail and excellent graphics, have high “pass-along” rates, and long shelf life. Disadvantages include inflexibility and long lead times. Internet. Internet ads link to more detailed website information, some with “pay for results” offers to the advertiser, but it’s difficult to compare total costs with other types of media. Outdoor advertising is flexible, inexpensive, and offers repeat exposures. However, exposure is very short and there is a lack of market segmentation.
- #77 Summary Overview Sales promotion includes those activities other than advertising, publicity, and personal selling that are designed to stimulate interest, trial, or purchase by final customers or others in the channel. Sales promotion typically seeks an immediate response. Key Issues Sales promotions can be launched quickly and lead to immediate results. However, the sales promotion objectives and the particular situation should influence the decision about which type of promotion to use. This exhibit shows three ways that a short-term sales promotion might affect sales. First sales pattern: a firm issues coupons to help clear excess inventory. Some consumers might buy in advance “stockpile” to take advantage of the coupon, but unless they use more of the product, their next purchase will be delayed. Second pattern: consumption increases during a limited-time promotion, but when the promotion ends, sales go back to normal. Third pattern: free samples of a product pull in new customers who like the product and keep coming back. This pattern is the kind of long-term result that is the aim of effective sales promotion. More companies are using a greater percentage of their promotion dollars on sales promotion. Sales promotion spending has grown in mature markets, where tough competition requires extra incentives to sell. Discussion Question: Think about a freestanding coupon insert in a newspaper, or a direct-mail packet containing coupons. In what stage of the product life cycle (introduction, growth, maturity, or decline) are most of these products?