Principles of Marketing – Undergraduate Marketing Course – Demand, Pricing, BCG Matrix, SWOT, Break-Even, Promotions

Class 12 Review – Pricing Fundamentals June 22, 2006

Price is the money or other considerations exchanged for the ownership or use of a good or service.
Value = Perceived Benefits / Price;

Setting the Price:

• STEP 1: Identify Pricing Objectives and Constraints
• STEP 2: Estimate Demand and Revenue
• STEP 3: Choose Pricing Strategy.

Pricing Objectives:

• Market Share
• Sales
• Profit
• Volume
• Survival
• Social Responsibility

Pricing in Competitive Markets:

Law of Demand: all other factors being the same, higher prices will lead to lower quantities being demanded.

Price Elasticity of Demand(e) = % change in Quantity Demanded / % change in Price.
Break Even Point: Point of zero profits, i.e., TR = TC.
BEP Quantity: F/[P - UVC]

Click here to download the Excel Worksheet we discussed in class.

Class 11 Review – Branding and Services June 22, 2006

"Brand" – is a name, symbol or sign that identifies a product and differentiates it from the competition.

Brand Equity: the added value a given brand name gives to a product beyond the functional benefits provided.

Building Brand Equity: Brand Salience -> Brand Performance, Imagery -> Consumer judgements, feeling -> Consumer Brand Resonance.

4 Brand Development Strategies:

1. New Brands
2. Multibranding.
3. Brand Extension Strategy
4. Line Extension Strategy.

Managing Services:
4 I's of Services:

• Intangibility
• Inconsistency
• Inseparability
• Inventory

Classifying Services:
Equipment-Based.
People-Based.

Dimensions of Service Quality:

• Reliability
• Tangibles
• Responsiveness
• Assurance
• Empathy

Class 10 Review – Managing Products June 20, 2006

Product Life Cycle: Shows how the sales of a product evolves over time from launch till product is withdrawn from market.

4 Stages in the product lifecycle:

Why is the product life cycle related to the diffusion of innovations?

4 Adopter categories:

• Innovators
• Early Adopters
• Late Adopters
• Laggards

Managing PLC:
Product Modification: changing product characteristics to boost sales (new color, flavor, product variant, etc)
Market Modification:

• Finding New Users (e.g. Sony launching video games for Under 13 age group)
• Increasing Use (e.g. Crest advertising to brush twice daily, increase consumption)
• Finding New Use situations (e.g. Arm & Hammer baking soda, used to deodorize refrigerators)

Product Repositioning: changing the place a product occupies in a consumer’s mind relative to competitors (perceptual map)

Repositioning Strategies

• Reacting to competitor Positioning
• Reaching a New Market
• Catching a rising trend
• Changing the value offered.

• Trading Up
• Trading Down – Downsizing

Class 9 Review – New Product Development June 20, 2006

Product is a good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers and is received in exchange for money or some other unit of value.

Product Levels:

• Core Product – core benefit
• Actual Product – core product + brand, packaging, features, styling, quality
• Augumented Product – actual product + delivery, financing, after-sales service, warranty.

Product Hierarchies:
Product Mix – number of product lines offered by a firm
Product Line – A product line is a group of products or services that satisfy a class of needs, are used together, are sold to the same customer group, are distributed through the same type of outlets, or fall within a given price range.

Types of Products: Durales, Non-durables and Services
Types of Consumer goods:

• Convenience – frequent; minimum effort
• Shopping – Compare several alternatives
• Specialty – special effort to find and buy
• Unsought – does not know or initially want

7 Stages in NPD process:

Why New products fail?

• Insignificant “point of difference”
• Incomplete initial market and product definition
• Too little market attractiveness
• Poor execution of the marketing mix
• Poor product quality
• Bad timing
• Expensive access to buyers

Test Market – a small market representative of US demographic pattern used to launch new products for trial.
Commericialization – what difficulties will be encountered?

Class 8 Review – Targeting and Positioning June 20, 2006

Targeting - identifying which market segments offer the best market-product fit.

4 Targeting Strategies:

1. Undifferentiated (Mass marketing) – one product targeted at all segments.
2. Concentrated (Niche Marketing) – one product targeted at one segment.
3. Differentitated – Multiple products targeted at multiple segments
4. Customized (1-to-1 Marketing) – customized product for each customer.

Criteria to use in choosing target segments:

• market size,
• expected growth,
• competitive position,
• cost of reaching the segment,
• compatibility with the organization’s objectives and resources.

Positioning – is the act of designing the company’s offering and image to occupy a distinctive place in the mind of the target market.
2 Positioning Strategies:

1. Head-to-Head Positioning
2. Differentiated Positioning

Perceptual Map – a means of displaying via two dimensions the location products or brands occupy in the minds of consumers.

 Perceptual mapping is most often used tool to position/reposition the product relative to competitors

Class 7 Review – Segmentation June 6, 2006

Market Segmentation involves aggregating prospective buyers into groups that have two key characteristics.

• have common needs and
• respond similarly to a marketing action.

5 Step Segmentation Process:

Two ways to segment Markets:

• Based on Customer Characteristics – Geographic, Demographic, Psychographic variables
• Based on Buying Situations – Usage, Benefits Sought, Frequency.

Market Product Grid:

• Marketing Synergies run horizontally across for each market segment.
• Product Synergies run vertically down for each product.

Class 6 Review – Global Markets June 1, 2006

International Trade – Why is it important?
What is GDP? – monetary value of all goods and services produced in a country per year.
Barriers to World Trade:

• Protectionism

• Tariffs – Increase price
• Quotas – Limit Supply

Breaking barriers – Free Trade Agreements – NAFTA, EU, Asian Free Trade Agreement.
Global Marketing Strategy:

• International Firms
• Multinational Firms
• Translational Firms

Adapting Marketing Strategy:

• Product Emphasis
• Promotion Emphasis

Other factors: Cultural, Economic, Values, Customs.