marketing lecture a presentation by mr allah dad khan former director general agriculture extension...

Marketing Mix of Traditional Products & Services

• The marketing mix is the set of controllable, The marketing mix is the set of controllable, tactical marketing tools that the producer/craft tactical marketing tools that the producer/craft maker blends to produce the response in the maker blends to produce the response in the marketplace.marketplace.

•

Marketing Mix. 4 P’s into 7 P's

4Ps serves for selection consumers with their reaction only for product presentation or observation.

7Ps – Price, Product, Promotion, Place, People, Process, Physical Environment - extends to encompass growth of services, and helps to gain the reaction from its target market

9 Ps consists of everything controllable, tactical the craftmakers can influence the interest or demand for TG.

Marketing Mix. Marketing Mix. 4 P’s into 7 P's4 P’s into 7 P's

1. Process of Planning to come with TP to a target market2. People or a target market3. Product - TP (goods and services in combination)

offered to target market. • Variety of product mix, features, designs, packaging, sizes,

services, warrantees and return policies.

4. Price for TP consumers is important shift for communication or interactive behavior.

Retail price/wholesale Discounts

5. Promotion - activities trended to communicate the merits of TP. • Personal Selling or Sales Force• Advertising• Sales Promotion – samples, coupons, premiums, cash refunds,

demos, point-of-purchase materials, display allowances, trade shows, sales rep contests

• Public relations• Direct marketing - direct mail, Internet, telemarketing, and

direct-response, catalogs.



66. Place/Distribution - activities that make the TP available to the target market. Includes distribution channel, geographic coverage, locations, inventory, transportation or logistics.

7. Partners/Alliances - joint relationships involving cooperation and responsibilities for duties including products, distribution and promotion functions.

Integrated Marketing Concept

When craft maker works so hard to serve the When craft maker works so hard to serve the customer’s interestscustomer’s interests

Two levels of marketing integration:Two levels of marketing integration: – The various marketing functions of marketing research, The various marketing functions of marketing research,

planning, sales force, advertising, TP/brand management, planning, sales force, advertising, TP/brand management, pricing and promotion are using together. pricing and promotion are using together.

– ““Think about Customer”Think about Customer” - as marketing is well-coordinated - as marketing is well-coordinated by craft maker.by craft maker.

Marion Harper: Marion Harper: ““To manage a business well is to manage its future; and to manage the future is to To manage a business well is to manage its future; and to manage the future is to manage information.”manage information.”

• No guarantee against product obsolescence. No guarantee against product obsolescence. – Always appears better TP combination.Always appears better TP combination.

• Customers buy “by their eyes and emotions”Customers buy “by their eyes and emotions”– They buy when they see varietyThey buy when they see variety– Customers have special experience not to buy a lot of TP from one Customers have special experience not to buy a lot of TP from one

placeplace• Customers can’t evaluate quality.Customers can’t evaluate quality.

– They always evaluate quality for sized TPThey always evaluate quality for sized TP– Demanded TP with styleDemanded TP with style

• Customers need TPCustomers need TP– They need it when they are 1They need it when they are 1stst time in target place time in target place– Higher inspiration from more advertised or famous placesHigher inspiration from more advertised or famous places

Most popular myths – Marketing myopia about consumers

Marketing’s Role

• Marketing should try to mobilize resources to develop Marketing should try to mobilize resources to develop customer satisfaction. customer satisfaction.

• Requests to Requests to increaseincrease product design, material costs, product design, material costs, disruptdisrupt production schedules, production schedules, increaseincrease costs and costs and createcreate budget budget headaches.headaches.

DISTRIBUTION – 3PDISTRIBUTION – 3P

Lecturer R. RukuiLecturer R. RukuižžienienėėLithunian University of AgricultureLithunian University of Agriculture

Faculty of Economics and ManagementFaculty of Economics and ManagementDEPARTMENT OF BUSINESS MANAGEMENTDEPARTMENT OF BUSINESS MANAGEMENT

2011-05-062011-05-06

DISTRIBUTION CONCEPTIONDISTRIBUTION CONCEPTION

Learning Objectives of Distribution Theory:Learning Objectives of Distribution Theory:• Understanding of decisions range concerning Understanding of decisions range concerning

distribution planning. distribution planning. • Alternative distribution channels’ structure and Alternative distribution channels’ structure and

relevant criteria of their choice.relevant criteria of their choice.• Distinctive characteristics of distribution Distinctive characteristics of distribution

management.management.• Contributions to distribution process and marketing Contributions to distribution process and marketing

strategy.strategy.

• DistributionDistribution is a is a processprocess of identification and appliance of of identification and appliance of production distribution shifts.production distribution shifts.

• Distribution Distribution as as supply systemsupply system applied for customers to find applied for customers to find the useful products at determined place and moment.the useful products at determined place and moment.

• DistributionDistribution as as communication systemcommunication system of producers, of producers, purchasers, customers in concrete area and time period.purchasers, customers in concrete area and time period.

DISTRIBUTION CONCEPTION DISTRIBUTION CONCEPTION

DISTRIBUTIONDISTRIBUTION

Distribution – element of marketing mix, which Distribution – element of marketing mix, which is oriented to the decisions and acts concerning is oriented to the decisions and acts concerning production movement from producer to production movement from producer to consumer. consumer.

Distribution - the element of marketing mix, - concerning Distribution - the element of marketing mix, - concerning decisions and activity, - focused upon production decisions and activity, - focused upon production

movement from producers to consumers.movement from producers to consumers.


