Managing Market Strategies

Forming Marketing Objectives Marketing-Process of developing, promoting, and distributing products Marketing Plan-Used by a business to guide its marketing process Research to get info, focus on target market Marketing Objectives-What a business wants to accomplish through its marketing efforts Product Introduction Sales/ Market Share Profitability Pricing Distribution Advertising Team Organization Objectives Must be measurable---Limit # of objectives so you can monitor them

The Marketing Mix Objectives-Specify WHAT you want to accomplish through your goals Marketing Mix-Maps out HOW you’re going to accomplish them 5 Marketing strategies (4 P’s, plus a fifth) Product Price Place Promotion People Strategy

Product Strategy Goods/Services provided Features and Benefits List them! These are your main selling points!!!! What does your product offer? Branding, Packaging, Labeling How do you identify your product? Logo? All 3 can be used to maintain customer loyalty Product Positioning How do consumers view your product? Prestigious? A value, or bargain? Equal to your competition? Quality, availability, pricing, and uses have an effect on this. Product Mix All of the products your company sells makes up the product mix Do they relate to one another? This will depend on the market(s) you are trying to target

Price & Promotion Strategies Pricing-impacts a business two ways. 1) Financial decision that ensures costs get covered and profit is made 2) What is the customer’s motivation to buy? Promotion-how potential customers come to find out about your products, characteristics, benefits, and availability

Factors that Affect Price Costs & Expenses To make a profit, prices must exceed costs and expenses Fixed costs-Do not change depending on # of units sold Examples ? Variable costs-Change based upon number of units sold Examples? Law of Supply & Demand When demand is high, supply is low, you can price it high Just the opposite is true (low demand, high supply) lower prices Elastic vs. Inelastic Demand Elastic- Examples? Inelastic- Examples?

Government Regulations Consumer Perceptions Your price creates the image in the minds of your customers. Too low-Lacks Quality, Too high-Turn customers away Competition Your competitors pricing will influence your prices Government Regulations Federal and State laws affect your prices Price Gouging-Pricing above the market when no other retailer is available Price Fixing-Illegal, competing companies agree to keep prices within a range Bait and Switch-Illegal, when customers are attracted to an item and then referred to an inferior or higher priced item

Pricing Objectives Obtaining a Target Return on Investment ROI (Return on Investment) Amount earned as a result of that investment Invest $20,000 in t-shirt sales and want a 20% return $20,000 x .20 = $4,000 expected profit on top Obtaining Market Share If you want more market share, you will have to adjust your prices to attract customers who are doing business with your competitors Other Objectives Social/Ethical considerations. These help establish your image

Pricing Strategies Competition-Based Pricing Cost-Based Pricing Find out what your competitors charge, then decide to price yours above or below theirs Cost-Based Pricing Consider business costs and your profit objectives. Figure out your cost to make/buy your product. Then, figure out the cost of doing business. Last, add your profit margin. (Markup) Demand-Based Pricing Find out what your customers are willing to pay for your product, then set price accordingly Useful only when certain conditions exist. Inelastic demand, or when customers think your product is better than the competitions

Product Life Cycle Pricing Stage 1, Introduction Profits are low or negative. 2 methods are commonly used. Price skimming, or Penetration pricing Skimming-Charge a high price to recover costs and maximize profits Penetration-Build sales by charging a low initial price Stage 2, Growth Sales climb rapidly, costs decrease, and you show profit Make adjustments Stage 3, Maturity Stretch the life cycle of the product- Sales slow, profits peak Identify new markets or make improvements, if not, then decline stage Stage 4, Decline Sales and profits continue to fall Businesses should cut prices to generate sales or clear inventory If it is no longer profitable, then phase it out!

Pricing Techniques Psychological-Based on customers’ perceptions Most often used by retail businesses Prestige Pricing-Higher than average prices are used to suggest status and prestige Odd/Even Pricing-Technique in which odd numbers are used to suggest bargains. $19.99 Price Lining-Items in a certain category are priced the same. Jeans priced at $25, $50, $75 Promotional Pricing-Lower prices are offered to stimulate sales for a short period of time Multiple-Unit Pricing-Items are priced in multiples. 3 for $10, 2 for $15 Bundle Pricing-Several complementary products are sold at a single price. Tv & DVD combo for $599

Pricing Techniques Discount Pricing- offers customers reductions from the regular price Encourages customers to buy Cash Discounts-Given to customers for prompt payment. Example: 2/10, N/30 2 % off bill if paid within 10 days, net amount due in 30 days Quantity Discounts-Encourages buyers to order large quantities than they normally would buy. Example: If you buy $50,000 this year, we’ll give you 20% off Trade Discounts-Given to distribution-channel members who provide functions for the manufacturer. Example: 30% off for companies who have a relationship with the manufacturer Promotional Discounts-When manufacturers want to pay wholesalers or retailers for carrying out their promotional activities Seasonal Discounts-Used for products that have a high seasonal demand Example: Heavy coats in the middle of the summer.

Place Strategy How will you deliver your goods/services to customers? Distribution strategy-the movement of your product Channel of Distribution-path a product takes from producer to consumer This is important to consider---It will affect your cost on the product. More importantly, how quickly your customers can get it Intensity of Distribution Intensive-placement of a product in all suitable sales areas Selective-limits the number of sales outlets in an area Exclusive-limits the number of outlets to one per area Location, Layout, Availability-Where are your products/services located?

People Strategy People: assembling, preparing, and maintaining the people involved in running your business Basic Hiring Criteria-Does your business require specific skills? What is the bare minimum qualification to work for you? Developing Employees-Contains two parts Orientation-Gets them on the same page as you. Share your vision Training-For skills and knowledge they need now and in the future Establishing a Productive Environment All about the atmosphere. Employees need to feel comfortable, respected and trusted. This will bring pride, cooperation and team spirit = Positive Results! Rewarding your People When people know their efforts are appreciated, they are more likely to stay. Recognize their contributions and achievements with awards or incentives