PROJECT Of

PRINCIPLES OF MARKETING

Submitted To:

Prof. ZIA-UR-REHMAN

Project On:

MINERAL WATER

Submitted By:

SALMA BASHIR 126

SANA KHALID 127

NASIBA WARIS 139

SABA KHURSHED 1541

SAMEERA 1542

SOBIA AKHLAQ 1548

KIRAN ZAHRA 1550

Section: “C” (Morning)

Semester 6th

ACKNOWLEDGEMENTWe are grateful to Allah almighty, for enabling us to fulfill this tiring,

but interesting job for the completion of our project. We would not be

going to do justice in presenting our work without mentioning the

people around us who have been inextricably related with the

completion of this task.

We would like to express our heartfelt thanks to our course instructor

Prof. Zia-ur-Rehman for his support and guidance, which he rendered

through out the study. It could not have been possible to accomplish

this without his thoughtful guidance and expertise.

Finally, for any all too fallible errors, omissions and shortcomings in the

writing of the report only we are responsible for which we hope that all

concerning regards of this report will forgive us.

NILE, It’s NatureSafe drinking water is critical - Whether you are canoeing on

your favorite lake, trekking through South East Asia or in an area that

has been hard hit by flooding or water treatment failure... Don't take

chances with water as that is what we are made of & is what sustains

us.

NILE ,its Nature: The leader in Mineral water"

Katadyn Water Filters are dependable, reliable, and durable. For the

First time in Pakistan Specifically in Punjab LAHORE, NILE , its

Nature water filters that rely on by militaries, missionaries,

hikers, explorers, disaster relief organizations and professionals

worldwide for safe and dependable drinking water.

Water

is a common chemical substance that is essential for the survival of all

known forms of life. In typical usage, water refers only to its liquid form

or state, but the substance also has a solid state, ice, and a gaseous

state, water vapor. About 1.460 petatonnes (Pt) of water covers 71% of

the

Earth's surface, mostly in oceans and other large water bodies, with

1.6% of water below ground in aquifers and 0.001% in the air as vapor,

clouds (formed of solid and liquid water particles suspended in air),

and precipitation.[1] Saltwater oceans hold 97% of surface water,

glaciers and polar ice caps 2.4%, and other land surface water such as

rivers, lakes and ponds 0.6%. IN ANOTHER WORDS "WATER IS

LIFE"

The name of our product relates itself with nature as NILE is the name

of a famous and beautiful river. And as the word NILE comes in mind,

everybody feels the sense of purity and care. Something desirable and

comes under the basic need of everyone’s life.

MARKET RESEARCHarket Research is a most valuable tool for all businesses. It’s the process of gathering information to help in making informed

decisions about the marketing of business. Statistics and other market research data help us in understand potential customers and their needs, as well as what competitors are doing.

M

Market research is the process of systematically gathering, recording and analyzing data and information about customers, competitors and the market. Market research can be used to determine which portion of the population will purchase a product/service, based on variables like age, gender, location and income level.

A list of questions that can be answered through market research:

What is happening in the market? What are the trends? Who are the competitors?

How do consumers talk about the products in the market?

Which needs are important? Are the needs being met by current products?

Market research for business planning

We have to carry out market research for discovering what people want, need, or believe. It also involves discovering how they act. Once that research is complete it can be used to determine how to market

our specific product, NILE, its nature.

Market Research - The Process

Market research, like other components of marketing such as advertising, can be quite simple or very complex. We might conduct simple market research such as including a questionnaire in our customer bills to gather demographic information about our customers. On the more complex side, we

might engage a professional market research firm to conduct primary research to aid in developing a marketing strategy to launch a new product.

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We'll benefit by reviewing the following seven steps in the market research process.

Step One: Define Marketing Problems and Opportunities

The market research process begins with identifying and defining the problems and opportunities that exist for our business, such as:

Launching a new product or service Low awareness of company and its products

or services Low utilization of company's products or services. A poor

company image and reputation

Step Two: Set Objectives, Budget, and Timetables Objective

With a marketing problem or opportunity defined, the next step is to set objectives for market research operations. Objective might be to explore the nature of a problem so may further define it, or perhaps it is to determine how many people will buy product packaged in a certain way and offered at a certain price. Objective might even be to test possible cause and effect relationships. For example, if we lower our price by 10 percent, what increased sales volume should we expect? What impact will this strategy have on our profit?

Budget

How much money are we willing to invest in our market research? How much can we afford? Market research budget is a portion of overall marketing budget. A method popular with small business owners to establish a

marketing budget is to allocate a small percentage of gross sales for the most recent year.

This usually amounts to about two percent for an existing business. However, if we are planning on launching a new product or business,

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we may want to increase our budget figure to as much as 10 percent of our expected gross sales. Other methods used by small businesses include analyzing and estimating the competition's budget and calculating our cost of marketing per sale.

Time tables

We prepare a detailed, realistic time frame to complete all steps of the market research process. If business operates in cycles, establish target dates that will allow the best accessibility to our market. For example, a holiday greeting card business may want to conduct research before or around the holiday season buying period, when their customers are most likely to be thinking about their purchases.

Step Three: Select Research Types, Methods, and Techniques

There are two types of research: primary research or original information gathered for a specific purpose and secondary research or information that already exists somewhere. Both types of research have a number of activities and methods of conducting associated with them. Secondary research is usually faster and less expensive to obtain that primary research. Gathering secondary research may be as simple as making a trip to local library or business information center or browsing the Internet.

Step Four: Design Research Instruments

The most common research instrument is the questionnaire. Keep these tips in mind when designing market research questionnaire.

Keep it simple. Include instructions for answering all questions included on the survey.

Begin the survey with general questions and move towards more specific questions. Keep each question brief.

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If the questionnaire is completed by the respondent and not by an interviewer or survey staff member, remember to design a questionnaire that is graphically pleasing and easy to read.

Remember to pre-test the questionnaire. Before taking the survey to the printer, ask a few people such as regular customers, colleagues, friends, or employees to complete the survey. Ask them for feedback on the survey's style, simplicity and their perception of its purpose.

Mix the form of the questions. Use scales, rankings, open-ended questions, and closed-ended questions for different sections of the questionnaire. The form or way a question is asked may influence the answer given. Basically, there are two question forms: closed-end questions and open-end questions.

Close-end questions - Respondents choose from possible answers included on the questionnaire.

Open-end questions - Respondents answer questions in their own words. Completely unstructured questions allow respondents to answer any way they choose.

Step Five: Collect Data

To help to obtain clear, unbiased and reliable results, collect the data under the direction of experienced researchers. Before beginning the collection of data, it is important to train, educate, and supervise research staff. An untrained staff person conducting primary research will lead to interviewer bias.

Step Six: Organize and Analyze the Data

Once our data has been collected, it needs to be cleaned. Cleaning research data involves editing, coding, and tabulating results. To make this step easier, start with a simply designed research instrument or questionnaire.

Step Seven: Present and Use Market Research Findings

Once marketing information about target market, competition and environment is collected and analyzed, present it in an organized manner to the decision makers of the business. Assess Available Information assess the information that is immediately available. It may be that current knowledge supports one or more hypotheses, and

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solutions to the problem may become obvious through the process of defining it. Weigh the cost of gathering more information against its potential usefulness. 

As for our new staple convenient consumer good, NILE, its nature is concerned; the mineral water market is far more complex than is often recognized, though the product itself is simple. It is seen that there is a difference in quality and purpose between the most popular and other brands. Yet the market is divided into a number of segments.The key to successful marketing is a solid understanding of the environment in which business operates: position in the market place, products and services, competition, and customers. Here's where market research comes in.

In order to begin market research, we have examined three main questions:

Who are our potential customers?

Who are our competitors?

What is the state of our industry?

Planning for Marketing Research

It consists of several steps that should be carried out in order.  Each step is discussed in detail:

Step 1: Determine the Research PurposeThe first step in conducting research is to examine the reasons why research is being undertaken.  Determining the research purpose sets the stage for the rest of the research plan because it lets everyone (e.g., researcher, client, outside firms) with a stake in the outcome of the research know the general philosophy of the project and also establishes the urgency of the research.

Marketers use research to support decisions in five important ways: explanation, prediction, monitoring, discovery and hypothesis testing.  Thus, the purpose for research falls into one of these categories.

Explanation

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Possibly the most cited reason for conducting research is to use it to explain why something is occurring.  Most often this means identifying and explaining a problem facing the marketing organization.  For example, marketers may seek to know why sales in a certain geographic region are declining when it was forecasted to rise. Prediction

Research is used to help assess a situation and predict what may happen in the future.  This type of information is critical in many marketing decisions such as forecasting demand for a new product.  It is also used to predict what may happen if something is changed such as a key marketing variable decision (e.g., effect on sales if price is changed).

Monitoring

Many decisions made by marketers must be monitored to insure that goals are being attained.  A sales manger, for instance, will look to monitoring research in order to track the performance of the sales force in meeting sales targets.

Discovery

Most marketers are continually on the look out for ways to improve their marketing efforts.  Improvements may include such things as new product options, ways to increase sales or decrease costs, promotional approaches that improve the company’s image and many more.  Finding new opportunities is sometimes the result of luck but more often the marketer engages in research to locate these.

Hypothesis Testing

Finally, marketers use research to help test theories or “gut feelings” about some issues.  For instance, a marketer may suspect there is a difference between the purchasing habits of one type of customer as compared to another type.  Hypothesis testing, which is at the heart of scientific research, relies on statistical analysis to help evaluate a hypothesis.

It should be noted that each of the previously described purposes for doing research can also be undertaken as a hypothesis test.  For example, a marketer looking to explain why sales are declining in a

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certain region may have a “gut feeling” for why this is occurring and thus can combine explanation with hypothesis testing.

So, for our consumer good,

NILE, its nature we are carrying this research to gain knowledge about the new geographical markets. The basic purpose

behind this is to know well about our competitors strategies, so that we can win in our price war competition and can promote sales within the new geographical boundaries.

Our research in this regard is then used to assess a marketing situation and predict what may happen in the future.  This type of information is critical in many marketing decisions such as forecasting demand for a new product.  It could also be used to predict what may happen if something is changed such as a key marketing variable decision (e.g., effect on sales if price is changed).

Step 2: Identify What is to be Learned

Once the general purpose of research is determined, the researcher’s next job is to decide what specific information he or she wants to obtain.  Many in the market research field believe this is the most critical step in the research process since it provides guidance on what must be accomplished.  While the purpose identified in Step 1 may be determined relatively quickly (e.g., sale reports shows an obvious problem that needs to be explained), in Step 2 the researcher may spend a considerable amount of time deciding what to study.  For instance, the researcher may engage in numerous conversations with company personal to insure that she/he understands the circumstances facing those requesting the research. 

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Identifying what needs to be learned is not always easy.  For example, saying a drop in sales in a region is the problem does not tell the researcher much since declining sales is a symptom with the real problem resting in some other area. 

In situations where the party needing the research has trouble articulating what is needed the researcher must probe the client for more details until they can uncover what information is really needed.  Doing this helps the researcher decide what to study and, more specifically, what concepts to include in the research (i.e., what questions to ask, what variables to study).

Determining what is to be learned is also important in helping market researchers envision the scope and demands of what must be done.  The

scope of a research project refers to the amount of information needed.  If the scope is too large the researcher may find that it is not worth carrying out the research since they lack the resources to accomplish the goal.  Alternatively, knowing in advance what is needed may give the researcher the opportunity to break a larger project into smaller, more manageable parts.

Step 3: Research Design - Methods

To get answers to the issues raised in Step 2 the researcher  lays out a design for obtaining the information.  Of course many marketers do not produce a formal design plan when conducting research.  For example, a small retailer who asks a returning customer how she liked the product she purchased the previous week is engaged in research and doing so without the need to produce a formal plan.  But for marketers looking to undertake formal research, a written research design  plan is important. 

The first part of the research design is to decide on the type of research that will work best for the purpose (i.e., explain, predict, monitor, discover, hypothesis test) and information that is sought.  Research method choices can be broadly categorized as:

Descriptive Research

Exploratory Research

Causal Research

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As we will see, these methods differ in terms what each hopes to learn and how information is acquired

Descriptive Research

The focus of descriptive research is to provide an accurate description for something that is occurring.  For example, what age group is buying a particular brand, a product’s market share within a certain industry, how many competitors a company faces, etc.  This type of research is by far the most popular form of market research.  It is used extensively when the

research purpose is to explain, monitor and test hypotheses, and can also be used to a lesser extent to help make predictions and for discovery.

Marketers routinely conduct basic descriptive research using informal means.  For instance, the head of marketing for a clothing company may email a retailer to see how the products are selling.  But informal descriptive research, while widely undertaken, often fails to meet the tests of research validity and reliability and, consequently, the information should not be used as an important component in marketing decisions.  Rather, to be useful, descriptive research must be conducted in a way that adheres to a strict set of research requirements to capture relevant results.  This often means that care must be taken to develop a structured research plan.  Under most circumstances this requires researchers have a good grasp of research methods including knowledge of data analysis.

Exploratory Research

The exploratory approach attempts to discover general information about a topic that is not well understood by the marketer.  For instance, a marketer has heard news reports about a new Internet technology that is helping competitors but the marketer is not familiar with the technology and needs to do research to learn more.  When gaining insight (i.e., discovery) on an issue is the primary goal, exploratory research is used.  The basic difference between exploratory and descriptive research is the research design.  Exploratory research follows a format that is less structured and more flexible than descriptive research.  This approach works well when the marketer doesn’t have an understanding of the topic or the topic is new and it is hard to pinpoint the research direction.  The downside, however, is that results may not be as useful in aiding a marketing decision.  So why use this method? 

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In addition to offering the marketer basic information on a topic, exploratory research may also provide direction for a more formal research effort.  For instance, exploratory research may indicate who the key decision makers are in a particular market thus enabling a more structured descriptive study targeted to this group.

Causal Research

In this form of research the marketer tries to determine if the manipulation of one variable, called the independent variable, affects another variable, called the dependent variable.  In essence, the marketer is conducting an experiment.  To be effective the design of causal research is highly structured and controlled so that other factors do not affect those being studied. 

Marketers use this approach primarily for purposes of prediction and to test hypotheses, though it can also be used to a lesser extent for discovery and explanatory purposes.  In marketing, causal research is used for many types of research including testing marketing scenarios, such as what might happen to product sales if changes are made to a product’s design or if advertising is changed.  If causal research is performed well marketers may be able to use results for forecasting what might happen if the changes are made.

Step 4: Research Design - Data Collection

The second part of research design involves laying out a plan to collect the information within the research method selected.  To gather research marketers have three choices:

Acquire pre-existing research

Undertake new research themselves

Out-source the task of new research to a third-party, such as a market research company

The first option is associated with secondary research, which involves accessing information that was previously collected.  The last two options are associated with conducting primary research, which involves the collection of original data generally for one’s own use. 

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As we will see, the data collection approach used depends on what the researcher determined in the Steps 1-3 of the research plan.  That is, the optimal data collection technique is selected only after the researcher has determined the purpose, the information sought and the basic research design method.  In many instances the researcher uses both secondary and primary data collection as part of the same research project.

In most cases this means finding information from third-party sources such as marketing research reports, company websites, magazine articles, and other sources.  But in actuality any information previously gathered, whether from sources external to the marketer or from internal sources, such as accessing material from previous market research carried out by the marketer’s organization, old sales reports, accounting records and many others, falls under the heading of secondary research. Market research is generally either primary or secondary ,there are two types of market research:

Primary Research

When marketers conduct research to collect original data for their own needs it is called primary research.  This process has the marketer or someone working for the marketer designing and then carrying out a research plan.  As we noted earlier, primary research is often undertaken after the researcher has gained some insight into the issue by collecting secondary data. While not as frequently used as secondary research, primary research still represents a significant part of overall marketing research.  For many organizations, especially large consumer products firms, spending on primary research far exceeds spending on secondary research. 

The primary research market consists of marketers carrying out their own research and an extensive group of companies offering their services to marketers.  These companies include:

Full-Service Market Research Firms – These companies develop and carryout the full research plan for their clients.

Partial-Service Market Research Firms – These companies offer expertise that address a specific part of the research plan, such as developing methods to collect data (e.g.,

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design surveys), locating research participants or undertaking data analysis.

Research Tools Suppliers – These firms provide tools used by researchers and include data collection tools (e.g., online surveys), data analysis software and report presentation products.

Primary research is collected in a research “instrument” designed to record information for later analysis.  Marketing researchers use many types of instruments from basic methods that record participant responses to highly advanced electronic measurement where research participants are connected to sophisticated equipment. 

Primary data collection offers advantages and disadvantages that include:

Advantages

Addresses Specific Research Issues Carrying out their own research allows the marketing organization to address issues specific to their own situation.  Primary research is designed to collect the information the marketer wants to know (Step 2) and report it in ways that benefit the marketer.  For example, while information reported with secondary research may not fit the marketer’s needs (e.g., different age groupings) no such problem exists with primary research since the marketer controls the research design.

Greater ControlNot only does primary research enable the marketer to focus on specific issues, it also enables the marketer to have a higher level of control over how the information is collected.  In this way the marketer can decide on such issues as size of project (e.g., how many responses), location of research (e.g., geographic area) and time frame for completing the project.

Efficient Spending for Information Unlike secondary research where the marketer may spend for information that is not needed, primary data collections’ focus on issues specific to the researcher improves the chances that research funds will be spent efficiently.

Information collected by the marketer using primary research is their own and is generally not shared with others.  Thus,

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information can be kept hidden from competitors and potentially offer an “information advantage” to the company that undertook the primary research.

Disadvantages

CostCompared to secondary research, primary data may be very expensive since there is a great deal of marketer involvement and the expense in preparing and carrying out research can be high.

Time ConsumingTo be done correctly primary data collection requires the development and execution of a research plan.  Going from the start-point of deciding to undertake a research project to the end-point to having results is often much longer than the time it takes to acquire secondary data.

Not Always Feasible

Some research projects, while potentially offering information that could prove quite valuable, are not within the reach of a marketer.  Many are just too large to be carried out by all but the largest companies and some are not feasible at all. 

For instance, it would not be practical for McDonalds to attempt to interview every customer who visits their stores on a certain day since doing so would require hiring a huge number of researchers, an unrealistic expense.  Fortunately, as we will see in a later tutorial there are ways for McDonalds to use other methods (e.g., sampling) to meet their needs without the need to talk with all customers.

Types of Primary Research

In general there are two basic types of primary research – quantitative data collection and qualitative data collection.

Quantitative Data Collection

Quantitative data collection involves the use of numbers to assess information.  This information can then be evaluated using statistical analysis which offers researchers the opportunity to dig deeper into

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the data and look for greater meaning (see Step 6: Analyze Data below). 

Certain information is by nature numerical.  For example, asking a person their actual age or yearly income will result in a number.  But under the right circumstances numbers can also be used to represent certain characteristics which are not on the surface considered numerical.  This most often occurs with data collected within a structured and well-controlled scientific research design.  For instance, research of customers’ attitude toward a company’s products may include the following:

Place an "X" on the line that best indicates impression of the overall quality of our company’s products:

Poor     _     _     _     _     _     _     _     Excellent

In this example each line, which represents a potential customer response, could be assigned a number.  For example, checking the left-most line could result in the researcher entering a “1”, the next line a “2”, the next line a “3” and so on.  Once research is completed this question can undergo statistical analysis. 

While quantitative analysis is potentially used for all types of research purposes (Step 1) it is most critical for hypothesis testing.  As discussed below in Step 6: Analyze Data, such analysis may prove very relevant by allowing the researcher to draw conclusions.

Types of Quantitative Data Collection

Quantitative data collection comes in many forms but the most popular forms are surveys, tracking and experiments. 

Surveys - This method captures information through the input of responses to a research instrument containing questions (i.e., such as a questionnaire)..  Information can be input either by the respondents themselves (e.g., complete online survey) or the researcher can input the data (e.g. phone survey, mall intercept).  The main methods for distributing surveys are via postal mail, phone, website or in person.  However, newer technologies are

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creating additional delivery options including through wireless devices, such as smart phones.

Tracking - With tracking research marketers are able to monitor the behavior of customers as they engage in regular purchase or information gathering activities.  Possibly the most well-known example of tracking research is used by websites as they track customer visits.  But tracking research also has offline applications, especially when point-of-purchase scanners are employed, such as tracking product purchases at grocery stores and automated collections on toll roads.

This method of research is expected to grow significantly as more devices are introduced that provide means for tracking.  However, as we discussed in the Marketing Research Tutorial, some customers may see tracking devices as intrusive and many privacy advocates have raised concerns about certain tracking methods especially if these are not disclosed to customers. 

Experiments - Marketers often undertake experiments to gauge how the manipulation of one marketing variable affects another (i.e., causal research).  The use of experiments has applications for many marketing decision areas including product testing, advertising design, setting price points and creating packaging.  For example, a market researcher for a retail chain may want to study the effect on sales if a

product display is moved to different locations in a store.  Unfortunately, performing highly controlled experiments can be quite costly.  Some researchers have found the use of computer simulations can work nearly as well as experiments and may be less expensive, though the number of simulation applications for marketing decisions is still fairly limited.

Qualitative Data Collection

Sometimes referred to as “touchy-feely” research, qualitative data collection requires researchers to interpret the information gathered, most often without the benefit of statistical support.  If the researcher is well trained in interpreting respondents’ comments and activities, this form of research can offer very good information.  However, it may not hold the same level of relevancy as quantitative research due to the lack of scientific controls with this data collection method.  For

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example, a researcher may want to know more about how customers make purchase decisions.  One way to do this is to sit and talk with customers using one-on-one interviews.  However, if the interview process allows the researcher to vary what questions are asked (i.e., not all respondents are asked the same questions), then this type of research may lack controls needed to follow a scientific approach. 

An additional drawback of qualitative research is that it can be time consuming and expensive and, consequently, only a very small portion of the marketer’s desired market can participate in qualitative research.  Due to the lack of strong controls in the research design (i.e., not as well structured, fewer participants), using results to estimate characteristics of a larger group is more difficult.  Thus, qualitative data collection is generally not used for hypothesis testing.  This is not to say qualitative research is not useful, it is very useful if its limitations are understood. It is widely employed for marketing research especially for research for  the purpose of discovery, and to a lesser extent, explanation.

Types of Qualitative Data Collection

Qualitative data collection options include personal interviews, focus groups and observational research.

Personal Interviews - Talking to someone one-on-one allows a researcher to cover more ground than may be covered if a respondent was completing a survey.  The reason lies with the researcher’s ability to dig deeper into a respondent’s comments to find out additional details that might not emerge from initial responses.  Unfortunately, individual interviewing can be quite expensive and may be intimidating to some who are not comfortable sharing details with a researcher.

Focus Groups - To overcome the drawbacks associated with personal interviews, marketers can turn to focus groups.  Under this research format, a group of respondents (generally numbering 8-12) are guided through discussion by a moderator.  The power of focus groups as a research tool rests with the environment created

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by the interaction of the participants.  In well-run sessions, members of the group are stimulated to respond by the comments and the support of others in the group.  In this way, the depth of information offered by a respondent may be much greater than that obtained through individual interviews. 

However, focus groups can be costly to conduct especially if participants must be paid.  To help reduce costs, online options for focus groups have emerged.  While there are many positive aspects to online focus groups, the fact that respondents are not physically present diminishes the benefits gained by group dynamics.  However, as technology improves, in particular video conferencing, the online focus group could become a major research option.

Observational Research - Watching customers as they perform activities can be a very useful research method, especially when customers are observed in a natural setting (e.g., shopping in a retail store, using products at home).  In fact, an emerging research technique

called ethnographic research has researchers following customers as they shop, work, and relax at home in order to see how they make decisions, use products and more.

Secondary Research

By far the most widely used method for collecting data is through secondary data collection, commonly called secondary research.  This process involves collecting data from either the originator or a distributor of primary research (see Primary Research discussion below).  In other words, accessing information already gathered. 

Secondary research offers advantages and disadvantages that include

Advantages:

Ease of Access - In years past accessing good secondary data required marketers to visit libraries or wait until a report was shipped by mail.  When online access initially became an option marketers needed training to learn different rules and procedures for each data source.  However, the Internet has changed how secondary research is accessed by offering convenience (e.g., online access from many

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locations) and generally standardized usage methods for all data sources.

Low Cost to Acquire - Researchers are often attracted to secondary data because getting this information is much less expensive than if the researchers had to carry out the research themselves.

May Help Clarify Research Question – Secondary research is often used prior to larger scale primary research to help clarify what is to be learned (Step 2).  For instance, a researcher doing competitor analysis, but who is not familiar with competitors in a market, could access secondary sources to locate a list of potential competitors.

May Answer Research Question - As noted, secondary data collection is often used to help set the stage for primary research.  In the course of doing so researchers may find that the exact information they were looking

for is available via secondary sources thus eliminating  the need and expense to carrying out their own primary research.

May Show Difficulties in Conducting Primary Research – The originators of secondary research often provide details on how the information was collected.  This may include discussion of difficulties encountered.  For instance, the secondary research may be a research report written by a large market research company.  These types of reports often include a section discussing the procedures used to collect the data and within this may disclose problems in obtaining the data, such as a high percentage of people declining to take part in the research.  After reading this the marketer may decide the potential information that may be obtained is not worth the potential difficulties in conducting the research.

