PRODUCT, Price, Place, Promotion

Copyright 2009 Pearson Education, Inc.
Publishing as Prentice Hall
Chapter 2- slide 1
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall
Chapter 2- slide 2
How Sergio Zyman, former Chief Marketing Officer of Coca-Cola defines marketing:
Selling more (coke), to more people, for more money, more efficiently.
Meaningful Marketing/Hall, Doug
Chapter 2- slide 3
Marketing definitions over the years
70s find a need a fill it.

what is a need? (Positioning: Unique Selling Proposition)
Chapter 2- slide 4
80s-90s find a want/desire and fill it what is a want/desire? (WIIFM)
Chapter 2- slide 5
2000s Find a dream, fantasy and fill it. What is a dream, fantasy? Tom Peters calls it Dreamketing Example Harley Davidson, Starbucks Selling of experiences
Chapter 2- slide 6
Now customers can easily switch, even if they are satisfied with
your product or service, simply because they have a lot to choose from. When it comes to your relationships with the people who make or provide the products or services that you buy, its not against
the law to be promiscuous

Chapter 2- slide 7
SO MANY CHOICES!
AWSJ says there are up to 40,000 products stocked in a typical supermarket
[-Asian Wall Street Journal, april 24, 2001 p.n4 Emily Nelson]
Chapter 2- slide 8
Companies lose as much as 40% of their
customers every year.

(Direct Marketing Association or the DMA),
Chapter 2- slide 9
So what will keep your customers loyal to you?
Or does it matter?
Chapter 2- slide 10
CUSTOMER ORIENTATIONS EVOLUTION Production Concept This concept holds that consumers will prefer products that are widely available and inexpensive. Product concept This concept holds that consumers will favour those products that offer the most quality, performance, or innovative features. Selling concept. This concept holds that consumers and businesses, will ordinarily not buy enough of the organizations products, therefore, the organization must undertake aggressive selling and promotion effort. Only basic trainings were given the companys sales people.
Chapter 2- slide 11
Marketing Concept Beginning in the 1950s, Marketing, rather than selling, became the focus of business sales activities. This concept holds that the key to achieving organizational goals consists of the company being more effective than competitors in creating, delivering, and communicating superior customer value to its chosen target markets.
Chapter 2- slide 12
Marketing Concept 1. Reactive market orientation understanding and meeting consumers expressed needs.
2. Proactive marketing orientation researching or imagining latent consumers needs through a probe-and-learn process.
Chapter 2- slide 13
Selling concept Emphasis is on the product
Marketing concept Emphasis is on customer's wants
Company first makes the product and then figures out how to sell it Management is sales-volume oriented
Company first determines customers' wants and then figures out how to make and deliver a product to satisfy those wants.
Management is profit oriented. Planning is long-run, in terms of new products, tomorrow's markets, and future growth.
Chapter 2- slide 14 Stresses wants of buyers
Planning is short-run, in terms of today's products and markets
Stresses needs of sellers
Product
It is a bundle of tangible and intangible attributes, including packaging, color and brand, plus the services and even the reputation of the seller. People buy more than a set of physical attributes; they buy want-satisfaction, such as, what the product will do, its quality, and the image of owning the product. Why do you buy a Rolex? Or a Lacoste?
Chapter 2- slide 15
The term product may refer to good or service

Examples
Goods - a physical object for sale
Automobile Cell phone Prescription medicine
Services - an action or activity done for others for a fee

Automobile repair Wireless phone plan Health insurance
Chapter 2- slide 16
There Are Two General Types of Products Consumer and Industrial Products
What is a consumer product? A consumer product is produced for, and purchased by, households or end consumers for their personal use What is an example of a consumer product? Toothpaste Television Clothes
Chapter 2- slide 17
There Are Two General Types of Products Consumer and Industrial Products
What is industrial product?
An industrial product is sold primarily for use in producing other products. Industrial users are profit or non-profit organizations that buy good and services for one of three purposes. To make other goods and services To sell to consumer or other industrial users To conduct the organizations operations*
Chapter 2- slide 18
The Key Phrases That Differentiate Between Consumer and Industrial Products are: Consumer product - personal use Industrial product - producing other products What is an example of an industrial product? Airlines purchase airplanes Boeing sells their airplanes to airlines Asian College buys computers for the use of the students.
Chapter 2- slide 19
Price
This refers to the value or worth of a product that attracts the buyer to exchange money or something of value for the product.
Pricing techniques/ methods:

Cash rebates Discount coupons Special price offers
Chapter 2- slide 20
What is Price?
Price is : the one element of the marketing mix that produces revenue the amount paid for some goods or services
Chapter 2- slide 21
How to set pricing?

