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Foundations of Marketing
MARK 5F50 – Section 70
Topics for Tonight:
1. Current topics/websites
2. Chapters18 – Sales Promotion & Personal Selling
3. Chapters 19-20 – Pricing
4. Chapter 21 - Customer Relationship Management
5. Chapter 22 – Social Media & Marketing
6. Review Chapters 10 - 22
Chapter18 – Sale Promotion and Personal Selling
Sales Promotion = a marketing communication activity, other
than advertising, personal selling or public relations in which
a short term incentive motivates consumers to purchase now.
Offers incentive to buy - lower price or adding value.
Focused on either consumers or trade.
Sale Promotion and Personal Selling
Objectives of Sales Promotions:
Immediate Sales is the goal
Sale Promotion and Personal Selling
Types of Sales Promotions:
Loyal customers – loyalty programs
bonus packs
Competitors customers – product sampling
contests
Brand switching – coupons
Price buyers – coupons, refunds
Sale Promotion and Personal Selling
Tools for Consumer Sales Promotion
Coupons and Rebates, FSI
Premiums
Loyalty Mktg. Programs
Contests & Sweepstakes
Sampling
Point of purchase promotions
On-line sales promotions
Sale Promotion and Personal Selling
Tools for Trade Sales Promotion
Trade allowances
Push money
Training
Free merchandise
Store demonstrations
Business meetings
Sale Promotion and Personal Selling
Personal Selling
High valued product
Custom made product
Few customers
Technologically complex
Customer highly concentrated
Sale Promotion and Personal Selling
Relationship Selling
Relationships becoming more important
Relationship:
Sell advice, counsel
Improve customer bottom line
Sales planning key
Building problem solving
Conduct discovery
Team approach
Based on profit impact
Long term
Traditional:
Sell products
Focus on closing sale
Limited sales planning
Spend most time explaining product
Product-specific needs assessment
Lone wolf approach to account
Proposals based on pricing/features
Sale follow-up is short term
Steps in Selling Process:
1. Generate leads
2. Qualify leads
3. Approaching customer and probing needs (pre-approach)
4. Developing proposing solutions
5. Handling Objectives
6. Closing the sale
7. Follow-up
Chapter 19: Pricing Concepts
The importance of price
Price = what is given up in exchange for a product or service
Value is based upon perceived satisfaction
Price x units = revenue
Pricing Objectives:
1. Profit-Oriented –
profit maximization
satisfactory profits
Target return on investment
2. Sales-Oriented –
Market share
Dollars or unit sales
3. Status Quo -
Maintain existing or meet competition
Demand determinant of price
Demand = quantity of a product that will be sold at various prices
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Demand Curve
Demand determinant of price
Supply = quantity of a product that will be offered to the market by
the supplier at various price points
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Supply Curve
Price equilibrium = when demand and supply are equal
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Price Equilibrium
Elasticity of Demand = consumers responsiveness or sensitivity
of changes in price
Elastic demand = consumers buy more less as price changes
Inelastic demand = increase or decrease in price will not significantly
impact demand
Unitary elasticity = increase in sales exactly offsets a decrease in price
so total revenue remains the same
Inelastic demand:
Inexpensive items but convenient
Corn
Wheat
Soybeans
Elastic demand:
DVD players
Clothing
Factors that Affect Elasticity:
1. Availability of substitutes
2. Price relative to purchase power
3. Product durability
4. products uses
5. Rate of inflation
The Cost Determinant of Price
Variable costs = changes with level of output
Fixed costs = does not change as output increases or decreases
Average variable cost = Total variable cost
Qty of output
Average total cost = __Total cost___
QTY of output
Marginal cost = change in total cost by one unit change in output
1. Mark-up pricing = cost of making product + profit
2. Profit Maximization Pricing is when Marginal revenue=marginal cost
3. 3. Break-even Pricing
Other Determinants of Price
1. Stage in product life cycle
2. The competition
3. Distribution strategy
4. impact of internet and extranets
5. Promotion strategy
6. Demand of large customers
7. The relationship of price and quality
Chapter 20 – Setting the Right Price
How to set a price on a product
1. Establish pricing goal
2. Estimate demand, costs and profits
3. Chose a price strategy to help determine a base price
4. Fine-tune the base price with pricing tactics
3 basis approaches to price strategy:
1. Price skimming – “market plus”
price a little above competition
2. Penetrating price - charge low price to reach the mass market
3. Status Quo price = meeting competition
Tactics to fine tune pricing:
1. Discounts, allowances, rebates, value-based pricing
2. Geographic pricing
3. Other tactics
single price
flexible price
trade-ins
professional service
price lining
leader pricing
odd-even pricing
price bundling
two part pricing
Pricing during difficult economic times
Inflation---
Cost oriented tactics:
cull low profit products
delayed quotation pricing
escalator pricing
Demand oriented tactics:
Price shading – shrink packaging
Recession ---
Value based pricing
Bundling or unbundling products
Lower costs
Chapter 21: Customer Relationship Management (CMR)
Goal of focusing on understanding customers as individuals
rather than as a group
CMR is a company wide strategy
Identify customer relationships
Leverage customerinformation
Understnd interactions withcurrent customer
base
Identify bestcustomers
Capture customerdata based on
interaction
Capture customerdata based on
interaction
Store and integratecustomer data
using informationtechnology
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CUSTOMER RELATIONSHIP MANAGEMENT SYSTEM
Companies that follow a CMR system follow a
Customer-centric focus or model
Chapter 22 – Social Media & Marketing
Social Media:
Social networks
Blogs
Micro-blogs
Media sharing sites
social commerce