Disadvantages

Quality of Researcher – As we will discuss, research conducted using primary methods are largely controlled by the marketer.  However, this is not the case when it comes to data collected by others.  Consequently, the quality of secondary research should be scrutinized closely since the origins of the information may be questionable.  Organizations relying on secondary data as an important component in their decision-making (e.g., market research

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studies) must take extra steps to evaluate the validity and reliability of the information by critically evaluating how the information was gathered, analyzed and presented.

Not Specific to Researcher’s Needs – Secondary data is often not presented in a form that exactly meets the marketer’s needs.  For example, a marketer obtains an expensive research report that looks at how different age groups feel about certain products within the marketer’s industry.  Unfortunately, the marketer may be disappointed to discover that the way the research divides age groups (e.g., under 13, 14-18, 19-25, etc.) does not match how the marketer’s company designates its age groups (e.g., under 16, 17-21, 22-30, etc).  Because of this difference the results may not be useful.

Inefficient Spending for Information – Since the research received may not be specific to the marketer’s needs, an argument can be made that research spending is inefficient.  That is, the marketer may not receive a satisfactory amount of  information for what is spent.

Incomplete Information – Many times a researcher finds that research that appears promising is in fact a “teaser” released by the research supplier.  This often occurs when a small portion of a study is disclosed, often for free, but the full report, which is often expensive, is needed to gain the full value of the study.

Not Timely – Caution must be exercised in relying on secondary data that may have been collected well in the past.  Out-of-date information may offer little value especially for companies competing in fast changing markets.

Not Proprietary Information – In most cases secondary research is not undertaken specifically for one company.  Instead it is made available to many either for free or for a fee.  Consequently, there is rarely an “information advantage” gained by those who obtain the research.

Sources for Secondary Research

There are literally hundreds of thousands of potential sources for locating secondary information.  For marketers, the most commonly utilized options for locating third-party (i.e., external) data include:

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Trade Associations

Government Sources

Company-Provided Information

News and Media Sources

Market Research Companies

Financial Services Companies

Consulting Firms

Research Distributors

Step 5: Evaluate Data

The researcher’s next task is to make sense of the collected data.  Before the researcher can gain understanding from the collected data, he/she must first examine the raw information (i.e., what was actually collected) to make sure the information exists as required.  There are many reasons why data may not be presented in the form needed for further analysis.  Some of reasons include:

Incomplete Responses – This most likely occurs when the method of data collection (e.g., survey) is not fully completed, such as when the person taking part in the research fails to provide all information (e.g., skips questions).

Data Entry Error – This exists when the information is not recorded properly which can occur due to the wrong entry being made (e.g., entry should be choice “B” but is entered as choice “C”) or failure of data entry technology (e.g., online connection is disrupted before full completion of survey).

Questionable Entry – This occurs when there are apparent inconsistencies in responses such as when a respondent does not appear to be answering honestly.

To address these issues the researcher will take steps to “cleanse” the data which may include dropping problematic data either in part (e.g., exclude a single question) or in full (e.g., drop an entire survey).  Alternatively, the research may be able to salvage some problem data with certain coding methods, though a discussion of these is beyond the scope of this tutorial.

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Step 6: Analyze Data

With the data in a form that is now useful, the researcher can begin the process of analyzing the data to determine what has been learned.  The method used to analyze data depends on the approach used to collect the information (secondary research, primary quantitative research or primary qualitative research).  For primary research the selection of method of

analysis also depends on the type of research instrument used to collect the information.

Essentially there are two types of methods of analysis – descriptive and inferential.

Descriptive Data Analysis

Not to be confused with descriptive research, descriptive analysis, as the name implies, is used to describe the results obtained.  In most cases the results are merely used to provide a summary of what has been gathered (e.g., how many liked or dislike a product) without making a statement of whether the results hold up to statistical evaluation.  For quantitative data collection the most common methods used for this basic level of analysis are visual representations, such as charts and tables, and measures of central tendency including averages (i.e., mean value).  For qualitative data collection, where analysis may consist of the researcher’s own interpretation of what was learned, the information may be coded or summarized into grouping categories.

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Inferential Data Analysis

While descriptive data analysis can present a picture of the results, to really be useful the results of research should allow the researcher to accomplish other goals such as:

Using information obtained from a small group (i.e., sample of customers) to make judgments about a larger group (i.e., all customers)

Comparing groups to see if there is a difference in how they respond to an issue

Forecasting what may happen based on collected information

To move beyond simply describing results requires the use of inferential data analysis where advanced statistical techniques are used to make judgments (i.e., inferences) about some issue (e.g., is one type of customer different from another type of customer).  Using inferential data analysis requires a well-structured research plan that follows the scientific method.  Also, most (but not all) inferential data analysis techniques require the use of quantitative data collection.

As an example of the use of inferential data analysis, a marketer may wish to know if North American, European and Asian customers differ in how they rate certain issues.  The marketer uses a survey that includes a number of questions asking customers from all three regions to rate issues on a scale of 1 to 5.  If a survey is constructed properly the marketer can compare each group using statistical software that tests whether differences exists.  This analysis offers much more insight than simply showing how many customers from each region responded to each question. 

Step 7: Communicate Results

The final stage in the marketing research process is to report the findings.  For marketers doing small-scale research for their own purposes, communication may be quite informal.  The marketer may simply draw conclusions from what he or she gleans from the data analysis. 

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For more serious marketing research projects, those conducting the research will prepare a written report outlining what was researched and offer results.  Additionally, an oral presentation may be required in which the research is explained within a slide presentation.

Market Trends

The upward or downward movements of a market, during a period of time. The market size is more difficult to estimate if we are starting with something completely new. In this case, we will have to derive the figures from the number of potential customers or customer segments.

But besides information about the target market we also need information about our competitor, like Aqua Fina, Atlantis, Nestle, our customers, like wholesalers, retailers, products etc. A few techniques are:

Customer analysis

Choice Modeling

Competitor analysis

Risk analysis

A competitive price analysis compared to NILE,its nature is shown in table

Name of Brands 0.5 liter 1.5 liter 6 liter

Nestle, pure life

Atlantis

Aqua Fina, purity guaranteed

Nile, its nature 10 20 100

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TARGET MARKETTarget markets are a set of buyers sharing common needs or characteristics that the company decides to serve.

Target Marketing involves breaking a market into segments and then concentrating your marketing efforts on one or a few key segments.Target marketing can be the key to a small business’s success.The beauty of target marketing is that it makes the promotion, pricing and distribution of your products and/or services easier and more cost-effective. Target marketing provides a focus to all of your marketing activities.

So if, for instance, I open a catering business offering catering services in the client’s home, instead of advertising with a newspaper insert that goes out to everyone, I could target my market with a direct mail campaign that went only to particular residents.While market segmentation can be done in many ways, depending on how you want to slice up the pie, three of the most common types are:

Geographic segmentation – based on location such as home addresses;

Demographic segmentation – based on measurable statistics, such as age or income;

Psychographic segmentation – based on lifestyle preferences, such as being urban dwellers or pet lovers.

Market Segmentation For Customer Retention

Market segmentation is when you divide your potential market into separate categories or segments according to their individual needs. When you target the correct market segmentation, you will find more customers that need your product. As long as these customers are happy with your customer service, and your prices, they will stay with

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you. This will help you with customer retention. Though these concepts may seem simplistic, if you do

not target your business, you may find that your potential customer base is too large. A large potential customer base means that it is too hard to please all your customers.

When you focus on market segmentation and your target market selection, you will be better able to handle any potential problems with customer service. In some cases, you may need to hire consultants to help you with your target market selection. However, when customer retention is your priority, you will find that the expense of hiring a consultant for this selection process is well worth the help that you receive. Market segmentation is a valued advertising and sales strategy. Though it may seem that you are limiting your potential client base, you will find that focusing on the potential client base that is left leads to more sales and more repeat customers.

Determining Target Market

It is best to determine your target market when you first start your business. When you put together a business plan, you will state your target market. Though you may only have a general idea of your target market when you first start your business proposal or business plan, you will either want to research your target market on your own, or you will want to speak to a number of target market selection consultants to get an idea of the different types of target markets for your business.

In many cases, you will use market segmentation to determine your target market. You can hire a group of target market selection consultants to help you research what you should choose as your target market. Other times, you may be able to determine your target market without hiring an outside group of specialists. At times, it may take a great deal of research, as you will want to ensure that you determine all possibilities for this target market.

Market segmentation is different than choosing your target market. With market segmentation, you may find a niche for your business. However, once you have your business niche, you will want to determine who will be your customer base. This customer base is your target market

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How to Identify a Target Market and Prepare a Customer Profile?

Get your message to the people who need and want what you have to offer! This guide takes you through a step-by-step process that helps you identify specific target markets within your industry and provides you with the know-how to create customer profiles to better channel your marketing efforts.

What Should Know Before Getting Started

Identifying Your Market

Step One: Identifying Why a Customer Would Want to Buy Your Product/Service

Step Two: Segment Your Overall Market Step Three: Research Your Market

What to Expect?

This Business Builder will take you through a step-by-step process that will help you identify specific target markets within your industry and provide you with the know-how to create a customer profile.

What You Should Know before Getting Started?

In order to market your product or service, it is imperative that you tailor your marketing and sales efforts to specifically reach the segment of population that will most likely buy your product or service. It is critical that you first determine or clearly identify your primary market. Your energies and funds then can be spent more efficiently.

If you don't know who your customers are, how will you be able to assess whether you are meeting their needs? Since success depends on your being able to meet customers' needs and desires, you must know who your customers are, what they want, where they live and what they can afford.

We've all heard a business owner say, "My product is terrific! It appeals to everyone." Many of us have also seen small businesses that try to be all things to all people. This is a difficult, if not impossible, bridge to cross.

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Targeting your market is simply defining who your primary customer will be. The market should be measurable, sufficiently large and reachable.For Example, a printer's target of mid-sized firms with mid-size projects is not a measurable definition. However, a target market of firms within a radius of 20 miles, with annual revenues of $10 to $25 million and a need for four-color printing runs of approximately 5,000 pieces is a clear definition.

Once your target market is defined through your knowledge of product appeals and market analysis, and can be measured, you should determine whether that target market is large enough to sustain your business on an ongoing basis. In addition, your target market needs to be reachable. There must be ways of talking to your target audience.

Types of Markets

A market is simply any group of actual or potential buyers of a product. There are three major types of markets.

1. The consumer market. Individuals and households who buy goods for their own use or benefit are part of the consumer market. Drug and grocery items are the most common types of consumer products.

2. The industrial market. Individuals, groups or organizations that purchase your product or service for direct use in producing other products or for use in their day-to-day operations.

3. The reseller market. Middlemen or intermediaries, such as wholesalers and retailers, who buy finished goods and resell them for a profit.

Identifying Your Market

Here are three steps to follow when identifying your market: Identify Why A Customer Would Want To Buy Your

Product/Service

Segment Your Overall Market Research Your Market

Step One

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Identify Why A Customer Would Want To Buy Your Product/service

The first step in identifying your target market understands what your products/services have to offer to a group of people or businesses. To do this, identify your product or service's features and benefits. A feature is a characteristic of a product/service that automatically comes with it.

For example, if toothpaste has a stain-removing formula, that's a feature. The benefit to the customer, however, is whiter teeth. While features are valuable and can certainly enhance your product, benefits motivate people to buy.

An Example is anti-lock brakes; they are features on a car, but the benefit to the consumer is safety. By knowing what your product/service has to offer and what will make customers buy, you can begin to identify common characteristics of your potential market.

For example, there are many different consumers who desire safety as a benefit when purchasing a car. Rather than targeting everyone in their promotional strategy, a car manufacturer may target a specific group of consumers.

Step Two

Segment Your Overall Market:

It is a natural instinct to want to target as many people and groups as possible. However, by doing this your promotional strategy will never talk specifically to any one group, and you will most likely turn many potential

customers off. Your promotional budget will be much more cost effective if you promote to one type of customer and speak directly to them. This allows you to create a highly focused campaign that will directly meet the needs and desires of a specific group. Again, this is called market segmentation.

Geographic. Potential customers are in a local, state, regional or national marketplace segment. If you are selling a product such as farm equipment, geographic location will remain a major factor in segmenting your target markets since your customers

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are located in particular rural areas. Or, if you own retail store, geographic location of the store is one of the most important considerations.

Climate is a commonly used geographic segmentation variable that affects industries such as heating and air conditioning, sporting equipment, lawn equipment and building materials.Decide if your business is going to do business on a local, regional, national or international level. Identify the geographic region where your market is located. Identify specific boundaries within which you will do business.

Demographic. Potential customers are identified by criteria such as age, race, religion, gender, income level, family size, occupation, education level and marital status. Choose those characteristics of your demographic target market that relates to the interest, need and ability of the customer to purchase your product or service. Identify the following demographic characteristics of your market.

Consumer Market Age

Income

Gender

Profession

Education

Family Size

Homeowner

Marital Status

Business Market Geographic location

Size of Company

Annual revenue

Number of Branches

Number of Employees

Industry

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Age of Company

Psychographic

Many businesses offer products based on the attitudes, beliefs and emotions of their target market. The desire for status, enhanced appearance and more money are examples of psychographic variables. They are the factors that influence your customers' purchasing decision. A seller of luxury items would appeal to an individual's desire for status symbols.

Business customers, as well as consumers, can be described in psychographic terms. Some companies view themselves as cutting edge or high tech, while others consider themselves socially responsible, stable and strong. Still others see themselves as innovative and creative. These distinctions help in determining how your company is positioned and how you can use the company's position as a marketing tactic.

For Example: Southwest Airlines has positioned itself as an innovative and fun airline that takes passengers on short, inexpensive excursions, whereas Delta chooses to promote reliability and safety. The following are psychographic variables. Identify the characteristics of your target market.

Consumer market

Lifestyle

Fun-Seeking

Family Stage

Trendy

Hobbies

Status Seeking

Sports Enthusiasts

Conservative

Forms of Entertainment

Socially Responsible

Publication

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Environmentally Conscious

Influencer

Subscriptions

Family Oriented

Technical

Workforce Type

Management Style

Other

Business Market

Business Style

Industry Leader

Business Stage

Innovative

Employee Relations

Conservative

Trade Associations

Socially Responsible

Business Products/Stable

Services Used

Employee Friendly

Publication Subscriptions

Workforce Type

Management Style

Behaviorist

Products and services are purchased for a variety of reasons. Business owners must determine what those reasons are, such as: brand, loyalty, cost, how frequently and at what time of year customers in a segment use and consume products. It's important to understand the buying habits and patterns of your customers. Consumers do not rush and buy the first car they see, or the first sofa they sit on. A Fortune 500 company doesn't typically make quick purchasing decisions.

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Answer the following questions regarding your market.

Reason/occasion for purchase? Number of times they'll purchase? Timetable of purchase, every week, month, quarter, etc Amount of product/service purchased? How long to make a decision to purchase? Where customer purchases and/or uses

product/service?

Most businesses use a combination of the above to segment their markets. Demographic and geographic criteria will usually qualify your target markets so you can establish if segment members have enough money to purchase your offering or if they're in a location that's accessible to the product.

Most businesses then use the psychographic and behaviorist factors to construct a promotional campaign that will appeal to the target market.

For example, Career Options is limited to the geographic region where their office is situated because their target customers want to work in that area. In their advertising they will appeal to psychographic factors such as the desire for stability and income. Take a moment to decide which segmentation criteria will be most helpful to you in segmenting your target market:

Geographic _____Yes _____Nodemographic _____Yes _____Nopsychographic

_____Yes _____No

behaviorist _____Yes _____No

Next, identify what is important to your customers and rank these on a scale of high, medium, low or not at all. Are they price sensitive? Are they looking for the highest quality? Is great customer service important? Or, is location a deciding factor?

Sample of a Customer Profile and Analysis

Career Option's Sample Customer Profile:

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Professionals in Transition Segment

Gender:

30% Female 70% Male

Age:

   10% 26-30 30% 31-40 30% 41-55 30% 56-64

Income:

   25% 30-40K 25% 40-50K 50% 50-75K

Marital Status:

80% Married 20% Single

Level Of Education:

   60% Bachelor's degree 40% Master's degree

Occupations:

   10% Health Care 20% Financial

   30% Marketing/Advertising 40% Hi-Tech Fields

Job Sought:

   70% Same Field 30% New Field

Most Important Benefits:

1. Assistance in finding work quickly.

2. Want a better job.

3. Want equal salary or increase.

4. Stability.

Psychographic Summary: This segment closely associates work with self-esteem. They feel pressure because most have families and comfortable lifestyles to maintain. They are not interested in forging new careers but want stability.

Having completed the customer profile, Career Options will have a good idea of how to attract and serve customers in this target market.

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Their advertising will emphasize that Career Options specializes in helping professionals find good paying jobs quickly.

They will also discover that most of their potential customers in this segment are seeking employment in technical industries. Advertising in various local industry publications would therefore be a good way to reach this market segment. They can also develop an expertise for counseling and placing hi-tech career professionals.

Constructing a similar profile will assist you in developing the proper marketing strategies to be successful in your target market. Remember, no two customer profiles will be the same. You'll have to decide how much emphasis to place on a potential user's lifestyle, loyalty, and spending habits. If you're going to advertise heavily, you'll want to know the media habits of potential customers as well. Whatever information will help you better promote and sell your product should be included in your customer profile.

Choose the Segmented Target Market(s) You Will Sell To:

After identifying and defining the possible segments within your target market, you must face the critical question of whether it would be profitable and feasible for you to pursue each identified segment, or choose one or two. To make this decision, you must answer the following questions:

What is the financial condition of my firm? If you have limited resources at this time, you may want to direct your marketing efforts to only one segment. A concentrated advertising campaign to reach one market segment is likely to be more effective than a diffuse campaign attempting to reach two.

What segments are my competitors covering? Are they ignoring smaller segments that I can possibly exploit? The printing company previously mentioned may decide to pursue small magazine publishers because there are many competitors currently serving the needs of larger publishers. Or, Career Options may discover that since in their geographic location there are several firms that specialize in helping professionals in transition, they should specialize in the recent college graduate market.

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Is the market new to your firm? If so, it may be better for you to concentrate on one segment for now, and expand to others when your initial segment has been successfully penetrated. Developing new markets takes a greater commitment of time, money and energy.

Important Considerations:

If you pursue one segment of your target market and the demand for your product decreases, so will your financial strength. In essence, you are putting all your eggs in one basket.

When your firm becomes well established in a particular market segment, it may be difficult for you to move to another segment. This may occur due to your market reputation or popularity. For example, if Career Options becomes known for helping college graduates find jobs, unemployed professionals may perceive them as only having the expertise to serve that market.

After you have mastered one particular segment, you can then begin to develop another. Directing your firm's marketing efforts at more than one market segment by developing a marketing mix for each specific segment is known as multi-segment strategy. An example of a product that was traditionally targeted at women and is now being targeted with variations in strategy at men is hair coloring.

The marketing mixes for multi-segment strategy may vary by product feature, price, promotional material and distribution methods. If product variations requires additional work, you may incur higher production costs. Additionally, different promotional plans and distribution efforts will result in higher marketing costs. Plan carefully, to make sure the costs don't outweigh the benefits.

Nile ( it’s Nature)Nile (it’s Nature) is pure, safe and healthy drinking water for you and your family every bottle of Nile( it’s Nature) is produced with Nile( it’s Nature)safety system and is carefully sealed with a proprietary seal. Purity of the highest standards is matched by an optimal balance of essential minerals, enhancing the health and wellbeing of your family.

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Undoubtedly it is the most liked and favorite water of people of Pakistan

who believe in standards in terms of their health. it may be classified in five different categories of size they are as follows

SIZE Litre 1 6 2 1.5 3 500 ml

Why a customer would want to buy our product?Pure Water is essential to life

Water is the source of life. We cannot go without water for 2 to 5 days. Even light dehydration has dramatic effects on your physical and mental performances. Consequently, it is essential to drink regularly throughout the day, without waiting until you feel thirsty. Indeed when you start feeling thirsty, you are already dehydrated!

The only drink that is essential to life is water.Water is the main component of all the vital organs (brain, heart, lungs, kidneys, etc.) so it is necessary to drink water to provide your body with the water it needs to function properly. Drinking water regularly throughout the day therefore constitutes an easy reflex that is key for maintaining your vitality and health.

Drink before you feel thirsty

Travel, hot weather and exercise increase the whole family’s needs to drink more water

Proper hydration helps keep mental functions at good levels

Proper hydration helps keep mental & physical performances sharp

At tea-time when your children ask for a drink, start by giving them a glass of water

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Drink water frequently when you are with your children, and tell them how good and thirst quenching it is

Get your children used to drinking water regularly from a very early age

Don't wait for them to ask you for a drink before giving them water

Always carry a small bottle of water, wherever you go

Slip a small bottle of water into your child's school or sports bag, or take one with you when you pick them up from school.

Feature Benefit Analysis

Features: Benefits:

1.Light Weight 1.Digestable

2.Calcium 2.Meet the deficiency of Calcium in the Body

3.Pure 3.Freshness

4.Ingredients 4. Quench Thirst

5.Technology 5. Taste never change

Marketing:

Primarily we are focusing our drive/lunch of marketing NILE (symbol of purify) in Punjab due to the fact that the people in this province are move venerable to such sort of inventions. It is because of their taste, habits and standard of living.

Never the less it will not be out of placing to mentioned that with expansion of system. It shall also be introduced in other parts of country as well.Geographic Segmentation (Punjab)

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S. No.

City Province

Population

S. No.

City Province

Population

1 Sargodha Punjab 573,541 7 Jhang Punjab 357,826

2 Lahore Punjab 6,747,238

8 Bahawalpur Punjab 516,882

3 Faisalabad

Punjab 2,708,944

9 Sialkot Punjab 494,591

4 Rawalpindi

Punjab 1,877,580

10 Rahim Yar

Khan

Punjab 328,903

5 Multan Punjab 1,528,075

11 Gujarat Punjab 320,440

6 Shekhupura

Punjab 397,186 12 Gujranwala Punjab 1,484,172

Marketing in Lahore:

As stated above that we are focusing in the province of Punjab at the movement. Again in this province we are mainly concentrating on big cities but more specifically the city of Lahore firstly to begin with. In this way in view of the total population of Lahore which is approximately 8 millions. Again Lahore is divided in to further posh areas with the regard of market segment. These are follows model

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town, garden town .Fasial town, Gulberg, Defence Cantt, Iqbal town, and Johar town

Model Town

The total population of the Model town is about 100,000. Model Town Society is a unique housing area in its design and is considered posh locality of the town. Each block has its own market, play ground, mosque, triangular parks etc., which is a rare phenomenon as compared to other housing schemes.

Garden

The total population of the garden town is about 80,000. Garden Town is one of the most developed neighborhoods’ in Lahore, home to the wealthy middle class. The majority of its residents comprise mainly of businessmen as well as students who attend the various colleges and universities in the area, namely Punjab University and Allama Iqbal Medical College. It is also home to some celebrities, politicians and overseas Pakistanis. The community in recent years has developed a vibrant social life and literate elite. Property value has increased significantly in the passed 5 years due to location of Garden Town and the development of Barkat market into a major Lahore market.

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Gulberg

The total population of the gulberg is about 90,000. Gulberg (Urdu: ( گلبرگ is a residential and commercial area of Lahore, Punjab, Pakistan. It is known for its upscale shopping centers, restaurants, posh residential areas and the Hafeez Center (perhaps the largest computer and mobile market in Asia). It also includes Lahore's Gaddafi Stadium Sports Complex, the home of Pakistani cricket. It is also known as the hub of the fashion industry in Pakistan.

Cantt

The total population of the cantt is about 60,000. Cantt is a unique housing area in its design and is considered posh locality of the town. Each block has its own market, play ground, mosque, triangular parks etc., which is a rare phenomenon as compared to other housing schemes.

Defence

The total population of the defence is about 3, 00000. The Defence Housing Authority, Lahore is a housing authority located in north Lahore, Pakistan. It was originally built for army officers but is now a popular destination for potential residents and businessmen.

Johar Town:

The total population of the johar town about 65,000. Johar Town in Pakistan is a residential area located in the north of Lahore on the map, neighboring the motorway M-2. It is the largest residential society of Lahore developed by Lahore Development Authority- LDA. The population in this newly established suburban area is sprawling as the property rates offered here are lesser than other very expensive suburbs of Lahore city like DHA. But the prices are on the rise. The area is providing a very good housing opportunity for the upper middle class people. Faisal Town

The total population of the faisal town is about 70,000. Faisal Town is one of the major residential areas of Lahore, close to Model Town. It lies at Latitude 31° 28' 40N Longitude 74° 18' 30E and has an altitude of 201 meters. In the last few years this area has undergone major

40

changes and developments, with the value of property increasing quite considerably. It is divided into four residential blocks named A to D.