Managerial market shiftsManagerial market shifts

Marketing mix (4 P’s)Marketing mix (4 P’s)ProductProductPricePricePlace (distribution)Place (distribution)PromotionPromotion

Market of … productsMarket of … productsProducer organizationsProducer organizationsDistributorsDistributorsTrade organizationsTrade organizationsWholesalersWholesalersRetailersRetailers

ConsumersConsumers

Flows (Products Flows (Products & Information & Money)& Information & Money)

Distribution processDistribution process

Distribution process is focused on:Distribution process is focused on: Order of processing and it’s management.Order of processing and it’s management. Purchasing and selling of products (raw materials and other Purchasing and selling of products (raw materials and other

resources).resources). Production possession and storing.Production possession and storing. Transportation and protection.Transportation and protection. Production delivery and money transfers.Production delivery and money transfers. Reserve store formation and quality management.Reserve store formation and quality management.


Complexity factors of distribution system :Complexity factors of distribution system :– Dispersion of products into territorial units.Dispersion of products into territorial units.

– Frequency of ordering.Frequency of ordering.

– Products submission methods and dates.Products submission methods and dates.

– Complexity of “route” schema.Complexity of “route” schema.

– Products nomenclature and it’s formation complexity.Products nomenclature and it’s formation complexity.

– Policy of reserve management. Policy of reserve management.


Characterization of Distribution ChannelsCharacterization of Distribution Channels

Criteria and motivation of feasibility as a Criteria and motivation of feasibility as a basement to form distribution channel basement to form distribution channel

according producers or purchasers according producers or purchasers philosophyphilosophy

Functions of Distribution ChannelFunctions of Distribution Channel

Intermediaries in channel are subordinated to Intermediaries in channel are subordinated to general schema of organization, possession and general schema of organization, possession and control.control.Subordinated actions of intermediaries upon: Subordinated actions of intermediaries upon:

• Pricing items.Pricing items.• Purchase items.Purchase items.• Market penetration and/or retention items. Market penetration and/or retention items. • Total responsibility and unified service system.Total responsibility and unified service system.

Formation of Distribution ChannelFormation of Distribution Channel

• Distributor acceptance Distributor acceptance • Distributor elimination Distributor elimination • Distributor change to more competitiveDistributor change to more competitive

Distributors are available to act in distribution channel Distributors are available to act in distribution channel as long as they have power as long as they have power

to impact distribution service scope and priceto impact distribution service scope and priceconcerning supplier’s requirements to sale managementconcerning supplier’s requirements to sale management

HORIZONTAL AND VERTICAL HORIZONTAL AND VERTICAL DISTRIBUTION (MARKETING)DISTRIBUTION (MARKETING)

SYSTEMSSYSTEMS

System of distribution channelsistribution channels is organizations is organizations (intermediaries) which coordinate the products flows (intermediaries) which coordinate the products flows and make contracts.and make contracts.

– Length of distribution channelLength of distribution channel – amount of members – amount of members (intermediaries) in distribution chain.(intermediaries) in distribution chain.

– With of distribution channelWith of distribution channel – amount of independent – amount of independent members in each distribution chainmembers in each distribution chain..

DISTRIBUTIONDISTRIBUTION

Vertical marketing systems (VMS - 1)Vertical marketing systems (VMS - 1) The net of intermediariesThe net of intermediaries - territorial trade unit where - territorial trade unit where the strongest member of distribution channel keeps the the strongest member of distribution channel keeps the control in his hands (as current stockholder or franchiser control in his hands (as current stockholder or franchiser with the higher-stock financial capital) in managing with the higher-stock financial capital) in managing separately all members as unified in corporation.separately all members as unified in corporation.

ProducerProducer WholesalerWholesaler TraderTrader ConsumersConsumers

1 level1 level 2 level2 level



Moderator of distribution channel - a producer or intermediary of any levelModerator of distribution channel - a producer or intermediary of any level

VMS creates managerial net of intermediaries (channel) VMS creates managerial net of intermediaries (channel) with financial, technologic and communication matches to with financial, technologic and communication matches to prevent conflicts inside the channel of differentiation the prevent conflicts inside the channel of differentiation the goals of corporative activity.goals of corporative activity.


Vertical marketing systems (VMS - 2)Vertical marketing systems (VMS - 2)

VMSVMS

ProducerProducer DistributorDistributor TraderTrader ConsumersConsumers

Synergy effect = (1) Economic effect = Product diffusion

(2) Technologic effect (3) Financial effect (4) Communicational effect

• Corporative systemsCorporative systems cover the net of intermediaries as warrant for cover the net of intermediaries as warrant for production circulation from producers to customers.production circulation from producers to customers.

• Administered systems Administered systems cover companies, whichcover companies, which keep the net of intermediaries keep the net of intermediaries (channel) with the provision of their support to accountancy, provision or (channel) with the provision of their support to accountancy, provision or technological adequacy. technological adequacy.

• Contractual systemsContractual systems cover the independent producers with different cover the independent producers with different specialization, distribution ability, and actively cooperating in creation specialization, distribution ability, and actively cooperating in creation contracts for higher turnovers.contracts for higher turnovers.

– Voluntary trading systemsVoluntary trading systems (vertical channels) cover the collaboration (vertical channels) cover the collaboration contracts between wholesalers and retailers, where wholesalers manage contracts between wholesalers and retailers, where wholesalers manage the activity of retailers.the activity of retailers.

