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