CONSUMER PSYCHOLOGY: provides
opportunities to examine issues such as what factors are most important
when people decide to purchase a particular item how customers determine the value of a service and whether or not television & magazine advertisements can convince a reluctant consumer to try a new product for the 1st time.
PRICING: is the process of determining what a company

will receive in exchange for its products
Chapter 2- slide 22
Setting the Price Strategy

NINE Price-Quality Strategies
Chapter 2- slide 23
6 Steps in Setting the Price

Selecting the pricing objective Determining demand Estimating costs
Price
objective
Demand
Costs
Selecting the final price Selecting pricing method Analyze competitors costs, prices, and offers
Competitors
Final
price
Pricing
method
Chapter 2- slide 24
1. Selecting the pricing objective

Selecting the pricing objective
Survival (B/E)
Price
objective
Maximize profit
Product leadership
Maximize market skimming Copyright 2010 Pearson Education, Inc.
Publishing as Prentice Hall
Maximize market share

Chapter 2- slide 25
2. Determining Demand
Selecting the pricing objective
Price
objective
Determining demand
Demand
Surveys
Demand elasticity
Statistical analysis Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall
Price experiments
Chapter 2- slide 26
Customers are likely to be less sensitive to price changes when:
product is more distinctive
less aware of substitutes
cannot easily compare the quality of substitutes

expenditure is a smaller part of buyers total income
Chapter 2- slide 27
Customers are likely to be less sensitive to price changes when:
assumed to have high quality and prestige
cannot store the product
Chapter 2- slide 28
3. Estimating costs
Price
objective
Demand
Costs
Learning curve
Fixed and Variable Cost per unit of production
Chapter 2- slide 29
4. Analyze competitors costs, prices and offers

Price
objective
Demand
Costs
Analyze competitors costs, prices, and offers
Competitors
Evaluate the competitors price and product value
Chapter 2- slide 30
5. Selecting price method

Price
objective
Demand
Costs
Selecting pricing method
Pricing
method Analyze competitors costs, prices, and offers
Competitors
Price markup
Value pricing Perceived value Target ROI
Going-rate pricing
Auction-type pricing
Break-even point
Chapter 2- slide 31
6. Selecting final price

Price
objective
Demand
Costs
Selecting the final price

Competitors
Final
price
Pricing
method
Gain & risk sharing
High advertising
Pricing policies Copyright 2010 Pearson Education, Inc. Price fixing Publishing as Prentice Hall
Chapter 2- slide 32
6 Steps in Setting the Price

Price
objective
Demand
Costs
Survival (B/E)
Maximize profit Maximize market share
Demand elasticity
Surveys
Learning curve
Fixed and Variable Cost per unit of production
Product leadership
Statistical analysis
Price experiments
Maximize market skimming
Selecting the final price

Competitors
Price markup Evaluate the competitors price and product value
Final
price
Perceived value Gain & risk sharing Value pricing Going-rate pricing
Pricing
method
High advertising
Target ROI
Copyright 2010 Pearson Pricing policies Education, Inc. Auction-type Price fixing pricing Publishing as Prentice Hall
Break-even point
Chapter 2- slide 33
Place
Distribution refers to the channel structure used to transfer products from an organization to its customers. It is important to have the product available to customers in a convenient and accessible location when they want it. What is your preferred retail store? Why?
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Promotion
This increases companys sales by communicating product information to potential customers. Four basic parts of promotion:
Personal Selling Advertising Public relations Sales promotion
Chapter 2- slide 36
Promotion
Personal selling- personal communications of information to persuade a prospective customer to buy something a good, a service, an idea, or something else that satisfies that individuals needs.
Advertising Non-personal communication of information paid for by an identified sponsor. TV, radio, direct mails, catalogues, newspapers, and outdoor ads like billboards.
Online ads, Texting, SMS.
Chapter 2- slide 37
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Chapter 2- slide 39
Half the money I spend on advertising is wasted. The trouble is I never know which half.
Chapter 2- slide 40
Advertising is all about building ones share-of-voice in the market.

