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become established
- Competitors have entered the
market
The decline phase:
Stars Question
Question Marks ?
High
Marks
• High growth & share ••High
Highgrowth,
growth,low
lowshare
share
• Profit potential ••Build
Build into Stars orphase
into Stars or phaseout
out
• May need heavy ••Require
Requirecash
cashto
tohold
hold
investment to grow market
marketshare
share
Cash
Cash Cows
Cows Dogs
Dogs
••Low • Low
Lowgrowth
growth&&share
Lowgrowth,
growth,high share ••Low
highshare share
Low
Specialised versions
New editions
Improvements – real or
otherwise!
Changed packaging
Technology, etc.
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The Marketing Mix
The tools available to a business to gain the
reaction it is seeking from its target market in
relation to its marketing objectives
7Ps – Price, Product, Promotion, Place, People,
Process, Physical Environment
Traditional 4Ps extended to encompass growth of
service industry
Price
Setting Initial Product
Prices
Market
Market Skimming
Skimming Market
Market Penetration
Penetration
> Setting a High Price for > Setting a Low Price for
a New Product to Skim a New Product in Order
Maximum Revenues to Attract a Large
from the Target Market. Number of Buyers.
> Results in Fewer, More > Results in a Larger
Profitable Sales. Market Share.
> Intel’s $1,000 Chip > Wal-mart
What is Cost-Plus Pricing
and Why
isAdding
it Popular?
a Standard Markup to the Cost of the Product.
Sellers
SellersAre
AreMore
More Minimizes
Minimizes
Certain
CertainAbout
About Price
Price
Costs
CostsThan
Than Competition
Competition
Demand
Demand
Perceived
Perceived
Fairness
Fairnessto
to
Both
BothBuyers
Buyers
and
andSellers
Sellers
Types of Cost Factors
that
Affect (Overhead)
Pricing
Fixed Costs Variable Costs
Decisions
Costs that don’t
vary with sales or
Costs that do vary
directly with the
production levels. level of production.
Executive Salaries Raw materials
Rent
Total
TotalCosts
Costs
Sum
Sumof
ofthe
theFixed
Fixedand
andVariable
VariableCosts
Costsfor
foraaGiven
Given
Level
Levelof
ofProduction
Production
Product Mix Pricing
Strategies Product
ProductLine
Setting
LinePricing
SettingPrice
Pricing
PriceSteps
Steps
Between
BetweenProduct
ProductLine
LineItems
Items
i.e.
i.e. Lawnmowers
Lawnmowersat at$299
$299&&$399
$399
Optional-Product
Optional-ProductPricing
Pricing
Pricing
PricingOptional
OptionalororAccessory
AccessoryProducts
Products
Sold
SoldWith
WithThe
TheMain
MainProduct
Product
i.e.
i.e.Car
CarOptions
Optionssuch
suchasasaaCD
CDplayer
player
Product
Product Captive-Product
Captive-ProductPricing
Pricing
Pricing
PricingProducts
ProductsThat
ThatMust
MustBe
Mix
Mix Used
Be
UsedAlong
AlongWith
WithThe
TheMain
MainProduct
Product
Pricing
Pricing i.e.
i.e.Razor
RazorBlades,
Blades,Film,
Film,Software
Software
Strategies
Strategies By-Product
By-ProductPricing
Pricing
Pricing
PricingLow-Value
Low-ValueBy-Products
By-ProductsTo To
Get
GetRid
Ridof
ofThem
Them
i.e.
i.e. From
FromChemicals,
Chemicals,Lumber
LumberMills,
Mills,Zoos
Zoos
Product-Bundle
Product-BundlePricing
Pricing
Bundles
BundlesOf OfProducts
ProductsSold
Sold
Together
TogetheratataaReduced
ReducedPrice
Price
i.e.
i.e.Season
SeasonTickets,
Tickets,Computer
ComputerMakers
Makers
Price-Adjustment
Strategies
• Adjusting Prices for
Psychological Pricing Psychological Effect.
• Price Used as a Quality
Indicator.
• Reference Prices i.e.
Clothing.
Q2 Q 1
Quantity Demanded per Period
B. Elastic Demand -
Demand Changes Greatly With
a Small Change in Price.
Price
P’2
P’1
Q2 Q1
Quantity Demanded per Period
Promotion
The Promotion Mix
14-22
The Promotion Mix
14-23
The Promotion Mix
Major Promotion Tools: Sales promotion
Sales promotion is the short-term incentives to encourage the
purchase or sale of a product or service.
– Discounts
– Coupons
– Displays
– Demonstrations
– Samples
– Cash refund
– Price packs
– Premium
14-24
The Promotion Mix
Major Promotion Tools: Public relations
Public relations involves building good relations with
the company’s various publics by obtaining favorable
publicity, building up a good corporate image, and
handling or heading off unfavorable rumors, stories, and
events.
– Publicity - Press releases
– Sponsorships
– Special events
– Web pages
14-25
The Promotion Mix
Major Promotion Tools: Personal selling
Personal selling is the personal presentation by the
firm’s sales force for the purpose of making sales and
building customer relationships.
Sales presentations
Trade shows
Incentive programs
14-26
The Promotion Mix
Major Promotion Tools: Direct marketing
Direct marketing involves making direct connections
with carefully targeted individual consumers to both
obtain an immediate response and cultivate lasting
customer relationships – by using direct mail, telephone,
direct-response television, e-mail, and the Internet to
communicate directly with specific consumers.
Catalog
Telemarketing
Kiosks
Direct mail
14-27
Promotion
Strategies
to make the consumer
aware of the
existence of a product
or service
NOT just advertising
Promotion Mix Strategies
Push strategy involves pushing the product
14-29
Promotion Mix Strategies
Pull strategy is when the producer directs its
14-30
Place
Place
1-level channel
Producer
Producer Retailer
Retailer → Consumer
Consumer
2-level channel
Producer → Wholesaler
Producer Wholesaler Retailer
Retailer → Consumer
Consumer
3-level channel
Producer → Wholesaler
Producer Wholesaler→ Jobber
Jobber → Retailer
Retailer → Consumer
Consumer
33
People
SWOT is an acronym for strengths,
weaknesses, opportunities, and threats
2-37
SWOT
2-38
Analysis
People
People represent the business
The image they present can be important
First contact often human – what is the lasting image they
provide to the customer?
Extent of training and knowledge
of the product/service concerned
Mission statement – how relevant?
Do staff represent the desired culture
of the business?
Process
Process
How do people consume services?
What processes do they have to go through to acquire
the services?
Where do they find the availability
of the service?
Contact
Reminders
Registration
Subscription
Form filling
Degree of technology
Physical Environment
Physical Environment
The ambience, mood or physical presentation of the
environment
Smart/shabby?
Trendy/retro/modern/old fashioned?
Light/dark/bright/subdued?
Romantic/chic/loud?
Clean/dirty/unkempt/neat?
Music?
Smell?
The Marketing Mix
Boston Matrix