Complete Marketing Report
Complete Marketing Report
Complete Marketing Report
These pricing approaches are the simplest one in which the cost of product or service is added with a
certain proportion of markup as profit to ascertain a certain price. Examples include construction
businesses that estimate the cost of any project and submit their bid by adding a certain portion of
profit to their estimated cost. Moreover Accountants, Lawyers and other professionals charge a price of
their services by adding the cost of work with a certain proportion of markup.
Markup pricing is not regarded as an effective pricing model as it ignores both demand and the pricing
of competitors. Therefore, it is almost impossible for a business to keep its price as best one by adopting
this category of pricing. But still Cost based pricing is popular due to the following reasons.
It makes pricing simpler so the marketers do not change the price of their product or service with the
changing demand.
When the majority of businesses in the market adopt this pricing model, there would be minimum price
competition due to similarity in prices.
Generally cost based pricing looks fairer for both buyers and sellers as buyers are not exploited under
condition of higher demand and also the seller can earn a reasonable profit in such pricing.
These pricing approaches is extensively applied by many organizations in which the perceived value of
buyer is regarded as a base for Setting Price for a product or service. In this pricing model the value of
product or service is perceived by customers that give the guideline for the price of that product or
service. In other words the price is not set after the production of product, but before the production.
This means that the organization considers the customers along with their perception about certain
product or service. On this basis, the business sets a certain price and then starts manufacturing that
product. The expected value and price provide guideline for the cost and design of the product so that it
can match the perceptions of the customers.
It is difficult for a business organization to ascertain the different perceived value by the customers on
different products. For this purpose these organizations conduct surveys and experiments. If a business
keeps the price of its product higher than the perceived value of customers, then its sales are affected.
On the other hand, if a business keeps its product’s price lower, then maybe its sales increase, but the
profit does not increase accordingly. Therefore, those organizations, which want to adopt this value-
based pricing strategy, should keep the price of their products in accordance with their perceived value
by customers. But more effective strategy is that the businesses should try to deliver more value to the
customers than they perceived in order to retain them as loyal customers.
In this pricing model, businesses keep the price of their products or services on the basis of the prices of
their competitors. Also, customers in the market perceived value to any product or service in relation to
prices of similar products of competitors. So there is some sort of going rate pricing in which the prices
of products are altered according to changes in the prices of competitors. For example, steel or fertilizer
manufacturing businesses face oligopolistic competition in which they charge almost similar prices in the
market same like the competitors. There is a market leader whose price is followed by all other smaller
competitors. When the price of market leader is changed, other competitors in the market also adjust
their prices accordingly. Some smaller business may keep a slight difference in their price as compared
to the market leader, but this slight difference remains constant in different conditions.
There is one big advantage of adopting this ongoing rate of competition based pricing, which is the
prevention of price wars in the market among competitors.
Another form of competition, pricing model is sealed bid pricing in which the price of a job is raised by
keeping in view the prices set by competitors. In this case the pricing also ignores the cost and demand
factor, but the businesses try to keep their prices little higher than their cost in order to earn a revenue.
Pricing is not confined to only above categories rather there are other factors that affect the pricing
decision like environmental etc.
GROUP 2
DISTRIBUTION CHANNEL
Distribution Channel
Direct form
Indirect form
BREAKING DOWN!
Distribution channels can be short or long and depend on the amount of intermediaries
required to deliver a product or service.
However, goods and services sometimes pass to consumers through multiple channels —
a combination of short and long.
Retailer Consumer
Consumer
EXAMPLES:
First Channel
The wine and adult beverage industry. In this industry, thanks to laws born out of
prohibition, a winery cannot sell directly to a retailer. It operates in the three-tier system,
meaning law requires the winery to first sell its product to a wholesaler who then sells to a
retailer. The retailer the sells the product to the end consumer.
Second Channel
Dell, for example, is large to sell its products directly to reputable retailers such as Best
Buy.
Third Channel
Amazon -using its own platform to sell Kindles to its customers, is an example of a direct
model.
GROUP 3: The Difference of Advertising and Sales Promotion
Members:
Castañares Fadrilan
Chua Poblete
Condez Rolle
PERSONAL SELLING
Personal selling is where businesses use people (the "sales force") to sell the product
after meeting face-to-face with the customer.
The sellers promote the product through their attitude, appearance and specialist
product knowledge. They aim to inform and encourage the customer to buy, or at least
trial the product.
A good example of personal selling is found in department stores on the perfume and
cosmetic counters. A customer can get advice on how to apply the product and can try
different products. Products with relatively high prices, or with complex features, are
often sold using personal selling. Great examples include cars, office equipment (e.g.
photocopiers) and many products that are sold by businesses to other industrial
customers.
PROMOTION
- Keeps the product in the mind of the customer and helps stimulate demand for the
product. Promotion involves on going advertising and publicity. Advertising, sales,
public relation are the on going activities that are considered in the aspect of promotion.
The target of promotion is to persuade its audience.
- It has five elements and these are;
1. Advertising
2. Public relation/Publicity
3. Sale Promotion
4. Direct Marketing
5. Personal Selling
ADVERTISING
- Advertising is bringing product or service to the potential current customers. It only focus
on one particular product or service.
- It is typically done with signs, brochures, commercials, direct mailings, etc..
PUBLIC RELATION/PUBLICITY
DIRECT MARKETING
- Direct marketing is a type of advertising that uses variety of media as a channel to give
information about the company’s products or services, such as cellphones, email,
websites, online advertisement and they use it as a communication to their potential
customers.
- Form of advertising in which companies provide physical marketing materials to
consumers to communicate information about products or services.
PERSONAL SELLING
Direct Marketing
Form of advertising in which companies provide physical
marketing materials to consumers to communicate
information about a product or service.