FDNMARK PRODUCT

Marketing Elements of Product Planning for Goods & Services

 more than just selling and advertising
 performance of activities that aims to 1. Product Idea
accomplish a firm’s objectives through - physical good or service
satisfying the customer’s needs – for profit - experience, benefits and features
 begins w potential customer’s needs
2. Branding
Marketing Discrepancies & Separations - creating a name, symbol or design that
- Discrepancies of Quantity identifies and differentiates a product from
- Discrepancies of Assortment other products 5L of Brand Familiarity
- Spatial Separation
- Separation in time Manufacturer –
- Separation of information national brand owned
- Separation in values by producers
- Separation of ownership Dealer – private brands
owned by
Marketing Functions intermediaries
- Buying
- Selling 3. Packaging
- Transporting Protecting
- Storing Promoting
- Standardization & grading Enhancing
- Financing
- Risk taking 4. Warranty
- Market information - what sellers promise about the product
Limited Warranty – specified scope
Marketing Concept Full Warranty – repair or replacement of a
- Customer satisfaction product for a certain time period
- Total company effort
- Profit 5. Product Classes
- depends on the type of customer
Marketing Orientation – from a firm 1. Consumer Products – final consumer
Production Orientation – from a customer a. Convenience – purchased quickly
with little effort staple impulse emrgn
Customer Value – benefits vs costs obtaining the b. Shopping – worthy to compare
benefits c. Specialty – no substitutes
d. Unsought – not normally bought
Micro-macro dilemma – economic phenomenon 2. Business Products – how products will be
results in negative social consequences used
a. Installations – major facilities
Marketing Management Process b. Accessories – short-lived capital item
1. Planning c. Raw materials – becomes part of the
2. Implementation physical good
3. Controlling d. Components – processed and
becomes a part of the final product
4Ps of Marketing e. Maintenance, repair & operations
1. Product – Customer’s needs; goods/services Supplies - not directly related to
2. Place – Convenience; channel of distrib making a finished product but are
3. Promotion – Communication necessary to keep their operation
4. Price – Cost going
f. Professional Services – supports a
Product Life Cycle firm’s operations
1. Introduction
2. Growth
3. Maturity
4. Decline
New Product Development Process
1. Idea Generation
2. Screening – S&W
3. Idea Evaluation – concept testing
4. Development – prototypes; market test
5. Commercialization – putting into the market
PLACE
Distribution channel - chain of intermediaries
through which a good or service passes until it
reaches the final buyer or the end consumer
Direct – maintains control; lower costs; no
intermediaries; direct contact w consumers
Indirect – through intermediaries
Regrouping Activities
Assortment
Sorting – separating products into grades & qualities
by diff target markets
Assorting – putting together variety of products to
give target market what it wants
Quantity
Accumulating – collecting products from many
small producers
Bulk-breaking – dividing larger quantities into smaller
quantities as it approach the final market
Types of Channel
1. Traditional
2. Vertical Marketing
Market Exposure Strategies
1. Intensive - when a business ignores market
segmentation and decides to supply their
product to every market available
2. Selective - through intermediaries who will
give their product special attention
3. Exclusive – selling in only one intermediary in
a particular location
Entering International Markets
1. Exporting
2. Licensing
3. Management Contracting
4. Joint Venture
5. Direct Investment
Logistics – physical distribution
Physical Distribution Concept – transporting, storing
& product-handling activities of a firm and a whole
channel system should be coordinated
Total Cost Approach – evaluating each possible PD
system and identifying all costs for each alternative
PRICE
Pricing Objectives
1. Profit-oriented
- profit as an objective; target return
2. Sales-oriented
- objectives seek to boost volume or market
share
3. Status quo oriented
- don’t-rock-the-boat objectives
- copies the price levels of its competitors or
maintains the current price levels of similar
products or services in the market
Pricing Policies
Administered prices – prices set by firms
One-price policy – same price to all customers
Flexible-price policy – same product & quantities to
diff customers at diff prices
