This document discusses Muhammad Al-Shaibah's marketing strategy report which includes sections on pricing, promotion, and distribution strategies. The pricing strategy section outlines different pricing methods like cost pricing, competitive pricing, and psychological pricing. The promotion strategy section defines promotion and discusses the promotional mix of advertising, personal selling, sales promotions, and publicity. The document provides details on each of these promotion strategies, including their merits and demerits.

1. Muhammad Al-Shaibah
Roll No. : 44 (General)

2. CONTENTS
 Pricing Strategy
 Promotion strategy
 Channel strategy

3. PRICING STRATEGY
Price
Price is what a buyer pays to acquire products or services from a
seller.
- Price means different things to different participants in an exchange:
 In the view of the buyer, price refers to what must be given up to
obtain benefits.
 In the case of the seller, price reflects the revenue generated for
each product sold.

4. - For marketing organizations seeking to make a profit the
hope is that price will exceed cost ,so the organization can
see financial gain from the transaction.
- Pricing decisions are not limited to For-Profit companies,
Not-for-Profit organizations also set prices.

5. PRICING METHODS
PRICING
METHODS
COST
PRICING
BID
PRICING
MARKET
PRICING
COMPETITIVE
PRICING
MARKUP
PRICING
BREAKEVEN
PRICING
COST-PLUS
PRICING
BELOW
COMPETITIVE
PRICING
PARITY
PRICING
ABOVE
COMPETITIVE
PRICING
BACKWARDP
RICING
PRICE LINING
PSYCHOLOGICAL
PRICING

6. 1. Cost Pricing
In this method the production cost is the key
factor in determining the initial price , however the
one major disadvantage of this method is that it
does not take into consideration the target market’s
demand .

7. 1.1 Markup Pricing
In this method the final price is determined by adding a certain percentage to
the cost of the product.
There are two methods of markup pricing:
i. Markup on Cost : This method is determined by simply multiplying the cost
on each item by a predetermined percentage then adding the result to the
cost.
Item Cost+(Item Cost X Markup Percentage) = Price
ii. Markup on selling Price: In this method markup is discussed as a reflection
of price
𝑰𝒕𝒆𝒎 𝑪𝒐𝒔𝒕
(𝟏 −𝑴𝒂𝒓𝒌𝒖𝒑 𝑷𝒆𝒓𝒄𝒆𝒏𝒕𝒂𝒈𝒆)
= Price

8. 1.3 Breakeven Pricing
In this method price is determined by adding a fixed monetary
amount to the product’s cost.
1.2 Cost-plus Pricing
Breakeven pricing is associated
with breakeven analysis, which is a
forecasting tool used by marketers to
determine how many products must be
sold before the company starts
realizing a profit.

9. 2. MARKET PRICING
In this method initial price is
based on analysis of market on
which customer expectations are
measured.
Market pricing is one of the most
common methods for setting price,
and the one that seems most
logical, given marketing’s focus on
satisfying customers.

10. 2.1 Backward Pricing
In situations where a price range is deep-rooted in the market,
the marketer may need to use this price as the starting point for
many decisions and work backwards to develop product, promotion
and distribution plans.

11. 2.1 Lining Pricing
This method primarily uses price to create the separation between the
different models according to cost categories in order to create various
quality levels in the minds of consumers. Effective price lining by a
business will usually involve putting sufficient price gaps between
categories to inform prospective buyers of quality differentials.

12. 2.3 Psychological Pricing
Psychological pricing method based on the belief that certain prices or price
ranges are more appealing to buyers.
1. Odd-Even Pricing: This method involves setting a price in odd numbers (just
under round even numbers) such as $49.95 instead of $50.00. Originally, this
practice was meant to prevent pilfering of cash by forcing a cashier to open the
cash-register (to pay change to the customer) and thus register the transaction.
Although not supported by any research findings, its proponents claim that
the consumers see a $49.95 price as 'just above $40' and not as 'just below
$50.'

