13.planning the marketing mix

7/30/2019 13.Planning the Marketing Mix

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Planning theMarketing Mix


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A Good Marketing Plan

Looks at the Big Picture

Leads to Changes

Estimate Production & Profit Risks

Anticipates the Reactions ofCompetitors

Looks at a Longer Time Horizon

Meet Your Business and Family Goals A Written Plan


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Products

PricePlace

Promotion

TargetMarket

Marketing is finding, developing, and

profiting from opportunities

Your target markets will determine your production and

marketing practices, Not vise versa.


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Setting Pricing Policy

1. Selecting the pricingobjective

2. Determining demand

3. Estimating costs

4. Analyzing competitorscosts, prices, and offers

5. Selecting a pricingmethod

6. Selecting final price


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Quantitative:gross margin/mark-up

Qualitative:unique value, no close

substitutes, difficult to compare.

Relative to competitors

Select Pricing Strategies

First Step is to Know Your Costs!


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Types of Costs

Total CostsSum of the Fixed and Variable Costs for a Given

Level of Production

Fixed Costs(Overhead)

Costs that dontvary with sales or

production levels.

Executive SalariesRent

Variable Costs

Costs that do varydirectly with the

level of production.

Raw materials


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Select Pricing Strategies

Price Making vs Price Taking


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The Three Cs Model

for Price Setting

Costs Competitorsprices andprices ofsubstitutes

Customersassessmentof uniqueproductfeatures

Low Price

No possibleprofit at

this price

High Price

No possibledemand atthis price


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Some important pricing dimensions

Utility: The attribute that makes itcapable of want satisfaction

Value: The worth in terms of other

products

Price: The monetary medium of exchange.


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Pricing Methods

Markup Pricing

Target Return Pricing

Perceived Value Pricing Value Pricing (demand)

Going-Rate Pricing

Sealed-Bid Pricing


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Promotional Pricing

Loss-leader pricing

Special-event pricing

Cash rebates Low-interest financing

Longer payment terms

Warranties & service contracts

Psychological discounting


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Psychological Pricing

Most Attractive?

Better Value? Psychological

reason to price this

way?

A

32 oz.

$2.19

B26 oz.

$1.99Assume Equal Quality


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Wholesale channels through a wholesaler

through a retailer

marketing cooperatives

Direct-to-consumer channels Home-based shopping: e-commerce, mail order

Store-based shopping

Select Place/Distribution Strategies

Customers, Customers, Customers!

Location, Location, Location?


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Five Promotion Tools

1. Advertising

2. Sales Promotion Activities3. Public Relations

4. Sales Force

5. Direct Marketing

Selecting Promotion Strategies


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Most effective when trying to reach largeamount of people to build awareness

Most effective when narrowly targeted

Select a media

will reach the target audience

is appropriate for the message conveyed

Does not increase sales quickly - Changes

minds but does not change behavior.

Advertising


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Coupons, discounts, in-store displays, trade

shows, samples, in-store demonstrations, contests,

and sponsoring retailers.

Motivate consumers to change behaviors

Overused?Weaken brand loyalty

To supplement efforts in the advertising and personal

selling. Most sales promotion lost money - except a superior

product paired with low awareness

Sales Promotion


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Publicity (or public relation) uses non-paidcommunication presented by the media.

Publications, Events, News, Community

involvement, Identity media, Lobbyingactivity, Social responsibility

A broad effort to influence publics

attitudestoward the firm or its products.

Create an image

Public Relations


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Sales Force

Direct Marketing

Most expenses (30% of time is spending on selling)

One on one selling can effectively find what customer

really want

Evaluate the costs to sale ratio

Hire good sales people, help them do a better job

Retail stores, direct selling, direct mailing, internet

Data -base marketing

Product demonstration


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Who is the target?

The role of promotion

$ Provide product information

$Stimulate demand

$ Differentiate products and/or build a brand image

$ Remind current customers about product benefits

$ Counter competitors

$Respond to the news

$ Smooth out seasonal demand fluctuation

Multi-media approach

Which promotion strategy to use?


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Implementing Phase

Determine Objectives

Measurable, quantifiable, and realistic Budgeting

Percentage of sales approach

Match the competitor approach

Task or objective approach

Action Plan:

Who is responsible?

What tasks are they responsible for?

When the tasks are to be completed?

DO IT!


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The Control Phase

Set Performance Targets

Monitor progress

Evaluate key indicators

Sales by weekly/monthly

Cost on key items Orders and profit at key times of the year

Consumer feedback

Marketing plan can be modified. It is an

ongoing process.


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Activity 1

13.planning the marketing mix

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