Marketing Strategies 2 (4Ps) Flashcards
(24 cards)
Price including Pricing methods - Cost, market, competition based Points
Pricing strategies - skimming, penetration, loss leaders, price points
Price and quality interaction
Price
Refers to the amount of money a customer is prepared to pay in purchasing a product
- Cost based
- Market based
- Competition Based
Cost Based Pricing
Determine the total costs of producing one unit of the product
- They then add that amount, enough to cover costs (interest, etc) to make a profit = Mark up
Market Based Pricing
Price is set according to supply and demand
Higher Demand for a product = Shortage, businesses can hike up price as supply is limited
+ Opposite
Competition Based Pricing
Covers the cost of product comparable to competitor’s prices
Once base price is set, businesses can go above, below or equal to competitors
Pricing Strategies
Price Skimming
Price Penetration
Loss Leader
Price Points
Price Skimming
Charging highest possible price for the product during intro phase
Obj: Recover costs of research and development as quickly before competition enters market
Price Penetration (opposite of Skimming)
Charging lowest price possible
- Mass Market Pricing
Obj:
- Aims to quickly achieve a large market share for a product
- Sell large amount of products during early stages of lifecycle and discourage competitors from entering market / taking market share
Loss Leader
Product sold at or below cost price, no profit is being made on its sale = Instead they are covering costs or losing money
These products may be bought alongside other products as they may be attracted to buy it afterwards (Main source of sales)
Price Points
Businesses sell products only at certain predetermined prices
- Chooses a limited number of key prices or price points for select product lines
Price / Quality Interaction
Better Quality = Higher price due to manufacturing cost
- Price + Quality relationship helps determine image customers have
- Pricing strategy is refered to as prestige, helping status conscious consumer buy products
Promotion
Describes the methods used by a business to inform, persuade, and remind a target market about its product
Promotion Mix
- Advertising
- Personal Selling and Relationship Marketing
- Sales Promotion
- Publicity and Public Relations
Advertising
Paid, non-personal message communicated through a mass medium
- Can result in increased sales and profit for a business
E.g Signs, radio, TV, Website, etc
Personal Selling and Relationship Marketing
Activities of a salesperson directed to a customer in an attempt to make a sale
- Depends on sales skills
Customers want more individualised treatment = Businesses develop long term, cost effective, strong relationships
Sales Promotion
Involves use of activities or materials as a direct incentive to attract customers
E.g Discounts, coupons, refunds, samples,
Aims to:
- Entice new customers
- Encourage trial purchase
- Increase sales to existing / repeat purchases
Publicity and Public Relations
Publicity:
- Free news story about a business’s products
Public Relations
- Activities aimed at creating and maintaining favourable relations between a business and its customers
Effectiveness of PR
- Promoting a positive image
- Reinforcing favourable attitudes and perceptions - Effective communication of messages
- Using advertising, sales promotion, publicity, personal selling to showcase info - Issues Monitoring
- Providing an early warning of public trends - Crisis Management
- Protecting reputation as a result of negative rumours / publicity
Communication Process
Marketing Managers must be able to communicate clearly, efficiently and succinctly to their target market
- Miscommunication may mean lost sales
Channel: Method to carry messages
Noise: Interference in communication
Opinion Leader: Person of influence
Communication Process Continued
Consumers trust word of mouth communication more = Especially if communicated by friend or opinion leader
Business are using social media to engage in WOM communication
Place / Distribution
Activities that make products avaliable to customers when and were they want to buy them
- Distribution Channels
- Channel Choice (Intensive, selective, exclusive
- Physical distribution issues (Transport, warehousing, inventory)
Distribution Channels
Routes taken to get the product from business to consumer
Process usually involves a number of inbetween people
- Such as wholesaler, broker, agent, retailer (consumer doesn’t know much about this process)
Channel E.g
Producer - Customer (mostly services)
Producer - Retailer - Customer
Producer - wholesaler - retailer - customer
Producer - Agent - wholesaler - retailer - customer
Distribution Channels - Other means
E-commerce
- Buying / selling of goods and services via internet
- E.g Ebay, store website
Mobile commerce
- Buying / selling of goods / services through handheld devices such as phones
- E.g Menulog, Uber
Channel Choice
Channel used for distribution
Market coverage
- No.1 of outlets (shops) a businesses choose for its product
3 Main Strategies on coverage
- Intensive distribution (Saturation of market with product / avaliable in all / most outlets)
- Selective distribution (Moderate number of outlets)
- Exclusive distribution (1 retail outlet for a large geographic area)
Physical Distribution
Activities involved in moving of products from producer to consumer
Transport
- Methods of transport will depend on type of product and level of service
Warehousing
- Activities involved in receiving, storing, and dispatching goods
Inventory
- System that maintain quantities and products appropriate for target market, balance of sufficient inventory amounts
