Learning Objectives. STA 473 Business Management. Marketing. The Eight Functions of Marketing. Introduction to Business Management

Transcription

1 Learning Objectives STA 473 Business Management Chapter 9 Marketing: Product and Price Chukiat Worasucheep Define marketing and its eight functions. Understand market segmentation and name the types of segmentation. Explain the process consumers go though when purchasing products and how consumer markets differ from business-to-business markets. Describe the various aspects that go into the product element of marketing s 4Ps. Describe the different types of pricing that should be considered in marketing products. Chukiat Worasucheep 2 Marketing Marketing is more than selling or advertisement. Definition: is the process of planning and executing the conception, pricing, promotion, and distribution of goods and services to facilitate exchanges that satisfy individual and organizational objectives. The Eight Functions of Marketing Exchange Buying Selling Physical distribution Transportation Storage Facilitating Quality and quantity Financial Risk Pricing, payment, charge Marketing information Chukiat Worasucheep 3 Chukiat Worasucheep 4 Chukiat Worasucheep 1

2 Steps of Marketing Plan Business reviews Review of corporate and products Analysis of market Analysis of consumer behavior Analysis of competitors Market segmentation Specify target market Formulate market objectives and strategies Positioning strategy Define marketing mix Define marketing plans and budget Implement the plans Evaluate and review the strategies and plans Market Segmentation Marketing begins with determining who your customers are. Market segmentation is the process of dividing the total market into groups whose members have similar characteristics. Target marketing is choosing the market segment for a marketer to focus its efforts on. Segmenting the Consumer Market Geographic Demographic Psychographic Benefit Volume Segmentation for sizable, reachable, and profitable groups. Chukiat Worasucheep 5 Chukiat Worasucheep 6 Reaching smaller market segments Niche marketing is the process of finding small but profitable market segments and designing custom-made products for them Consumer Behavior 1/2 Understand consumers process and motivation Decision-making process: Relationship marketing is a marketing strategy with the goal of keeping individual customers over time by offering them new products that exactly meet their requirements Service firms such as airlines, rental car companies, and hotels. Problem recognition Information search Alternative evaluation Purchase decision and/or no purchase Post purchase evaluation Chukiat Worasucheep 7 Chukiat Worasucheep 8 Chukiat Worasucheep 2

3 Consumer Behavior 2/2 Decision-making factors: Learning Reference group Culture Subculture The Business-to-Business Market Larger purchases Fewer customers Geographically concentrated More rational buyers Sales are direct More functional packaging Chukiat Worasucheep 9 Chukiat Worasucheep 10 Marketing Mix Service Marketing Mix Source: 11 People employees (skill, aptitude, service knowledge) culture Process service delivery (speed, consistency, quality) fast foods complaints Physical Evidence/Environment service location clean hotel room user stories Chukiat Worasucheep 12 Chukiat Worasucheep 3

4 Marketing Mix: 4P s Product Price Place Promotion The 4Ps of Marketing: Product Total Product Offer Everything that consumers evaluate Important beyond product Chukiat Worasucheep 13 Chukiat Worasucheep 14 Chukiat Worasucheep 15 Chukiat Worasucheep 16 Chukiat Worasucheep 4

5 Market Research Past and future purchase Four steps: Define the question. Collect data. Primary research e.g. focus group Secondary research Pros/Cons of Primary/Secondary Analyze data. Choose and implement solution. Market Research Product line is a group of products that are physically similar or intended for a similar market. E.g. makeup product line: concealer, powder, blush, eyeliner, eyeshadow, mascara and lipstick products. Cost of marketing research can be spread out. Chukiat Worasucheep 17 Chukiat Worasucheep 18 Product Differentiation (1/2) Definition: is the creation of real or perceived product differences. Goal is to develop a position that target customers see as unique. Small differences Unique, attractive Create strong loyalties over perceived difference. Product Differentiation (2/2) How to be differentiated? difference in quality difference in functional features or design difference in time and place of availability. Chukiat Worasucheep 19 Chukiat Worasucheep 20 Chukiat Worasucheep 5

6 Product Classifications (1/2) 1) Consumer products Convenience products Product Classifications (2/2) 2) Industrial products used to produce or as a component of, other products B2B products Shopping products Clothes Specialty products Wine, jewelry Unsought products car towing services, burial services Chukiat Worasucheep 21 Chukiat Worasucheep 22 Branding Brand Is a name and symbol that identify the product of one seller over another Branding Brand equity a combination of factors that people associate with a given brand name, such as image and perceived quality Brand awareness Perceived quality Brand loyalty Brand loyalty is the extent to which a customer will choose one product over another on a continual basis Chukiat Worasucheep 23 Chukiat Worasucheep 24 Chukiat Worasucheep 6

