Transcript Kotler Keller 14

14
Developing Pricing
Strategies and Programs
Marketing Management, 13th ed
Chapter Questions
• How do consumers process and evaluate
prices?
• How should a company set prices initially for
products or services?
• How should a company adapt prices to meet
varying circumstances and opportunities?
• When should a company initiate a price
change?
• How should a company respond to a
competitor’s price challenge?
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14-2
Consumer Psychology
and Pricing
Reference Prices: compare with internal
or external reference price
Price-quality inferences
Price endings; Odd price
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14-3
Table 14.2 Consumer Perceptions vs.
Reality for Cars
Overvalued Brands
• Land Rover
• Kia
• Volkswagen
• Volvo
• Mercedes
Undervalued Brands
• Mercury
• Infiniti
• Buick
• Lincoln
• Chrysler
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Setting the Price
Pricing Procedure
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Select pricing objective
Determine demand
Estimate costs
Analyze competition
Select pricing method
Select final price
• Survival
• Maximize current profits
• Maximize market share
• Penetration strategy
• Market skimming
• Skimming strategy
• Product quality leaders
• Partial cost recovery
To accompany A Framework for Marketing Management, 2nd Edition
Slide 5 in
Setting the Price
Pricing Procedure
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Select pricing objective
Determine demand
Estimate costs
Analyze competition
Select pricing method
Select final price
• Understand factors
that affect price
sensitivity
• Estimate demand
curves
• Understand price
elasticity of demand
• Elasticity
• Inelasticty
To accompany A Framework for Marketing Management, 2nd Edition
Slide 6 in
Marketing Strategies
Conditions Under Which Consumers are
Less Price Sensitive:
• Product is more distinctive
• Buyers are less aware of
substitutes
• Buyers cannot easily compare
quality of substitutes
• The expenditure is small
compared to the total cost
• The product is assumed
to have more quality,
prestige, or exclusiveness
• Buyers cannot store the
product
To accompany A Framework for Marketing Management, 2nd Edition
Slide 7 in
Marketing Strategies
Conditions Under Which Demand
is Less Elastic:
• There are few or
• Buyers are slow to
no substitutes
change their buying
habits and search for
• Buyers do not readily
lower prices
notice the higher price
• Buyers think higher
prices are justified
To accompany A Framework for Marketing Management, 2nd Edition
Slide 8 in
Figure 14.2 Inelastic and
Elastic Demand
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Setting the Price
Pricing Procedure
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Select pricing objective
Determine demand
Estimate costs
Analyze competition
Select pricing method
Select final price
• Types of costs and levels
of production must be
considered
• Accumulated production
leads to cost reduction
via the experience curve
• Differentiated marketing
offers create different
cost levels
To accompany A Framework for Marketing Management, 2nd Edition
Slide 10 in
Setting the Price
• Key Pricing Terms:
• Fixed costs: do not vary directly with
changes in level of production
• Variable costs: vary with production
• Total costs: sum of fixed and variable
costs a given level of production
• Average cost: cost per unit at a given level
of production
To accompany A Framework for Marketing Management, 2nd Edition
Slide 11 in
Setting the Price
Pricing Procedure
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Select pricing objective
Determine demand
Estimate costs
Analyze competition
Select pricing method
Select final price
• Firms must analyze the
competition with respect
to:
• Costs
• Prices
• Possible price reactions
• Pricing decisions are
also influenced by quality
of offering relative to
competition
To accompany A Framework for Marketing Management, 2nd Edition
Slide 12 in
Setting the Price
Pricing Procedure
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Select pricing objective
Determine demand
Estimate costs
Analyze competition
Select pricing method
Select final price
• Price-setting begins with
the three “C’s”
• Select method:
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Markup pricing
Target-return pricing ROI
Perceived-value pricing
Value pricing (EDLP) High
or low change daily
• Going-rate pricing
according to competitors
prices higher or lower
• Auction-type pricing
• Group pricing
To accompany A Framework for Marketing Management, 2nd Edition
Slide 13 in
Setting the Price
Pricing Procedure
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Select pricing objective
Determine demand
Estimate costs
Analyze competition
Select pricing method
Select final price
• Requires consideration
of additional factors:
• Psychological pricing
• Gain-and-risk-sharing
pricing
• Influence of other
marketing mix variables
• Company pricing policies
To accompany A Framework for Marketing Management, 2nd Edition
Slide 14 in
Chapter 13
Auction-Type Pricing
• English auctions; put up an item bidder
rise price
• Dutch auctions; auctioneer announce a
high price for a product and slowly
decrease price
• Sealed-bid auctions
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Price-Adaptation Strategies