– Cooperated retailing systemsCooperated retailing systems (vertical channels) corporate the amount of (vertical channels) corporate the amount of retailers in producing addition functions of reproduction, storage, retailers in producing addition functions of reproduction, storage, packaging, transporting, delivering. packaging, transporting, delivering.

– Franchise organizationsFranchise organizations cover special created channels of distribution cover special created channels of distribution for special production delivery and distribution for special customers.for special production delivery and distribution for special customers.

Vertical marketing systems (VMS - 3)Vertical marketing systems (VMS - 3)Types of VRS: Types of VRS:

Horizontal marketing systems (HMS - 1)Horizontal marketing systems (HMS - 1)

HMS is a corporative formation of independent HMS is a corporative formation of independent intermediaries (horizontal channel), which join their intermediaries (horizontal channel), which join their resources for effective actions in the market under resources for effective actions in the market under beneficial or risky circumstances.beneficial or risky circumstances.HMS help to develop such channel in building financial HMS help to develop such channel in building financial stability, innovative technologies, marketing strategy of stability, innovative technologies, marketing strategy of each intermediary under market obstacles.each intermediary under market obstacles.


HMS coordinate themselves by special managerial HMS coordinate themselves by special managerial departments for trading, information system possession, departments for trading, information system possession, implementation of integrated marketing tools. implementation of integrated marketing tools.

General coordination of HMS (horizontal channel) members General coordination of HMS (horizontal channel) members • Assessment of market obstacles.Assessment of market obstacles.• Planning of production flows.Planning of production flows.• Management of production reserves.Management of production reserves.• Prognostication of turnover.Prognostication of turnover.• Implementation of differentiated pricing policy.Implementation of differentiated pricing policy.


Horizontal marketing systems (HMS - 1)Horizontal marketing systems (HMS - 1)

Multi-channel marketing systems (McMS – 1)Multi-channel marketing systems (McMS – 1)

McMS create the possibilities to producers to get into McMS create the possibilities to producers to get into different market segments by the help of different different market segments by the help of different distribution channels. distribution channels. McMS - popular distribution formula under market McMS - popular distribution formula under market profilation to eliminate conflicts in different distribution profilation to eliminate conflicts in different distribution channels, and under implementation of general marketing channels, and under implementation of general marketing strategy:strategy:

• In covering new market segments.In covering new market segments.• In forming new demand.In forming new demand.• In creating higher dispersion of production.In creating higher dispersion of production.

Value chain for creation competitive advantageValue chain for creation competitive advantage

Management of Distribution ChannelManagement of Distribution Channel Channel Choice Decisions Channel Choice Decisions

• Firm’s infrastructureFirm’s infrastructure• Human resources managementHuman resources management• Technology developmentTechnology development• ProcurementProcurement

5 primary activities5 primary activities

Inbound logistics * Operations * Outbound logistics * Marketing and sales * ServiceInbound logistics * Operations * Outbound logistics * Marketing and sales * Service

4 support activities4 support activities

Margin

Margin

Margin

Margin

THANK YOU FOR ATTENTIONTHANK YOU FOR ATTENTION

Lecturer Rasa RukuiLecturer Rasa RukuižžienienėėLithunian University of AgricultureLithunian University of Agriculture

DEPARTMENT OF BUSINESS MANAGEMENTDEPARTMENT OF BUSINESS MANAGEMENT

2011-05-062011-05-06

Formation of product/service pricing underimpact of market globalization

PRICING DECISIONS

MARKETING MIX. PRODUCT PRICE AND MARKETING MIX. PRODUCT PRICE AND PRICINGPRICING

Price – value in exchanging market of products/services.

Price – products’ value, which in market could be defined as pushing process for presenting products to consumers.

(Ph. Kotler, H. Amstrong, J. Sonders, V. Wong).

MARKETING MIX. PRODUCT PRICE AND PRICINGMARKETING MIX. PRODUCT PRICE AND PRICING

PRICING IMPACTS THE REQUIREMENTS PRICING IMPACTS THE REQUIREMENTS OF ACTIVITY:OF ACTIVITY: reduce the costs;reduce the costs; enhance the profit;enhance the profit; correspond with the value of consumers in communication;correspond with the value of consumers in communication; reflect the TP distribution (other MM) problems;reflect the TP distribution (other MM) problems; correspond with other marketing mix elements, but is not correspond with other marketing mix elements, but is not

the the singlesingle competition providence mode. competition providence mode.


Low price – as a competition providence force Low price – as a competition providence force possible in situation when enterprises have low possible in situation when enterprises have low costs or their sales are sensitive to lower prices.costs or their sales are sensitive to lower prices.

Effective marketing goal – to create Effective marketing goal – to create pleasing pleasing environmentenvironment with low sensitiveness to price with low sensitiveness to price fluctuations.fluctuations.


