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

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

Relationship: Sell advice, counsel Improve customer bottom line Sales planning key Building problem solving Conduct discovery Team approach Based on profit impact Long 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

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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

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Price equilibrium = when demand and supply are equal

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Price Equilibrium

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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

CUSTOMER RELATIONSHIP MANAGEMENT SYSTEM Identify customer relationships

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Leverage customer information

Understnd interactions with current customer base

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Identify best customers

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Capture customer data based on interaction

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Store and integrate customer data using information technology

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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