1 marketing · pricing pricing strategies cost-plus pricing competition-based pricing penetration...

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Suraj Business Management & Economics Shanghai https://businessworldsuraj.weebly.com/

Marketing

“The greatest pleasure in life is doing what people say you cannot do”. Walter Bagehot (1826-1877), British journalist

Marketing is the management process of predicting, identifying

and meeting the needs and wants of customers in a profitable

manner.

Market - Place or process whereby customers and suppliers trade. It exists where there is demand for a particular product. Where there is a willingness from businesses to supply these products Consumer Markets - Markets that cater for the needs and wants of private individuals. Suit the general population

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Industrial or Commercial Markets - Markets that cater for the needs and wants of organisations, other businesses and government

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How to market a product….? B

C E

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D F

G

The 4 P’s of marketing mix The marketing mix is the combination of various elements needed to successfully market a product.

PRODUCT, PRICE, PROMOTION, PLACE

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Product - the good or service being marketed to meet the needs and wants of customers. Price - how much customers have to pay to buy the product.

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Promotion - methods of informing, reminding and persuading customers to buy the product. Place - the distribution channels used to get the product to customers.

Product

Products can be tangible (physical products) or intangible

(services). Products must have value added in order to stand any

chance of success in the market place.

Consumer products

These are products that are purchased by private individuals for

their personal use.

* Fast moving consumer goods (FMCG) – are everyday

convenience products that are sold in retail outlets. Examples –

groceries, personal care, newspaper etc.

* Consumer perishables – are products that do not last for very

long time, such as fresh flowers or fresh seafood.

*Consumer durables – are products that are purchased irregularly

because they tend to last for relatively long time and/ or take up a

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relatively large proportion of a consumer’s income. Example ;

Furniture, automobiles etc..

* Speciality consumer products- are exclusive and expensive

products that often require a large amount of commitment in

both money and time. Examples : jewellery, residential property

etc.

Producer products

Producer products or industrial goods are those that are

purchased by businesses, rather than aimed at consumers. They

are used in the production process to help the running of the

business. Examples – raw materials, machinery, tools and other

equipment.

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Branding

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Branding is a form of differentiating a firm’s product from

those of its competitors

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Activity

Research and make a list of 20 Brands

Brand name Product Company Logo

iPhone Smart phone Apple Inc. USA

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Pricing

Pricing strategies

Cost-plus pricing

Competition-based pricing

Penetration pricing

Loss leader pricing

Price skimming or market skimming

Promotional pricing

Price discrimination

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Promotion

Promotion is a component of the marketing mix. It refers to

the methods used to inform, persuade or remind people

about its products, brands or business. It is the key

element of any marketing strategy.

Examples of promotion include sales promotion, branding,

raising publicity, and advertising campaigns.

Objectives of promotion

Inform – Informative promotions aim to alert the market

about a firm’s products, especially new ones.

Persuade – Persuasive promotions aim to encourage

customers to make a purchase, to switch from rival brands

and to create loyalty for the product or brand.

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Remind – Reminder promotion techniques are used to

retain customer awareness and interest of an established

product

Popular business Slogans

“Impossible is nothing” – Adidas

“The ultimate driving machine” – BMW

“The world’s local bank” – HSBC

“Just do it’” – Nike

“I’m Lovin It’ – Mc Donald’s

“Connecting People” - Nokia

Advertisement Media:

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Television

Radio

Internet

Newspaper

Magazines

Cinemas

Leaflets

Billboards

Media Advantages Disadvantages Examples

Television Millions of

people will see it.

The product

can be presented

in a very

attractive way.

Easy to reach

target audiences.

Expensive Food

Cars

Household

tools

Radio Cheaper than

TV.

Uses song or

Cannot use

visual message.

Expensive

Local

services

Shops

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tune which makes

ads memorable. compared to

others.

The advert

has to be

remembered.

Not as wide

audience as TV

Newspaper Can reach

many people.

Cheap for

local newspapers.

A lot of info

can be put into

the ad.

Adverts are

permanent*.

Not eye-

catching if they

are in black and

white.