PRICING APPROACHESPRICING APPROACHESHigh price High price impacts deliberate demand

level Upper level price

Depends on demand: - What price level is impressive for

market? - How consumers can compare the

good value? Diapazone of pricing

If the comprehended value is higher, the price is going up

Botton level price

Depends on costs: diversification or activity reorientation is possible decision


• Goals of craft makersGoals of craft makers• Level of PLC Level of PLC • Product position in the marketProduct position in the market• Potential competitorsPotential competitors• Costs (internal and competitors’)Costs (internal and competitors’)• Distribution channels and impact of retailersDistribution channels and impact of retailers

FACTORS IMPACTING PRICING DECISIONSFACTORS IMPACTING PRICING DECISIONS


DETERMINATION OF PRICING DETERMINATION OF PRICING GOALS (1-3)GOALS (1-3)

1. 1. ORIENTED TO PROFIT ORIENTED TO PROFIT • Efficiency of invested capital or salesEfficiency of invested capital or sales• Maximization of profit under perfect demand Maximization of profit under perfect demand

elasticity, low prices and market enlargementelasticity, low prices and market enlargement• Maximization of profit under imperfect demand, high Maximization of profit under imperfect demand, high

prices (“cream skimming” strategy) and concentrated prices (“cream skimming” strategy) and concentrated market segmentsmarket segments


2.2. ORIENTED TO ORIENTED TO SALESSALES• Up-grade products value and salesUp-grade products value and sales• Sales of new products and advertising of new Sales of new products and advertising of new

enterprisesenterprises


DETERMINATION OF PRICING DETERMINATION OF PRICING GOALSGOALS

3.3. ORIENTED TO MARKET POSITION ORIENTED TO MARKET POSITION PROTECTION PROTECTION

• Prices reflect the level of competition and competitive Prices reflect the level of competition and competitive pricesprices

• Competition is concentrated to different elements of Competition is concentrated to different elements of marketing mix, ex., quality of products, consumers marketing mix, ex., quality of products, consumers service and etc.service and etc.


DETERMINATION OF PRICING DETERMINATION OF PRICING GOALSGOALS

PRICING UNDER PLC CONCEPTPRICING UNDER PLC CONCEPTStrategies in different levels of PLC Strategies in different levels of PLC


Period of PLCPeriod of PLC Pricing strategyPricing strategyIntroductionIntroduction • Low price oriented to experimentation in buyingLow price oriented to experimentation in buying

• High price oriented to skimming market shareHigh price oriented to skimming market shareGrowthGrowth Prices upturn under product’s image formationPrices upturn under product’s image formation

MaturityMaturity Orientation to prices stabilization under protection Orientation to prices stabilization under protection market sharemarket share

DeclineDecline Orientation to prices lowing under sales protectionOrientation to prices lowing under sales protection

PRICING METHODSPRICING METHODS

1.1. ORIENTATION TO COSTSORIENTATION TO COSTS

Orientation to production costs under calculation Orientation to production costs under calculation the direct fixed costs and percentage of fixed profit the direct fixed costs and percentage of fixed profit rate.rate.



2. AGREGATION METHOD2. AGREGATION METHOD

Orientation to product price under summing Orientation to product price under summing prices of separate product’s elements.prices of separate product’s elements.



3. PARAMETRIC METHOD3. PARAMETRIC METHOD

Orientation to product price under analysis of Orientation to product price under analysis of product’s quality parameters, evaluation and product’s quality parameters, evaluation and comparison of them.comparison of them.



4. ORIENTATION TO COMPETITION4. ORIENTATION TO COMPETITION

Orientation to product price under competitors Orientation to product price under competitors actions, but not to production costs or market actions, but not to production costs or market demand.demand.



5. 5. ORIENTATION TO PROFIT SHAREORIENTATION TO PROFIT SHARE

Orientation to product price under determined Orientation to product price under determined profit rate.profit rate.


PRICING METHODS (1-2)PRICING METHODS (1-2)

5. ORIENTATION TO PROFITABILITY5. ORIENTATION TO PROFITABILITY

* * Orientation to product price under determined profitability Orientation to product price under determined profitability rate. rate.

* The comparison of income and costs lets to evaluate margin * The comparison of income and costs lets to evaluate margin sale after deduction fixed and variable costs from income rate. sale after deduction fixed and variable costs from income rate.

* Break – Even – Point model shows the situation of activity * Break – Even – Point model shows the situation of activity profitability.profitability.


PRICING METHODS (1-2)PRICING METHODS (1-2) Break – Even – Point modelBreak – Even – Point model

AA - - break-even-point, units of products;break-even-point, units of products;

IIpastpast - total fixed costs, Lt; - total fixed costs, Lt;

kk - - product price, Lt per unit;product price, Lt per unit;

IIkintkint- - fixed costs per product unit, Ltfixed costs per product unit, Lt


,

intkIkpastI

A

7. 7. ORIENTATION TO DEMAND CURVE TRENDORIENTATION TO DEMAND CURVE TREND

Orientation to product price under Orientation to product price under the highest income rate.the highest income rate.


PRICING METHODS (1-2)PRICING METHODS (1-2)

Pricing concept - PLC The nature of product life cycle - 4 stages

• launch

• growth

• maturity

• decline

O (1)Launch

(2)Growth

(3)Maturity

(4)Decline

Sal

es p

er p

erio

d

Time

Product notbecomingobsolete

Productbecomingobsolete

PRICING STRATEGIESPRICING STRATEGIES



““Cream skimming” price strategyCream skimming” price strategy is oriented to reach high is oriented to reach high profitability rate, and helpful:profitability rate, and helpful:

a) in short terms the changes of competition level are a) in short terms the changes of competition level are invisible under impact of business licenses, high invisible under impact of business licenses, high expenditures to market entrance, new technologies and etc.;expenditures to market entrance, new technologies and etc.;

b) b) unique features of TP make the barriers in pricing unique features of TP make the barriers in pricing under creation imperfect demand elasticity;under creation imperfect demand elasticity;c) demand limitation depends on TP quantity for sales;c) demand limitation depends on TP quantity for sales;d) efficiency of TP requires the quick investment d) efficiency of TP requires the quick investment

return.return.