Each Block consists of about 1000 Houses. It houses the Lahore campus of National University of Computer and Emerging Sciences built by Foundation for Advancement of Science and Technology in its Block-B. Faisal town was located in the newly developed area of Lahore city. In its North lies Model Town, in East lies Township, in South lies Johar Town and in its West lie Punjab University, Allama Iqbal Medical College and Jinnah Hospital. .Iqbal Town

The total population of the iqbal town is about 75,000. Iqbal Town (also known as Allama Iqbal Town; is a commercial and residential locality in the south-western Lahore. It is named after Allama Iqbal, the national poet of Pakistan. Development was started in the late 1970s and early 1980s. It was previously famed for its name in Urdu, 'Sola Soo Acre' (meaning 1600 acres), due to its area. Its extent is marked by Multan Road to the west and north, and by Wahdet Road to the population

As we have estimated the total population of posh areas as above at ,0840 million, It may be safely concluded that in view of high, middle, and average income groups of people resident in these locators are to be approved and make them realize the purity of Nile (it’s Nature). Thus in this way we have to target the marketing of Nile between 15 to 20% of the residents of these areas’ of all groups to use this pure drinking water. This will further provide us to accelerate our marketing plans for profit orientation in future to the manufacturing of the product i-e Nile (it’s Nature)

Exclusive Target Market Locations

Air ports

Railvay Stations

Bus Station

Hospitals

Tourism Places

Universities and College

Demographic Segmentation

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Consumer Market

Age 15 – 55 Income 10,000 +/month Gender Both Profession Any Education Matriculation – Higher Family Size 2 – 5 Marital Status Both

PRODUCTMarketing starts with the product and when we talk about our product that brings with it the feel of purity, care for health, feel of satisfaction

etc all comes through one and only NILE ,its Nature.

Organizations attempt to provide solutions to a target markets offer its target market. Our problems. These solutions include tangible or intangible (or both) product offerings marketed by an organization.

In addition to satisfying the target market’s needs, the product is important because it is how organizations generate revenue. It is the “thing” that for-profit companies sell in order to realize profits and

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satisfy stakeholders and what non-profit organizations use to generate funds needed to sustain itself. Without a well-developed product strategy that includes input from the target market, a marketing organization will not have long-term success.

What is a Product?

In marketing, the term “product” is often used as a catch-all word to identify solutions a marketer provides to its target market. We will follow this approach and permit the term “product” to cover offerings that fall into one of the following categories:

Goods – Something is considered a good if it is a tangible item. That is, it is something that is felt, tasted, heard, smelled or seen. For example, bicycles, cellphones, and donuts are all examples of tangible goods. In some cases there is a fine line between items that affect the senses and whether these are considered tangible or intangible. We often see this with digital goods accessed via the Internet, such as listening to music online or visiting an information website.In these cases there does not appear to be anything that is tangible or real since it is essentially computer code that is proving the solution. However, for our purposes, we distinguish these as goods since these products are built (albeit using

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computer code), are stored (e.g., on a computer hard drive), and generally offer the same benefits each time (e.g., quality of the download song is always the same).

Services – Something is considered a service if it is an offering a customer obtains through the work or labor of someone else. Services

can result in the creation of tangible goods (e.g., a publisher of business magazines hires a freelance writer to write an article) but the main solution being purchased is the service. Unlike goods, services are not stored, they are only available at the time of use (e.g., hair salon) and the consistency of the benefit offered can vary from one purchaser to another (e.g., not exactly the same hair styling each time).

Ideas – Something falls into the category of an idea if the marketer attempts to convince the customer to alter their behavior or their perception in some way. Marketing ideas is often a solution put forth by non-profit groups or governments in order to get targeted groups to avoid or change certain behavior. This is seen with public service announcements directed toward such activity as youth smoking, automobile safety, and illegal drug use.

While in some cases a marketer offers solutions that provide both tangible and intangible attributes, for most organizations their primary offering -- the thing that is the main focus of the marketing effort -- is concentrated in one area. So while a manufacturer may offer intangible services or a service firm provides certain tangible equipment, these are often used as add-ons that augment the organization’s main product.

When I talked about my Product that is NILE, its Nature which is a tangible product use by people every day of life so it’s a daily buying product will taste the purity in every sip. Everything about

NILE, its Nature contributes to this NATURE brand experience- from its name, packaging, and label to the places that will sell it, to the celebrities that will dink and endorse it. The name was a natural –

NILE, its Nature that evokes visions of unspoiled natural beauty and purity.

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Categories of Consumer Products:

In addition to categorizing by type of offering, most products intended for consumer use can be further categorized by how frequently and where they are purchased.

Convenience Products – These are products that appeal to a very large market segment. They are generally consumed regularly and purchased frequently. Examples include most household items such as food, cleaning products, and personal care products. Because of the high purchase volume, pricing per item tends to be relatively low and consumers often see little value in shopping around since additional effort yields minimal savings. From the marketer’s perspective the low price of convenience products means that profit per unit sold is very low. In order to make high profits marketers must sell in large volume. Consequently, marketers attempt to distribute these products in mass through as many retail outlets as possible.

Shopping Products – These are products consumers purchase and consume on a less frequent schedule compared to convenience products. Consumers are willing to spend more time locating these products since they are relatively more expensive than convenience products and because these may possess additional psychological benefits for the purchaser, such as raising their perceived status level within their social group. Examples include many clothing products, personal services, electronic products, and household furnishings. Because consumers are purchasing less frequently and are willing to shop to locate these products, the target market is much smaller than that of convenience goods. Consequently, marketers often are more selective when choosing distribution outlets to sell their products.

Specialty Products – These are products that tend to carry a high price tag relative to convenience and shopping products. Consumption may occur at about the same rate as shopping products but consumers are much more selective. In fact, in many cases consumers know in advance which product they prefer and will not shop to compare products. But they may shop at retailers that provide the best value. Examples include high-end luxury automobiles, expensive champagne, and celebrity hair care experts. The target markets are generally very small

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and outlets selling the products are very limited to the point of being exclusive.

In addition to the three main categories above, products are classified in at least two additional ways:

Emergency Products – These are products a customer seeks due to sudden events and for which pre-purchase planning is not considered. Often the decision is one of convenience (e.g., whatever works to fix a problem) or personal fulfillment (e.g., perceived to improve purchaser’s image).

Unsought Products – These are products whose purchase is unplanned by the consumer but occur as a result of marketer’s actions. Such purchase decisions are made when the customer is exposed to promotional activity, such as a salesperson’s persuasion or purchase incentives like special discounts offered to certain online shoppers. These promotional activities often lead customers to engage in Impulse Purchasing.

The categories of consumer products mineral Water and our Product

NILE, its Nature comes under the category of Convenience Product that it is bought on daily basis. It will be used by ever class because of its cheap rate, its pure taste and excellent quality. So we try our best to let the consumers to buy it with warranty of its purity and taste.

We are going to launch our product in the holy MONTH OF RAMADAN with the name of ALLAH the most merciful. We will offer NILE on suitable rate to our customers. As it is a daily product not only used for drinking purposes.

Categories of Business ProductsThe amount spent on business purchasing far exceeds consumer

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purchasing. Products sold within the b-to-b market fall into one of the following categories:

Raw Materials – These are products obtained through mining, harvesting, fishing, etc., that are key ingredients in the production of higher-order products.

Processed Materials – These are products created through the processing of basic raw materials. In some cases the processing refines original raw materials while in other cases the process combines different raw materials to create something new. For instance, several crops including corn and sugar cane can be processed to create ethanol which has many uses including as a fuel to power car and truck engines.

Equipment – These are products used to help with production

or operations activities. Examples range from conveyor belts used on an assembly line to large buildings used to house the headquarters staff of a multi-national company.

Basic Components – These are products used within more

advanced components. These are often built with raw material or processed material. Electrical wire is an example.

Advanced Components – These are products that use

basic components to produce products that offer a significant function needed within a larger product. Yet by itself an advanced component does not stand alone as a final product. In computers the motherboard would be an example since it contains many basic components but without the inclusion of other products (e.g., memory chips, microprocessor, etc.) would have little value.

Product Component – These are products used in the

assembly of a

final product though these could also function as stand alone products. Dice included as part of a children’s board game would be an example.

MRO (Maintenance, Repair and Operating)

Products – These are products used to assist with the operation of the organization but are not directly used in producing goods or services. Office supplies, parts for a truck

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fleet and natural gas to heat a factory would fall into this category

Our product NILE, its Nature comes under the category of processed material. That is extracted and then purified with the modern equipments without the use of any harsh chemical that can be dangerous to our custemer’health.above is shown the modern n latest equipment we use that is the basic part of our plant

Components of a Product

On the surface it seems a product is simply a marketing offering, whether tangible or intangible, that someone wants to purchase and

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consume. In which case one might believe product decisions are focused exclusively on designing and building the consumable elements of goods, services or ideas. For instance, one might think the key product decision for a manufacturer of floor cleaners is to focus on creating a formula that cleans more effectively. In actuality, while decisions related to the consumable parts of the product are extremely important, the Total Product consists of more than what is consumed. The total product offering and the decisions facing the marketer can be broken down into three key parts:

Core Benefits Actual Product Augmented Product

1. Core Benefits

People make buying decisions that satisfy their needs. While many needs are addressed by the consumption of a product or service, some needs are not. For instance, customers may need to be perceived highly by other members of their group or need a product that is easy to use or need a risk-free purchase. In each of these cases, and many more, the core product itself is the benefit the customer receives from using the product. In some cases these core benefits are offered by the product itself (e.g., floor cleaner) while in other cases the benefit is offered by other aspects of the product (e.g., the can containing the floor cleaner that makes it easier to spread the product). Consequently, at the very heart of all product decisions is determining the key or core benefits a product will provide. From this decision, the rest of the product offering can be developed.

2. Actual Product

The core benefits are offered through the components that make up the actual product the customer purchases. For instance, when a consumer

returns home from shopping at the grocery store and takes a purchased item out of her shopping bag, the actual product is the item she holds in her hand. Within the actual product is the consumable product, which can be viewed as the main good, service or idea the customer is buying. For instance, while toothpaste may come in a package that makes dispensing it easy, the Consumable Product is the paste that is placed on a toothbrush. But marketers must understand that while the consumable product is, in most cases, the most critical of all product decisions, the actual product includes many separate

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product decisions including product features, branding, packaging, labeling, and more. Full coverage of several of these important areas is provided later in this tutorial.

3. Augmented Product

Marketers often surround their actual products with goods and services that provide additional value to the customer’s purchase. While these factors may not be key reasons leading customers to purchase (i.e., not core benefits), for some the inclusion of these items strengthens the purchase decision while for others failure to include these may cause the customer not to buy. Items considered part of the augmented product include:

Guarantee – This provides a level of assurance that the product will perform up to expectations and if not the company marketing the product will support the customer’s decision to replace, have it repaired or return for a refund.

Warranty – This offers customers a level of protection that often extends past the guarantee period to cover repair or replacement of certain product components.

Customer Service – This consists of additional services that support the customer’s needs including offering training and assistance via telephone or online.

Complementary Products – The value of some product purchases can be enhanced with add-on products, such as items

that make the main product easier to use (e.g., laptop carry bag), enhance styling (e.g., cell phone face plates) or extend functionality (e.g., portable keyboard for PDAs).

Accessibility – How customers obtain the product can affect its perceived value depending on such considerations as how easy it is to obtain (e.g., stocked at nearby store, delivered directly to office), the speed at which it can be obtained, and the likelihood it will be available when needed.

We have tried our best to make our customers avail the core benefits

of our Actual Product that is NILE, its Nature. Its attractive bottle, its aqua color and its pure taste will definitely fulfill the need of

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our customer. We keep our objective in our mind that is to satisfy our customer in every aspect of our product’s nature. we are sure about our product that it will not only compete with other mineral waters successfully but also will let the people to buy it in future with satisfaction and warranty taste,quality,affordable rate.The customers would also b happy with the RAMADAN SCHEME of getting two bottles at the cost of one. Key Product Decisions

The actual product is designed to provide the core benefits sought by the target market. The marketer offers these benefits through a combination of factors that make up the actual product.Below we discuss in detail four key factors that together help shape the actual product. These factors include:

Consumable Product Features Branding Packaging Labeling

Consumable Product Features

Features are characteristics of a product that offer benefits to the customer. In most cases, the most important features are those associated

with the consumable product since they are the main reason a customer makes a purchase. We separate the benefits of consumable product features into two groups: functional and psychological.

Functional BenefitsAre benefits derived from features that are part the consumable product. For instance, a plasma television includes such features and benefits as:

Feature Functional Benefit

screen size

screen resolution

surround sound

remote control

offers greater detail and allows for more distant viewing

viewing provides clear, more realistic picture

immerses all senses in the viewing experience

allows for greater comfort while viewing

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These features are called functional because they result in a benefit the user directly associates with the consumable product. For marketers functional benefits are often the result of materials, design and production decisions. How the product is built can lead to benefits such as effectiveness, durability, speed, ease-of-use, and cost savings to name just few.

Psychological Benefits

Are benefits the customer perceives to receive when using the product though these may be difficult to measure and may vary by customer. These benefits address needs such as status within a group, risk reduction, sense of independence, and happiness. Such benefits are developed through promotional efforts that target customer’s internal makeup (see discussion in Part 4: Consumer Buying Behavior).In addition to determining the type of features to include in a product, the marketer faces several other decisions related to features:

Quantity & Quality vs. Cost - For the marketers an important

decision focuses on the quantity and quality of features to include in a product. In most cases the more features included or the higher the quality level for a particular feature, the more expensive the product is to produce and market.

Is More Better? – Even if added cost is not a major concern, the marketer must determine if more features help or hurt the target market’s perception of the product. A product with too many features could be viewed as too difficult to use. This was often the case when video cassette recorders (VCR) were the principle device for taping television programs and watching rented movies. Many of the higher-level features introduced in the 1990s as the product matured, such as advanced television recording, proved too difficult for the average consumer to master.

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Who Should Choose the Features? – Historically marketers determined what features to include in a product. Technology, and especially the Internet, offer customers the opportunity to choose their own features to custom build a product. For instance, companies offering website hosting services allow website owners to choose from a list of service options that best suits their needs. Also, for traditional products, such as clothing, companies allow customers to stylize their purchases with logos and other personalized options.

While launching NILE, its Nature we keep in our mind to fulfill the Functional n Psychological need of our customers. As it is important to open a network at large scale and customers also prefer such products

among the Competitors that is NESTLE and AQUAFINA.

NILE, its Nature can get a good place in the market. Offseason launch would make sense as Nestle n even other small competitors wud not be expect any new entered. So a good entry. Sleeveless T -shirts wood work, as focus of the audience wood b more on models rather then ad temperature in the adv. beside the carbonated that are the Black drinks-Craze of the Young Community while mineral water drinkers are those who are extremely health conscious and are more of indoor kind of people.

Branding

Branding involves decisions that establish an identity for a product with the goal of distinguishing it from competitors’ offerings. In markets where competition is fierce and where customers may select from among many competitive products, creating an identity through branding is essential. It is particularly important in helping position the product (see discussion of product position) in the minds of the product’s target market. While consumer products companies have long recognized the value of

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branding, it has only been within the last 10-15 years that organizations selling component products in the business-to-business market have begun to focus on brand building strategies. The most well-known company to brand components is Intel with its now famous “Intel Inside” slogan. Intel’s success has led many other b-to-b companies and even non-profits to incorporate branding within their overall marketing strategy.

Brand Names and Brand Marks

At a very basic level branding is achieved through the use of unique brand names and brand marks. The brand name, which may be either the individual product name or a name applied to a group or family of products, is important for many reasons including suggesting what the product is or does (e.g., Mop-and-Glow). The name is also what we utter when we discuss the product (i.e., word-of-mouth marketing). The brand mark is a design element, such as a symbol (e.g., Nike swoosh), logo (e.g., Yahoo! graphic), a character (e.g., Feebler elves) or even a sound (e.g., Intel inside sound), that provides

visual or auditory recognition for the product.

Advantages of Brands

A strong brand offers many advantages for marketers including: Brands provide multiple sensory stimuli to enhance customer

recognition. For example, a brand can be visually recognizable from its packaging, logo, shape, etc. It can also be recognizable via sound, such as hearing the name on a radio advertisement or talking with someone who mentions the product.

Customers who are frequent and enthusiastic purchasers of a particular brand are likely to become Brand Loyal. Cultivating brand loyalty among customers is the ultimate reward for successful marketers since these customers are far less likely to be enticed to switch to other brands compared to non-loyal customers.

Well-developed and promoted brands make product positioning efforts more effective. The result is that upon exposure to a brand (e.g., hearing it, seeing it) customers conjure up mental images or feelings of the benefits they receive from using that brand. The reverse is even better. When customers associate

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benefits with a particular brand, the brand may have attained a significant competitive advantage. In these situations the customer who recognizes he needs a solution to a problem (e.g., needs to bleach clothes) may automatically think of one brand that offers the solution to the problem (e.g., Clorox). This “benefit = brand” association provides a significant advantage for the brand that the customer associates with the benefit sought.

Firms that establish a successful brand can extend the brand by adding new products under the same “family” brand. Such branding may allow companies to introduce new products more easily since the brand is already recognized within the market.

Strong brands can lead to financial advantages through the concept of Brand Equity in which the brand itself becomes valuable. Such gains can be realized through the out-right sale of a brand or through licensing arrangements. For example, Company A may have a well-recognized brand (Brand X) within a market but for some reason they are looking to concentrate their efforts in other markets. Company B is looking to enter the same market as Brand X. If circumstances are right Company A could sell to Company B the rights to use the Brand X name without selling any other part of the company. That is, Company A simply sells the legal rights to the Brand X name but retains all other parts of Brand X, such as the production facilities and employees. In cases of well developed brands such a transaction may carry a very large price tag. Thus, through strong branding efforts Company A achieves a large financial gain by simply signing over the rights to the name. But why would Company B seek to purchase a brand for such a high price tag? Because by buying the brand Company B has already achieved an important marketing goal – building awareness within the target market. The fact the market is already be familiar with the brand allows the Company B to concentrate on other marketing decisions.

While finalizing our project we basically focus on the branding of our product. We select the best brand name related to nature without any

ambiguity. The brand name reflect the taste of NILE, it’s

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Nature. We have shown a waterfall at its background and the colorful aqua label at once clicks the idea about the product.

We basically emphasize on the brand name and used a logical logo attract the customers. To make the square shape of the bottle more trust worthy, the company came up with its own distinctive idea of silver serving sleeve, custom-made to fit NILE, its Nature. It will tell everyone in its vicinity in competition with other companies that the customer who will order appreciate the best and can afford it.

Packaging:

Nearly all tangible products (i.e., goods) are sold to customers within a container or package that, as we will discuss, serves many purposes including protecting the product during shipment. In a few cases, such as with certain produce items, the final customer may purchase the product without a package but the produce marketer still faces packaging decisions when it comes to shipping to the store. Thus, for many products there are two packaging decisions – final customer and distribution.

Final Customer Packaging

This relates to the package the final customer receives in exchange for their payment. When the final customer makes a purchase he or she is initially exposed to the Primary Package – the outermost container that is seen and touched by the final customer. This primary package can be further divided into the following:

First-Level Package - This is packaging that holds the actual product (e.g., Tylenol Bottle). In some cases this packaging is minimal since it only serves to protect the product. For instance, certain frozen food products are sold to consumers in a cardboard box with the product itself contained in a plastic bag found inside the box. This plastic bag represents the first-level package. In other cases frozen food products are sold in the plastic bag that contains the product. In these cases the plastic bag is both first-level package and the primary package for convey product information.

Second-Level Package – In some cases the first-level package is surrounded by one or more outer packages (e.g., box

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holding the Tylenol Bottle). This second-level package may act as the primary package for the product.

Package Inserts - Marketers use a variety of other methods to communicate with customers after they open the product package. These methods are often inserted within, or sometimes on, the

product’s package. Insertions include information such as instruction manuals and warranty cards, promotional incentives such as coupons, and items that add value such as recipes and software.

Distribution Packaging

This packaging is used to transport the customer package through the supply chain. It generally holds multiple customer packages and also offers a higher level of damage protection than that of customer packaging.

Factors to Consider When Making Packaging DecisionPackaging decisions are important for several reasons including:

Protection – Packaging is used to protect the product from damage during shipping and handling, and to lessen spoilage if the protect is exposed to air or other elements.

Visibility – Packaging design is used to capture customers’ attention as they are shopping or glancing through a catalog or website. This is particularly important for customers who are not familiar with the product and in situations, such as those found in grocery stores, where a product must stand out among thousands of other products. Packaging designs that standout are more likely to be remembered on future shopping trips.

Added Value – Packaging design and structure can add value

to a product. For instance, benefits can be obtained from package structures that make the product easier to use while stylistic designs can make the product more attractive to display in the customer’s home.

Distributor Acceptance – Packaging decisions must not only be accepted by the final customer, they may also have to be accepted by distributors who sell the product for the supplier. For

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instance, a retailer may not accept packages unless they conform to requirements

they have for storing products on their shelves.

Cost – Packaging can represent a significant portion of a product’s selling price. For example, it is estimated that in the cosmetics industry the packaging cost of some products may be as high as 40% of a product’s selling price. Smart packaging decisions can help reduce costs and possibly lead to higher profits.

Expensive to Create - Developing new packaging can be extremely expensive. The costs involved in creating new packaging include: graphic and structural design, production, customer testing, possible destruction of leftover old packaging, and possible advertising to inform customer of the new packaging.

Long Term Decision – When companies create a new

package it is most often with the intention of having the design on the market for an extended period of time. In fact, changing a product’s packaging too frequently can have negative effects since customers become conditioned to locate the product based on its package and may be confused if the design is altered.

Environmental or Legal Issues – Packaging decisions must also include an assessment of its environmental impact especially for products with packages that are frequently discarded. Packages that are not easily bio-degradable could draw customer and possibly governmental concern. Also, caution must be exercised in order to create packages that do not infringe on intellectual property, such as copyrights, trademarks or patents, held by others.

Labeling

Most packages, whether final customer packaging or distribution packaging, are imprinted with information intended to assist the customer. For consumer products, labeling decisions are extremely important for the following reasons.

Labels serve to capture the attention of shoppers. The use of catchy

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words may cause strolling customers to stop and evaluate the product.

The label is likely to be the first thing a new customer sees and thus offers their first impression of the product.

The label provides customers with product information to aid their purchase decision or help improve the customer’s experience when using the product (e.g., recipes).

Labels generally include a universal product codes (UPC) and, in

some cases, radio frequency identification (RFID) tags, that make it easy for resellers, such as retailers, to checkout customers and manage inventory.

For companies serving international markets or diverse cultures

within a single country, bilingual or multilingual labels may be needed.

In some countries many products, including food and

pharmaceuticals, are required by law to contain certain labels such as listing ingredients, providing nutritional information or including usage warning information.

Marketers are confronted with many issues when building the product component of their marketing strategy. While product decisions represent just one aspect of marketer’s overall activities, these decisions are often the most important because they lead directly to the reasons (i.e., benefits offered, solutions to problems) for why the customer decides to choose the organization’s goods, services or ideas.

The unique bottle of NILE and colorful labeling also sets the brand

apart.yhe clear plastic front label presents the NILE name with the waterfall at its background. In combination with the front and back label creates a striking 3-D picture that emphasizes NILE’s clarity and Purity.

It will not b wrong to say that “The Bottle Appears to Have a MAGIC in it”

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Product Management Responsibilities

Touching the basic concepts and strategies applicable to a large percentage of marketing situations, the reader should understand that no two marketing situations are the same. Yet while some concepts and strategies important to one marketer may not hold the same weight with another, in general, the basic principles of marketing (e.g., satisfying target markets, support decisions using research, etc.) hold no matter the type of industry, type of company or type of product being sold.

What is often different between two marketing situations is the level of complication and challenge that arises as a marketer’s scope of responsibility increases. For our purposes a marketer’s level of responsibility is measured in terms of:

the number and variety of tasks that must be performed (i.e., what has to be done)

the value these tasks represent to the organization (i.e., how

important marketing is perceived within the company)

the overall financial stake the marketing position holds (i.e., total sales volume and profit generation).

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As responsibilities change so to do the marketer’s tasks. For instance, with regard to product decisions, as a marketer’s responsibilities become greater her or his day-to-day job shifts from being involved in specific product issues (e.g., finding a graphics design company to create a new label) to decisions concerning many products and focusing on setting the future marketing direction of the company (e.g., developing marketing plans for numerous products). We can see this in greater detail by examining the responsibilities associated with four different marketing management levels:

Product Item Level – At this level responsibilities are associated with marketing a single product or brand. By “single” we are limiting the marketer’s responsibility to one item. For instance, a startup software development company may initially market just one product. In some organizations the person in charge has the title Product Manager, though in smaller companies this person may simply be the Marketing Manager.

Brand Product Line Level – At this level responsibilities are

associated with managing two or more similar product items. By “similar” we are referring to products carrying the same brand name that fit within the same product category and offer similar solutions to customers’ needs. Procter & Gamble, one of the largest consumer products companies in the world, markets Tide laundry detergent in several different packaging sizes (e.g., 50oz., 100oz., 200oz.), in different forms (e.g., powder, liquid) and with different added features (e.g., softener, bleach). Tide’s product line consists of over 100 different versions of the product.

Differences in the product offerings indicate these are targeted to different segments within the larger market (e.g., those preferring liquid vs. those preferring powder), however, it may also represent a choice for the same target market who may seek variety. A product

line is often measured by its depth, relative to competitors, with deep product lines offering extensive product items. Brand product lines are often managed by a Brand or Product Line Manager.