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Geographical pricing
Discounts/allowances
Promotional pricing
Differentiated pricing
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Price-Adaptation Strategies
Countertrade
• Barter
• Compensation deal
• Buyback
arrangement
• Offset: full cash but
agree to spend
apart of this cash to
buy certain product
Discounts/ Allowances
• Cash discount
• Quantity discount
• Functional discount
• Seasonal discount
• Allowance
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Promotional Pricing Tactics
• Loss-leader pricing; decrease leader
price
• Special-event pricing
• Cash rebates;
• Low-interest financing: Automobile
• Longer payment terms
• Warranties and service contracts
• Psychological discounting
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Differentiated Pricing
• Customer-segment pricing
• Product-form pricing: size ,volume price
• Image pricing: perfume different bottle and
names
• Channel pricing: coca ,restaurant, shops
• Location pricing:
• Time pricing: Seasons
• Yield pricing: Airline tickets early
purchased
Copyright
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Brand Leader Responses to
Competitive Price Cuts
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Maintain price
Maintain price and add value
Reduce price
Increase price and improve quality
Launch a low-price fighter line
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14-20
15
Designing and Managing
Integrated
Marketing Channels
Marketing Management, 13th ed
Chapter Questions
• What is a marketing channel system and
value network?
• What work do marketing channels perform?
• How should channels be designed?
• What decisions do companies face in
managing their channels?
• How should companies integrate channels
and manage channel conflict?
• What are the key issues with e-commerce?
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What is a Marketing Channel?
A marketing channel system is the
particular set of interdependent
organizations involved in the process of
making a product or service available
for use or consumption.
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Channels and
Marketing Decisions
• A push strategy uses the manufacturer’s
sales force, trade promotion money, and
other means to induce intermediaries to
carry, promote, and sell the product to end
users
• A pull strategy uses advertising, promotion,
and other forms of communication to
persuade consumers to demand the product
from intermediaries
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Categories of Buyers
• Habitual shoppers; buy from the same
place
• High value deal seekers; they seek the
lower price
• Variety-loving shoppers; evaluate the
values added by channels and buy
from the best one whatever price
• High-involvement shoppers; looking for
good price and a good supports
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Types of Shoppers
• Service/quality customers seeking quality
and services
• Price/value customers: wisely spending
money wisely
• Affinity customers; who sought stores
which is suited to them
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Channel Member Functions
• Gather information
• Develop and disseminate persuasive
communications
• Reach agreements on price and terms
• Acquire funds to finance inventories
• Assume risks
• Provide for storage
• Provide for buyers’ payment of their bills
• Oversee actual transfer of ownership
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Figure 15.2 Marketing Channel Flows
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Figure 15.3
Consumer Marketing Channels
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Figure 15.3
Industrial Marketing Channels
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Designing a
Marketing Channel System
• Analyze customer needs; lot size,
delivery time ,product variety and
services
• Establish channel objectives: types of
product
• Identify major channel alternatives:
levels
• Evaluate major channel alternatives;
economic criteria and control criteria
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Identifying Channel Alternatives
• Types of intermediaries
• Number of intermediaries
• Terms and responsibilities
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Number of Intermediaries
• Exclusive
• Selective
• Intensive
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Channel-Management Decisions
• Selecting channel members: its characteristics
• Training channel members &Motivating
channel members
• Evaluating channel members
• Modifying channel members : periodically
review and modify its channel design
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Channel Power
• Coercive : Threaten
• Reward: offer incentives
• Legitimate: implement the clues of
contract
• Expert
• Referent : Image of manufacturer
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Channel Integration and Systems
Conventional marketing channel
Vertical marketing systems
• Corporate VMS: manufacturer owned
distributor
• Administered VMS: who has more power
• Contractual VMS: Independent firms
working together in contractual basis
Horizontal marketing systems
Multichannel systems
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What is Channel Conflict?
• Channel conflict occurs when one
member’s actions prevent another
channel from achieving its goal.
