MGT301 Principles of Marketing Lecture-45

Summary of Lecture-44

Review-1

Today’s Topics Review-2

Individual Product Decisions

Product Attributes Branding Packaging Labeling Product Support Services

Idea Generation Idea Screening Concept Development and Testing Marketing Strategy Business Analysis Product Development Test Marketing Commercializat ion New Product Development

Time Product Development Stage Introduction Profits Sales GrowthMaturityDecline Sales and Profits ($) Sales and Profits Over the Product’s Life From Inception to Demise Product Life-Cycle (PLC)

Price – –The amount of money charged for a product or service, or the sum of the values that consumers exchange for the benefits of having or using the product or service.

Factors Affecting Price Decisions

Internal Factors Pricing Decisions Pricing Decisions External Factors Target Market Positioning Objectives

Total Costs Sum of the Fixed and Variable Costs for a Given Level of Production Total Costs Sum of the Fixed and Variable Costs for a Given Level of Production Variable Costs Costs that do vary directly with the level of production. Raw materials Variable Costs Costs that do vary directly with the level of production. Raw materials Fixed Costs (Overhead) Costs that don’t vary with sales or production levels. Executive Salaries Rent Fixed Costs (Overhead) Costs that don’t vary with sales or production levels. Executive Salaries RentCosts

Fixed Costs Variable Costs Raw materials Component parts Hourly wages Packaging & freight Sales commissions Rent Depreciation Manager’s salaries Property taxes Insurance

Setting Pricing Policy

  Cost-based Pricing   Value-based Pricing   Competition-based Pricing General Pricing Approaches

Break-even…for Determining Target Return Price and Break-even Volume

Rupees (in thousands) Total cost Fixed cost Target profit Total revenue Sales volume in units (thousands) Break-even point

Market Skimming Market Penetration New Product Pricing Strategies

Price - Quality Strategies

Premium Strategy Overcharging Strategy Overcharging Strategy Good-Value Strategy Good-Value Strategy Economy Strategy Economy Strategy Price HigherLower Higher Lower Quality

Discount and Allowance Pricing Segmented Pricing Psychological Pricing Promotional Pricing Geographical Pricing International Pricing Price-Adjustment Strategies

Price Changes

Responding to price changes

Hold Current Price; Continue to Monitor Competitor’s Price. Hold Current Price; Continue to Monitor Competitor’s Price. Reduce Price Raise Perceived Quality Raise Perceived Quality Improve Quality & Increase Price Improve Quality & Increase Price Launch Low-Price “Fighting Brand” Launch Low-Price “Fighting Brand” Has Competitor Cut Price? Has Competitor Cut Price? Will Lower Price Negatively Affect Our Market Share & Profits? Will Lower Price Negatively Affect Our Market Share & Profits? Can/ Should Effective Action be Taken? Can/ Should Effective Action be Taken? Yes No

Place….Distribution Channel….Marketing Channel

20 Contacts Manufacturer Customer

9 Contacts Manufacturer Customer Wholesaling Intermediary

Producer Agent/ Broker WholesalerRetailerConsumer Producer WholesalerRetailerConsumer ProducerRetailerConsumer ProducerConsumer

Selecting FEEDBACK Motivating Training Evaluating Channel Management Decisions

Marketing Logistics and Supply Chain Management

Inventory When to order? How much to order? Just-in-Time

Right Product Right Cost Right Place Right Condition Right Time Customer Service Concept

Producer End users Interme- diaries Marketing activities Demand Push Strategy Demand Push Versus Pull Strategy

End users Interme- diaries Producer Demand Pull Strategy Marketing activities

Compete on value (not just price.) Save customers time and energy. Make shopping fun. Retailing and Wholesaling

Marketing Communications

Builds Relationships Persuades Informs Reminds Promotion and Its Goals

The Marketing Communications Mix

Advertising Personal Selling Any Paid Form of Non- personal Presentation by an Identified Sponsor. Sales Promotion Short-term Incentives to Encourage Sales. Public Relations Building Good Relations with Various Publics by Obtaining Favorable Unpaid Publicity. Direct Marketing Direct Communications With Individuals to Obtain an Immediate Response. Personal Presentations by a Firm’s Sales Force.

Setting the Promotion Mix

Advertising A paid form of non-personal communication about an organization and/or its products to a target audience through a mass medium.

Personal selling The direct presentation of a product to a prospective customer by a representative of the selling organization.

Sales promotion Demand-stimulating activity designed to supplement advertising and facilitate personal selling.

Public relations A planned communication effort by an organization to contribute to generally favorable attitudes and opinions toward an organization and its products.

Direct Marketing Direct connections with carefully targeted individual consumers to obtain an immediate response and cultivate lasting customer relationship

Step 1. Prospecting andQualifying Step 1. Prospecting andQualifying Step 2. Preapproach Step 3. Approach Step 4. Presentation/Demonstration Step 4. Presentation/Demonstration Identifying and Screening For Qualified Potential Customers. Learning As Much As Possible About a Prospective Customer Before Making a Sales Call. Knowing How to Meet the Buyer to Get the Relationship Off to a Good Start. Telling the Product “Story” to the Buyer, and Showing the Product Benefits. Steps in the Selling Process

Step 5. Handling Objections Step 6. Closing Step 7. Follow-Up Seeking Out, Clarifying, and Overcoming Customer Objections to Buying. Asking the Customer for the Order. Following Up After the Sale to Ensure Customer Satisfaction and Repeat Business.

Managing the Sales force

Designing Sales force Strategy and Structure Recruiting and Selecting Salespeople Training Salespeople Compensating Salespeople Supervising Salespeople Evaluating Salespeople

Competitive Strategies

Market Leader Market Challenger Market Follower Market Nicher Competitive Positions

Global Village

Global Marketplace

Think Globally Act Locally Global Marketing

e-Marketing New Tool to Reach Consumer

Internet Postal Service Television Telephone Radio

Marketing and Society

Current Issues in Marketing

The current issues and marketing can be divided into two major subjects: – –Social responsibility – –Ethics The two concepts are very closely related

Summary – Marketing Management

Target Consumers Product PlacePrice Promotion Marketing Implementation Marketing Planning Marketing Control Marketing Analysis Competitors Marketing Intermediaries PublicsSuppliers Demographic- Economic Environment Technological- Natural Environment Political- Legal Environment Social- Cultural Environment

Simple Marketing System Producer/SellerConsumer Communication Product/Service Money Feedback

Marketing Process The process of :  Analyzing marketing opportunities  Selecting target markets  Developing the market Mix  Managing the marketing effort

Marketing in Theory and Practice ??

Enough for Marketing...

MGT301 Principles of Marketing Lecture-45