Category Product Line Level – At this level responsibilities are associated with managing two or more brand product lines within the same product category. In this situation the marketer may manage products that offer similar basic benefits (e.g., clean

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clothes) but target their offerings to slightly different needs (e.g., product for tough to clean clothing vs. product to clean delicate clothing). Multiple brand product lines allow the marketer to cover the needs of more segments and, consequently, increase their chance to generate sales. Often in larger companies category product lines are the responsibility of the Product Category or Divisional Marketing Manager who may have Brand Product Managers reporting to him/her.

Product Mix Level – At this level responsibilities include two or more category product lines that are directed to different product categories. In some cases the category product lines may yield similar general solutions (e.g., cleaning) but are aimed at entirely different target markets (e.g., cleaning dishes vs. cleaning automobiles). In large companies, the product lines are very diverse and offer different solutions.

For example, BIC sells writing instruments, shaving products, and lighters. This diversification strategy cushions against an “all-eggs-in-one-basket” risk that may come if a company directs all resources to one product category. A product mix can be classified based on its width (how many different category product lines) and its depth (how many different brand product lines within a category product line). Generally responsibility for this level belongs to a company’s Vice President for Marketing.

Being product manager, I keep my objective in my mind to sell my single product and to emphasize on its selling. Our major product

today is to launch a Safe and secure mineral water that is NILE, it’s Nature. With the passage of time we will obviously like to introduce new products of our brand.e.g juices, ketchup with the name of our company.etc.

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Branding Strategy

Branding is an important decision designed to enhance the identity of the product through the use of unique brand names, symbols and other distinctive measures. With competition growing more intense in almost all industries, establishing a strong brand allows an organization’s products to stand out and avoid potential pitfalls, such as price wars, that have befallen many products. Therefore, a clear understanding of branding strategy is essential in order to build solid products and product lines. In particular, marketers should be aware of various branding approaches that can be pursued.By branding approach we are referring to different product identification strategies that can be deployed to establish a product within the market. As we will see, the purpose of these approaches is to build a brand that will exist for the long term. Making smart decisions up front is crucial since a company may have to live with the decision for a long time. Branding approaches include the following:

Individual Product Branding – Under this branding approach new products are assigned new names with no obvious connection to

existing brands offered by the company. Under individual product branding the marketing organization must work hard to establish the brand in the market since it cannot ride the coattails of previously introduced brands. The chief advantage of this approach is it allows brands to stand on their own thus lessening threats that may occur to other brands marketed by the company. For instance, if another company brand receives negative publicity this news is less likely to rub off on the company’s other brands that carry their own unique names. Brands can create financial gains through the concept known as brand equity. Under an individual branding approach, each brand builds its own separate equity which allows the company, if they choose, to sell off individual brands without impacting other brands owned by the company. The most famous marketing organization to follow this strategy is Procter and Gamble, which has historically introduced new brands without any link to other

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brands or even to the company name.

Family Branding – Under this branding approach new products are placed under the umbrella of an existing brand. The principle advantage of this approach is that it enables the organization to rapidly build market awareness and acceptance since the brand is already established and known to the market. But the potential disadvantage is that the market has already established certain perceptions of the brand. For instance, a company that sells low-end, lower priced products may have a brand that is viewed as an economy brand. This brand image may create customer confusion and hinder the company if they attempt to introduce higher-end, higher priced products using the same brand name. Additionally, with family branding any negative publicity that may occur for one product within a brand could spread to all other products that share the same name.

Co-Branding – This approach takes the idea of individual and family branding a step further. With co-branding a marketer seeks to

partner with another firm, which has an established brand, in hopes synergy of two brands on a product is even more powerful than a single brand. The partnership often has both firms sharing costs but also sharing the gains. For instance, major credit card companies, such as Visa and MasterCard, offer co-branding options to companies and organizations. The cards carry the name of a co-branded organization (e.g., University name) along with the name of the issuing bank (e.g., Citibank) and the name of the credit card company. Besides tapping into awareness for multiple brands, the co-branding strategy is also designed to appeal to a larger target market, especially if each brand, when viewed separately, does not have extensive overlapping target markets with the other brand. Thus, co-branding allows both firms to tap into market segments where they did not previously have a strong position.

Private or Store Branding – Some suppliers are in the business of producing products for other companies including

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placing another company’s brand name on the product. This is most often seen in the retail industry where stores or online sellers contract with suppliers to manufacture the retailer’s own branded products. In some cases the supplier not only produces product for the retailer’s brand but also markets their own brand so that store shelves will contain both brands.

No-Name or Generic Branding – Certain suppliers supply products that are intentionally “brand less.” These products are mostly basic commodity-type products that consumer or business customers purchase as low price alternatives to branded products. Basic household products such as paper products, over-the-counter medicines such as ibuprofen, and even dog food are available in a generic form.

Brand Licensing – Under brand licensing a contractual arrangement is created in which a company owning a brand name allows others to produce and supply products carrying the brand name. This is often seen when a brand is not directly connected with a product category. For instance, several famous children’s characters, such as Sesame Street’s Elmo, have been licensed to toy and food manufacturers who market products using the branded character’s name and image.

Currently we are at the initial stage of our launch, we have a very

planed future for our launching NILE, it’s Nature in other cities of Pakistan not only with an individual brand but we establish our network at international level also. We are looking forward for co- brands in future.We have taken the brand license legally under the supervision of Government of Pk.

Developing New Products

By its nature marketing requires new ideas. Unlike some organizational functions, where basic processes follow a fairly consistent routine (e.g., accounting), successful marketers are constantly making adjustments to their marketing efforts. New ideas are essential for responding to changing demand by the target market and by pressure exerted by competitors. These changes are manifested in decisions in all marketing areas including the development of new products.

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In addition to being responsive to changing customer tastes and competitive forces, there are many other reasons why new product development is vital. These include:

Many new products earn higher profits than older products. This is often the case for products considered innovative or unique which, for a period of time, may enjoy success and initially face little or no competition.

New products can help reposition the company in customer’s minds. For instance, a company that traditionally sold low priced products with few features may shift customers’ perceptions about the

company by introducing products with more features and slightly higher pricing.

Fierce global competition and technological developments make

it much easier for competitors to learn about products and replicate them. To stay ahead of competitors marketers must innovate and often create and introduce new products on a consistent schedule.

Companies with limited depth in a product line may miss out on

more sales unless they can add new products to fill out the line.

Some firms market seasonal products that garner their highest sales during a certain time of the year or sell cyclical products whose sales fluctuate depending on economic or market factors. Expanding the firm’s product mix into new areas may help offset these fluctuations. For manufacturing firms an additional benefit is realized as new products utilize existing production capacity that is under-used when seasonal or cyclical products are not being produced.

Categories of New Products

New products can fall into one of several categories. These categories are defined by the type of market the product is entering (i.e., newly created, existing but not previously targeted, existing and targeted ) and the level of product innovation (i.e., radically new, new, upgrade).

Creates New Market with Radically New Product or Product Line – This category is represented by new breakthrough products that are so revolutionary they create an entirely new market. Recent

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examples include digital music players, such as Apple’s iPod, that have spawned new delivery methods (downloadable music) and new media (podcasting). Highly innovative products are rare so very few new products fall into this category.

Enters Existing But Not Previously Targeted Market with New-Product or Product Line – In this category a marketer introduces a new product item or product line to an existing market which they did

not previously target. Often these products are similar to competitors’ products already available in the market but with some level of difference (e.g., different features, lower price, etc.). Microsoft’s entry into the video gaming system market with their Xbox is an example.

Stays in Existing and Previously Targeted Market by Enhancing Existing Product or Product Line – Under this development category the marketer attempts to improve its current position in the market by either improving or upgrading existing products or by extending a product line by adding new products. This type of new product is seen in our earlier example of Procter and Gamble’s Tide product line which contains many product variations of the basic Tide product.

How New Products Are ObtainedMarketers have several options for obtaining new products. First, products can be developed within an organization’s own research operations. For some companies, such as service firms, this may simply mean the marketer designs new service options to sell to target markets. For instance, a marketer for a mortgage company may design new mortgage packages that offer borrowers different rates or payment options. At the other extreme companies may support an extensive research and development effort where engineers, scientists or others are engaged in new product discovery.

A second way to obtain products is to acquire them from external sources. This can occur in several ways including:

Purchase the Product - With this option a marketer purchases the product outright from another firm that currently owns the product. The advantage is that the product is already developed, which reduces the purchasing company’s time and cost of trying to develop it themselves. On the negative side the purchase cost

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may be high.

License the Product – Under this option the marketer negotiates with the owner of the product for the rights to market the product. This

may be a particularly attractive option for companies who have to fill a product need quickly (e.g., give a product line more depth) or it may be used as a temporary source of products while the marketer’s company is developing its own product. On the negative side the arrangement may have a limited time frame at which point the licensor may decide to end the relationship leaving the marketer without a source for the product.

Purchase Another Firm - Instead of purchasing another company’s products marketers may find it easier to just purchase the whole company selling the products. One key advantage to this is that the acquisition often includes the people and resources that developed the product which may be a key consideration if the acquiring company wants to continue to develop the acquired products.

New Product Development Process

Because introducing new products on a consistent basis is important to the future success of many organizations, marketers in charge of product decisions often follow set procedures for bringing products to market. In the scientific area that may mean the establishment of ongoing laboratory research programs for discovering new products (e.g., medicines) while less scientific companies may pull together resources for product development on a less structured timetable.

In this section we present a 7-step process comprising the key elements of new product development. While some companies may not follow a deliberate step-by-step approach, the steps are useful in showing the information input and decision making that must be done in order to successfully develop new products. The process also shows the importance market research plays in developing products. We should note that while the 7-step process works for most industries, it is less effective in developing radically new products. The main reason lies in the inability of the target market to provide sufficient feedback on advanced product concepts since they often find it difficult to understand radically different ideas. So while many of these steps are used to research breakthrough ideas, the marketer should exercise caution when interpreting the results.

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Step 1. IDEA GENERATION

The first step of new product development requires gathering ideas to be evaluated as potential product options. For many companies idea generation is an ongoing process with contributions from inside and outside the organization. Many market research techniques are used to encourage ideas including: running focus groups with consumers, channel members, and the company’s sales force; encouraging customer comments and suggestions via toll-free telephone numbers and website forms; and gaining insight on competitive product developments through secondary data sources. One important research technique used to generate ideas is brainstorming where open-minded, creative thinkers from inside and outside the company gather and share ideas. The dynamic nature of group members floating ideas, where one idea often sparks another idea, can yield a wide range of possible products that can be further pursued. Step 2. SCREENING

In Step 2 the ideas generated in Step 1 are critically evaluated by company personnel to isolate the most attractive options. Depending on the number of ideas, screening may be done in rounds with the first round involving company executives judging the feasibility of ideas while successive rounds may utilize more advanced research techniques. As the ideas are whittled down to a few attractive options, rough estimates are made of an idea’s potential in terms of sales, production costs, profit potential, and competitors’ response if the product is introduced. Acceptable ideas move on to the next step.

Step 3. CONCEPT DEVELOPMENT AND TESTING

With a few ideas in hand the marketer now attempts to obtain initial feedback from customers, distributors and its own employees. Generally, focus groups are convened where the ideas are presented to a group, often in the form of concept board presentations (i.e., storyboards) and not in actual working form. For instance, customers may be shown a concept board displaying drawings of a product idea or even an advertisement featuring the

product. In some cases focus groups are exposed to a mock-up of the ideas, which is a physical but generally non-functional version of product idea. During focus groups with customers the marketer seeks information that may include: likes and dislike of the concept; level of interest in purchasing the product; frequency of purchase (used to help

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forecast demand); and price points to determine how much customers are willing to spend to acquire the product. Step 4. BUSINESS ANALYSIS

At this point in the new product development process the marketer has reduced a potentially large number of ideas down to one or two options. Now in Step 4 the process becomes very dependent on market research as efforts are made to analyze the viability of the product ideas. (Note, in many cases the product has not been produced and still remains only an idea.) The key objective at this stage is to obtain useful forecasts of market size (e.g., overall demand), operational costs (e.g., production costs) and financial projections (e.g., sales and profits). Additionally, the organization must determine if the product will fit within the company’s overall mission and strategy. Much effort is directed at both internal research, such as discussions with production and purchasing personnel, and external marketing research, such as customer and distributor surveys, secondary research, and competitor analysis.

Step 5. PRODUCT AND MARKETING MIX DEVELOPMENT

Ideas passing through business analysis are given serious consideration for development. Companies direct their research and development teams to construct an initial design or prototype of the idea. Marketers also begin to construct a marketing plan for the product. Once the prototype is ready the marketer seeks customer input. However, unlike the concept testing stage where customers were only exposed to the idea, in this step the customer gets to experience the real product as well as other aspects of the marketing mix, such as advertising, pricing, and distribution options (e.g., retail store, direct from company, etc.).

Favorable customer reaction helps solidify the marketer’s decision to introduce the product and also provides other valuable information such as estimated purchase rates and understanding how the product will be used by the customer. Reaction that is less favorable may suggest the need for adjustments to elements of the marketing mix. Once these are made the marketer may again have the customer test the product. In addition to gaining customer feedback, this step is used to gauge the feasibility of large-scale, cost effective production for manufactured products.

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Step 6. MARKET TESTING

Products surviving to Step 6 are ready to be tested as real products. In some cases the marketer accepts what was learned from concept testing and skips over market testing to launch the idea as a fully marketed product. But other companies may seek more input from a larger group before moving to commercialization. The most common type of market testing makes the product available to a selective small segment of the target market (e.g., one city), which is exposed to the full marketing effort as they would be to any product they could purchase. In some cases, especially with consumer products sold at retail stores, the marketer must work hard to get the product into the test market by convincing distributors to agree to purchase and place the product on their store shelves. In more controlled test markets distributors may be paid a fee if they agree to place the product on their shelves to allow for testing. Another form of market testing found with consumer products is even more controlled with customers recruited to a “laboratory” store where they are given shopping instructions. Product interest can then be measured based on customer’s shopping response.

Finally, there are several high-tech approaches to market testing including virtual reality and computer simulations. With virtual reality testing customers are exposed to a computer-projected environment, such as a store, and are asked to locate and select products. With computer simulations customers may not be directly involved at all. Instead certain variables are entered into a sophisticated computer program and estimates of a target market’s response are calculated.

Step 7. COMMERCIALIZATION

If market testing displays promising results the product is ready to be introduced to a wider market. Some firms introduce or roll-out the product in waves with parts of the market receiving the product on different schedules. This allows the company to ramp up production in a more controlled way and to fine tune the marketing mix as the product is distributed to new areas.

Managing Existing Products

Marketing strategies developed for initial product introduction almost

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certainly need to be revised as the product settles into the market. While commercialization may be the last step in the new product development process it is just the beginning of managing the product. Adjusting the product’s marketing strategy is required for many reasons including:

Changing customer tastes Domestic and foreign competitors Economic conditions Technological advances

To stay on top of all possible threats the marketer must monitor all aspects of the marketing mix and make changes as needed. Such efforts require the marketer to develop and refine the product’s marketing plan on a regular basis. In fact, as we will discuss in a later section of this tutorial, marketing strategies change as a product moves through time leading to the concept called the Product Life Cycle (PLC). We will see that marketers make numerous revisions to their strategy as product move through different stage of the PLC.

We have followed every necessary step for introducing our Brand in this revolutionize and modern market. We are well aware of the people’s taste so we are not going to bore them with a single product but hope they would believe in our quality and taste and will give us opportunity to bring more products after this launch.

NILE, it’s Nature can compete easily with the other developed largest distribution network in the country...so in accordance with the current product positioning and sales network the any issue can be resolved effectively.

The main issue for NILE, it’s Nature is to compete with Nestlé’s brand power...Pure life has really proved to be an active brand over the last three years or so...the positing is good as well.

But the main problem with NILE, it’s Nature is that not many are aware of the new Launch of NILE. But our promotion department has tried its best to create awareness among people. This product for all season....NILE (it’s Nature) is not a CSD or some summer drink.

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PRICErice is second most component of the four P’s of the market mix. Price is defined as “The amount of money charged for a product or

service or the sum of the values that consumers exchange for the benefits of having or using the product or service”. Simply price is the amount of money with utility needed to acquire a product and utility is an attribute with the potential to satisfy wants.

P

“Price is what you pay for what you get.”

Price is the only element of the mix that provides revenue, the other elements are costs (there is cost in building product or service, promoting it, and placing or distributing it). It is extremely important

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for marketers to remember that individuals in a market are highly receptive not only to the price of an item, but also to the value offered by the product. Successful companies take special consideration at the different parts involved in setting its prices. For this they take into account that the prices they offer for their products and services must strike a balance between gaining acceptance with the target customers and making the profit for the organization. Item such as list price, discounts, allowances, payment periods and credit terms are items that work together to set the price of the product.

The prices of NILE, its nature is based on the value based pricing which means that we use several standards to define the price like product design , product cost, delivery etc. Our prices are not too high but they fall between high and low that is they are sufficient to create demand and to produce a profit.

When setting price we have considered: Whether to discount or not. The price that the competition charges. The cost of providing the product. The company’s market position.

The type or nature of demand e.g. If an increase or decrease of price will effect amounts purchased.

The market segment we are seeking to attract. Price is also the marketing variable that can be changed most quickly, perhaps in response to a competitor price change. Price is the amount of money charged for a product or service or the value exchanged for the benefits of the product or service. 

For a new product, we must understand our positioning before set a price. We must make sure it is not too low, or the product will not be taken seriously. If it is too high, the potential customer will not take the risk.Put simply, price is the amount of money or goods for which a thing is bought or sold. The price of a product may be seen as a financial expression of the value of that product.

For a consumer, price is the monetary expression of the value to be enjoyed/benefits of purchasing a product, as compared with other available items.

The concept of value can therefore be expressed as:

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(perceived) VALUE = (perceived) BENEFITS – (perceived) COSTS

A customer’s motivation to purchase a product comes firstly from a need and a want: e.g.

Need: "I need to eat Want: I would like to go out for a meal tonight"

The second motivation comes from a perception of the value of a product in satisfying that need/want (e.g. "I really fancy a McDonalds").The perception of the value of a product varies from customer to customer, because perceptions of benefits and costs vary.

Perceived benefits are often largely dependent on personal taste (e.g. spicy versus sweet, or green versus blue). In order to obtain the maximum possible

value from the available market, businesses try to ‘segment’ the market – that is to divide up the market into groups of consumers whose preferences are broadly similar – and to adapt their products to attract these customers.In general, a products perceived value may be increased in one of two ways – either by:

Increasing the benefits that the product will deliver, or, Reducing the cost.

For consumers, the PRICE of a product is the most obvious indicator of cost hence the need to get product pricing right.

Importance of Pricing

When we talk about what they do as part of their responsibilities for marketing products, the tasks associated with setting price are often not at the top of the list. We are much more likely to discuss their activities related to promotion, product development, market research and other tasks that are viewed as the more interesting and exciting parts of the job. Yet pricing

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decisions can have important consequences for the marketing organization and the attention given by the marketer to pricing is just as important as the attention given to more recognizable marketing activities.  Some reasons pricing is important include:

Most Flexible Marketing Mix Variable

For us price is the most adjustable of all marketing decisions.  Unlike product and distribution decisions, which can take months or years to change, or some forms of promotion which can be time consuming to alter (e.g., television advertisement), price can be changed very rapidly.  The flexibility of pricing decisions is particularly important in times when the

marketer seeks to quickly stimulate demand or respond to competitor price actions.  For instance, a marketer can agree to a field salesperson’s request to lower price for a potential prospect during a phone conversation.  Likewise a marketer in charge of online operations can raise prices on hot selling products with the click of a few website buttons.

Setting the Right Price

Pricing decisions made hastily without sufficient research, analysis, and strategic evaluation can lead to the marketing organization losing revenue.  Prices set too low may mean the company is missing out on additional profits that could be earned if the target market is willing to spend more to acquire the product. Additionally, attempts to raise an initially low priced product to a higher price may be met by customer resistance as they may feel the marketer is attempting to take advantage of their customers.  Prices set too high can also impact revenue as it prevents interested customers from purchasing the product.  Setting the right price level often takes considerable market knowledge and, especially with new products, testing of different pricing options.

Trigger of First Impressions

Often times customers’ perception of a product is formed as soon as they learn the price, such as when a product is first seen when walking down the aisle of a store.  While the final decision to make a purchase may be based on the value offered by the entire marketing offering (i.e., entire product), it is possible the customer will not evaluate a marketer’s product at all based on price alone. 

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It is important for marketers to know if customers are more likely to dismiss a product when all they know is its price.  If so, pricing may become the most important of all marketing decisions if it can be shown that customers are avoiding learning more about the product because of the price.

Important Part of Sales Promotion

Many times price adjustments is part of sales promotions that lower price for a short term to stimulate interest in the product.  However, as we noted in our discussion of promotional pricing in the Sales Promotion Tutorial, marketers must guard against the temptation to adjust prices too frequently since continually increasing and decreasing price can lead customers to be conditioned to anticipate price reductions and, consequently, withhold purchase until the price reduction occurs again.

Objectives of Pricing

Pricing objectives or goals give direction to the whole pricing process. Determining what our objectives are is the first step in pricing. When deciding on pricing objectives we must consider: 1) the overall financial, marketing, and strategic objectives of the company; 2) the objectives of our product or brand; 3) consumer price elasticity and price points; and 4) the resources we have available.

Some of the more common pricing objectives are:

Maximize long-run profit

Maximize short-run profit

Increase sales volume (quantity)

Increase dollar sales

Increase market share

Obtain a target rate of return on investment (ROI)

Obtain a target rate of return on sales

Stabilize market or stabilize market price: an objective to stabilize price means that the marketing manager attempts to keep prices stable in the marketplace and to compete on non-price considerations. Stabilization of margin is basically a cost-plus approach in which the

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manager attempts to maintain the same margin regardless of changes in cost.

Company growth

Maintain price leadership

Desensitize customers to price

Discourage new entrants into the industry

Match competitors prices

Encourage the exit of marginal firms from the industry

Survival

Avoid government investigation or intervention

Obtain or maintain the loyalty and enthusiasm of distributors and other sales personnel

Enhance the image of the firm, brand, or product

Be perceived as “fair” by customers and potential customers

Create interest and excitement about a product

Discourage competitors from cutting prices

Use price to make the product “visible"

Build store traffic

Help prepare for the sale of the business (harvesting)

Social, ethical, or ideological objectives

Get competitive advantage

Some other objectives are..

Achieve a Target Return

A firm may price its product to achieve a target return-a specified percentage return on its sales or on its investment. Many retailers and wholesalers use a target return on sales as a pricing objective for short periods such as a year or a fashion season. They add amount to the cost of

the product, called a markup, to cover anticipated operating expense and provide a desired profit for a period.

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Achieving a target return on investment is measured in relation to a firm’s net worth (its assets minus its liabilities). This pricing goal is often used by the leading firm in an industry. The leaders price so that they earn profit on the net worth. Current Revenue Maximization

It seeks to maximize the current revenues with no regards to profit margin. The underlying objective often is to maximize long-term profits by increase market share and lowering cost.

In both economic theory and business practice there is nothing wrong with the profit maximization. Theoretically if the profits become high in an industry because supply is short with respect to demand, new capital will be attracted to increase production capacity. This will increase supply and eventually reduce the profits. A profit maximization goal is likely to be far more beneficial to the company if it is pursued over the long term. To do this, however, firms may have to accept the modest profits or even loses over the short term.

Maximize Quantity

It seeks to maximize the number of units sold or the number of customers served in order to decrease long-term costs as predicted by the experience curve. In growing fields the companies want large shares in order to gain added clout with the vendors, drive down the production cost, or project a dominance appearance to consumers.

Maximize Profit Margin

Older products that appeal to a market that is no longer growing may have a company objective requiring the price be set at a level that optimizes profits.  This is often the case when the marketer has little incentive to

introduce improvements to the product (e.g., demand for product is declining) and will continue to sell the same product at a price premium for as long as some in the market is willing to buy.

Quality Leadership

It use price to signal high quality in an attempt to position the product as the quality leader.

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Partial Recovery of Costs

An organization that has other revenue source may seek only partial cost recovery.

Cash Flow

Firms may seek to set prices at a level that will insure that sales revenue will at least cover product production and marketing costs.  This is most likely to occur with new products where the organizational objectives allow a new product to simply meet its expenses while efforts are made to establish the product in the market.  This objective allows the marketer to worry less about product profitability and instead directs energies to building a market for the product.

Survival

In situation as market decline and overcapacity the goal may be to select a price that will cover cost and permit the firm to remain in the market. In this case survival may take priority over profits, so this objective is considered temporarily.

Status Quo

In this two closely related goals are stabilizing prices and meeting competition. They are intended simply to maintain the firm’s current

situation that is, the status quo. With either of these goals the firm seeks to avoid price competition.

Price stabilization is often the goal in the industry where they product is highly standardized such as steel or bulk chemicals and where one large firm act as the leader in setting price. The smaller firms “follow the leader” in setting price. Firms that adopt status quo pricing goals to avoid price competition may not necessarily be passive in their marketing. Typically these companies compete aggressively by using other marketing mix elements- product, promotion, and distribution. This approach is called the non-price competition.