Does not grab

reader’s attention.

Local

products

Cars

Banks

Magazines Can use

specialist

magazines to

reach onlytarget

audience.

Magazine ads

are in colour and

are more

attractive.

They are only

published once

per month/week.

More

expensive then

newspapers.

Perfume

sports

equipment

Fashion

clothes

Posters/billboards Permanent*

Cheap

Potentially

seen by anyone

who passes by

them.

Can easily be

missed.

No detailed

info can be

included.

Events

Products

bought by a

large section

of the

population

Cinemas Visual image Only seen by Toys for a

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shows product in

a positive way.

Fairly cheap.

Effective if

target audience

goes to see

particular films.

people who go to

watch films. children’s

film.

Leaflets Cheap

Given to a

wide range of

people.

Delivered to

people’s houses.

May contain

vouchers to

encourage readers

to keep the

advert.

Permanent*

May not be

read. Local

events.

Retail

stores like

Seven-Eleven

Internet Can be seen

by anybody

around the world.

Can store lots

of info.

Orders can

instantly be made.

Internet

searches may not

highlight the

website and it

could be missed.

Internet

access is limited

in some

countries.

Competition

from other

websites.

Security

issues may

Virtual

goods.

Services

such as

banking or

insurance.

Virtually

anything that

is not too

small.

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discourage people

from buying

online.

Others (delivery

vehicles or sides

of bags)

Cheap May not be

seen by everyone. Shops put

their names on

plastic bags.

Coca cola

use neon

signs.

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Different types of promotion Promotion is usually used to support advertising and to encourage new or existing customers to buy the product. Its main function is to boost sales in the short-term, but not in the long term. It is used to attract new customers. Here are some ways in which promotion is used: Price reductions: Involves sales or price reduction coupons.

Gifts: Gifts are placed in the packaging of the product to encourage consumers to buy it. (e.g. toys in McDonald's happy meal).

Competitions: A card may be put in the packaging allowing the consumer to enter contests such as the lottery.

After sales service: e.g. warranty services. It reassures the customers that if the product has a problem then they can go and fix it for free. This make the product more attractive than others without warranty.

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Free samples: Encourages people to try the product. It can

be included in other products as well. E.g. washing machine

comes with free washing powder

PLACE

Place refers to the distribution of a product, i.e. how products get

to the consumer.

The chain of distribution refers to the means of getting a product

to the customer.

Intermediaries are agents or firms that act as a middle person in

the chain of distribution between the manufactures and

consumers of a product.

The traditional chain of distribution consists of manufacturers,

wholesalers and retailers. A long chain of distribution will tend to

raise prices for the consumer since each intermediary adds a

profit margin to their price.

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Intermediaries:

Distributors are independent businesses that act as

intermediaries by specialising in the trade of products made by

certain manufacturers.

Agents (or brokers) are negotiators who help to sell a vendors

products, such as real estate agents selling residential and

commercial property for their clients.

Wholesalers are businesses that purchase large quantities of

products from a manufacturer and then separate or ‘break’ the

bulk-purchases into smaller units for resale, mainly to retailers.

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Retailers are the sellers of products to the general public (i.e.

consumers) that operate in outlets (or ‘shops’ in everyday

language).

Zero-level channel

A zero-level channel does not have any intermediaries, i.e. the

producer sells directly to the consumer. Examples include direct

mail, e-commerce, telesales and mail order.

Producer

Consumer

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One-level channel

A one-level channel has one intermediary, such as retailers or distributors being used to sell

products to consumers.

Two-level channel

A two-level channel has two intermediaries, such as the use of wholesalers and retailers to get

products to consumers.

Producer

Distributors

Consumer

Producer

Agents

Consumer

Producer

Retailers

Consumer

Producer

Wholesalers

Retailers

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Activity: Suggest with reasons, the best way to distribute the

following products

A. IBDP text books

B. Shampoo, tooth paste, tissue paper

C. BMW car

D. Luxury apartments

Consumer

1 marketing · pricing pricing strategies cost-plus pricing competition-based pricing penetration...

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