Noise in media means presence and this could translate to consumer awareness and recall.
Chapter 2- slide 41
Promotion
Public relations non personal communication of information that is not paid for by an individual or organization. Information appears in media such as TV, radio and newspapers.
Chapter 2- slide 42
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Promotion
Sales promotion- involves activities or materials used to create sales for goods or services. The two types of sales promotion are: Consumer free samples, coupons, contests and demonstration to customers Trade encourages wholesalers and retailers to purchase and to sell aggressively using devices such as sales contests, displays, special purchase prices and free merchandise.
Chapter 2- slide 46
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Goal of Marketing Mix

The goal of designing a marketing mix is simple. The organizations marketing group strives to create a marketing mix containing the right product, at the right price, at the right time, with the right promotional effort.
Chapter 2- slide 50
Personal Selling Builds Relationships
PS is an essential element of any organizations marketing mix. The main functions of personal selling are to generate revenue and provide service to help make customers satisfied with their purchases.
Chapter 2- slide 51
Customer Relationship Management (CRM)

Satisfied customers are more likely to be loyal customers, and loyal customers are more likely to give the company a larger share of their business. Satisfied customers are less price sensitive. However, even a slight drop from complete satisfaction can create an enormous drop in loyalty. For example, one study showed that completely satisfied customers are nearly 42% more likely to be loyal than merely satisfied customer. Another study, by AT&T, showed that 70% of customers who say they are satisfied with a product or service are still willing to switch to a competitor; customers who are highly satisfied are the ones who are much loyal.
Chapter 2- slide 52
Relationship Marketing
The emphasis is shifting from selling customers today to creating customers tomorrow. Is the creation of customer loyalty. Organizations use the 4Ps and service to achieve this goal.
E.g. Shopwise loyalty promos, Krisflyers frequent flyers promotion.
Chapter 2- slide 53
Relationship Marketing
Is based on the idea that important customers need continuous attention.
Chapter 2- slide 54
Levels of relationship marketing

Transactional selling : customers are sold to and not contacted again. Relationship selling: the seller contacts customers after the purchase to determine if they are satisfied and have future needs. Partnering: the seller works continually to improve its customers operations, sales, and profits. (key accounts, Pareto Principle)
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What is the most important P of Marketing that a sales manager must consider? Group discussion: Given the companys limited budget, focus your effort on a crucial P of marketing that will generate the target sales of a product: juice patrol drink.
Chapter 2- slide 58
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4Ps Product Price Place
4Cs Customer solution Customer cost Convenience
Promotion
Communication
Chapter 2- slide 61
Customer Service by salesperson include: Salesperson goes to customers business to help:

Resell products Customer use product Handling complaints Return damaged products Provide samples Suggest further business opportunities
Chapter 2- slide 62
Consumer and Industrial Products are Often Distributed Through Resellers What are Resellers? Resellers, such as wholesalers or retailers, purchase products and then sell to organizations and/or individuals Wholesaler primarily engaged in buying, taking title to, usually storing and physically handling goods in large quantities, and reselling the goods, usually in smaller quantities to
Retailers Wholesalers Manufacturers
Chapter 2- slide 63
Examples of Distribution Channels for Consumer and Industrial Products
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PRODUCT, Price, Place, Promotion

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Copyright 2009 Pearson Education, Inc.

Publishing as Prentice Hall

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

Marketing definitions over the years

70s find a need a fill it.

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

80s-90s find a want/desire and fill it what is a want/desire? (WIIFM)

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

the law to be promiscuous

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

Companies lose as much as 40% of their

customers every year.

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

So what will keep your customers loyal to you?

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

Selling concept Emphasis is on the product

Marketing concept Emphasis is on customer's wants

Planning is short-run, in terms of today's products and markets

Stresses needs of sellers

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

The term product may refer to good or service

Services - an action or activity done for others for a fee

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

What is industrial product?

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

Pricing techniques/ methods:

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

How to set pricing?

PRICING: is the process of determining what a company

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

Setting the Price Strategy

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

6 Steps in Setting the Price

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

1. Selecting the pricing objective

Maximize market share

Customers are likely to be less sensitive to price changes when:

product is more distinctive

less aware of substitutes

cannot easily compare the quality of substitutes

expenditure is a smaller part of buyers total income

Customers are likely to be less sensitive to price changes when:

assumed to have high quality and prestige

cannot store the product

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

Fixed and Variable Cost per unit of production

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

4. Analyze competitors costs, prices and offers

Analyze competitors costs, prices, and offers

Evaluate the competitors price and product value

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

5. Selecting price method

Selecting pricing method

Value pricing Perceived value Target ROI

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

6. Selecting final price

Selecting the final price

Selecting pricing method

Analyze competitors costs, prices, and offers