March 2nd-6th notes
March 2nd-6th notes MKTG 360
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This 4 page Class Notes was uploaded by Cassidy Reid on Thursday March 5, 2015. The Class Notes belongs to MKTG 360 at Washington State University taught by Dr. Jeff Joireman in Winter2015. Since its upload, it has received 52 views. For similar materials see Principles of Marketing in Marketing at Washington State University.
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Date Created: 03/05/15
Marketing Notes March 15t6th SalesMarket Objectives Goal reach a certain level of sales or market share Pro t Objectives Critical when product is a fad Competitive Effect Goal have an impact on the competition cut into sales preempt introduction of competing product Customer Satisfaction Price transparency Image Enhancement Prestige products priced higher expensive is good Pricing and Placebo MIT Study on quotVeladonequot FDA approved drug used in dental surgery In opiate family similar to codeine Made up pens and brochures Price 10 cents per pill or 250 per pill Effectiveness 85 in expensive condition said it reduced pain 61 in cheap condition said it reduced pain Step 2 Estimate Demand Demand Customer s desires for a product Demand Curves Graphs that show impact of price on demand Normal Products As price decreases demand increases Prestige Products Curvalinear Demand increases as price increases but If price too high demand begins to decline Price Elasticity The percentage change in unit sales that results from a percentage change in price CrossElasticity of Demand When changes in price for one product affect demand for another product If products substitutes an increased for Prod1 will lead to an increased demand for Prod2 o If products complementary an increased for Prod1 will lead to a decreased demand for Prod2 Step 3 Determine Costs Variable Costs Production costs associated with materials parts labor Vary depending on units produced Variable Costs Production costs associated with materials parts labor Vary depending on units produced Fixed Costs Costs that don t change as a function of production Rent executive salaries heating Average xed cost total xed costs units Total Costs Variable Fixed Costs BreakEven Analysis How many units must we produce amp sell at a given price in order to cover our costs No loss no pro ts BreakEven Point BEP When total revenues total costs Above BEP pro t Below BEP loss Step 4 Evaluate Pricing Environment Overall Goal Once costs covered create a competitive advantage Factors to Consider Economy eg reduce prices during recession Competition what are competitors doing Consumer Trends eg bargain hunting Step 5 Choose Pricing Strategy Cost Plus Pricing Add a xed amount to total costs of producing product DemandBased Pricing Adjust price based on expected demand Target Costing Figure out price amp quality of product customer wants Figure out how much it costs to make desired product Evaluate whether you can make a pro t Yield Management Pricing Charge different folks different prices to manage demand and maximize pro ts Step 6 Develop Pricing Tactics Pricing for Individual Products Two Part Pricing Need to pay two times yearly fee plus per use Payment Pricing Breaking overall price into smaller payments Pricing for Multiple Products Price Bundling Put multiple items together in a bundle Captive Pricing Price basic product low and second complementary and necessary product at high pro t margin Psychological Issues in Pricing Internal Reference Price Set price or range of prices consumers think are reasonable PriceQualitylnferences Expensive good OddEven Pricing Odd prices sell more However for certain productsservices eg medical this strategy may convey low quality Price Lining Developing a variety of products at different price points What is a brand Brand elements name logo symbol and slogan Keller 2008 Purpose of a brand Keller 2003 2008 Enhance awareness Form strong favorable and unique brand associations Branding provides a recognition factor that helps products succeed in the marketplace Domestic International Brands can build an emotional connection with consumers RememberThe Gap rebranding debacle Firms can take on various methods when executing a brand strategy Individual Brands Separate and unique brand for each product Some contend this route is more clear and concise due to focused brand strategy for each product Family Brands Also known as an umbrella brand strategy Market multiple products under the same brand name Line Extension Minor variants of a single product are marketed under the same brand name Brand Extension Extensions of the brand name to other product categories as a marketing strategy to increase brand equity The new product is referred to as a spinoff