Pricing and Estimated Demand

In pricing a company, must estimates the total demands of the product. Demand is the quantity of goods which can be bought at a

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given price. Successful businesses are those who can satisfy the consumer demand and can get

“The right goods to the right place, at the right time and at the right price”

The steps in estimating demand are:

Determine whether there is a price the market expects. Estimates what the sales volume might be at different prices.

The expected price of the product is the price at which customers consciously or unconsciously value it-what they think the product is worth. Expected prices usually are the range of prices rather than as a specific amount.

Factors Affecting DemandSome factors affecting the demand for a product are

Within the control of a business and Outside the control of a business

Factors within a businesses’ control include:

Price (assuming an imperfect market – i.e. not perfect competition)

Product research and development

Advertising & sales promotion

Training and organization of the sales force

Effectiveness of distribution (e.g. access to retail outlets; trained distributor agents)

Quality of after-sales service (e.g. which affects demand from repeat-business)

Factors outside the control of business include:

price of substitute goods and services

The price of complementary goods and services

Consumers’ disposable income

Consumer tastes and fashions

Pricing in Different types of Markets

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The seller’s pricing freedom varies with different types of markets. Economists recognize four types of markets, each presenting a different pricing challenge.

Under Pure Competition

This market consists of many buyers and sellers trading in a uniform commodity such as wheat copper or financial security. No single buyer or seller has much effect on the going market price.

A seller cannot charge more than the going price, because buyer can obtain as much as they need at the going price. Nor would sellers sell charge less than the market price because they can sell all, they want at this price.

Under Monopolistic Competition

The market consists of many buyers and sellers who trade over a range of prices rather than a single price. A range of prices occurs because sellers can differentiate their offers to buyers.

Under Oligopolistic Competition

The market consists of few sellers who are highly sensitive to each other’s pricing and marketing strategies. The product can be uniform (steel, aluminum) or non uniform (cars, computers). There are few sellers because it is difficult for new sellers to enter the market. Each seller is alert to competitors’ strategies and moves.

In Pure Monopoly

The market consists of one seller. The seller may be a government monopoly (the U.S postal service), a private regulated monopoly (a power company), or a private no regulated monopoly.

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Analyzing the Price-Demand Relationship

Each price the company might charge will lead to a different level of demand. The relationship between the price charged and the resulting demand level is shown in the demand curve. The demand curve shows the number of units the market will buy in a given time period, at different prices that might be charged. In the normal case, demand and price are inversely related: that is, that is the higher the price, the lower the demand. In short, consumers with limited budgets probably will buy less of some thing if its price is too high. In the case of prestige goods, the demand

curve sometimes slopes upward. Consumers think that higher prices mean more quality.

Most companies try to measure their demand curves by estimating demand at different prices. The type of market makes a difference. In a monopoly, the demand curve shows the total market demand resulting from different prices. If the company faces competitions, its demand at different prices will depend on whether competitor’s prices stay constant or change with the company’s own prices.

Price Elasticity Demand

A measure of the sensitivity of demand to change in price. The price elasticity of demand is given by the following formula:

Price elasticity of Demand = %Change in Quantity Demanded % Change in Demand

Finally, buyers are price sensitive when the total expenditure for a product is low relative to their income or when another party shares the cost. Price is, therefore, a critically important element of the choices available to businesses in trying to attract demand for their products.

Elasticity of Demand

Marketers should never rest on their marketing decisions.  They must continually use market research and their own judgment to determine whether marketing decisions need to be adjusted.  When it comes to

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adjusting price, the marketer must understand what effect a change in price is likely to have on target market demand for a product. 

Understanding how price changes impact the market requires the marketer have a firm understanding of the concept economists call elasticity of demand, which relates to how purchase quantity changes as prices change.  Elasticity is evaluated under the assumption that no other changes are being made (i.e., “all things being equal”) and only price is adjusted.  The logic is to see how price by itself will affect overall demand.  Obviously, the chance of

nothing else changing in the market but the price of one product is often unrealistic.  For example, competitors may react to the marketer’s price change by changing the price on their product.  Despite this, elasticity analysis does serve as a useful tool for estimating market reaction.Elasticity deals with three types of demand scenarios:

Elastic Demand

Products are considered to exist in a market that exhibits elastic demand when a certain percentage change in price results in a larger and opposite percentage change in demand.  For example, if the price of a product increases (decreases) by 10%, the demand for the product is likely to decline (rise) by greater than 10%.

Inelastic Demand

Products are considered to exist in an inelastic market when a certain percentage change in price results in a smaller and opposite percentage change in demand.  For example, if the price of a product increases (decreases) by 10%, the demand for the product is likely to decline (rise) by less than 10%. 

Unitary Demand

This demand occurs when a percentage change in price results in an equal and opposite percentage change in demand.  For example, if the price of a product increases (decreases) by 10%, the demand for the product is likely to decline (rise) by 10%. 

For us the important issue with elasticity of demand is to understand how it impacts company revenue.  In general the following scenarios apply to making price changes for a given type of market demand:

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For elastic markets – increasing price lowers total revenue while decreasing price

Increases total revenue.

For inelastic markets – increasing price raises total revenue while decreasing price lowers total revenue.

For unitary markets – there is no change in revenue when price is changed.

Customer and Channel Partner Expectation

Possibly the most obvious external factors that influence price setting are the expectations of customers and channel partners.  As we discussed, when it comes to making a purchase decision customers assess the overall “value” of a product much more than they assess the price.  When deciding on a price marketers need to conduct customer research to determine what “price points” are acceptable.  Pricing beyond these price points could discourage customers from purchasing.

Firms within the marketer’s channels of distribution also must be considered when determining price.  Distribution partners expect to receive financial compensation for their efforts, which usually means they will receive a percentage of the final selling price.  This percentage or margin between what they pay the marketer to acquire the product and the price they charge their customers must be sufficient for the distributor to cover their costs and also earn a desired profit. 

Competitive and Related Products

Marketers will undoubtedly look to market competitors for indications of how price should be set.  For many marketers of consumer products researching competitive pricing is relatively easy, particularly when Internet search tools are used.  Price analysis can be somewhat more complicated for products sold to the business market since final price may be affected by a number of factors including if competitors allow customers to negotiate their final price. Analysis of competition will include pricing by direct competitors, related products and primary products.

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Direct Competitor Pricing Almost all marketing decisions, including pricing, will include an evaluation of competitors’ offerings.  The impact of this information on the actual setting of price will depend on the competitive nature of the market.  For instance, products that dominate markets and are viewed as market leaders may not be heavily influenced by competitor pricing since they are in a commanding position to set prices as they see fit.  On the other hand in markets where a clear leader does not exist, the pricing of competitive products will be carefully considered. 

Marketers must not only research competitive prices but must also pay close attention to how these companies will respond to the marketer’s pricing decisions.  For instance, in highly competitive industries, such as gasoline or airline travel, competitors may respond quickly to competitors’ price adjustments thus reducing the effect of such changes.

Related Product Pricing

Products that offer new ways for solving customer needs may look to pricing of products that customers are currently using even though these other products may not appear to be direct competitors.  For example, a marketer of a new online golf instruction service that allows customers to access golf instruction via their computer may look at prices charged by local golf professionals for in-person instruction to gauge where to set their price.  While on the surface online golf instruction may not be a direct competitor to a golf instructor, marketers for the online service can use the cost of in-person instruction as a reference point for setting price.

Primary Product Pricing

As we discussed in the Product Decisions Tutorial, marketers may sell products viewed as complementary to a primary product.  For example, Bluetooth headsets are considered complementary to the primary product cell phones.  The pricing of complementary products may be affected by pricing changes made to the primary product since customers may compare the price for complementary products based on the primary product price.

Government Regulation

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Marketers must be aware of regulations that impact how price is set in the markets in which their products are sold.  These regulations are primarily government enacted meaning that there may be legal ramifications if the rules are not followed.  Price regulations can come from any level of government and vary widely in their requirements.  For instance, in some industries, government regulation may set price ceilings (how high price may be set) while in other industries there may be price floors (how low price may be set).  Additional areas of potential regulation include: deceptive pricing, price discrimination, predatory pricing and price fixing.

Finally, when selling beyond their home market, marketers must recognize that local regulations may make pricing decisions different for each market.  This is particularly a concern when selling to international markets where failure to consider regulations can lead to severe penalties.  Consequently marketers must have a clear understanding of regulations in each market they serve.

Pricing as Part of the Mix

In marketing terms, pricing is viewed as part of the marketing mix, along with Promotion, Place (distribution), Product (i.e. the product/service you are offering) and (for services) People and Process. There usually is a tradeoff between product quality and price so price is an important variable in positioning. Because of inherent tradeoffs between marketing mix elements, pricing is depend on the other product, distribution and promotion decisions.Product.

As discussed above a product’s price is affected by whether it is a new one or established product. Over the life cycle of a product the price changes is necessary in order to make it competitive one. A products price is also influenced by whether

It may be leased or as well as purchase outright

A trade-in is involved.

It may be returned by the customer to a seller for a refund or an exchange e.g. a firm that has the liberal return policy may compensate by having higher initial prices.

The end use of the product must also be considered .for instance there is a little price competition among the manufacturers of packaging materials so their prices are relatively stable. These business products

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are only an incidental part of the final article, so customers will buy the least expensive product consistent with the required quality.

Distribution Channels

The channels and type of middle man selected will influence the producer’s pricing. A firm selling through both wholesalers and directly to retailers often sets a different factory price for these classes of customers. The prices to wholesalers is lower because they perform services that the producer would have to perform, such as providing storage, granting credits to retailers and selling to small retailers.

Promotion

The extent to which the product is promoted by the producer or middleman and the methods used are added in consideration in pricing. If major promotional responsibility is placed on retailers, they ordinarily will be charged a lower price for a product than if the producer advertises it heavily. Even when a producer promotes heavily, it may want retailers to use local advertising to tie in with national advertising. Such a decision must be reflected in the products price to retailers.

Philip Kotler, a marketing guru who has written extensively about marketing of services and marketing in non-profit organizations, has redefined the 'P's' of the Marketing Mix as 'C's'. In this new system, 'Price' becomes 'Cost to the user'. This is a useful reminder that a user will look at all the time, money and energy they have expended in order to use the service, not just the part we charge for. Therefore, users might be willing to pay extra for a service that delivered information directly to their door, because the overall cost to them is lower, rather than paying less and having to collect the information themselves.

If we are starting out, or feel that a change in strategy is needed, it is important to get feedback from users and potential users, rather than jumping to conclusions. However, when drawing up questionnaires or handling focus groups, the question of price has to be approached carefully. On the one hand, a number of information brokers have commented that what people say they are prepared to pay in theory (i.e. when answering a pre-service questionnaire), does not tally with what they are prepared to pay in practice. In addition, users may prefer to say 'I didn't use the service again because it was too expensive' rather than giving the real reason (e.g. 'I didn't use it again because the person

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doing my search used a lot of jargon and didn't explain why she didn't find much') because the 'price' answer is less likely to be probed and challenged.

Therefore, we may not want to ask directly how much people are willing to pay for a service: it may be more useful to find out which services are valued most, and to analyze user needs and usage patterns, in order to identify what people would be willing to pay most for.

Knowing CostsIn order to be able to price something, need to know how much it costs. This means having Management Information Systems (MIS) which provide information on the separate services .If you work as part of an organisation, it is important to know what they mean by cost recovery: does this mean direct costs only, or all costs including overheads such as accommodation, heating and superannuation? Different organizations allocate overheads in different ways. A bluffer's knowledge of accounting terms and MIS jargon will be very useful.

Types of costs

A common way of distinguishing costs is to look at whether they are fixed or variable costs, and whether they are direct costs or overheads.

Fixed costs -In an industry fixed costs like rent, executive salaries or property tax remains constant regardless of the fact that how many units are produced.

Such a cost continues even if the production stops completely. It is called a fixed cost because it is difficult to change in the short run (but not in the long run). In an organization it is that which is the same whatever the usage (e.g. a journal subscription, photocopier rental): they may also involve an up-front commitment.

Variable costs-In a manufacturing company variable costs are those which vary according to usage (e.g. online searches, photocopy paper costs). Variable cost can be controlled in the short run simply by changing the level of production. When production stops, for example, all variable production costs become zero .In organizations which are worried about cash flow, there may be a preference for incurring variable costs (less risk of paying for something you do not use).

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Direct costs-Direct costs are those which can be associated directly with the service (eg a journal or piece of equipment bought specifically for use in one service). Overheads are costs which benefit a range of services (eg the cost of heating and lighting university buildings). A salaried employee employed on a specific service might be seen as a fixed, direct cost. An online search carried out for the same service would be a variable direct cost.

A number of fee-based services have found that they need to keep more detailed records than their organization’s MIS is able to provide. If you work in the sort of organization where objectives may be changed without warning, then it is useful to have costing data to hand which will enable you to work out quickly, for example, the effect of having to include accommodation costs for the first time, or split costs differently between internal clients.

Total fixed cost: is the sum of all fixed costs.

Average fixed cost: is the total fixed cost divided by the number of units produced.

Total variable cost: is the sum of all variable costs. The more units produced the higher the cost is.

Average variable cost: is the total variable costs divided by the number of units produced. Average variable cost is usually higher for the first few units produced. And it decrease as production increase because of such things as quantity discounts on the materials and more efficient use of labor. Beyond some optimum output it increases because of such factors as crowding of production facilities and overtime pays

Total Cost: is the sum of total fixed cost and total variable cost for a specific quantity produced.

Average Total Cost: is total cost divided by the number of units produced.

Marginal Cost: is the cost of producing and selling one more unit. Usually the marginal cost of the last unit is the same as that unit’s variable cost.

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Factors Affecting Pricing Decision

The final price for a product may be influenced by many factors which can be categorized into two main groups:

Internal Factors

When setting price, marketers must take into consideration several factors which are the result of company decisions and actions.  To a large extent these factors are controllable by the company and, if necessary, can be altered.  However, while the organization may have control over these factors making a quick change is not always realistic.  For instance, product pricing may depend heavily on the productivity of a manufacturing facility (e.g., how much can be produced within a certain period of time). 

The marketer knows that increasing productivity can reduce the cost of producing each product and thus allow the marketer to potentially lower the product’s price.  But increasing productivity may require major changes at the manufacturing facility that will take time (not to mention be costly) and will not translate into lower price products for a considerable period of time.

External Factors

There are a number of influencing factors which are not controlled by the company but will impact pricing decisions.  Understanding these factors requires the marketer conduct research to monitor what is happening in each market the company serves since the effect of these factors can vary by market.

Factors

There are many factors which will have an influence on pricing and the better our understanding of these factors, the more likely we are to be able to set the optimum prices. No business can survive without generating enough profit, so setting the right price for our product or service is essential to the success of our enterprise. There are a number of established techniques for setting prices and the one we use will depend upon; our market, our customers, our competitors and so on.

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Mark-up and margin pricing

This is where our profit is either determined as a percentage of the cost price or of the sell price. Where the profit percentage is based on the cost price, it is referred to as mark-up. Where it is based on the sell price it is known as margin.

Pricing by competition This type of pricing is common where the products for sale are available from a large number of suppliers, the margins are narrow and the customers

are especially price-sensitive. Going rate pricing effectively means that we match the prices that are being offered by our competitors. Breakeven pricing Breakeven pricing is where we calculate the breakeven point of our business - the point at which our sales income and our fixed and variable costs are equal - and set our prices by adding our profit margin onto our unit price. Perception pricing This type of pricing technique may require a significant amount of market research. It is often suitable where a brand new type of product is being introduced into the marketplace and the price is determined by what our target market perceives to be its value, i.e how much they would pay for it. Rule of thumb pricing The rule of thumb technique is simple and lends itself better to certain types of businesses such as construction or repair services. An example of a rule of thumb formula would be where a building contractor would charge twice the cost of the raw materials plus labour or twice the cost of the labour plus the raw material costs, whichever is the greater.

Contract pricing

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Vying with our competitors for a contract can be a risky business if we are not sure of our market. our pricing will depend on what our profit objectives are and a general understanding of what our competitors are likely to be offering. Bear in mind that if we tender for a lot of business and our success rate is very high, we might be offering our service or product too cheaply. Many businesses use their own tailored pricing techniques and these vary greatly. They all have a number of factors in common, however. They take into consideration factors such as; competition, products, the state of the market, the value of your stock, demand and supply, and are calculated to cover costs and provide an adequate profit in the long term.

We use perception pricing for our new lunching Nile, its nature product because this type of pricing technique may require a significant amount of market research. It is often suitable where a brand new type of product is being introduced into the marketplace.

Common Mistakes with Pricing

These include: Not being varied enough

Commercial operators adapt pricing strategy to different market segments and also provide different 'packages' (with product variations, and promoted and priced in different ways). Price negotiation is part of business life. Those running a service from within a public-sector organisation may unfortunately find that their managers view differential pricing as suspicious (or illegal).

Being set unrealistically for example, too low to cover costs. Not being the result of a marketing decision. This can happen when someone further up in our organization takes a policy decision on pricing (often without thinking-through the implications).

Not providing tangible packages

Intangibility is a problem common to services - clients cannot view the product in advance to confirm its appropriateness and value. Some information brokers approach this problem by creating packages which can at least be understood by the potential client, even if they cannot

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be previewed. Examples are: providing a certain number of news stories for a fixed fee; having a fixed charge for a company profile. Document supply is in fact the most obvious example.

Being too cost-orientated

Being incomprehensible to the client

This can easily happen if we try and reflect costs too exactly. Online search charges are difficult enough for information professionals to understand. Clients will generally respond better to a pricing structure that charges more if more information is supplied. Some brokers do this informally, but it can be a better idea to fit this in as a formal part of our pricing strategy. It may mean that (for example)we make relatively little profit on searches which did not find much information, and considerably more on searches which were 'successful'. There are some types of search in which the client will be happiest if little or no information is found (for example patent searches), and if we have significant numbers of this type of search we obviously would not want to adopt a find-less/charge-less approach.

To say that guesswork is never an element of pricing would be unrealistic. However, it should be used with caution. The fact that there have been numerous examples of information brokers struggling for survival (and in some cases going under) because they are not sufficiently profitable, indicates that their pricing strategy (but almost certainly not only their pricing strategy) was flawed.

The services which are surviving today are the ones which have tackled pricing as part of their overall marketing strategy and are managing their strategy in response to their market. What do the following words have in common? Fare, dues, tuition, interest, rent, and fee.  The answer is that each of these is a term used to describe what one must pay to acquire benefits from another party.  More commonly, most people simply use the word price to indicate what it costs to acquire a product.  The pricing decision is a critical one for most marketers, yet the amount of attention given to this key area is often much less than is given to other marketing decisions.

One reason for the lack of attention is that many believe price setting is a mechanical process requiring the marketer to utilize financial tools, such as spreadsheets, to build their case for setting price levels.  While financial tools are widely used to assist in setting price, marketers

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must consider many other factors when arriving at the price for which their

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Tips for successful pricing

Good product prices are important to any successful business. Pricing takes creativity, time, research, good recordkeeping and flexibility. We need to balance the costs of producing a product with competition and the perceptions of our target customer to select the right product price. Follow these tips to ensure greater pricing success.

Be creative

Think of new ways to sell more to existing customers or to attract new customer groups.

Listen to our customer

Make a point of noting customer comments in a journal or file. Review them periodically to glean new ideas.

Do our homework

Keep good notes of how we arrived at a price so we can make similar assumptions in the future.

Boost our records

Good record keeping will help we to set a price and to track the performance of our pricing.

Cover the basics

The three basics of pricing involve product price, competition and customers. Blend pricing methods to ensure the three basics are in balance.

Be flexible

Constantly review both internal and external factors and calculate how a price change would affect the new situation.

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Launching Nile , its nature these are the most effective tips which ensure the greater pricing success of our product. Pricing is an important business decisions

Pricing our product or service is one of the most important business decisions we will make. We must offer our products for a price our target market is willing to pay - and one that produces a profit for our company - or we won't be in business for long. There are many approaches to pricing, some scientific, some not. Here is one framework for making pricing decisions that takes into account our costs, the effects of competition and the customer's perception of value.

Six Steps to Price Product  

Pricing is a balancing process. We want to create a price that is low enough to be accepted by our market, but high enough to make us the greatest amount of profit. To do this, follow these 6 steps:

The first step in defining a price is to determine our costs. We will keep it simple and concentrate on the cost per product. We will not take into consideration the fixed cost of our business such as rent, phone, etc., because these costs will change in accordance to both sales per period and the number of products we offer. So begin by accounting for the our initial cost plus the cost to get the product to the consumers, such as marketing, shipping, handling, and credit cards or bank fees.

Now that we know our cost per product, do some research and find out the competitions' price range. Analyze products that are in direct competition with ours. Only make a comparison of items that closely resemble our product.

If we know the characteristics of our audience, it will be easier to create a price that will be acceptable to them. Without this

information, our business will be more apt to fail. For example, try selling an in-depth marketing course complete with audiotapes, videos, a hands-on workbook, and 12 months of unlimited phone support for $2000.00 to someone who does not even know how he will pay his bills this week. Then try selling this same course for $19.95 to a well-established businessperson seeking ways to improve his business.

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Decide on our desired position in the marketplace with regard to price. A high price coupled with a quality product conveys the message that our product is superior to that of the competition. Low prices convey the message that we are focusing on discount selling. So what does a middle price convey? In-between pricing doesn't say much, does it? If we decide on the high price category, be sure to add value to our product. We can do this by bundling multiple products, giving a guarantee that is unheard of in the industry, etc.

Most people under price, or "lowball" their product, because they think that

People won't pay the higher price, Their product is not worth it They will make more sales with a lower price.

Your products won't sell themselves. You must take the time and

effort to create a marketing strategy. This is one of the most important parts of your business. It will take the same amount of effort to create a marketing strategy whether your product is priced high or low. The steps involved are identical.

Selling for less may result in more sales, but it will also mean less profit, which translates into marketing that won't allow for mistakes, or limited support for customers. Also, it will be difficult to improve upon your product because low profits won't allow for the added expense and customer service will suffer. You will end up working too hard for the profits.

Selling for more allows you to increase your marketing and improve quality, customer service, and support. Also, when you're making a

good profit in your business, you tend to stay motivated and expand your business as opposed to just getting by.

The above steps are a good beginning, but fine-tuning the process means taking the market into consideration. It is the market that will set the ultimate price. We suggest that we start off with a low price, test the market and record the results, then raise the price and test again. Keep doing this until we notice that sales are starting to drop off. When we get to the highest point before sales drop off, we have found the ultimate market price for our product. Be sure circumstances are similar for each

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of our tests to ensure that it was the price that caused a change in sales and not some other factor.

By now we should have determined the optimal price for our product based on our market. The final step is to make sure that this price will be profitable for us. If we find that it won't be, we will then have to find a way to cut costs without sacrificing our product's perceived value.

Take the time to fine-tune our pricing and we will reap the benefits from increased sales and profits, or, at the very least, be reassured that our price has been right all along.

Launching Nile, its nature we have concentrate on these sixes steps to price our product and acceptable by our market and high enough to make the greatest amount of profit.

Stating the Problem

Let us first say that our goal is to find the price at which profit is maximized. If we say that a price is "too high" or "too low," we are saying that our profit could have been greater if we had set the price either lower or higher. Obviously, revenue is the simple multiplication of quantity by price:

Revenue = Quantity * Price

Where "Quantity" is the total number of units we sell, and "Price" is the amount we charged for each unit. The only variable we can control is the price. But the price we choose will influence the quantity sold. In a simplified view of the world, we would draw a graph with price on the x axis and revenue on the y axis. The curve would look like a parabola. The price we want is the value of x at the point at which the curve peaks. However, in real life, pricing is far more complicated than this.

It Starts with Posiotioning

Pricing and positioning are inseparable. Don't bother trying to figure out our price point until we first figure out what position our product will have in the market.

Ask our self these four questions:

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Who are our competitors? Either there is a huge success or a huge failure.

How is our product different from our competitors? We should have a very short answer to this question, and we should be able to deliver it quickly. One important caveat: If we think our primary differentiator is price, think again. Differentiation is absolutely critical, but using low prices as our primary differentiator is a well-worn path to failure.

How do we want to be known in our market? We need to be able to describe what position you want to have in terms of the way we want our target market to perceive us.

Think About Expenses

In more traditional industries, a classic approach to the pricing problem is called "cost plus." Basically, "cost plus" means that we determine our product price by taking all our costs and adding the amount of profit we want. We don't really want to price things this way. The software industry is maturing, but our markets are a long way from the day when they behave like actual

commodities. Our pricing should not be primarily based on our expenses. We want to charge the maximum amount that our customers are willing to pay. However, that doesn't mean we should completely ignore our expenses when we make our pricing decisions. Whatever price we choose, we do have to convince ourselves that we can in fact make a profit. We need to identify all our costs, being careful not to overlook any of them that might be hiding. The total of all of those expenses will help us define the floor—the minimum price we can consider.

