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4P's (Place (Important (consumers need easy access to the firms'…
4P's
Place
Channel of distribution: chain of intermediaries a product passes through from producer to final consumer
Important
- consumers need easy access to the firms' product where they can see it, touch it, buy it, return it
- manufacturers need distribution that provides a wide market coverage effectively and efficiently
- uses of internet making it easier for businesses to reach a wide range of consumers
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Direct Channel
- manufacturer to customer
*customer not considered part of the supply chain
Single-Intermediary Channel
- manufacturer to retailer/distributor/agent to a customer *customer not considered part of the supply chain
Two-Intermediary Channel
- manufacturer to wholesaler to retailer to customer
*customer not considered part of the supply chain
Types of intermediaries
- wholesaler
- retailer
- distributor/agent
- specialty channel (telemarketing, e-commerce, vending machines, mail order/direct mail
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Promotion
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Promotional Objectives
- Create awareness or informing consumers of a
new or improved product in the market.
- Convincing or persuading consumer to
purchase a firm’s products.
- Branding consumers of the existence of a product (to retain existing customers or gain new customers)
- Enhancing the brand image of the product
why do promotion?
1) attract new buyers
2) demonstrate the superior quality of product as compared to its competitors - often occurs after a product has been updated
3) create or reinforce the brand image
4) correct misleading reports about the product or the business and reassure consumers after a "scare" or "accident"
5) develop or adapt the public image rather than the product
Promotion Types
Above-the-line : purchasing communication with the consumer AKA advertising.
- visual and auditory promotion
Advertising
- communicating information about a product or business through the media such as radio, TV, newspapers, magazines or billboards
- informative : provide info to potential customers like price, features etc.
- persuasive : trying to create a distinct image or brand identity
which media to use?
1) Cost
- TV and radio can be expensive to purchase and produce
- print media can be less expensive
2) Profile of the target audience
- best media to reach :question:
3) Type of product message to deliver
- written forms are the best for detailed info about a product
4) Link between the marketing mix and advertising media :question:5) Law and barriers
- tobacco, alcohol, adult imagery are banned
Below-the-line : short-term incentives to encourage consumers to purchase the product
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Promotional Mix - combination of promotional techniques that a firm uses to communicate the benefits of its product to customers
1) Viral Marketing - use of social media sites or text messages to increase brand awareness or sell products
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Price
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more about it
1) influences revenue and profit of a business due to impacting demand of product
2) reflects the marketing objectives of the business
3) establishes the psychological image and identify of a product.
factors in determining price
- costs of production
- competitive conditions in the market
- competitors' prices
- marketing objectives
- price elasticity of demand
- whether it is a new or existing product
Pricing Strategies
Cost-Based Pricing (Cost-Plus Pricing)
- firms determine the costs of producing and supplying a product and then ADD money on top of this calculated costs to determine the selling price.
- popular among retailers.
Market-Based Pricing
- based upon the marketing objectives of the company - use in mass marketing.
- introduce product development OR entering market penetration
1) Penetration Pricing
- setting a low price supported by strong promotion in order to achieve high volumes in sales.
- occurs when firms are trying to obtain market share, if success, price can increase later.
2) Market Skimming
- high price for new product with little or no competition
- used to maximise short-term profits until competitors enter the market
- to project an exclusive image
Example: Pharmaceuticals, Techno products
3) Psychological Pricing
- set prices that take advantage of a customer's perception of value of product
- customers may associate a high-price product with a high-quality and vice versa
- set below key price to make it look cheaper eg: $999 instead of $1000
4) Loss Leader
- product sold at very low price to encourage
- commonly done in grocery store
Example: milk, bread or chips sold a very low price - to entice buyers
5) Price Discrimination
- charging different groups of consumers different prices for the same good or services
Example: airline tickets, bus fare, senior citizen discounts, child VS adult prices
6) Promotional Pricing
- special low prices used to gain market share or sell off excess stock - includes "buy 1 get 1 free"
- widely used pricing strategy to stimulate sales for limited periods of time usually during low product demand periods or to promote the opening of new store.
7) Price Leadership
- when one business sets a price for its products and other firms in the market set the same price, they "follow suit"
Examples: Walmart, McDonalds
8) Predatory Pricing
- deliberately setting prices so low that competitors are forced out of the market
- typically illegal in most countries but difficult to prove.
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