““Scrolling” price strategyScrolling” price strategy is the modification of is the modification of “cream skimming” price strategy, and effectively “cream skimming” price strategy, and effectively implementing after mentioned strategy. implementing after mentioned strategy.

The amount of consumers is very important under the The amount of consumers is very important under the conditions when in long term period prices are going conditions when in long term period prices are going down, and market share is growing, then the down, and market share is growing, then the conditions for competitors access to market is limited conditions for competitors access to market is limited of limited profit rate.of limited profit rate.



Penetration pricing strategyPenetration pricing strategy is effectively is effectively implementing with low prices by launching TP to new implementing with low prices by launching TP to new market segments or trying increasing market share market segments or trying increasing market share under creation successful position in market.under creation successful position in market.

To pursuance of new TP producers or new TP come to To pursuance of new TP producers or new TP come to target market.target market.

To get advantage against competitors who not necessary To get advantage against competitors who not necessary react applying with low prices.react applying with low prices.

To get additional share of market and receive To get additional share of market and receive investment as quicker as possible.investment as quicker as possible.



Elasticity pricing strategyElasticity pricing strategy is oriented to the needs of consumers after is oriented to the needs of consumers after long experimental measures in target market segments concerning long experimental measures in target market segments concerning the demand elasticity to price. the demand elasticity to price.

According to the level of price (high or low), elasticity strategy According to the level of price (high or low), elasticity strategy effectively impacts:effectively impacts:

Market reaction to lower prices in activating the purchase.Market reaction to lower prices in activating the purchase. Market reaction to higher price in activating purchase in low level.Market reaction to higher price in activating purchase in low level.



Passing the leader pricing strategyPassing the leader pricing strategy is oriented to price definition is oriented to price definition according the leaders prices in economical sector. according the leaders prices in economical sector.

After implementation this strategy the progressive investigation of After implementation this strategy the progressive investigation of market parameters has to applied and prognostication of changes in market parameters has to applied and prognostication of changes in the market concerning the leaders actions. the market concerning the leaders actions.

According to this strategy the adoptions acts in the market have to According to this strategy the adoptions acts in the market have to realized:realized: Small companies have to follow some large scaled companies actions.Small companies have to follow some large scaled companies actions. The leaders have to react to the mostly high or low prices.The leaders have to react to the mostly high or low prices. Products design and quality doesn’t differ according the companies size.Products design and quality doesn’t differ according the companies size.



Pricing strategy only for TP segmentsPricing strategy only for TP segments is oriented to the is oriented to the application of different products prices in different markets or for application of different products prices in different markets or for different customers. different customers.

This strategy is important when customers are very different, and This strategy is important when customers are very different, and the purchase of TP with small different features in product’s design the purchase of TP with small different features in product’s design has to be high.has to be high.

Differentiated product strategy impacts the differentiated pricing Differentiated product strategy impacts the differentiated pricing strategy. strategy. Pricing in segments creates special segment as Pricing in segments creates special segment as niche of market.niche of market.



Pricing strategy of segments is useful when: Pricing strategy of segments is useful when: • Product is easily applicable in different market segments.Product is easily applicable in different market segments.• Product is easily changeable – has substitute to be as Product is easily changeable – has substitute to be as

adequate in different market segments.adequate in different market segments.• Different market segments are not competing Different market segments are not competing

interdependently.interdependently.



““Costs plus” pricing strategyCosts plus” pricing strategy is oriented to costs level contrary as is oriented to costs level contrary as oriented to market and can’t be flexible, and is available when:oriented to market and can’t be flexible, and is available when:

• Product is under state regulation market.Product is under state regulation market.• Total costs are not predictable.Total costs are not predictable.• Product is testes as new product.Product is testes as new product.



Flexible pricing strategyFlexible pricing strategy is oriented to determined product is oriented to determined product price, which depends upon changeable preconditions of market.price, which depends upon changeable preconditions of market.This strategy is available when:This strategy is available when:

• Exists important competitive challenge.Exists important competitive challenge.• Competitors use penetration pricing.Competitors use penetration pricing.• Demand level is flexible.Demand level is flexible.



“Road gate” pricing strategy is oriented to deter the competitors from entrance to target market. This strategy help to defend in dominant market:

• To keep strong position in the market and fight with competitors.

• To satisfy market needs by creating loyalty.



Product life cycle (PLC) pricing strategyProduct life cycle (PLC) pricing strategy is oriented to price identification is oriented to price identification in each PLC period. in each PLC period.

Old product is well-known for customers, and amount of purchase can be Old product is well-known for customers, and amount of purchase can be produced by the help of high price.produced by the help of high price.This strategy is available when:This strategy is available when:

• Product is demanded, but long perspective demand is going down.Product is demanded, but long perspective demand is going down.• Substitutes create new demand.Substitutes create new demand.• Product line is constructed according production level. Product line is constructed according production level.



Loss leader’s pricing strategyLoss leader’s pricing strategy is oriented to attract customers is oriented to attract customers for purchasing other products. for purchasing other products. This strategy is available when:This strategy is available when:

• Intermediary wants to make “market noise”.Intermediary wants to make “market noise”.• Complement product details price is higher, when low price Complement product details price is higher, when low price

is presenting for whole product.is presenting for whole product.