Cost of goods The price paid for the bike is called "cost of goods." The difference between cost of goods and the product price is usually called "markup." In traditional businesses, the amount of markup varies widely. Clothing at the mall may be sold at 100% markup. A clothing business may buy a shirt for $15 and sell it for $30. The markup on a gallon of milk—or a small sedan—is much lower. Tech support This cost is sometimes difficult to quantify. Customers need help. They

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get themselves into strange messes and expect you to get them out. We have to be ready to provide assistance to our customers. There are two common ways of dealing with this:

Hire tech support people who help customers full-time. Have our developers use a slice of their time to help customers.

There are costs associated with each of these two approaches.

Cost of selling

How are we going to sell our product?

If we have a sales guy (or gal), you have to pay his (or her) expenses and commission. This can be an enormous amount of money.

If we use resellers, they will expect a discount of at least 20 percent.

If we pay someone to host a Web storefront, that person will take a percentage.

If we want your product on the shelf at a major retailer, the retailer might take 50%.

If we accept corporate purchase orders, some percentage of them will not be paid.

Regardless of how we do it, the act of selling costs money. We have to include these costs somewhere in the price of our product.

Overhead

All of the costs in our business have to get paid somehow, including rent, utilities, insurance, taxes and your T-1 line. When we calculate our costs, don't overlook anything. Make sure our understanding of our company's expenses is complete. How Much Is Your Product Worth to the Customer? One of the most important issues in our pricing decision is the matter of how much value our product generates for our customer. This value is the justification for the price of our product. As much as possible, it is important to understand our customer's perspective on this. Some products generate value that is much easier to quantify than others.

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Let us suppose for a moment that we invented a molecular transporter that can instantly "beam" an individual to any place in the world.

High-Volume-Low-Price or High-Price-Low-Volume With apologies for grossly oversimplifying, we assert that we are facing an important strategic decision that offers us two alternatives: Do we want to sell our product to a few customers, each of whom will pay us a very high price? Or would we rather sell our product to many customers, each of whom will pay us a lower price? This matter is highly tied to the questions about

our positioning. It is important to realize that we have these two alternatives. In fact, there are probably a number of other opportunities available between these two extremes.

Conventional wisdom says that if all else is equal, if we can get the same revenue with fewer customers, we should do so. There is a certain cost associated with having every customer. Having fewer customers reduces those costs and simplifies things.

Is Price Too Low? Low prices can cause all kinds of problems. Most people are naturally afraid of setting a high price point, worrying that the customer simply won't buy the product if it is too expensive. To balance that fear, here are two reasons we might want to be afraid of setting a price point that is too low. Price alone is a lousy differentiator Referring back to the issue of positioning, it is hard to overstate the importance of being different. Our product doesn't need to be better in every way—it needs to be better in just one way. But as we mention above, we don't want lower price to be our primary differentiator. It's okay to be competitive on price, but we need something else to say as well. If our only message is about price, a certain portion of our market will perceive our product to be "cheap" or "low quality." If we want to be aggressive on price, fine, but focus our message on something else. Even worse, if price is our only message, what happens if our competitors lower their price to match? Now we have nothing at all to say.

Add-ons

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If our product is an add-on for another product, the price of the base product will be a barrier for our own price. The market will usually expect our product to be significantly less expensive than the base product. For example, suppose we are selling plug-ins for Adobe Photoshop. It is only natural that customers will raise an eyebrow if our plug-in costs more than Photoshop itself.

PoliciesIn corporate environments, our customer has spending limits. At each rung of the corporate ladder, the organization has policies that specify how much that person is allowed to spend without getting higher approval. It's worth trying to make sure that our price point is within the amount that our customer is allowed to spend. Exactly who is making the purchasing decision for our product? Find out how much she is allowed to spend, and price our product slightly less.

Price Is Not Just a Number Up to this point, we have been assuming that price is simply one constant number. It doesn't have to be.

Perfect pricing

In an ideal world, the price would be different for every customer. The "perfect" pricing scheme would charge every customer a different amount, extracting from each one the maximum amount they are willing to pay. our pricing is more than just a number. A complete pricing policy contains lots of details that we have to consider.

How will we handle volume discounts?

From what companies will we accept a purchase order?

What is our policy on refunds?

How much will we charge for shipping?

We can never make your pricing "perfect," but we can do much better than simply setting one constant price for all situations. By carefully tuning all these details, we can find ways to charge more money from the people who are willing to pay more.

Tiers

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The most common way to approach perfect pricing is to have a product with multiple tiers. Each tier has a feature set and price point that is carefully

chosen. For example:The lowest tier might be our "Standard Edition," supporting a very basic feature set at a very low price. The middle tier might be our "Professional Edition," designed for the largest segment of our market. The top tier might be our "Enterprise Edition," including every feature and priced much higher. Three tiers is a good number to have:

Our middle tier is our main product. Most people buy this one.

The lower tier gets our product into the hands of those who could not otherwise afford it.

The top tier allows us to charge top dollar to the folks who are willing to pay for the comfort of knowing they didn't miss out on a feature.

The wise use of multiple tiers can offer a very rough way of approximating "perfect pricing."

Loss LeadersThe basic idea of a "loss leader" is to price a product very low in an effort to gain the attention of a large number of people to whom we plan to sell something else. Many traditional businesses do this all the time. Our grocery store sells milk at a loss, placing it in the very back of the store so we have to walk by a bunch of higher-profit items in order to buy it.

How to Price our Product

As you know, there are many ways to price a product. Different policies and strategies work in various situations.

Premium Pricing:Use a high price where there is uniqueness about the product or service. This approach is used where a substantial competitive advantage exists. Such high prices are charge for luxuries.

Economy PricingThis is a no-frills low price. The cost of marketing and manufacturing are

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kept at a minimum. Supermarkets often have economy brands for soups, spaghetti, etc.

Product Line Pricing Where there is a range of product or services the pricing reflect the benefits of parts of the range. For example car washes. Basic wash could be $2, wash and wax $4 and the whole package $6.

Optional Product Pricing Companies will attempt to increase the amount customer spend once they start to buy. Optional 'extras' increase the overall price of the product or service. For example, airlines will charge for optional extras such as guaranteeing a window seat or reserving a row of seats next to each other.

Captive Product PricingWhere products have complements, companies will charge a premium price where the consumer is captured. For example, a razor manufacturer will charge a low price and recoup its margin (and more) from the sale of the only design of blades which fit the razor.

Product Bundle Pricing Here sellers combine several products in the same package. This also serves to move old stock. Videos and CDs are often sold using the bundle approach.

Tips on how we price our product or service .

It is important to make sure to have the perfect price for our product or service. The goal with every company is to make profit. we may be wondering how much to price our products or service. Here are ten tips on how to price our product or service.

1. Always mark up the price at least 100% more than what you paid for it. Your company needs to make a profit so always make sure mark up the price at a minimum of 100% more than what we paid for it. We can

even mark up the price to 300% more than what we paid for it sometimes.

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2. See what our other competitor’s prices are for each product or service that is similar to our company. We can see how much they charge to get a general idea of what price customers are usually paying for each product. We want to have our price range for each product or service somewhere in between the price range of other competitors unless our product or service is much better than others.

3. Is our company product or service better than the other competitors? If the products are better than the others then make sure to mark up the price. We need to be able to back up our prices with reasons as to why our products are better. We need to give them reasons how our products or service will benefit them more than the competitor.

4. Is there any additional products or services that our company can offer? We have an advantage over other competitors if they don't currently offer an additional product or service. There is another way that we can make more profit for our company by having even more products or service.

5. Make sure to check out which weekends that our competitor has sales or special deals. We need to make sure that our company offers the same type of sales or special deals in regards to products and services that are similar. We want the customers to buy a service or product from our company instead of our competitor.

6. We want to become better than our competitor in regards to being able to provide excellent customer service along with services and products offered. It will help us get more profits if we become the best company in the local area no matter what the product or service may be.

7. Don't be worried about our prices being too high for certain product or service. Customers are willing to pay a higher price for a better product or service with the best company in town than they would with

our competitors. Customers want to know that they are going to receive the best service or product by going with our company instead of the competitor. It is a situation where everyone wins since our company will make more of a profit long term and the customer is happy.

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8. It is important that our customers are happy. If our customers are happy with our company then they won't mind paying a little higher price since them already like our company. We will often get repeat customers and even more future customers from word of mouth. When our customers are happy with our company products or service including customer service then in return we will get repeat customers and even more future customers.

Always make sure to be aware of any new companies that may open up in the local area of town. Some companies send their employees over to the competitors store to look at the prices and any other offers that a certain company may have. Be alert about any new competitors and watch out for any of their employees. Sometimes they pretend to be a customer. This is important to remember when dealing with prices.

The number one top thing to remember in prices along with products and service is to always be better than our competitor in every way possible. We want to provide the best customer service, the best products, and the best service available in town. We want our company to always have happy customers and have an excellent reputation.When we're in business, one of the most difficult--and important--decisions we make is how to price our product or service. Too high, and we lose some of our buyers; too low, and we don't make a profit.

Here are seven tips to get our price point just right:

1. Cover our costs: Obviously this is the critical factor--we need to make more selling the product or service than it cost us to produce it.

2. Test tries offering it at different price points. We may sell more at a lower price--but not necessarily enough to make a bigger profit.

3. Offer the item at different prices to different markets. Some markets actually prefer to pay more for the same item, because they attach more value to the item if it's priced higher. (Some people won't.)

4. Create urgency. Offer the item at a limited-time discounted price, which will encourage bargain shoppers to hurry and buy the item before the price goes up.

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5. Create "pretend" urgency. Mail or e-mail a coupon with the words "redeem immediately" or "redeem within 30 days." Most people will forget when they received the coupon. Some people will redeem it immediately; those who redeem it much later still get the discount—and we still make the sale.

6. Offer different payment options. Give those who pay in full a discount.

7. Include a guarantee. This removes all risk; people are more likely to buy if they know they can get their money back. Most people won't ask for a refund, and those who do, we can learn something from as to how to improve our product or service.

Pricing Methods

There is no "one right way" to calculate pricing. The way in which the prices are derived depends on the company’s pricing policy. “A pricing policy is the guiding philosophy or course of action designed to influence and determine pricing decisions”. Once the company has decided on a pricing policy, it must then choose a pricing method. “A pricing method is a mechanical procedure for setting prices on a regular basis”.

Cost Pricing

Under cost pricing the marketer primarily looks at production costs as the key factor in determining the initial price.  This method offers the advantage of being easy to implement as long as costs are known.  But one major disadvantage is that it does not take into consideration the target market’s demand for the product.  This could present major problems if the product is operating in a highly competitive market where competitors

frequently alter their prices. With cost based Pricing Methods no account is taken of market requirements but a set amount is added to the costs. The disadvantage is that if costs increase, the price of the product must also increase. The following are examples of cost based pricing methods: Absorption cost pricing-Used mainly in large department stores. The price of each product is dependant on how many costs it creates.

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Target pricing: A target price is made and then costs are adjusted so that that price can be achieved. Each of the three cost based pricing methods described begin with a product cost subtotal. To calculate product cost we need to include the costs of production.

Promotion and distribution: Add the profit level we want from the business to the product cost subtotal to determine our product price. The amount of profit we add to the product cost subtotal can be set according to three different methods.

All types of cost based pricing will be more accurate if we use a complete product cost subtotal. The key to accuracy is to ensure all cash and non-cash costs are included in the product cost subtotal. We need to set a value for your management expertise and labor. Using our land or capital equipment also must be valued along with depreciation on our machinery and buildings. These values are included in the product cost subtotal. Include a profit percentage with product cost. Marketers call this method mark-up pricing. Mark-up pricing is favored by businesses with many products because its simple to calculate. The profit level we want for the business is expressed in a percentage. This percentage is added to the per unit cost to set product price. Mark-up pricing is common in retail business because it offers so many types of products and purchases goods from many vendors.

Example:Wild Blue Preserves makes 15 different jams and jellies. They set up a small shop in a local mall to sell their products along side other prepared foods. A jar of wild blueberry jelly costs $1.50 per 250 ml jar to produce. The mark-

up pricing percentage Wild Blue Preserves plans to use is 100 per cent. The jar of jam will cost $3.00 in the shop.

Add a percentage to an unknown product cost:

This type of pricing is often called cost-plus pricing. Cost-plus pricing works well if we don’t know our production costs. This method is very similar to mark-up pricing. The big difference between mark-up pricing and cost-plus pricing is that both buyer and seller settle on the profit figure or percentage, accepting that the cost of production is an unknown. If we produce custom order products for other firms or individuals, a cost-plus pricing method could reduce our risk. Rather

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than take a risk on input costs increasing during the project, we could use a cost-plus pricing agreement.

Disadvantages of cost based pricing

Before we select a cost based pricing option, we should consider the disadvantages. There are two important reasons why cost based pricing doesn’t work for some businesses. Cost based pricing doesn’t consider how customer demand affects price. Demand for a product will directly affect how much people will pay. If the customer believes a product may be in short supply, due to heavy demand, they may be willing to pay more. On the other hand, if demand is very low the customer will look for a discount on the price. Competition is not included in cost-based pricing methods. Competition should affect how we price our product. The idea of simply adding a profit level or percentage to a product price will only work in industries with limited competition. In a competitive market, cost based pricing may encourage competitors to enter the market with a lower price.There are several types of cost pricing including

Markup Pricing

This pricing method, often utilized by resellers who acquire products from suppliers, uses a percentage increase on top of product cost to arrive at an initial price. A major general retailer, such as Walmart, may apply a set

percentage for each product category (e.g., women’s clothing, automotive, garden supplies, etc.) making the pricing consistent for all like-products. Alternatively, the predetermined percentage may be a number that is identified with the marketing objectives (e.g., required 20% ROI).

For resellers that purchase thousands of products (e.g., retailers) the simplicity inherent in markup pricing makes it a more attractive pricing option than more time-consuming methods. However, the advantage of ease of use is sometimes offset by the disadvantage that products may not always be optimally priced resulting in products that are priced too high or too low given the demand for the product. Resellers differ in how they use markup pricing with some using the Markup-on-Cost method and others using the Markup-on-Selling-Price method.

Markup-on-Cost

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Using this method, markup is reflected as a percentage by which initial price is set above product cost as reflected in this formula:

                                Markup Amount = Markup Percentage                                    Item Cost   Markup-on-Selling-Price

Many resellers, and in particular retailers, discuss their markup not in terms of Markup-on-Cost but as a reflection of price. That is, the markup is viewed as a percentage of the selling price and not as a percentage of cost as it is with the Markup-on-Cost method. For example, using the same information as was used in the Markup-on-Cost, the Markup-on-Selling-Price is reflected in this formula:                            Markup Amount = Markup Percentage                                Selling Price

Cost-Plus Pricing

In the same way markup pricing arrives at price by adding a certain percentage to the product’s cost, cost-plus pricing also adds to the cost by

using a fixed monetary amount rather than percentage.  For instance, a contractor hired to renovate a homeowner’s bathroom will estimate the cost of doing the job by adding their total labor cost to the cost of the materials used in the renovation.  The homeowner’s selection of ceramic tile to be used in the bathroom is likely to have little effect on the labor needed to install it whether it is a low-end, low priced tile or a high-end, premium priced tile. Assuming most material in the project are standard sizes and configuration, any change in the total price for the renovation is a result of changes in material costs while labor costs are constant. It means adding a standard markup to the cost of the product. This is the simplest pricing method. Lawyers, accountants, and other professionals typically price by adding a standard markup to their cost.

Mark up pricing remains popular for many reasons. Sellers are more certain about cost than about demand. Second, when all firms in the industry use this pricing method, prices tend to be similar and price competitions are thus minimized. Third, many people feel that cost-plus pricing is fairer to both buyers’ and sellers. Sellers earn a fair return on their investment but don’t take advantage of buyers when

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buyers’ demand becomes great. To illustrate mark up pricing , suppose a manufacturing firm had the following costs and expected sales:

Variable cost $10 Fixed cost $300,000 Expected unit sales 50,000Thus the manufacturing cost per unit is as:

Unit cost = Variable Cost + Fixed Cost Unit Sales

= $10 + $300,000/50,000 = $16Now suppose the manufacturer wants to earn a 20 percent mark up on sales. Thus mark up price is as:

Mark up price = Unit Cost (1-desired return on sales)

= $16/1-.2 = $20

Breakeven PricingBreakeven pricing is associated with breakeven analysis, which is a forecasting tool used by marketers to determine how many products must be sold before the company starts realizing a profit.  Like the markup method, breakeven pricing does not directly consider market demand when determining price, however it does indicate the minimum level of demand that is needed before a product will show a profit.  From this the marketer can then assess whether the product can realistically achieve these levels.

The idea is to set the price of a unit of product or service at a level where it will cover all of its own variable costs (material, labor, marketing etc.) plus its portion of the fixed costs of the company (overhead). At the point where enough units have been sold to cover all fixed and variable costs, breakeven is achieved. After that point, the sales price of a unit sold minus the variable (direct) cost to produce it equals pure profit.Breakeven point can be determined by using the following formulas:

Sales Price – Variable Costs = Contribution Margin

Contribution Margin per Unit = Contribution Margin RatioSales Price per Unit

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Breakeven Sales Volume= Fixed Costs Contribution Margin Ratio

Market Pricing

Under the market pricing method cost is not the main factor driving price decisions; rather initial price is based on analysis of market research in which customer expectations are measured.  The main goal is to learn what customers in an organization’s target market are likely to perceive as an acceptable price.  Of course this price should also help the organization meet its marketing objectives.

Market pricing is one of the most common methods for setting price, and the one that seems most logical given marketing’s focus on satisfying

customers.  So if this is the most logical approach why don’t all companies follow it?  The main reason is that using the market pricing approach requires a strong market research effort to measure customer reaction.  For many marketers it is not feasible to spend the time and money it takes to do this right.  Additionally for some products, especially new high-tech products, customers are not always knowledgeable about the product to know what an acceptable price level should be.   Consequently, some marketers may forego market pricing in favor of other approaches.

Market based Pricing Methods

Depend on accurate analysis of the market and consumer requirements. The following are examples of market based pricing methods:

Market-Skimming Pricing Market-Penetration Pricing

Market-Skimming Pricing

Price skimming is also known as market skimming; it is a strategy that needs to be considered as part of the sales planning process and as part of marketing planning process. The strategy of price or market skimming has a negative connotation but it is actually a viable and positive pricing strategy.

Price or market skimming raises the price above the real market price to be able to cover costs quickly and earn a quick profit. The price is

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gradually lowered over time to the market price as the product becomes more widely distributed, and as more competition enters the market.

In this product pricing strategy firm charges the highest initial price that customers will pay. As the demand of the first customers is satisfied, the firm lowers the price to attract another, more price-sensitive segment. Therefore, the skimming strategy gets its name from skimming successive layers of "cream," or customer segments, as prices are lowered over time. Notes:Firms often use this technique to recover the cost of development.

Skimming is a useful strategy when:

There are enough prospective customers willing to buy the product at the high price.

The high price does not attract competitors. Lowering the price would have only a minor effect on

increasing sales volume and reducing unit costs. The high price is interpreted as a sign of high quality.

A pricing technique designed to allow a business to charge each potential client the most that he or she would be willing pay, in an effort to minimize consumer surplus.

A pricing technique designed to allow a business to charge each potential customer the most that he or she would be willing pay for a given product or service. The product or service is first offered at the highest price that customers will pay, and the price is incrementally dropped until it Price skimming is a pricing strategy in which a marketer sets a relatively high price for a product or service at first, then lowers the price over time.

It is a temporal version of price discrimination/yield management. It allows the firm to recover its sunk costs quickly before competition steps in and lowers the market price.

Price skimming is sometimes referred to as riding down the demand curve.The objective of a price skimming strategy is to capture the consumer surplus If this is done successfully, then theoretically no customer will pay less for the product than the maximum they are

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willing to pay. In practice it is impossible for a firm to capture all of this surplus.

Limitations of Price Skimming

There are several potential problems with this strategy.

It is effective only when the firm is facing an inelastic demand curve. If the long run demand schedule is elastic (as in the diagram to the left), market equilibrium will be achieved by quantity changes rather

than price changes. Penetration pricing is a more suitable strategy in this case. Price changes by any one firm will be matched by other firms resulting in a rapid growth in industry volume. Dominant market share will typically be obtained by a low cost producer that pursues a penetration strategy.

A price skimmer must be careful with the law. Price discrimination is illegal in many jurisdictions, but yield management is not. Price skimming can be considered either a form of price discrimination or a form of yield management. Price discrimination uses market characteristics (such as price elasticity) to adjust prices, whereas yield management uses product characteristics. Marketers see this legal distinction as quaint since in almost all cases market characteristics correlate highly with product characteristics. If using a skimming strategy, a marketer must speak and think in terms of product characteristics in order to stay on the right side of the law.

The inventory turn rate can be very low for skimmed products.

This could cause problems for the manufacturer's distribution chain. It may be necessary to give retailers higher margins to convince them to enthusiastically handle the product.

Skimming encourages the entry of competitors. When other

firms see the high margins available in the industry, they will quickly enter.

Skimming results in a slow rate of stuff diffusion and adaptation.

This results in a high level of untapped demand. This gives competitors time to either imitate the product or leap frog it with

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a new innovation. If competitors do this, the window of opportunity will have been lost.

High margins may make the firm inefficient. There will be no incentive to keep costs under control. Inefficient practices will become established making it difficult to compete on value or price.

An example of price or market skimming can be seen in the computer industry, where technology sets up the environment for this price strategy. A computer manufacturer comes out with a new laptop every 8 to 10 months. The older, unsold models move down in price (they are in their mature or declining stage of their very short life-cycle), while the new model laptop (with newer features and benefits) is in the introductory phase and is able to command a higher price. The computer manufacturer is skimming price at various life cycle levels (introduction, growth, maturity and decline) and gaining the maximum profit through the maximum price that each level will support.

Marketing Penetration Pricing

Market penetration pricing is a quick-entry price strategy that assumes low price will gain high sales volume which, in turn, will result in lowering cost. A strategy often used when introducing new products to the market or when trying to gain significant market share. The concept is that the new low, 'introductory' price will entice customers to buy. Prices are low to attract attention and buyers. This should be used only if a company feels that

It needs a low price to stimulate attention from the market

If want to hold off or stall competitors from entering the market (they might be scared off at the low margins).

Most successful when used for products that are mass produced and therefore have some economies of scale: and a company will be ramping production up to launch the new product and therefore costs per unit should be lower.

Prof. Allen says

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"A penetration pricing policy involves setting prices of products relatively low compared to those of similar products in the hope that they will secure

wide market acceptance that will allow the company to later raise its prices.  Such a policy is often used when the firm expects competition from similar products within a short time and when large-scale production and marketing will produce substantial reductions in overall costs. The low price must help keep out the competition, and the company must maintain its low price position."

A variation of Penetration Pricing is Predatory Pricing Prof. Allen explains Predatory pricing is the illegal practice of setting unreasonably low prices to force competitors out of business. Many countries have rules and regulations trying to catch people doing this and there can be stiff penalties if the company is caught.This strategy is used in price sensitive markets. For example, consider the market for DVD players; it is a high volume market, it has a high number of competitors, the costs to produce DVD players have fallen, and new and/or changing technology allow businesses to rapidly introduce new features and benefits on new models. The businesses that introduce DVD players quickly, sell high volume at low or reasonable prices, are following a market penetration strategy.In case of mineral water market the market is highly price sensitive manufacturing and distribution costs is low. So, market penetration

pricing strategy is suitable for “Nile, its nature”. The customer response has been seemed to be highly elastic. The concept behind is that the new low price would entice the customers to buy. Our low price and high quality penetration strategy would help us to carter our competitors.

Loss leader pricing

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Charging below cost price to try and attract customers to other products (normally in supermarkets). Psychological pricingHitting price points that are significant e.g. £99.99 sounds better than £100.00

Price discriminationCharging different people different prices for effectively the same product. Normally time based (charging different prices at different times of the day / week / year).

Discount pricingOffering lower prices for a set time period to try and boost sales and sell off unwanted stock. For those marketers who use market pricing, options include:

Backward Pricing Psychological Pricing Price Lining

Backward Pricing

In some marketing organizations the price the market is willing to pay for a product is an important determinant of many other marketing decisions.  This is likely to occur when the market has a clear perception of what it believes is an acceptable level of pricing. 

For example, customers may question a product that carries a price tag that is double that of a competitor’s offerings but is perceived to offer only minor improvements compared to other products.  In these markets it is important to undertake research to learn whether customers have mentally established a price range or reference price for products in a certain product category.  The marketer can learn this by surveying customers with

such questions as: “How much do you think these types of products should cost you?”

In situations where a price range is ingrained in the market, the marketer may need to use this price as the starting point for many decisions and work backwards to develop product, promotion and distribution plans.  For instance, assume a company sells products through retailers. 

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If the market is willing to pay (US)$199 for a product but is resistant to pricing that is higher, the marketer will work backwards factoring out the profit margin retailers are likely to want (e.g., $40) and as well as removing the marketer’s profit (e.g., $70).  From this, the product cost will remain ($199 -$40-$70= $89).  The marketer must then decide whether they can create a product with sufficient features and benefits to satisfy customers’ needs at this cost level.

