Managing Products and Services Pricing Strategy

8/14/2019 Managing Products and Services Pricing Strategy

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Managing products and services Pricing strategy Promotional mix and distribution

strategy


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Product Attributes - Features of a product that

gives value to customers.

Branding collection of images or ideas to

represent a product and its producer.

Usually in the form of logos, name, slogan, design.

Main step of marketing communication.

Helps to get more prospects


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BRAND MANAGEMENT

To build a brand the following points should be

clear

Product you offer and the core value of the product.

Mission of the organization and USP of the product Target market


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Brand Objective to frame brand objective clear

view about the purpose of the brand & the value of

the product to be communicated to the people. Brand identity how the brand is to be perceived

by the consumers Brand barriers to be recognized and plan to

overcome the barriers. Brand packaging should be clear, professional,

eager to serve the customers.


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Approaches of Branding

Individual branding brand with separate name

competing with other brands of the same company Attitude branding makes to feel larger

Brand extension using the existing strong brand

name for new products.

Multi brands same firm, same product categorybut with different brand names

Brand equity value built over a period of time or the

outcomes of the product with brand than without

brand.


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Advantages of branding

Helps to build corporate image

Helps to attract loyal customers

Gives legal protection to unique productfeatures.


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Product Mix- set of all products a seller sells, consists

of various product lines. Product Line related products, various size, color,

price, etc.,


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Four dimensions of product mix

Depth number of variants of each product Width number of product lines

Length total number of items in the mix

Consistency how closely related are the product

lines Line extension - extending the product line to

reach different market segments. Vulnerability percentage of sale or profit in a line


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Decision proces

Review review the product lines in effect

Modify add/ delete the products in product line

Compare & Monitor the effect monitor the effect of new

product line with the old line and with the other existing

product lines

Forecast forecast for the effects of the change of

product mix.


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Strategies for Product Development

Generation of ideas R & D

InteractionWider search

Screening the ideas generated

Ideas compatible with companys objectives

Develop conceptsElaborated version of the ideas


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Testing concepts

Testing and getting feed back from the targetmarket

Marketing

Target market, product positioning

Distribution strategy and budgeting

Profit, shares, long term sales

Analysis of the business

Analysis whether it suits the companys

objectives and make profits


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PrototypesBuilt by R & D and checked for its product

concepts and estimated costFunctional test & Consumer test

Testing in the marketResponse of the dealers and consumers

Commercialization (target market)When - Market entry timingWhere localityHow action plan

Adoption of the product4 stages awareness, interest, trying &

adopting


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Product life cycle 4 stages, bell shaped

Introduction

Growth Maturity

Decline


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Service An act offered by one to another, intangible. Marketing strategies

Holistic marketing External, Internal & Interactive Marketing Managing the quality of service

Meeting Customer expectations

Commitment for quality with high standards

Monitoring the performance

Employee satisfaction


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Pricing Applying prices to purchase and sales

order, one of the four Ps of marketing mix. Factors to be considered for pricing

Internal factors productivity, profit maximization.

External factors consumers psychology, political

& economical factors.


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Select the objectives of pricing

Positioning the product in the market

survival/profit maximization/increase in market

share/ high quality/market skimming Determine the demand and estimate the cost

Statistical analysis, Experiments, Surveys.

Fixed cost + Variable cost + Profit margin Analyze competitors price


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Select a pricing method

Markup Pricing Target Return Pricing

Perceived Value Pricing

Value Pricing

Going rate pricing Group pricing

Setting the final price

Companys pricing policies

Other Marketing activities


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Pricing strategies most commonly used Premium pricing - high price customers - sign of self worthPenetration pricing initial stage low price to gain

market share

Price skimming (Creaming) high price reimburse theinvested amount

Psychological pricing emotional basis - positive

psychological impact

Predatory pricing aggressive pricing low price to driveout competitors.


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Product Line pricing includes the price for benefits

of the parts in the range of products or services. Optional product pricing optional extra services

increases overall price. Product Bundle pricing bundle of products in a

package usually to clear off old stock Captive product pricing products with

complements products with premium price

recoups margin by selling complement

Byproduct pricing pricing the by products lowerprice on main product


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4 Aspects of Promotional Mix

Advertising

Sales Promotion Public relation

Personal Selling


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Advertising Action of describing or presenting a

product, service or idea in order to induce the

individuals to buy or support it. Types of advertising

Print Advertising

Brochures, new papers, magazines

Outdoor AdvertisingAttracting customers outdoors. Eg:-billboards,

events

Media Advertising

Advertising in Television, Internet, Radio

Covert Advertising

Using the products in cinemas, in stage shows

or in any other entertainment


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Sales Promotion initiative to promote a increase in sales.

Two forms- (i) Consumer sales promotion target

consumers (ii) Trade sales promotion target retailers.

Techniques of sales promotion

Consumer sales promotion

Coupons , Rebates , Rewards , Price deal, Trade sales promotion

Training ,Push money, Allowances, Point -of-purchase

displays


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Public Relations managing the flow of

information & maintaining mutual relations

between the organization & public. Creating awareness of the product and its uses.

Via newspapers, television or magazines. Personal Selling oral communication intend to

make a sale.

Push strategy; pull strategy

Prospects

Communicate


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5 stages of personal selling

Prospects

Communicate Sale

Service

Feedback Advantages

Personal attention

Demonstrate the product

Long term relationship


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Direct Marketing market products directly to

customers without intervening any media

Channels of direct marketing Mail

E Mail

Telemarketing

Couponing Advantages

Communicate directly

Costs less than other marketing techniques Greater control and accountability


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Marketing communication mix particular combinationof marketing tools working together.

Setting up Marketing Communication Mix

Decide what is to be and to whom is to be

communicated

Evaluate the characteristics of each component

Consider the total budget & the resources available

Select the components which suits the objective to

reach the target market

Set up the marketing communication mix.


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Distribution channels -"Channel of distribution

comprises a set of institutions which perform all of

the activities utilized to move a product and its title

from production to consumption- Buclin in

"Theory of Distribution Channel Structure"


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Factors to be considered:

Market factors Producer factors

Product factors Types of distribution channels

Wholesalers

Retailers

Agents

Direct sales


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Managing Products and Services Pricing Strategy

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