7 Packaging Goals Protect goods, attract buyers, describe content, explain benefits, provide info, indication of price, values, & use, and provide dimension & weight info Universal Product Code (UPC Barcode) Country, company, article, check digit Aztec code (2D barcode) 1995 Chukiat Worasucheep 25 Chukiat Worasucheep 26 Product Development Process Ideas Profit potential Prototype Testing Product analysis Development Idea generation Product screening Chukiat Worasucheep 27 Chukiat Worasucheep 28 Chukiat Worasucheep 7

8 Marketing management: 4P s Product Price Place Promotion The 4Ps of Marketing: Price Objectives Profit Building traffic Loss leader Market share Auto companies offer low finance rates, low lease rates, or rebates Image Social objectives A product may be priced low so more people can afford to buy it Chukiat Worasucheep 29 Chukiat Worasucheep 30 Product Life Cycle Product life cycle is a theoretical model of what happens to sales and profits for a product class over time (for most products) 4 stages: Introduction Growth Maturity Decline Affects pricing Chukiat Worasucheep 31 Chukiat Worasucheep 32 Chukiat Worasucheep 8

9 Marketing Strategy Marketing Objective Gain awareness Stress differentiation Maintain brand loyalty Harvesting, deletion Competition Few More Many Reduced Product One More versions Full product line Price Promotion Introduction Growth Maturity Decline Skimming or penetration Inform, educate Gain market share Stress competitive difference Defend market share, profit Reminder oriented Best sellers Stay profitable Minimal promotion Basic Pricing Strategies Cost-Based Pricing Producers use cost as a primary basis for setting price In the long run, market determines price Demand-Based Pricing Target Costing Means to price based on demand Competition-Based Pricing is a strategy based on what other competitors are doing. the price can be set at, above, or below competitor s prices Price leadership Chukiat Worasucheep 33 Chukiat Worasucheep 34 Breakeven Analysis is the process used to determine profitability at various levels of sales The break-even point (BEP) is the (sell units) point where revenues from sales equal all costs BEP = Total fixed cost Price of 1 unit Variable cost of 1 unit Breakeven Analysis Chukiat Worasucheep 35 Chukiat Worasucheep 36 Chukiat Worasucheep 9

10 Example: A flower for u shop Other Pricing Strategies (1/5) Fixed costs (per month) Rental 15,000 Refrig 35,000 (5 year depreciation) 584 Other equipments and decoration 5,500 Electricity & Water & Phone Bills 2,000 Payroll 20,000 Other expenses 751 Total 43,835 Variable cost (per unit) Flowers 150 Other materials 110 Delivery 50 Total 310 Average unit selling price 550 BEP = Fixed cost / (Price Variable cost) = 43,835 / ( ) = 182 units per month = 6 units per day Skimming price strategy is a pricing strategy in which a new product is priced high to make optimum profit while there is little competition; however, it invites competitors Chukiat Worasucheep 37 Chukiat Worasucheep 38 Other Pricing Strategies (2/5) Penetration strategy is a pricing strategy in which a product is priced low to attract more customers and discourage competitors. This pricing strategy will only be suitable if customer demand is price elastic (responsive to price changes). Other Pricing Strategies (3/5) Everyday low pricing is a pricing strategy where prices are set lower than other stores and there are no special sales (example: Wal-Mart) Chukiat Worasucheep 39 Chukiat Worasucheep 40 Chukiat Worasucheep 10

11 Other Pricing Strategies (4/5) High-low pricing strategy has regular prices that are higher than at stores using EDLP, but they have many special sales in which the prices are lower (example: department stores) Other Pricing Strategies (5/5) Bundling grouping two or more products together and pricing them as a unit. Psychological pricing (odd pricing) is pricing goods and services at price points that make them appear less expensive than they are (example: gasoline priced at instead of 30.00) Chukiat Worasucheep 41 Chukiat Worasucheep 42 Marketing management: 4P s Next Classes Product Price Place Promotion Next week! Next few classes will continue on marketing management! Chapter 10 Marketing: Place & Promotion Assignment: ให บรรยายถ ง Marketing action ท ท านเห น ณ ป จจ บ น มา 2 กรณ พร อมบรรยายแนวค ด Marketing strategy/goal ของแต ะกรณ Read Chapter 10 Marketing: Place & Promotion Chukiat Worasucheep 43 Chukiat Worasucheep 44 Chukiat Worasucheep 11