4.5 the four ps (Price & promotion) Flashcards
Price
Price refers to the amount paid by a customer to purchase a good or service
Cost plus (mark-up) pricing
Involves adding a precentage of profit to the cost
to the costs of variable cost to set the selling price
Markup shows how much more a company’s selling price is than the amount the item costs the company
markeup involves adding a pertange of profit to the cost of production per unit.
Example AVC =4$ and you want to have a 50% markup the price is set at 6 dollars
Price skimming, pentration pricing, psychological pricing
Price skimming is a product pricing strategy by which a firm charges the highest initial price that customers will pay and then lowers it over time.
The penetration pricing strategy involves offering a new product or service at a low initial price to gain customers’ attention
Psychological pricing is a pricing strategy that takes advantage of the way people perceive prices. This strategy involves setting prices just below a price point that contains a “9,” such as $9.99 or $19.99,
Price discmrination, loss leader, price leadership
Price discrimination is a selling strategy that sells a good or service at different prices to different customers. Example children and adults pay different prices for generating the same cinema
Loss leader pricing is a marketing strategy that prices products lower than the cost to produce them in order to attract new customers and gain brand loyalty
rice leadership refers to a situation where prices and price changes established by a dominant firm, or a firm are accepted by others as the leader, and which other firms in the industry adopt and follow.
Promotion
promotion refers to the methods used to inform , educate and persuade customers to buy the firms products
promotion is the marketing process of raising customer awareness and interest in a product or brand to generate sales
3 key objectives, Inform, persuade and remind
Infomrative promotion aims to laert the market about the firms products.
Persuasive promotion aims to encourage customers to make a purchase
Remainader promotion ar techniques used to retain customers awarness
Above the line promotion
Above the line advertising – ATL is used when the focus is on mass media promotion to reach a large audience.
Examples, Televison advertising, radio advertising, cinema, newspaper advertising,
Below the line promotion
Below-the-line promotion (BTL) is the use of promotional methods that can be controlled by the company selling the goods or service, such as in-store offers and direct selling
So the company does its own advertising without any third party
Example include:
Branding,
word of mouth: spread of information from to another through oral communication
Packaging,
sales promotion: Example byy one get one: short term promotional tactics used to entice customers to buy certain products
Sponshersip: involves a busninss providing financial funds and resources to support an even or another organization for publicity and prime advertising space
Publicity: by getting on media coverage without paying
Direct mail,
Promotional mix (Defintion, what is consists of)
Promotion mix refers to the comibation of ATL and BTL promotion methods by a business, to show the benefits of the product and what needs and wants it satisfies
All elements of the promotional mix share two common objectives: to inform customers about the product and to persuade them to buy the product over rival brands
Promtoional mix consists of : Personal selling, public relations, direct marketing, and sales promotion, advertising
Promotional mix is the set of tools a business can use to communicate efficiently th benfits of its products or services to its customers
It is considering by the acrynom AIDA
Attention - Promtoional mix should raise the awareness of the product
Interest - should stimulate and keep customers interested
Desire- Mix should generate a desire or feeling of need for th product
Action - it is vital that the promotional mix encourages customers to take action (ex buying the product)
It consists of Advertising, personal selling, public relations, sales promotion
Advertising: Is the objective to promote the business and its product to raise brand awareness, sales, and customer loyalty
Peronsl selling refer to the promotional technique that rely on sales representative directly helping and perusaidng customers to buy the product
Public relations refers to business activities aimed at esiabilishing and protecting the desired image of an organizations
Sales promotion: Short term marketing activities aimed at increasing sales revenue (example buy1 get one free) used to get loyalty, brand awarness
Direct marketing: is a type of marketing that involves communicating directly with customers and potential customers in order to promote products and services.
Guerrilla marketing
Guerilla marketin , sometimes known as steal marketing, uses untradiitonal, unconventional and perhaps unruly but creative and original methods of promotion on a low budget. It is desgiedn to make the target audience unaware that they are being targeted and is favored by small businesses they cannot afford mainstream ATL
Example: Kit kat benches
ADV: Can lead to viral marketing
Guerilla marketing can be very cheap and is often free
Guerilla can help a business understand the needs of its customers by coming with creative ways to communicate its products
DIS: Controvial and unethical methods are sometimes used
Does not always reach the right target audience
Does not always work
Can create negative publicity if gone wrong
Viral marketing, social media amrketing, social networking
Viral marketing is the spread of infomration about a firms goods or services from one interent user to another, potineally creating expoenital growth
Social media marketing is the use of online tools and wesbite to promote products in a less formal way, example using facebook (googel)
Social networking refers to the use of internet based tools and platmforms to create and share online content
Publicity
Publicity refer to the process of promoting a business by getting media coverage without directly paying for it.
Example Ferrari gave david backham a ferrari so everytime people see him they see the ferrari which gives them media coverage
Advertising is to advertise a product or service of a company, for commercial purposes. Publicity is to publicize a product, service or company to provide information