(St. L. Montgomery)(St. L. Montgomery)



Yours exercise – Price of TP

Yours products has to find their consumers

• Whom you expect in trading area? Who is a product’s consumer?

• How you can manage price of a product?• What pricing strategy you can adopt?

Exercise for You: Create the pricing for yours TP. How much

it costs for craft maker?

• What value TP can suggest for customers?• Is TP correspond with customers needs?• Are customers sensitive to TP price?• What customers assess in TP?• Does TP need special environment? What kind of?• Can TP be substituted?• Can TP be obsolescence?

Thank you for attention …

PROMOTION MIXPROMOTION MIXSTRATEGIES OF PROMOTIONSTRATEGIES OF PROMOTION

2011-05-062011-05-06PasvalysPasvalys

PROMOTION - element of PROMOTION - element of marketing mix, which is oriented to marketing mix, which is oriented to initiate purchase or initiatives of initiate purchase or initiatives of consumers.consumers.

Advertisement

Inducement of purchase

Public relations

Personnel selling

Product

Price

Distribution

Promotion

Promotion

Promotion – the system of information and persuasion acts oriented to consumers and their attraction.

Main promotion methods:• advertising;• personnel sale.

Additional promotion methods:• popularization;• inducement of purchase.

Promotion

• Advertising – impersonal profitable presentation of products/services/ideas.

• Sales Force – verbal presentation of product

in communicating with customers in case to sell the product.

PROMOTION

• Popularization – impersonal inducement of products/services/ideas demand concerning the information dispersion in media.

• Inducement of purchase – short term sale and purchase measures, various non repeatable efforts to sell product/service hardly connected with standard promotion types (advertising, personnel sale and popularization).

GOALS OF PROMOTION

Main goal: INDUCEMENT OF DEMAND

Problems: ,

PROMOTION

Advertising Popularization Personnel sale Inducement of purchase

To sell product

Inducement of product

To form image of company

Inducement of demand

PromotionPromotion - - Marketing Communication Marketing Communication ProcessProcess

Information of customers about product innovations, Information of customers about product innovations, new products and their additional value (utility).new products and their additional value (utility).

Interactive dialog among craft makers and their customers Interactive dialog among craft makers and their customers in various market swap version. in various market swap version.

What promotive information is necessary to present?What promotive information is necessary to present?Whom promotive information is expendable?Whom promotive information is expendable?

When promotive information has to be presented?When promotive information has to be presented?

Marketing Communication (Promotion) Marketing Communication (Promotion) MixMix

• Information instructions for societyInformation instructions for society• Stimulation of supply Stimulation of supply • Popularization Popularization ((Public RelationsPublic Relations))• Personal selling Personal selling • AdvertisingAdvertising• Direct marketingDirect marketing

Marketing Communication (Promotion) Marketing Communication (Promotion) ProcessProcess

Factors influencing scoring of marketing Factors influencing scoring of marketing communication process communication process (1)(1)

Info

rmat

ion

Info

rmat

ion

Product featuresProduct features((priceprice, , formform, , colorcolor, , packagepackage, , noveltynovelty))

Product positioning place Product positioning place ((sale place and interiorsale place and interior))

Product positioning methodProduct positioning method((staff services and consultingstaff services and consulting)

Consum

ersC

onsumers

Product PositioningProduct Positioning

Territorial Distribution SystemTerritorial Distribution System

Marketing Communication (Promotion) Marketing Communication (Promotion) ProcessProcess

Factors influencing scoring of marketing Factors influencing scoring of marketing communication process communication process ((2)2)

• Product (features, positioning place and method)Product (features, positioning place and method)• Characteristics of ConsumersCharacteristics of Consumers• Dimensions of CommunicationDimensions of Communication

IndividualsIndividuals Interest groupsInterest groups Social groupsSocial groups SocietySociety

Conception of Promotion MixConception of Promotion Mix

Promotion mix useful for application as demand Promotion mix useful for application as demand formation or maintenance process of new formation or maintenance process of new product/modification (dimensions of promotion product/modification (dimensions of promotion policy)policy)

Promotion policy currently is oriented to the interests Promotion policy currently is oriented to the interests of consumers and intermediaries.of consumers and intermediaries.

Sustainable leverage of promotion policy - the Sustainable leverage of promotion policy - the elements of promotion mix. elements of promotion mix.

Objective and Problems of Promotion Objective and Problems of Promotion MixMix

ConveyanceConveyance AllusionAllusion

PersuasionPersuasion

Consumers learning and education Consumers learning and education

Creation of competitive positionCreation of competitive position

Creation of information media systemCreation of information media system

Promotion Mix StructurePromotion Mix Structure

Sales stimulationSales stimulation Personal sellingPersonal selling Public relations (popularization)Public relations (popularization) Advertising Advertising

Promotion Mix StructurePromotion Mix Structure Sales stimulationSales stimulation

...... aggregation of promotion methods aggregation of promotion methods applied for stimulation consumer needs applied for stimulation consumer needs to purchase concrete product under to purchase concrete product under implementation of special stimulation implementation of special stimulation meansmeans, , exex.: .: testers to home, lotteriestesters to home, lotteries, , priprizes.zes.

Promotion Mix StructurePromotion Mix Structure Sales ForceSales Force

... ... satisfaction of consumers interests satisfaction of consumers interests concerning communication and personnel concerning communication and personnel selling under suggestion to purchase product selling under suggestion to purchase product repeatedly and actively inform about new repeatedly and actively inform about new products and additional services.products and additional services.