13. 2. Prestige Pricing : This method of pricing points to a strong
correlation between perceived product quality and price. The
higher the price the more likely customers are to perceive it as
being higher in quality compared to a lower priced product.

14. 3. COMPETITIVE PRICING
Competitive pricing is setting the price of a product or service based
on what the competition is charging. Competitive pricing is used more often
by businesses selling similar products, since services can vary from
business to business while the attributes of a product remain similar. This
type of pricing strategy is generally used once a price for a product or
service has reached a level of equilibrium, which often occurs when a
product has been on the market for a long time and there are many
substitutes for the product.

15. 4. BID PRICING
A bid price is the price a buyer is willing to pay for a security.
This is one part of the bid with the other being the bid size,
which details the amount of shares the investor is willing to
purchase at the bid price. The opposite of the bid is the ask
price, which is the price a seller is looking to get for his or her
shares.
A bid price offered by bidder (contractor, supplier, vendor) for a
specific good, job, or service, and valid only for the specified
period.

16. PROMOTION STRATEGY
Promotion refers to raising customer awareness of a product or
brand, generating sales, and creating brand loyalty. It is one of
the four basic elements of the market mix, which includes the
four P's: price, product, promotion, and place.

17.  Fundamentally, there are three basic objectives of promotion.
These are:
1. To present information to consumers and others.
2. To increase demand.
3. To differentiate a product.
 Promotion is also defined as one of four pieces in
the promotional mix or promotional plan. These are advertising,
personal selling, sales promotion, and publicity . A promotional
mix specifies how much attention to pay to each of the four
factors, and how much money to budget.

18.  It is a paid form of non personal mass communication by an identified
sponsor. The mass media used include print media, direct mail, audio
visual media, bill boards etc.
 Sponsors may be non-profit organizations, a political candidate, a
company or an individual.
 Advertising is used when sponsors want to communicate with a number of
people who cannot be reached economically and effectively through
personal means.
1) Advertising

19. Merits
 Can reach many consumers simultaneously.
 Relatively low cost.
 Excellent for creating brand images.
 High degree of flexibility and variety of medium to choose from.
 Can accomplish many different types of promotion objectives.
Demerits
 Many consumers, whom the company reaches out to, are not
potential buyers (waste of promotion money).
 High visibility makes advertising a major target of marketing
critics.
 Advertising exposure time is usually brief.
 Advertisements are often quickly and easily screened out by
consumers.

20. 2) Personal Selling
Personal selling is face to face contact between a seller's
representative and those people with whom the seller wants to
communicate. Non-profit organizations, political candidates, firms
and individuals use personal selling to communicate with the public.

21. Merits
 Can be the most persuasive promotion tool; sales people can
directly influence purchase behaviors.
 Allows two way communication.
 Often necessary for technically complex products.
 Allows direct one-on-one targeting of promotional effort.
Demerits
 High cost per contact.
 Sales training and motivation can be expensive and difficult.
 Personal selling often has a poor image, making sales force
recruitment difficult.
 Poorly done sales presentations can hurt sales as well as
company, product and brand images.

22. 3) Sales Promotion
Sales promotion includes activities that seek to directly induce or
indirectly serve as incentives to motivate, a desired response from the
target customers through their company middle men and sales
force.
These activities add value to the product. In sales promotion the
activities like discounts, gifts, contests, premiums, displays and coupons
are included.

23. Temporary price reductions via coupons, extended, interest free or low
interest credit, refunds, rebates, price off deals, combination offers,
bonus packs, multiple packs and other methods.
 Promotions designed to get trials, such as coupons, refunds,
rebates, price off deals, bonus packs, samples, offers, trial sizes,
free trials, special guarantees, premium, self liquidating premiums,
reusable containers and souvenirs.
Some types of sales promotion

24.  Business, industrial, and trades magazines and technical papers,
Journals and publications.
 Directories and buyers guides.
 Trading stamps redemption coupons, divided coupons and continuity
premiums.
 Displays, point of purchase, show windows, in store signs and banners.
 Catalogs, book lets, brochures, bulletins, post card, price lists and flyers
or handouts, etc.
 Sponsorship, special events and charity linked sales promotions.