Dynamic pricing – products at a price changing
depending on the level of demand, customer or
season
Price-cutting – cut prices to dominate market
PP Over the Product Life Cycle
Skimming Price- sets a relatively high initial price
then lowers the price over time
Penetration Pricing – sets a low initial price to attract
new customers
Introductory Price Dealing - set low prices in order to
enter a new market for your company and raises
prices after introductory is over
DISCOUNTS
- are deductions from the list price
Quantity Discounts – encourage customers to buy in
large quantities
a. Cumulative - encourages repeat buying;
adds potential discount to every purchase
b. Non-cumulative- a one-time discount
Seasonal Discounts - are offered on seasonal goods
during a certain season
Cash Discounts - encourages customers to pay bills
earlier (ex 2% if paid within 5 days)
Trade Discount (functional) - discount given by the
seller as a deduction in the list price
Sale Price – temporary discount; encourages
immediate buying
ALLOWANCES
- these are reduction in the price due to a problem
with the product or service
Common Types of Allowances
Advertising All. - price reductions given to firms to
get the word out about the product
Stocking All. – or slotting allowances; given to
intermediaries such as retailers to get shelf space for
their products
Push Money – spiffs; given to retailers to ensure that
they display the product significantly and ensuring
that products will be sold
Trade-in allowances - the amount a seller reduces
to a certain thing in return for a new product
bought
Rebates or Cash back - unlike discount, these are
given to a customer after the payment of the full
amount
GEOGRAPHICAL PRICING
- practice of modifying a basic list price based on
the location of the buyer
Geographic Pricing Policies
Freight on board - the shipping fee is paid by the
purchaser
Zone pricing - prices increase as distance increases
(LBC)
Uniform delivery pricing - the same price is
charged to all
Freight-absorption pricing - seller absorbs all or a
part of the cost of shipping as a promotional tactic
Value Pricing – setting a fair price level based on
the value consumers perceive a service or good to
have
Legality of Pricing Policies
Unfair Trade Practice Acts – places a lower limit on
prices
Dumping – pricing a product in a foreign market
below the cost of producing it
Phony List Prices – prices shown to customer to
suggest discounts
Price Fixing - the maintaining of prices at a certain
level by agreement between competing sellers
Price Discrimination – selling same products to diff
buyers at diff prices
Full-line Pricing – setting prices for a whole line of
products
Complementary product – set prices on several
products as a group
Price Setting
Cost-Oriented Approach
- takes into account the company's profit
objectives and that covers its costs of production
1. Markups - amount added to the cost price
of goods to cover overhead and profit
2. Average-cost pricing - setting prices close to
average cost ; maximize sales while
maintaining normal profit; dangerous; no
allowances
a. Average-variable – depends on output
b. Average-fixed – fixed cost
c. Average-total – sum of all production
costs
Types of Total Costs
1. Total Fixed Cost
2. Total Variable Cost
3. Total Cost – sum of the two
3. Breakeven Analysis – cost and income to
determine profit
4. Marginal Analysis – examination of the
associated costs and potential benefits;
profit maximization
Demand-Oriented Approach
- uses the customer demand to set up the price in
the market
1. Value-in-use Pricing – based on the
product’s value to customers
2. Auctions – bidding for the selling item
3. Sequential price Reductions – starts at a
relatively high price then step by step
reductions
4. Reference Prices – prices customers expect
to pay (competition)
5. Leader Pricing – setting very low prices to sell
large quantities and also buy other products
6. Bait Pricing – set low prices to attract
customers and try to sell expensive brands
once the customer is in store; false advertise
7. Demand-backward Pricing – estimates the
price from a consumer perspective and
adjusts accordingly
8. Psychological – special appeal to customers
Odd-even – ends in certain numbers
9. Price Lining - separating goods into cost
categories in order to create various quality
levels in the minds of consumers
10. Prestige – setting a high price to suggest
high quality
Product-bundle – one price for a set of products
Bid Pricing – offering a specific price for each
possible job
Negotiated Price – based on bargaining