Promotion Mix StructurePromotion Mix Structure Public RelationsPublic Relations

... ... interactive interactive impersonal communication impersonal communication process with consumers expansive generality process with consumers expansive generality concerning correct information about incoming concerning correct information about incoming origin new products, their features, origin new products, their features, functionality, utility and value, - image creation functionality, utility and value, - image creation philosophy and technology.philosophy and technology.

Promotion Mix StructurePromotion Mix Structure Advertising Advertising

... ... impersonal communication method for impersonal communication method for coverage huge target consumers groups. coverage huge target consumers groups.

Promotion Mix StructurePromotion Mix Structure Advertising conceptionAdvertising conception

• ConveyanceConveyance• PropagandaPropaganda• Opinion formation Opinion formation

Advertising types concerning application objectiveAdvertising types concerning application objective

• Informative advertisementInformative advertisement• Convincing advertisementConvincing advertisement• Allusive advertisementAllusive advertisement• Supportive advertisement Supportive advertisement • Comparative advertisementComparative advertisement

Promotion Mix StructurePromotion Mix Structure Advertising ConceptionAdvertising Conception

Promotion Mix StructurePromotion Mix Structure Advertising campaign steeringAdvertising campaign steering

5 M 5 M assessment principlesassessment principles

Mission Mission Money Money Message Message Media Media Measurement Measurement

SYSTEM OF MARKETING COMMUNICATION

OR

GA

NIZ

AT

ION

ADVERTISMENT

PERSONNEL SELLING

INDUCEMENT

PURCHASE

Public relations

INT

ER

ME

DIA

RIE

S

CO

NSU

ME

RS

OPI

NIO

N

CONTACTAUDITORIUM

PROMOTION

MIX

Promotion Mix StructurePromotion Mix Structure Preconditions of advertising Preconditions of advertising

efficiencyefficiency

• Supply stimulationSupply stimulation• Purchase stimulationPurchase stimulation• Stimulation of competitors activity or Stimulation of competitors activity or

partners in supply chainpartners in supply chain

Promotion Mix StructurePromotion Mix Structure Advertising mix applicationAdvertising mix application

Impulse meansImpulse meansCommunicative activity Communicative activity – – Stimulation and invitation to purchaseStimulation and invitation to purchase

AdvertisingAdvertisingAdvertisement campaignAdvertisement campaign Supply stimulation Coupons: competitions,

premium, shows and eventsPublic relations (popularization)Public relations (popularization)

Tremendous trust Tremendous trust Casual “consumer aggression”” ” ImpressionImpression reinforcementreinforcement

Personal sellingPersonal sellingPERSONAL CONTACTING PERSONAL CONTACTING COMMUNICATION CULTURE

RECIPROCAL REACTION

Direct marketingDirect marketing

INDIVIDUALITYINDIVIDUALITY CUSTOMIZATIONCUSTOMIZATION EXPEDITIONEXPEDITION IIINTERACTIONINTERACTION

Integrated marketing communicationIntegrated marketing communication – – planning planning conception of marketing communication (promotion) conception of marketing communication (promotion) means (CM) concerning assessment of strategic CM and means (CM) concerning assessment of strategic CM and their optimal derivatives under implementation maximum their optimal derivatives under implementation maximum continuity and impact of CM impact. continuity and impact of CM impact.

INTEGRATED MARKETING (PROMOTION) INTEGRATED MARKETING (PROMOTION) COMMUNICATION ENVIRONMENTCOMMUNICATION ENVIRONMENT

Mini marketsMini markets Mega marketsMega markets

Marketing communication (promotion) Marketing communication (promotion) processprocess

Marketing communication (promotion) Marketing communication (promotion) processprocess

INTEGRATED MARKETING COMMUNICATION INTEGRATED MARKETING COMMUNICATION (PROMOTION) STEERING(PROMOTION) STEERING

• IDENTIFICATION OF TARGET CONSUMERS GROUPSDifferences of consumers’ opinion appear under situations when product image or it’s competitive features after testing purchase/consumption creates negative attitude to further purchase or consumption.

• FORMULATION OF COMMUNICATIVE OBJECTIVESCognition Emotional reaction Behavioural reaction Creation of new ideas Atitudes change Action push

Conception of Promotion strategyConception of Promotion strategyPromotion strategyPromotion strategy – – organization and marketing organization and marketing communication (promotion) process under communication (promotion) process under implementation of specific marketing mix elements. implementation of specific marketing mix elements.

• Promotion appliance under seeking of economical results is Promotion appliance under seeking of economical results is available under necessity to act in national and regional available under necessity to act in national and regional markets. markets.

• Promotion unification is available under European focus to Promotion unification is available under European focus to life style. life style.

Promotion strategiesPromotion strategies

• PUSHING STRATEGY PUSHING STRATEGY – Aggressive personal selling Aggressive personal selling – Delegation of selling functions to distribution Delegation of selling functions to distribution

channelchannel ( (wholesalers and retailerswholesalers and retailers).).

• PULLING STRATEGY PULLING STRATEGY Promotion process directly oriented to consumers.Promotion process directly oriented to consumers.