• Types of channel conflict
• Vertical: between wholesaler and retailer
• Horizontal: Retailer and retailer
• Multichannel
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Causes of Channel Conflict
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Goal incompatibility: on pricing
Unclear roles and rights:
Differences in perception
Intermediaries’ dependence on
manufacturer
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Table 15.3 Strategies for Managing
Channel Conflict
• Adoption of
superordinate goals
• Exchange of
employees
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Cooptation
Diplomacy
Mediation
Arbitration
Legal recourse
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17
Designing and Managing
Integrated Marketing
Communications
Marketing Management, 13th ed
Chapter Questions
• What is the role of marketing
communications?
• How do marketing communications work?
• What are the major steps in developing
effective communications?
• What is the communications mix and how
should it be set?
• What is an integrated marketing
communications program?
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What are
Marketing Communications?
Marketing communications are the
means by which firms attempt to
inform, persuade, and remind
consumers, directly or indirectly, about
the products and brands they sell.
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Modes of Marketing Communications
• Advertising
• Sales promotion
• Events and
experiences
• Public relations and
publicity
• Direct marketing
• Interactive
marketing
• Word-of-mouth
marketing
• Personal selling
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Table 17.1 Communication Platforms
Advertising
• Print and broadcast ads
• Packaging inserts
• Motion pictures
• Brochures and booklets
• Posters
• Billboards
• POP displays
• Logos
• Videotapes
Sales Promotion
• Contests, games,
sweepstakes
• Premiums
• Sampling
• Trade shows, exhibits
• Coupons
• Rebates
• Entertainment
• Continuity programs
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Table 17.1 Communication Platforms
Events/ Experiences
Public Relations
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Sports
Entertainment
Festivals
Factory tours
Street activities
Speeches
Seminars
Annual reports
Charitable donations
Publications
Community relations
Lobbying
Company magazine
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Table 17.1 Communication Platforms
Personal Selling
Direct Marketing
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Sales presentations
Sales meetings
Incentive programs
Samples
Fairs and trade shows
Catalogs
Mailings
Telemarketing
Electronic shopping
TV shopping
Fax mail
E-mail
Voice mail
Websites
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Word-of-Mouth Marketing
• Person-to-person
• Chat rooms
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Figure17.2 Elements in the
Communications Process
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Figure 17.3
Response Hierarchy Models
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Steps in Developing Effective
Communications
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Identify target audience
Determine objectives
Design communications
Select channels
Establish budget
Decide on media mix
Measure results/manage IMC
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Communications Objectives
• Category need: electric care
• Brand awareness : increase the
awareness to buy again
• Brand attitude : removing problem
cleaning products
• Purchase intention: offers
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Designing the Communications
• Message strategy: Appeal them or idea helps in
positioning product
• Creative strategy: the way that marketer
translate their massages into specific
communication
a. Informal Appeal : focused into the attributes
and benefits of products
b. Transformational Appeal: focus on the kind of
person use products
• Message source: Celebrities
• Global adaptation
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Issues Facing Global Adaptations
• Is the product restricted in some
countries? Beer
• Are there restrictions on advertising the
product to a specific target market?
toys
• Can comparative ads be used?
• Can the same advertising be used in all
country markets?
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Select Communication Channels
• Personal channels
• Nonpersonal channels
• Integration of channels
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Personal
Communications Channels
• Advocate channels: sales people
• Expert channels: independent expert
• Social channels: friends family members
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Nonpersonal
Communication Channels
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Media
Sales promotion
Events and experiences
Public relations
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Establish the Budget
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Affordable
Percentage-of-sales
Competitive parity
Objective-and-task
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Characteristics of
the Marketing Communications Mix
Advertising
• Pervasiveness
• Amplified
expressiveness
• Impersonality
Sales Promotion
• Communication
• Incentive
• Invitation
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Characteristics of
the Marketing Communications Mix
Public Relations
and Publicity
• High credibility
• Ability to catch
buyers off guard
• Dramatization
Events and
Experiences
• Relevant
• Involving
• Implicit
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Characteristics of
the Marketing Communications Mix
Direct Marketing
• Customized
• Up-to-date
• Interactive
Personal Selling
• Personal interaction
• Cultivation
• Response
Word-of-Mouth Marketing
• Credible
• Personal
• Timely
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Factors in Setting
Communications Mix
• Type of product market
• Buyer readiness stage
• Product life cycle stage
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