Sales –Related marketing Policies

Product policies – what to sellProduct line policyChanges in product offeringsReappraising the product line and

line simplificationReappraising the product line and

line diversificationIdeas for new productAppraisal of proposed new

products

Product line policy Under product line pricing, a seller offers

merchandise at a limited number of prices rather than having individual prices for each item.

For instance, a boutique might offer lines of women's sportswear priced at 1200, 1500, and 2000.

Product line pricing is a common marketing practice among retailers.

As a pricing strategy, product line pricing prevents the confusion common in situations where all items are priced individually.

It makes the pricing function easier. But marketers must clearly identify the market segments to which they are appealing.

Product line policy cont’dA disadvantage of product line pricing is that

it is sometimes difficult to alter the price ranges once they have been set.

If costs go up, the firm must either raise the price of the line or reduce its quality.

Consumers may resist these alternatives.While product line pricing can be useful, its

implementation must be considered carefully.

Changes in product offerings

Reappraising the product line and line simplificationHow much is used?What is it used for?When is it used?Where is it used?Most critical factor : Profitability

Reappraising the product line and line diversificationSome firms diversify to surviveTo expand salesTo reduce costsAny shift in consumer’s buying patterns may

signal the need for line diversification

Ideas for new products Both internal and external sources generate new ideas Sales department Production department Research and development department

Ex: cool cats – decorated ceiling fans, nestle chocolates, cibaca lime toothpaste

Appraisal of proposed new productsWill this item add to profitability?Nature and size of marketsCompetitionPrice policy sales programsLegal implications

Product design policy The frequency of design change The extent to which designs should be protected

from copying Product design is the process of creating a new

product to be sold by a business to its customers. In a systematic approach, product designers

conceptualize and evaluate ideas, turning them into tangible inventions and products.

The product designer's role is to combine art, science, and technology to create new products that other people can use. Their evolving role has been facilitated by digital tools that now allow designers to communicate, visualize, analyze and actually produce tangible ideas in a way that would have taken greater manpower in the past.

Product Quality and service policy Quality is defined as fitness for purpose. Quality is a perceptual, conditional and somewhat

subjective attribute and may be understood differently by different people.

Consumers may focus on the specification quality of a product/service, or how it compares to competitors in the marketplace.

Producers might measure the conformance quality, or degree to which the product/service was produced correctly.

Support personnel may measure quality in the degree that a product is reliable, maintainable, or sustainable.

Simply put, a quality item (an item that has quality) has the ability to perform satisfactorily in service and is suitable for its intended purpose.

Guarantee policy

Distribution policies – who to sellPolicies on marketing channels

◦ A marketing channel consists of individuals and firms involved in the process of making a product or service available for consumption or use by consumers and industrial users.

Sales volume potential◦ For each channel option, the key question

is: Can enough potential buyers be reached to absorb the desired quantity of products?

Comparative distribution costsNet profit possibilities

Policies on distribution intensityMass distribution

◦ Company aims for maximum sales exposure by securing distribution through all possible outlets

◦ Ex: FMCG productsSelective distribution

◦ Selecting only those outlets that can best serve the manufacturer’s interests

◦ Ex: electronic appliancesExclusive agency distribution

◦ Ex: musical instruments, high-end clothing line

Pricing policiesPolicy on pricing relative to the

competition◦ Meeting the competition◦ Pricing above the competition◦ Pricing under the competition

Policy on pricing relative to costs◦ Full-cost pricing

No sale is made at price lower that covering total costs

◦ Promotion pricing◦ Contribution pricing

Pricing at any level above the relevant incremental costs

Policy on uniformity of pricesA one-price policyA variable- price policy

Policy on list pricingPrinting the price on the packageRequiring sales personnel to suggest the

resale price to buyers

Policy on DiscountsTrade discounts

◦ Different prices offered to each class of customers

Quantity discounts◦ Price reductions granted for purchases in a stated

quantity

Geographical pricing policiesF.O.B pricing

◦ The customers pays the freight

Delivered pricing◦ Seller pays the freight

Competitive bidding policy

Pure competition◦ No single buyer or seller is large enough to the

market that it can single handedly control total demand or supply

Monopolistic competitionOligopolistic competition

◦ Competitive setting where the number of competitors is small enough that they are individually identified and known to each other and it is difficult for new competitors to enter the market.

Product market analysis