Aspirations about optimal promotion strategy Aspirations about optimal promotion strategy implementation cover implementation of promotion implementation cover implementation of promotion mix elements applied to separate cultural and public mix elements applied to separate cultural and public market development preconditions and legal restraints market development preconditions and legal restraints concerning defined promotion strategy’s elements concerning defined promotion strategy’s elements applied in different EU countries. applied in different EU countries.

Promotion strategiesPromotion strategies

Characteristics of European Marketing Communication (Promotion)

Promotion goalPromotion goal – – decisions concern appropriate decisions concern appropriate marketing communication (promotion) means upon their marketing communication (promotion) means upon their options. options.

TV, TV, RadioRadio, , PressPress, , ShowsShows, , Events, External AdvertisementEvents, External AdvertisementINTERNEINTERNETT

Promotion strategiesPromotion strategies Marketing communication (promotion) Marketing communication (promotion)

systemssystems

Important European aspect of promotion choice is definition of role Important European aspect of promotion choice is definition of role and importance of international communication means in EU state-and importance of international communication means in EU state-members territory. members territory.

Marketing communication (promotion) means characterizationMarketing communication (promotion) means characterization

• Non European communication systemsNon European communication systems, ex., ., “Int. Harald “Int. Harald Tribune”,“New York Times”, “CNN”;Tribune”,“New York Times”, “CNN”;

• Non European communication systemsNon European communication systems, , oriented to European oriented to European consumersconsumers, , exex., “., “Wall Street Journal Europe”, “Business Week Wall Street Journal Europe”, “Business Week Europe”, “Time Europe”, “MTV Europe”;Europe”, “Time Europe”, “MTV Europe”;

• European communication systems,European communication systems, orientedoriented to European to European consumersconsumers, , exex., “., “Eurosport”, “Arte”.Eurosport”, “Arte”.

Promotion strategiesPromotion strategies Marketing communication (promotion) systemsMarketing communication (promotion) systems

Goal of promotionGoal of promotion – – option of promotion mix elements and option of promotion mix elements and their appropriate combination according to standardization their appropriate combination according to standardization and differentiation problems.and differentiation problems.

Promotion mix elements under implementation of Promotion mix elements under implementation of EuroEuro--Corporate-IdentityCorporate-Identity strategy: strategy:

• Advertising.Advertising.• Direct communication.Direct communication.• Sales stimulation.Sales stimulation.• Product positioning.Product positioning.• Sponsoring of consumers.Sponsoring of consumers.

Promotion strategiesPromotion strategies Marketing communication (promotion) systemsMarketing communication (promotion) systems

Structure of impersonal communication channel

• Media –Media – post means, mass information means, post means, mass information means, electronic electronic means and external advertisement.means and external advertisement.

• AtmosphereAtmosphere - “concentrated environment” for information - “concentrated environment” for information consumers and stimulation purchases. consumers and stimulation purchases.

• Events and showsEvents and shows – actions to inform consumers. – actions to inform consumers.

Promotion strategiesPromotion strategies Marketing communication (promotion) Marketing communication (promotion)

systemssystems

Stimulation means of communication channel:Stimulation means of communication channel:• to identify impact entities (customers/consumers and to identify impact entities (customers/consumers and

comapnies) and to concentrate efforts upon them;comapnies) and to concentrate efforts upon them;• to inform leaders of ideas;to inform leaders of ideas;• to make apply well-known and popular persons of target to make apply well-known and popular persons of target

community;community;• to embrace inner persons;to embrace inner persons;• to use attractive advertising as verbal metaphor for current to use attractive advertising as verbal metaphor for current

implications;implications;• to create verbal communication channels for consumers;to create verbal communication channels for consumers;• to organize e-forum. to organize e-forum.

Promotion strategiesPromotion strategies Marketing communication (promotion) systems (396)Marketing communication (promotion) systems (396)

Promotion decisions upon the demand Promotion decisions upon the demand formation and cultivation of new productsformation and cultivation of new products

DiffusionDiffusion,, or product convertibility speed by or product convertibility speed by other products, which shows consumers force to other products, which shows consumers force to react and buy new product, and to warrant product react and buy new product, and to warrant product distribution in various public groups.distribution in various public groups.

Product assimilation functionProduct assimilation function important for important for consumers to understand the advantages of product consumers to understand the advantages of product and the benefit of product innovation concerning its and the benefit of product innovation concerning its inducement for purchase.inducement for purchase.

Promotion decisions upon the demand formation Promotion decisions upon the demand formation and cultivation of new productsand cultivation of new products

Differentiation of consumers and different types of Differentiation of consumers and different types of information interpretation (hemophilia, heterophilia) can information interpretation (hemophilia, heterophilia) can produce produce effect of cognitive dissonance.effect of cognitive dissonance.

Diffusion of innovationsDiffusion of innovations – – desirable phenomenon in the desirable phenomenon in the market, is market, is ......

Levels of integrated marketing Levels of integrated marketing (promotion) process(promotion) process

Goals of CommunicationGoals of Communication

* * RecognitionRecognition * * Emotion reactionEmotion reaction * ** * Behavioral reactionBehavioral reaction * *

* * Creation of ideaCreation of idea * * * * Change of attitudesChange of attitudes * *

* * Pushing to actPushing to act * *

Exercise for You: Create a promotional for TP.

• Why TP is needing promotion?• What promotion tool is more effective?• Compare the promotional tools if TP is in different areas?• Is it true, that different promotional tools is useful for TP?

Prove yours version.

Thank you for attention

☺☺

marketing lecture a presentation by mr allah dad khan former director general agriculture extension...

Education