1. part Chapter © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 1 McGraw-Hill Marketing: Product and Price 1 Chapter 9

2. © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 2 McGraw-Hill Define marketing and its eight functions. Understand market segmentation and name the types of segmentation. Explain the process consumers go though when purchasing products and how consumer markets differ from business-to-business markets. Describe the various aspects that go into the product element of marketing’s 4Ps. Describe the different types of pricing that should be considered in marketing products. Learning Objectives

3. © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 3 McGraw-Hill Exchange –Buying –Selling Physical distribution –Transportation –Storage Facilitating –Quality and quantity –Financial –Risk –Marketing information The Eight Functions of Marketing

4. © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 4 McGraw-Hill Target marketing Segmenting the Consumer Market Geographic Demographic Psychographic Benefit Volume Niche marketing Relationship marketing Market Segmentation

5. © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 5 McGraw-Hill Understand consumers’ motivation Decision-making factors: –Learning –Reference group –Culture –Subculture –Cognitive dissonance Consumer Behavior

6. © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 6 McGraw-Hill Larger purchases Fewer customers Geographically concentrated More rational buyers Sales are direct More personal selling More functional packaging The Business-to-Business Market

7. © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 7 McGraw-Hill The 4Ps of Marketing: Product Marketing management 4Ps: –Product –Price –Place –Promotion Total Product Offer Everything that consumers evaluate Important beyond product

8. © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 8 McGraw-Hill Market Research Past and future purchase 4 steps: –Define the question. –Collect data. –Analyze data. –Choose and implement solution. Primary research –Focus group Secondary research Product line

9. © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 9 McGraw-Hill Small differences Loyalties Classification of goods/services Consumer goods and services Industrial goods and services Product Differentiation

10. © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 10 McGraw-Hill Packaging Goals –Protect goods, attract buyers, describe content, explain benefits, provide info, indication of price, values, & use, and provide dimension & weight info Branding Brand equity Brand loyalty

11. © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 11 McGraw-Hill Example of a UPC Barcode 12 34567 89012 8 Example only: not a valid UPC barcode

12. © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 12 McGraw-Hill Product Development Process Ideas Profit potential Prototype

13. © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 13 McGraw-Hill The 4Ps of Marketing: Price Objectives –Profit –Building traffic Loss leader –Market share –Image –Social objectives

14. © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 14 McGraw-Hill Product Life Cycle 4 stages: –Introduction –Growth –Maturity –Decline Affects pricing Cost-Based Pricing Producers use cost as a primary basis for setting price In the long run, market determines price

15. © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 15 McGraw-Hill Demand-Based Pricing Target Costing Competition-Based Pricing Price leadership Break-Even Analysis BEP= Total fixed cost Price of 1 unit – Variable cost of 1 unit

16. © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 16 McGraw-Hill Breakeven Analysis

17. © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 17 McGraw-Hill Other Pricing Strategies Skimming price strategy Penetration strategy Everyday low pricing High-low pricing strategy Bundling Psychological pricing (odd pricing)