Psychological Pricing

Psychological pricing or price ending is a marketing practice based on the theory that certain prices have a psychological impact. The retail prices are often expressed as "odd prices": a little less than a round number, e.g. $19.99 or £6.95 (but not necessarily mathematically odd, it could also be 2.98). The theory is this drives demand greater than would be expected if consumers were perfectly rational. Psychological pricing is one cause of price points

Price has a psychological value. Buyers will buy a high priced product because they believe that the high price is a good indicator of value. Their perception is not reality based, it is psychologically based therefore buyer behavior is affected by more than the product and price tangibles. Many

businesses use a psychological pricing strategy because most of the buyers use price as a measurement of quality: to them high price equals high quality or value and low price equals low value. When buyers have much more information on which to make a decision on perceived value or quality, price moves down the ranking scale as a determiner of value. One use of psychological pricing is in price-ending numbers. Buyers believe that prices ending in uneven, rather than even numbers, (such as, Rs.9.99, Rs.199,999, etc.) are a better deal or a better price than even numbers (e.g. $10 or $200,000). If the products to be priced are to be in a price 'band' (such as on-line auctions, or cars or other sales listings), if the listing price is in the odd range, say $199,000, it will

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appear in a lower price band than the $200,000 listing and will be viewed as better value. The challenge with this strategy is that products ending in an odd number are also often perceived as being lower in value. Ensure that you chose the right price and the right strategy for your specific product or service.

Another use of psychological pricing is Reference Price. Reference pricing is when the buyers carry prices in their mind and refer to when looking at a given product. The reference price might be formed by nothing current priced, remembering past prices or assessing the buying situation. A business could capitalize on reference pricing and position their product amongst high value or luxury items to imply that its product belongs in the same category.For psychological pricing to be an effective price strategy, the product needs to have some characteristics that would appeal to an ego-sensitive buyer. For example, luxury goods are attractive to ego-sensitive buyers. Premium recreational goods, such as boats, are attractive to ego-sensitive buyers.

For many years researchers have investigated customers’ response to product pricing.  Some of the results point to several interesting psychological effects price may have on customers’ buying behavior and on their perception of individual products.  We stress that certain pricing tactics “may” have a psychological effect since the results of some studies have suggested otherwise. 

Odd-Even Pricing One effect dubbed “odd-even” pricing relates to whole number pricing where customers may perceive a significant difference in product price when pricing is slightly below a whole number value.  For example, a product priced at (US) $299.95 may be perceived as offering more value than a product priced at $300.00.  This effect can also be used to influence potential customers who receive product information from others. 

Many times a buyer will pass along the price as being lower than it is either because they recall it being lower than the even number or they want to impress others with their success in obtaining a good value.  For instance, in our example a buyer who pays $299.95 may tell a friend they paid “a little more than $200” for the product when in fact it was much closer to $300.

Prestige Pricing

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Another psychological effect, called prestige pricing, points to a strong correlation between perceived product quality and price.  The higher the price the more likely customers are to perceive it has being higher quality compared to a lower priced product.  (Although there is point at which customers will begin to question the value of the product if the price is too high.) 

In fact, the less a customer knows about a product the more likely they are to judge the product as being of higher quality based on only knowing the price.  Prestige pricing can also work with odd-even pricing as marketers, looking to present an image of high quality, may choose to price products at even levels (e.g., $10 rather than $9.99).

Price Lining

The difference in the “needs-set” between customers often leads marketers to realization that the overall market is really made up of a collection smaller market segments.  These segments may seek similar products but with different sets of product features, which are presented in the form of

different models (e.g., different quality of basketball sneakers) or service options (e.g., different hotel room options).

Price lining or product line pricing is a method that primarily uses price to create the separation between the different models.  With this approach, even if customers possess little knowledge about a set of products, customers may perceive they are different based on price alone.  The key is whether the prices for all products in the group are perceived as representing distinct price points (i.e., enough separation between each).  For instance, a marketer may sell a base model, an upgraded model and a deluxe model each at a different price.  If the differences in features for each model is not readily apparent to a customer, such as differences that are inside the product and not easily viewed (e.g., difference between laptop computers), then price lining will help the customer recognize that differences do exist as long as the prices are noticeably different. 

Price lining can also be effective as a method for increasing profitability.  In many cases the cost to the marketer for adding different features to create different models or service options does not alone justify a big price difference.  For instance, an upgraded model may cost 10% more to produce than a base model but using the

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price lining method the upgraded product price may be 20% higher and thus more profitable than the base model.  The increase in profitability offered by price lining is one reason marketers introduce multiple models, since it allows the company to not only satisfy the needs of different segments but also presents an option for a customer to “buy up” to a higher priced and more profitable model.

Competitive Pricing

Clearly when setting price it makes sense to look at the price of competitive offerings.  For some, competitor’s price serves as an important reference point from which they set their price.  In some industries, particularly those in which there are a few dominant competitors and many small companies, the top companies are in the position of holding price leadership roles where they are often the first in the industry to change price.  Smaller companies

must then assume a price follower role and react once the big companies adjust their price.

The firm fixes the prices of the product or services in relation to the competitor’s prices. This involves offering the product or services at a lower price than that of the competitor’s products and services. This has the advantage of giving the firm the opportunity to increase sales and market share.  

In determining a "competitive" price marketer should answer the following questions:

Who will you are competing against?

What are their strengths and weaknesses?

Are any direct competitors vulnerable to your products?

Are any competitive products priced too high or not providing product "value" for the price? 

Companies offer many discounts and other incentives to build existing customer loyalty or for competitive reasons. Some are

Augmentation to Boost Sales 

Discounting To Gain Market Share

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Pricing to Kill small Competitors

The big advantage of competition based pricing is that we are focused on our industry and therefore our competition. Its often used by u-pick businesses and at farmers markets. An industry focus looks closely at the types of existing and emerging competition. Once we know what our competitors are doing, we can better decide how we will manage our business. Understanding our competition will take some research.

We need to understand what we are selling, the types of companies we compete with, the amount and types of substitutes and how companies

operate in our industry. Check with Statistics Canada, the business section of the local library, the local Chamber of Commerce, the yellow pages or the Internet to help find this information.

Three competition based pricing methods are detailed below:

Price our product the same as the competition.This market pricing method aims to make our product comparable to competitors. Scout out competitors and find out what they charge for similar products. This type of pricing works well if we make standard products. If we make unique products, we need to decide how specialized our product is. Products can be plotted on a scale according to how unique they are. Homogeneous products are on one end of the scale. Highly differentiated products are on the other end. The term highly differentiated is used to describe products which are unique and can’t be compared to other products on the market. Examples of homogeneous products include eggs, butter and bread. Highly differentiated products may begin as homogeneous products but they have one or more layers of special features like packaging, trademarks, design, flavor, freshness, appearance, etc.

Example:An established producer of beef jerky decides to use market penetration pricing at a local convenience store. A study of other convenience stores show a price range for jerky of $2.00 to $3.00 per 100 gram package. The seller decides to sell their jerky at $1.50 per 100 gram package to sell larger volumes. Seek larger market share through price.

This type of pricing is often called market share pricing. You need to select a price that will attract and hold as many customers as possible.

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Most businesses would adopt market share pricing after market penetration is achieved. Market share happens when you sell large volumes of product into a market. Companies who seek market share describe the amount of market they supply as a percentage. Market share is calculated by dividing the amount each company in an industry sells of the total market number.Marketers rely heavily on market share to evaluate their success in promotion, pricing, distribution and product strategies. This pricing method

is used mainly by larger, established businesses. The typical user of market share has many economies of scale and wants to measure the success of a marketing campaign. Disadvantages of competition based pricing While competition based pricing offers advantages, we need to consider the following disadvantages. We may ignore our own production costs if we focus too closely on the prices set by competitors. . More time is needed to conduct and update market research. Competitors can easily mimic whatever price we select.

Most business owners want to know .at what price do my customers think my product offers good value? Knowing our customer ensures we take a market focus with our business. We need to find out how our customer feels about various product prices and what they would do if the price changed. Customers change their buying habits according to product price. As a seller we need to find out how your target customers view our product. We also need to find out customer attitudes towards various prices or a Price change. When basing pricing decisions on how competitors are setting their price, firms may follow one of the following approaches:

Pricing below Competition: It is done by discount retailers. The risk in pricing below competition is that consumers begin to view the product as an undifferentiated commodity. If it happens then consumer choose the good with the lowest price. In turn the competing firms likely to wind up in a price war that diminishes or eliminates profit.

Pricing above Competition: Sometimes producers or retailers set their prices above the prevailing market level. Usually pricing above competition works

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only when the product is highly differentiated or distinct and when the seller has acquired prestige in this field.

Parity Pricing A simple method for setting the initial price is to price the product at the same level competitors price their product.

Methods of Competition based pricingThere are two types of competition based pricing methods:

Going rate or market pricing: Charging the same as competitors or the market leader.

Destroyer or destructor pricing: Charging a price below average to drive out competition.

Customer-based pricing methods

Use price to support product image. The key to pricing is to be consistent. We want our price to say exactly the same thing as the product image. Prestige oriented consumers believe a higher price means higher quality, while bargain seekers will only be happy with lower prices. Does our price reflect our product image?

Disadvantages of customer based pricing

Before we implement a customer based pricing method, note the following disadvantages. If we are too focused on the customer, we may ignore production costs forget about the competition .There are other factors which may affect your pricing strategy. You need to decide how to set both wholesale and retail prices for our product. Volume discounts and rebates much be considered. For more information we should refer to the Market Guide for Food Processors. After the discussion of all the methods above we thought the most suitable method for our product from all the methods above is customer base method because in this method we use price to support

product Nile, its

nature image, set price to increase product sale ,design a price rang to attract many consumers. As mineral water market is very competitive so in order to build existing customer loyalty, for quantity

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savings and for competitive reasons, we priced our consumer good,

Nile, its nature, slightly lower than our competitors. Our major competitors are Aqua Fina, purity guaranteed, Nestle, pure life, and Atlantis so, for this discounting can be a strong marketing tool.

Name of Brands 0.5 liter 1.5 liter 6 liter

Nestle, pure life 15 24 60

Atlantis 15 23 57

Aqua Fina, purity guaranteed 15 24 60

Nile, its nature 13 22 55

Bid Pricing

Not all selling situations allow the marketer to have advanced knowledge of the prices offered by competitors.  While the Internet has made researching competitor pricing a relatively routine exercise, this is not the case in markets where bid pricing occurs.  Bid pricing typically requires a marketer to submit a price to a potential buyer that is sealed or unseen by competitors.  It is not until all bids are obtained and unsealed that the marketer is informed of the price listed by competitors.

Bid pricing occurs in several industries though it is a standard requirement when selling to local, national and international governments.  In these situations the marketer’s pricing strategy depends on the projected winning bid price, which is generally the lowest price.  However, price alone is only the deciding factor if the bidder meets certain qualifications.  The fact that marketers often operate in the dark in terms of available competitor research, makes this type pricing one of the most challenging of all pricing setting methods.

Sales Promotion Strategies

There are three types of sales promotion strategies: Push, Pull, or a combination of the two

Push Strategy

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A push strategy involves convincing trade intermediary channel members to "push" the product through the distribution channels to the ultimate consumer via promotions and personal selling efforts. The company promotes the product through a reseller who in turn promotes it to yet another reseller or the final consumer.

Trade-promotion objectives are to persuade retailers or wholesalers to carry a brand, give a brand shelf space, promote a brand in advertising, and/or push a brand to final consumers. Typical tactics employed in push strategy are: allowances, buy-back guarantees, free trials, contests, specialty advertising items, discounts, displays, and premiums.

Pull strategy

A pull strategy attempts to get consumers to "pull" the product from the manufacturer through the marketing channel. The company focuses its marketing communications efforts on consumers in the hope that it stimulates interest and demand for the product at the end-user level. This strategy is often employed if distributors are reluctant to carry a product

because it gets as many consumers as possible to go to retail outlets and request the product, thus pulling it through the channel.

Consumer-promotion objectives are to entice consumers to try a new product, lure customers away from competitors’ products, get consumers to "load up" on a mature product, hold & reward loyal customers, and build consumer relationships. Typical tactics employed in pull strategy are: samples, coupons, cash refunds and rebates, premiums, advertising specialties, loyalty programs/patronage rewards, contests, sweepstakes, games, and point-of-purchase (POP) displays.

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NILE’s its nature, Pricing Method

For our quality product NILE, its nature we have taken special consideration at different parts involved in setting price. Total Fixed cost and Total Variable Cost are allocated precisely. Our total units of output are 100,000 out of which 99,000 units are expected to be sold with a markup of 30% on total cost of RS. 1300,000. The marketing costs are:

Nile’s its nature

Number of bottles produced and sold

NILE’s Costs, Selling Price and Profits Units produced=100,000

Packaging Cost Rs. 75,000

Promotion Cost Rs. 80,000

Distribution Cost Rs. 60,000

Total Fixed Cost Rs. 215,000

Total sales @ Rs.22 per bottle (99000 total sales)

Rs. 2178,000

Profit Per Bottle Rs. 4

Mark up 25%

Product Mix Pricing Strategy

The strategy for setting product’s price often change when it is a part of the product mix. In this case firm looks for a set of prices that maximizes the profits on the total product mix. Pricing is difficult because the various products have related demand and cost and face different degrees of competition.

The five product mix pricing situations are the:

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Product line Pricing Optional-product Pricing Captive-product Pricing By-product Pricing Product bundle Pricing

Product line Pricing

With a line of products to price, a special consideration is always given by the whole product mix and the product life cycle within the mix. Within the product mix or line, there are typically price points that reflect the price level: high, medium or low. For example, most computer manufacturers have basic models, business models and premium high graphic models. Each of those model levels has its own price point.

It is the pricing a number of products within one product line. For example, charging of a base price for a basic model, the next product up might have more features or be a better quality - it would be a higher price, and so on throughout the line (think of televisions with size and the number of pixels as a differentiation in the product line). This strategy is used only if a company has

More than two products in the line and

If the firm has cleared enough differentiation of features and benefit

Successful companies uses this strategy through the growth, maturity and declining stages of the product's life-cycle; if used in the introduction phase, there might not be enough early recognized value between the products in the product line.

One way of looking at pricing for a product line is to consider pricing and profitability of the whole line, not only individual products of the line. In this type of price analysis, there might be some products that lose money but they help pull in buyers for those products that make money (preferably that make a lot of money). Other products in the line might just break-even but they contribute to the fullness of the line and help support the money-making products.

With this particular pricing strategy it is important to build strong product differentiation within the line so that buyers can understand what they're paying for and why.

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Optional-Product Pricing

Companies use optional-product pricing--------offering to sell optional or accessory products along with the main product. Manufacturers of products such as razors or dvd players or tape dispensers will price those products low and then charge higher prices on the companions (razor blades, dvds, tape, etc.).

It is used if:

If a company has products that have companions in the product line

However try to be first in the market or try to have some unique features and benefits that are not easily duplicated because your competitors will quickly follow your strategy.

Captive-Product Pricing

Setting a price for products that must be used along with a main product such as blades of the razor and film for a camera. Producers of the main product often price them low and set high markups on the supplies. In the case of services this strategy is called the two-part pricing. The price of the service is broken into the fixed fee plus a variable usage rate. The service firm must decide how much to charge for the basic service and how much for the variable usage. The fixed amount should be low enough to induce usage of the service; profit can be made on the variable fees.

By-Product Pricing

It is the setting of a price for by-products in order to make the main product’s price competitive. In producing processed meats, petroleum and agricultural products, chemicals and other products they are often by-products. If the by-products have no value and if getting rid of them is costly, it will affect the pricing of the main product. Using by-products the manufacturer will seek a market of it and should accept any price that covers more of the price of storing and delivering them.By-products can even turn out to be profitable.

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Product Bundle Pricing

Using product bundle pricing seller often combines several of its products and offers the bundle at a reduced price. For example fast food restaurants bundle a burger, fries or a softy drink at a combo price. Resorts sell specially priced vacation packages that include airfare, accommodations, meals and entertainments. Price bundling can promote the sales of the products consumers might not otherwise buy, but the combined price must be low enough to get them to buy the bundle.

Keeping in view the customers need our product line is highly

differentiable due to its different size availability. For this, “Nile, its nature” is available in three sizes 0.5 liter, 1 liter and 6 liter. These price points or price levels

for different size of bottles has been set by complete understanding of the economies of scale and product environment. The different price lines are:

0.5 liter--- Rs.8 1.5 liter--- Rs.17 6 liter--- Rs. 100

Price Adjustment Strategies

Companies usually adjust their basic prices to account for various customers’ differences and changing situations. The different price adjustment strategies are:

Discount and Allowance Pricing Psychological Pricing Promotional Pricing Geographical Pricing

Discounts and Allowance Pricing:

Discounts or allowances result in the deduction from the list price. The deduction may be in the form of a reduced price or some other concession, such as free merchandise or advertising allowances. It is common in business dealings. Some types of the discounts and allowance are:

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Quantity Discount:Quantity discounts are the deductions from the seller’s list price intended to encourage customers to buy in larger amounts or to buy most of what they need from the seller offering the deduction.

Discounts are based on the size of purchase, either in dollars or in units.

A Noncumultative Discounts are based on the size of an individual order of one or more products. A retailer may sell golf balls at Rs.15 each or at three for Rs.20. a manufacturer or whole seller may set up a quantity dismount schedule.

Non-Cumultative Quantity discounts are intended to encourage large orders. Consequently selling expenses as a percentage of sales decrease as order grow in size.

A Cumultative Discount is based on the total volume purchased over a specified period of time. This type of discount is advantage to a seller because it ties customers closely to that firm. The more total business a buyer gives a seller, the greater the discount. To qualify for the discount the farmers had to agree to purchase the drug for at least six month. These discounts encourage customers to buy fresh supplies frequently so that the buyer’s merchandise will not become stale.

To achieve real economies in production as well as in selling, we have programmed to offer all discounts and allowances to our wholesalers and retailers. Our pricing strategy is highly based to attain the market share and customers loyalty so that it automatically would generate revenues in remaining product’s life cycle. The Quantity Discount schedule for the wholesalers would be

For Wholesalers :

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Boxes purchased in a single order % Discount from list price

Up to 1000 (6 liter bottle) none1000-1500 (1.5 liter bottle) 10%1600-2500 (1.5 liter bottle) 15%2500-3500 (0.5 liter bottle) 20%

For Retailers:Boxes purchased in a single order % Discount from list price

Up to 300 (0.5 liter or 1.5 liter bottle) none400-500 (6liter bottle) 15%600-1000 (1.5 liter bottle) 25%

In order to gain more sales from our customers we have structured our pricing to offer cumulative discounts to wholesalers and retailers. This structure is on monthly basis. Different packages for our customers would be: For Wholesalers

Qualifying Volume purchased %Discount from List Price and Period of time Incentives

4 months 10,000 (1.5L bottle) 15% discount for next one month5 months 15,000 (1.5L bottle) 20% discount for next two months12 months 35,000 (6 liter) Free visit of INDIA with family

On the one hand large orders (motivated by the noncumulative discounts) can result in lower production and transportation costs. On the other hand, frequent orders from a single customer motivated by the cumulative discount can enable the producer to make much more effective use of production capacity. Thus we may be benefited even though individual orders are small and do not generate savings in marketing costs.

Trade Discounts:

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Sometimes called functional discounts are reduction from the list price offered to buyers in payment for marketing functions the buyer

will perform. Storing, promoting and selling the product are the examples of function.

A manufacturer may quote the retail price of Rs.400 with trade discount of 40% and 10%. The retailer pays the wholesaler Rs.240 (400 less 40%) and the wholesaler pays the manufacturer Rs. 216 (240 less 10%). The wholesaler is given the 40% and 10% discounts. The wholesaler is expected to keep the 10% to cover costs of wholesaling functions and pass on the 40% discounts to retailers.

Sometimes the wholesalers keep more than the 10% and it’s not illegal for them to do so. Note that the 40% and 10%discounts do not constitute a total discount of 50% off list price. They are not additive because the second discount (in this case, 10%) is computed on the amount remaining after the preceding discount (40%) has been deducted.

Cash Discounts: Cash Discounts is the deduction granted to buyers for paying their bills within a specified time. The discount is computed on the net amount due after first deducting trade and quantity discounts from the base price. Every cash discount include the three elements:

The percentage discount

The period during which the discount may be taken.

The time when the bill becomes overdue.

There are almost as many different cash discounts as there are industries. For example, in women’s fashions, large discounts and short payments period is common. Thus a cash discount of 5/5, n/15 would not be surprising. Most buyers are eager to pay bills in time to earn cash discounts

Promotional Pricing

Promotional pricing is typically used when new products are being introduced to the market. With promotional pricing, companies will temporarily price

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their products below list price and sometimes even below cost to create buying excitement.

Some examples of promotional pricing are:

Special Event Pricing. Pricing that is 'special' (or lowered) for special events such as Christmas, Easter, Valentine's Day, Mother's Day, Super Bowl, Thanks giving and Back to School.

Cash Rebates.Manufacturers sometimes offer cash rebate to consumers who buy the product from dealers within a specified time; the manufacturer send the rebate directly to customers.

Rebate Allowance. Such as a rebate or allowance when buying a home and the seller offers a move-in allowance, or a carpet replacement or renovation allowance or a rebate for all cash, no financing, and purchases of big ticket items like cars.

Low or no-interest financing. A number of furniture stores will advertise no-interest financing loans for furniture purchases. Car dealerships also offer these pricing programs - often for last year's models.

Buy One, Get One free or Two for the Price of

One. If product costs are low, and price includes a healthy profit margin, this may be a good strategy to use if a firm has an overabundance of inventory. Even better if competitive pricing comparisons result in product offer being the better deal.

Extended payment terms. This can also be viewed as a hold and pay, or lay-away, pricing model. Customers typically pay a deposit and pay over time and they do not get the product until paid up. The renovation and construction

industry do a variation on this strategy. They usually are required to pay one third of the projected cost for the project up-front - this is to help pay for the materials; one third about half way through the project and the balance on completion.

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For the business-to-business market, the extended payment terms might be pays in net 30 days, or net 60 days or a discount if you pay in net 15 days. There are many variations to this pricing strategy.

No charge or low-cost warranties. If a business has a good warranty or return program (good in the sense that there are no, or few, product failures and no, or few, product returns), then it is not a high cost investment for them to offer low cost or no cost warranties. Buyers view these types of promotional prices very positively because they believe it shows that the business has high confidence in the product's performance.

Promotional pricing, however, can have adverse effects. Used to frequently and copied by competitors, price promotion can create “deal prone” customers who wait until brands go on sales before buying them. Or, constantly reduced price can erode a brand’s value in the eyes of customers. The frequent use of promotional price can also lead to industry price wars.

As we are launching our product in Ramadan, so in order to generate sales we would introduce many cash rebates to our customers,

wholesalers and retailers, who buy our specified packages of NILE, its nature within the first week of Ramadan. The rebates would be send directly to customers through our suppliers. In most companies it is used to stimulate demand for products or services with lagging demand.

Geographical Pricing

Setting prices for customers located in different parts of the country or world.

FOB-Origin PricingA geographical pricing strategy in which goods are placed free on board a carrier; the customer pays the freight from the factory to the destination.

Uniform-Delivered Pricing

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A geographical pricing strategy in which the company charges the same price plus freight to all customers, regardless of their location. This strategy is some time referred to as postage stamp pricing because of its similarity to the pricing of first class mail service.

Zone PricingA geographical pricing strategy in which the company sets up to or more zones. All customers within a zone pay the same total price; the more distant the zone the higher the price. When using this strategy, a seller must be careful to avoid charges of illegal price discrimination.

Basing-Point PricingA geographical pricing strategy in which the seller designate some city as a basing point and charges all customers the freight cost from that city to the customer.

Freight-Absorption Pricing.A geographical pricing strategy in which the seller absorbs all or part of the freight charges in order to get the desired charges. A freight absorption strategy is used to offset competitive disadvantage of FOB factory pricing.

Dynamic Pricing

Adjusting prices continually to meet the characteristics and needs of individual customers and situations. Dynamic pricing offers many advantages for market. For example, Internet sellers such as Amazon.com can mine their database to gauge a specific shopper’s desire, measure his or her

means, instantaneously tailor product to fit that shopper’s behavior, and price products accordingly.

International Pricing

Companies that market their products internationally must decide what price to charge in different countries in which they operate, in some cases, a company can set a uniform world wide price. The price the company should charge in specific country depends on many factors, including economic conditions, competitive situations, laws and regulations, and development of wholesaling and retailing system.

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DISTRIBUTIONIntroduction

Distribution (or "Place") is the fourth traditional element of the marketing mix. The other three are Product, Price and Promotion.

Distribution channel: a set of interdependent organizations involved in the process of making a product or service available for use or consumption by the consumer or business user

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Objective of distribution: To create place utility, the value of having the product or service where the customer wants them, when they want them.Distribution has two aspects:

Logistics: physical movement of goods Strategy : who participates and what they do

Distribution DecisionsIts indicate product decisions may be the most important of all marketing decisions

Since these lead directly to the reasons (i.e., offer benefits that satisfy needs) why customers decide to make a purchase.  But having a strong product does little good if customer is not able to easily and conveniently obtain it. 