25. Merits
 Excellent approach for short term price reductions for
stimulating demand.
 A large variety of sales promotion tools to choose from.
 Can be effective for changing a variety of consumer
behaviors.
 Can be easily tied in with other promotional tools.
Demerits
 May influence primarily brand-loyal customers to stock up at
lower price but attract few new customers.
 May have only short term impact.
 Over use of price related sales promotion tools may hurt
brand image and profits.
 Effective sales promotions are easily copied by competitors.

26. 4) Publicity
Publicity is news carried in the mass media about a firm, its products,
policies, personnel or actions. The unique feature about publicity is that it
is a non-paid form of promotion, organizations frequently provide the
material for publicity in the form of news, releases, photographs and press
conferences.

27. Merits
 As "free advertising", publicity can be positive and stimulate
demand at no cost.
 May be perceived by consumers as more credible, because it was
not paid for by the seller.
 Consumers may pay more attention to these messages, because
they are not quickly screened out as are many advertisements.

28. Demerits
 Publicity is not always possible because it is not in the hand of the
seller.
 Limited repetition of publicity messages.
 Publicity can be negative and hurt sales as well as company product,
and brand image.
 Company cannot completely control the content of publicity
messages.

29. FACTORS ADVERTISING PUBLICITY
PERSONAL
SELLING
SALES PROMOTION
Audience Mass Mass Small (One-to-One) Varies
Message Uniform Uniform Specific Varies
Cost
Low per viewer or
reader
None for media
space & time
High per customer
Moderate per
customer
Sponsor Company No formal sponsor Company Company
Flexibility Low Low High Moderate
Control over
content and
placement
High
None (controlled by
media)
High High
Credibility Moderate High Moderate Moderate
Major goal
To appeal to a
mass audience at
and create
awareness and
favorable attitude
To reach a mass
audience with an
independently
reported message
To deal with
individual
consumers, to
resolve questions,
to close sales
To stimulate Short-
run sales, to
increase impulse
purchase
Characteristics of Promotional Types

30. CHANNEL STRATEGY
The term used to describe the method that controls the flow
of goods and services from the manufacturer to the end-user. It
is a detailed plan for selling effectively through a particular
distribution channel or combination of channels.

31. Marketing Decision Issues
Distribution strategy can be shaped by how decision are made in other
marketing areas.
Product issues
The nature of the product often dictate the distribution options
available especially if the product requires special handling.
For example, flower shipping needs arrangements that are totally
different from those needed to steel beams,

32. Promotion issues
Beside issues related to physical handling of products, distribution
decisions are affected by the type of promotional activities needed to
sell the product to customers.
For example, the distribution options of automobile purchases are
different than bread purchases because of difference in needing for
extensive salesperson-to-customer contact.

33. Pricing issues
The desire price at which a marketer seeks to sell his product can
impact how he chooses to distribute. The inclusion of resellers in
marketer's distribution strategy may affect a product’s pricing since
every member in the channel seeks to make a profit.

34. Target market issues
The most important decision with regard to reaching the target
market is to determine the level of distribution coverage needed to
effectively meet customer’s needs. Distribution coverage is
measured in terms of the intensity by which the product is made
available.
There are three main levels of distribution coverage:
1- Mass coverage: This strategy attempts to distribute products
widely in nearly all locations in which that type of product sold.

35. 2- Selective coverage: In this level the marketer deliberately
seeks to limit the locations in which this type of product is
sold. In this strategy the market size is smaller consequently
the number of locations needed to support the distribution of
the product is also fewer.
3- Executive coverage : In this level customers are often
characterized as “discriminating” in their taste for products
and seek to satisfy some of their needs with high-quality,
though expensive products.