Distribution decisions focus on establishing a system that, at its basic level, allows customers to gain access and purchase a marketer’s product..Distribution decisions are relevant for nearly all types of products.  While it is easy to see how distribution decisions impact physical goods. In order to facilitate an effective and efficient distribution system many decisions must be made including (but certainly not limited to)

Assessing the best distribution channel for getting products to consumer

Determining whether the reseller network is needed to assist in the distribution process

Arranging a reliable ordering system that allows the customers to place orders

Creating a delivery system for transporting the product to the customers

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For tangible and digital goods, establishing facilities to product storage

TARGET MARKET

We selected Lahore city in Pakistan for the distribution of our product

NILE ,its nature. So Lahore is our target market. As you can see in the map

Market SegmentationSegmenting Consumer Markets may be

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We segmented our target market into eight different areas which are as follows:

1. Model town

2. Faisal town

3. Garden town

4. Joher town

5. Allama iqbal town

6. Defence

7. Gulberg

8. Cantt

Distributed Bottles Sizes

We distributed NILE in three different convenient sizes which are as follows:

o.5 liter1.5 liter6 liter

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Distribution Channels

Every industry sets up distribution channels of its own. A variety of businesses and organizations make up these channels, organizing the marketing and trade of products to consumers. It is important to understand the systems of distribution in the apparel industry and evaluate the options Frequently there may be a chain of intermediaries, each passing the product down the chain to the next organization, before it finally reaches the consumer or end-user. This process is known as the 'distribution chain' or the 'channel.' Each of the elements in these chains will have their own specific needs, which the producer must take into account, along with those of the all-important end-user.

The Nature of Distribution Channels:

Most businesses use third parties or intermediaries to bring their products to market. They try to forge a "distribution channel" which can be defined as "all the organizations through which a product must pass between its point of production and consumption"

Why does a business give the job of selling its products to intermediaries? After all, using intermediaries' means giving up some control over how products are sold and who they are sold to. The answer lies in efficiency of distribution costs. Intermediaries are specialists in selling. They have the contacts, experience and scale of operation which means that greater sales can be achieved than if the producing business tried run a sales operation itself. Channels of Distribution are known as "Place" in the "4 P's" model of Marketing.

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Distribution Channels provide the utility of place, of having products where the customer wants when the customer wants them.

In these days of customer focus and emphasis on competition, the 4 P's model is considered very simplistic, and I've always thought that was probably why Marketers began referring to Place as Channels, to move us away from "The "4 P's" as a description of all of what Marketing is about; nevertheless, "place" is a convenient way to think of the term Channels of Distribution.

Functions of a Distribution Channel

The main function of a distribution channel is to provide a link between production and consumption. Organisations that form any particular distribution channel perform many key functions:

Distribution Channel Functions:

Information

Promotion

Contact

Matching(including such things as manufacturing, grading, assembling, and packaging)

Negotiation

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Physical Distribution(transporting and storing)

Financing

Risk Taking

All of the above functions need to be undertaken in any market. The question is - who performs them and how many levels there need to be in the distribution channel in order to make it cost effective.

Numbers of Distribution Channel Levels

Each layer of marketing intermediaries that performs some work in bringing the product to its final buyer is a "channel level". The figure below shows some examples of channel levels for consumer marketing channels:

Number of Channel Levels:

Direct  

Manufacturer

Consumer

Indirect

 

There are two main categories of channels levels Direct and Indirect as shown in the above

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.

In the figure above, Channel 1 is called a "direct-marketing" channel, since it has no intermediary levels. In this case the manufacturer sells directly to customers. An example of a direct marketing channel would be a factory outlet store. Many holiday companies also market direct to consumers, bypassing a traditional retail intermediary - the travel agent.The remaining channels are "indirect-marketing channels".

Channel 2 contains one intermediary. In consumer markets, this is typically a retailer where producer sell their goods directly to large retailers which then sell the goods to the final consumers.Channel 3 contains two intermediary levels - a wholesaler and a retailer. A wholesaler typically buys and stores large quantities of several producers' goods and then breaks into the bulk deliveries to supply retailers with smaller quantities. For small retailers with limited order quantities, the use of wholesalers makes economic sense. This arrangement tends to work best where the retail channel is fragmented.Channel 4 contains three intermediary levels-a wholesaller,retailer and jobber/agent.

Within each channel of distribution there are a differing number of channel intermediaries, namely wholesalers and retailers, which stand between the producer and the consumer. The number of intermediaries in any particular channel is referred to as the length of the channel.

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We select all of above channels so that our customer can buy easily our product "NILE"

TYPES OF DELIVERIRING SERVICES:

Free Home Delivering:

We also provide free home delivery services to our customers so they

can use easily our product "NILE" mineral water with out any difficulty. Our vans go to the house of required customer and deliver

the cane of "NILE"

Choice of distribution channel:

The choice of a distribution channel will be influenced by a number of factors:

The type of product. Perishable, fragile or extremely large products that are difficult to transport are more likely to be distributed direct to avoid incurring additional costs.

The structure and geography of the Market Scattered or difficult to reach markets usually require the services of established wholesalers who will have the facilities and expertise to deal effectively and efficiently with these types of market.

The complexity of the product. Technically complex products which require expert advice and after sales service, are more efficiently distributed either directly from the producer to consumer, or through

expert retailers. The same will apply to individually tailored products or services, which require a high level of

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communication between the producer and consumer prior to production

The quantity and price of a product Producers, who rely on selling large quantities of a product at low prices, may look to reduce their overheads in terms of storage, and distribution of the product into the market, by selling to wholesales

Distribution Strategies

Refers to how an organization will distribute the product or service they are offering to the end user. The organization must distribute the product to the user at the right place at the right time. Efficient and effective distribution is important if the organization is to meet its overall marketing goals.

Depending on the type of product being distributed there are three common distribution strategies available:

Intensive distribution Used commonly to distribute low priced or impulse purchase products eg chocolates, soft drinks. Exclusive distribution Involves limiting distribution to a single outlet. The product is usually highly priced, and requires the intermediary to place much detail in its sell. An example of would be the sale of vehicles through exclusive dealers.

Selective Distribution:A small number of retail outlets are chosen to distribute the product. Selective distribution is common with products such as computers, televisions household appliances, where consumers are willing to shop around and where manufacturers want a large geographical spread.

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If a manufacturer decides to adopt an exclusive or selective strategy they should select a intermediary which has experience of handling similar products, credible and is known by the target audience.So we select intensive distribution strategy to distribute our product

"NILE" mineral water that our product reaches more and more people.

Channel Management Decisions:

Wholesaling

Wholesaling is an important part in distribution system.wholesellers is the people bought things in bulk and sell it to retailers, agent or

customers.Wholesalers are generally used when they are better at performing one or more of the Distribution Channel Functions

Functions of Wholesalers:

Distribution Function Example for Wholesaling

Information Telling retailers about the competition

Product Building assortments needed by retailers

PriceReaching many small retailers at low cost

PlaceProviding quick delivery by being located closer to retailer than the producers are

Promotion Having contacts with the buyer

Ownership Holding inventories, absorbing risk

Types of Wholesalers

These are three main types of wholesalers

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Merchant Wholesalers:Account for approximately 83% of wholesalers, 50% of wholesale sales. Employ 4.5 million people.Two types:

Full Service Wholesalers-offer widest possible range of functions. Categorized as:

General Merchandise-wide mix (unrelated), limited depth.

Limited Line-only few products but an extensive assortment.

Specialty Line-narrowest range of products.

Rack Jobbers-are specialty line that own and maintain display racks, take back unsold products.

Limited Service Merchant Wholesalers-only provide some marketing functions.

Cash and Carry wholesaler-customers pay and furnish their own transportation, No credit.

Truck Wholesalers-Operate rolling warehouses and sell a limited line of products directly from their trucks to their customers. Follow regular routes, primarily perishable products.

Drop Shippers (desk jobbers)-take title, negotiate sales but do not take possession.

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Mail Order Wholesalers-use catalogues instead of sales force to sell.

Agents and Brokers:.

Agents represent buyers and sellers on a permanent basis. Brokers represent buyers and sellers on a temporary basis. 10.4% of wholesalers total sales volume.

Manufacturers Agent-over half of all agents. Represent two or more sellers and offer customers complete lines. Handle non- competing (complementary) products. Written agreements.

Selling Agent-market either all specified line or manufacturers entire output. Perform every wholesaling activity except taking title of the product. Used in place of a marketing department. Represent non-competing product lines.

Commission Merchant-focus primarily on the selling task. Receive goods on consignment from local sellers and negotiate sales in large central markets.

Auction Companies-provide storage for inspection. Sales made to the highest bidder.

Brokers-negotiate exchanges-perform the fewest intermediary functions. Assume no risk.

We distribute our product through all these kinds of wholesellers so

that our product "NILE, its nature" mineral water must easily reach to more customers.

Wholesaler Marketing Decisions

Wholesalers make pretty much the same decisions that retailers do, where their assortment of products and services they offers. As well as decisions with the 4 P's:

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Manufacturer's Sales branches and offices:Resemble merchant wholesalers operations, 9% of wholesale establishments and generate 31% of wholesale sales. Manufacturer owned.

Sales Branches-sell product and provide support services to manufacturers sales forces.

Sales Office-serves normally associated with agents; like sales branches located away from a manufacturing plant-carry no inventory.

Benefits of wholesaling

Wholesaling provides an expanded consumer market potential in terms of geographical locations and consumer purchasing power while at the same time providing a cash flow for the manufacturer. There are several major reasons for the importance of wholesaling. First, all goods and necessary supplies for their production pass through some form of middle agent and wholesaling system. For this reason, the effective functioning of wholesale linkages contributes directly to the economic well-being of a society.

Secondly, for most small producers, an immediate geographic location is typically insufficient to provide and maintain an on-going customer base for their operations. As a means to sell their goods, smaller producers must have avenues to develop market segments of potential customers and must make sure their goods are of the quality customers want at prices they are willing to pay.

The role of wholesalers is to provide links to an expanded market base, i.e., to discover where customers are located and how best to

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reach them. In this sense, wholesaling uses time and place as it relates to information and availability. Wholesalers create utility through holding goods that can be drawn upon by buyers at a cost lower than direct exchange.

Finally, wholesalers act as distribution channels and interface with markets and producers within markets. Whereas wholesaling and retailing provide similar functions in that they receive, store, and distribute goods, the importance of wholesaling is in its ability to moderate supply and demand fluctuations and cope with larger transactions with less emphasis on selling techniques and services and product promotion. Wholesaling has the capability to adjust the distribution of goods from surplus to deficit areas. Wholesalers are successful only if they are able to serve the needs of their customers, who may be retailers or other wholesalers. Some of the marketing functions provided by wholesalers to their buyers are:

providing producer's goods in an appropriate quantity for resale by buyers

providing wider geographical access and diversity in obtaining goods

ensuring and maintaining a quality dimension with the goods that are being obtained and resold

providing cost-effectiveness by reducing the number of producer contacts needed

providing ready access to a supply of goods

assembling and arranging goods of a compatible nature from a number of producers for resale

minimizing buyer transportation costs by buying goods in larger quantities and distributing them in smaller amounts for resale

working with producers to understand and appreciate consumerism in their production process

Retailing

Retailing is another best way to distribute a product. Retailer is the person who buys products from wholesalers, agent or distributors and sells it to customers on different retail stores.

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Functions of Retailers:

Distribution Function Example for Retailing

Information Collecting information about customers in store

Product Advise manufacturer on product design changes

PriceOffer smaller volume of goods for consumer to buy

PlaceOffer variety of products in one location for consumer

PromotionRun own ads or team up with manufacturer in joint ads

OwnershipAbsorb risk by taking title and bearing cost of theft, damage, etc.

Types of Retailers

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Retailers are classified by

Types of store retailers and surveysStatistics Canada divides store retailers into categories according to the nature of their operations:

A chain operates four or more of the same type of store under a common ownership.

A franchise is part of a group of stores that sell the same products and operate similarly, but each franchise is independently owned.

An independent store generally operates less than four locations.

Each category includes the whole range of different retail sectors listed in the North American Industry Classification System. Thus, every type of store, (a flower shop, a gas station, a grocery store, etc.) is either an independent, a franchise or part of a in a chain.

Retailer Marketing Decisions

Retailers make different decisions according to the price, promotion and places. And select those which they consider best for matching the demand of the customers and best suited for the distribution of product. Magor retailers marketing decisions are shown in the figure.

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As shown in the figure retailer decisions may be in three field

Price Promotion place

And retailers take decision about product assortment and services decisions according to the steps shown in the figure given bellow.

Above mention marketing decisions are taken by different retailers to which our wholesalers distribute our product "NILE" mineral water bottles.

Retail Store Location Important   Factors

Tips for Choosing a LocationWe select our retail store location for the distribution of "NILE"

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Population and Your Customer

If you are choosing a city or state to locate your retail store, research the area thoroughly before making a final decision. Read local papers and speak to other small businesses in the area. Obtain location demographics from the local library, chamber of commerce or the Census Bureau. Any of these

sources should have information on the area's population, income and age. You know who your customers are, so make sure you find a location where your customers live, work and shop.

Accessibility, Visibility and TrafficDon't confuse a lot of traffic for a lot of customers. Retailers want to be located where there are many shoppers but only if that shopper meets the definition of their target market. Small retail stores may benefit from the traffic of nearby larger stores.

How many people walk or drive past the location. Is the area served by public transportation? Can customers and delivery trucks easily get in and out of the

parking lot? Is there adequate parking?

Depending on the type of business, it would be wise to have somewhere between 5 to 8 parking spaces per 1,000 square feet of retail advertising needed. A specialty retail store located six miles out of town in a free standing building will need more marketing than a shopping store located in a mall.

Signage, Zoning and Planning:

Before signing a lease, be sure you understand all the rules, policies and procedures related to your retail store location. Contact the local

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city hall and zoning commission for information on regulations regarding signage. Ask about any restrictions that may affect your retail operation and any future planning that could change traffic, such as highway construction.

Competition and NeighborsOther area businesses in your prospective location can actually help or hurt your retail shop. Determine if the types of businesses nearby are compatible you're your store. For example, a high-end fashion boutique may not be successful next door to a discount variety store. Place it next to a nail or hair salon and it may do much more business.

Location Costs

Besides the base rent, consider all costs involved when choosing a retail store location.

Who pays for lawn care, building maintenance, utilities and security?

Who pays for the upkeep and repair of the heating/air units? If the location is remote, how much additional marketing will it

take for customers to find you? How much is the average utility bill? Will you need to make any repairs, do any painting or remodeling

to have the location fit your needs? Will the retailer be responsible for property taxes?

The location you can afford now and what you can afford in the future should vary. It is difficult to create sales projects on a new business, but one way to get help in determining how much rent you can pay is to find out what sales similar retail businesses are making and how much rent they're paying.

Personal Factors

If you plan to work in your store, think about your personality, the distance from the shop to home and other personal considerations. If you spend much of your time traveling to and from work, the commute may overshadow the exhilaration of being your own boss. Also, many restrictions placed on a tenant by a landlord, management company or community can hamper a retailer's independence.Special ConsiderationsYour retail shop may require special considerations. Make a list of any unique characteristic of your business that may need to be addressed.

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Will the store require special lighting, fixtures or other hardware installed?

Are restrooms for staff and customers available?

Is there adequate fire and police protection for the area?

Is there sanitation service available?

Does the parking lot and building exterior have adequate lighting?

Does the building have a canopy that provides shelter if raining?

What is the crime rate in the area?

Are there (blue laws) restrictions on Sunday sales?

Don't feel rushed into making a decision on where to put your retail store. Take your time, research the area and have patience. If you have to change your schedule and push back the date of the store's opening, than do so. Waiting to find the perfect store.

Channel Design Decisions

To design our distribution channels we take different decisions and do bellow mention surveys.

Fisrt of all we analyze our customers needs then setting our channel of distribution objectives & constraints and then identified major alternatives and evaluating them and then design "NILE" distribution channels.

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Types of Intermediaries:Marketing Intermediaries link producers to other intermediaries or to the ultimate users of the product. Operate between the producer and the final buyer.

Company Sales Force - having your own in-house sales force provides the most control over selling activities, but entails high fixed costs and supervision

Manufacturer's Agency - using independent companies who sell non-competing, complementary products to a group of customers, paid a commission based on the

amount sold, can provide quick access to new markets, but loyalty and selling effort must be shared with other product lines

Wholesale Distributors - these are independent companies that specialize in the selling, storage, and servicing of other business customers for a wide variety of

product lines. They may provide market coverage over a large geographic area, but may carry product lines of your competitors 

Process of selecting and maintaining channel members

The process of selecting and maintaining channel members given

below is followed by us to distribute our product "NILE" mineral water.

Selecting: How many channel members you choose is partly a matter of determining what level of customer service you want to provide. 

 Motivating: Think of your channel members as people with whom you will build a relationship for everyone's mutual benefit

 Evaluating: Continual performance reviews, pruning dead wood

Delivery Mode and Terms:

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Delivery has been transformed by overnight delivery services that offer speedy delivery for a premium price. Yet faster is not always good business practice.

There are three modes of transportation which are

1) By air 2) By road3) By water

We distribute our product by road through our own vans and trucks which goes to diff erent retail stores in selected areas.

Importance of Distribution Channels

As noted, distribution channels often require the assistance of others in order for the marketer to reach its target market.  But why exactly does a company need others to help with the distribution of their product? Wouldn’t a company that handles its own distribution functions be in a better position to exercise control over product sales

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and potentially earn higher profits? Also, doesn’t the Internet make it much easier to distribute products thus lessening the need for others to be involved in selling a company product.Costs of Utilizing Channel Members Loss of Revenue – Resellers are not likely to offer services to a

marketer unless they see financial gain in doing so.  They obtain payment for their services as either direct payment (e.g., marketer pays for shipping costs) or, in the case of resellers, by charging their customers more than what they paid the marketer for acquiring the product (termed markup).  For the latter, marketers have a good idea of what the final customer will pay for their product which means the marketer must charge less when selling the product to resellers.  In these situations marketers are not reaping the full sale price by using resellers, which they may be able to do if they sold directly to the customer.

Loss of Communication Control – Marketers not only give up revenue when using resellers, they may also give up control of the message being conveyed to customers.  If the reseller engages in communication activities, such as personal selling in order to get customers to purchase the product, the marketer is no longer controlling what is being said about the product. 

This can lead to miscommunication problems with customers, especially if the reseller embellishes the benefits the product provides to the customer.  While marketers can influence what is being said by

training reseller’s salespeople, they lack ultimate control of the message.

Loss of Product Importance – Once a product is out of the marketer’s hands the importance of that product is left up to channel members.  If there are pressing issues in the channel, such as transportation problems, or if a competitor is using promotional incentives in an effort to push their product through resellers, the marketer’s product may not get the attention the marketer feels it should receive.

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Factors in Creating Distribution Channels

Like most marketing decisions, a great deal of research and thought must go into determining how to carry out distribution activities in a way that meets a marketer’s objectives.  The marketer must consider many factors when establishing a distribution system.  Some factors are directly related to marketing decisions while others are affected by relationships that exist with members of the channel.

Next we examine the key factors to consider when designing a distribution strategy.  We group these into two main categories: marketing decision issues and channel relationship issues.  In turn, each of these categories contains several topics of concern to marketers.

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Establishing Channel Relationships

Since channel members must be convinced to handle a marketer’s product it makes sense to consider channel partner’s needs in the same way the marketer considers the final user’s needs.  However, the needs of channel members are much different than those of the final customer.  Resellers seek products of interest to the reseller’s customers but are also concerned with many other issues such as:

Delivery

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Resellers want the product delivered on-time and in good condition in order to meet customer demand and avoid inventory out-of-stocks.

Profit MarginResellers are in business to make money so a key factor in their decision to handle a product is how much money they will make on each product sold.  They expect that the difference (i.e., margin) between their cost for acquiring the product from a supplier and the price they charge to sell the product to their customers will be sufficient to meet their profit objectives.

Other IncentivesBesides profit margin, resellers may want other incentives to entice them especially if they are required to give extra effort selling the product.  These incentives may be in the form of additional free products or even bonuses (e.g., bonus, free trips) for achieving sales goals.

Packaging Resellers want to handle products as easily as possible and want their suppliers to ship and sell products in packages that fit within their

system.  For example, products may need to be a certain size or design in order to fit on a store’s shelf, or the shipping package must fit within the reseller’s warehouse or receiving dock space.  Also, many resellers are now requiring marketers to consider adding identification tags to products (e.g., RFID tags) to allow for easier inventory tracking when the product is received and also when it is sold.

TrainingSome products require the reseller to have strong knowledge of the product including demonstrating the product to customers.  Marketers must consider offering training to resellers to insure the reseller has the knowledge to present the product accurately.

Promotional Help – Resellers often seek additional help from the product supplier to promote the product to customers.  Such help may come in the form of funding for advertisements, point-of-purchase product materials, or in-store demonstrations

Location is better than just settling for the first place that comes along. The wrong location choice could be devastating to your retail business.

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The Retail Trade sector comprises establishments engaged in retailing merchandise, generally without transformation, and rendering services incidental to the sale of merchandise.

The retailing process is the final step in the distribution of merchandise; retailers are, therefore, organized to sell merchandise in small quantities to the general public. This sector comprises two main types of retailers: store and nonstore retailers.

Store retailers operate fixed point-of-sale locations, located and designed to attract a high volume of walk-in customers. In general, retail stores have extensive displays of merchandise and use mass-media advertising to attract customers. They typically sell merchandise to the general public for personal or household consumption, but some also serve business and institutional clients. These include establishments, such as

office supply stores, computer and software stores, building materials dealers, plumbing supply stores, and electrical supply stores. Catalog showrooms, gasoline services stations, automotive dealers, and mobile home dealers are treated as store retailers.

In addition to retailing merchandise, some types of store retailers are also engaged in the provision of after-sales services, such as repair and installation. For example, new automobile dealers, electronic and appliance stores, and musical instrument and supply stores often provide repair services. As a general rule, establishments engaged in retailing merchandise and providing after-sales services are classified in this sector.

The first eleven sub sectors of retail trade are store retailers. The establishments are grouped into industries and industry groups typically based on one or more of the following criteria:

The merchandise line or lines carried by the store; for example, specialty stores are distinguished from general-line stores.

The usual trade designation of the establishments. This criterion applies in cases where a store type is well recognized by the industry and the public, but difficult to define strictly in terms of commodity lines carried; for example, pharmacies, hardware stores, and department stores.

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Capital requirements in terms of display equipment; for example, food stores have equipment requirements not found in other retail industries.

Human resource requirements in terms of expertise; for example, the staff of an automobile dealer requires knowledge in financing, registering, and licensing issues that are not necessary in other retail industries.

Nonstore retailers, like store retailers, are organized to serve the general public, but their retailing methods differ. The establishments of this sub sector reach customers and market merchandise with methods,

such as the broadcasting of "infomercials," the broadcasting and publishing of direct-response advertising, the publishing of paper and electronic catalogs, door-to-door solicitation, in-home demonstration, selling from portable stalls (street vendors, except food), and distribution through vending

The Communication Process

In general, communication is how people exchange meaningful information.  Too often, marketing communications focus on overcoming immediate awareness, image, or preference problems in the target market. Today, marketers are moving toward viewing communications as the management of the customer buying process over time, during the preselling, selling, consuming, and post consumption stages. To communicate effectively, marketers need to understand how communication works.

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Models that reflect how communication occurs often include the elements shown below:

 

Keys to Effective Communication

For marketers understanding how communication works can improve the delivery of their message.  From the information just discussed, marketers should focus on the following to improve communication with their targeted audience:

Carefully Encode – Marketers should make sure the message they send is crafted in a way that will be interpreted by message receivers as intended. 

Allow Feedback – Encouraging the message receiver to provide feedback can greatly improve communication and help determine if a marketer’s message was decoded and interpreted properly.  Feedback can be improved by providing easy-to-use options for responding, such as phone numbers, Internet chat, and email.

Reduce Noise – In many promotional situations the marketer has little control over interference with their message.  However, there are a few instances where the marketer can proactively lower the noise level. Additionally, advertising can be developed in ways that separates the marketer’s ad from others, including the use of whitespace in magazine ads.

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Choose Right Audience – Targeting the right message receiver will go a long way to improving a marketer’s ability to promote their products.  Messages are much more likely to be received and appropriately decoded by those who have an interest in the content of the message.

IMPORTANCE OF COMMUNICATION

Marketing is one of the most dynamic functions in business. Nearly every day, changes occur in the marketing environment; in consumer and organizational behavior; in product development; in pricing; in channel relationships; in marketing communications; and in technology. Therefore, in order to be successful, marketers should cope up with these changes particularly in marketing communication, because without effective communication a product can’t excel in the market. Weather a product is good or bad, if marketer has communicated well about the product, it can easily dominate the market. Because customer differs, communication programs needs to be developed for the specific segments, niches, and even individuals.

In addition to coordinating general promotion decisions with other business areas, individual promotions must also work together.  Under the concept of Integrated Marketing Communication marketers attempt to develop a unified promotional strategy involving the coordination of many different types of promotional techniques.  The key idea for the marketer who employs several promotional options to reach objectives for the product is to employ a consistent message across all options. For instance, salespeople will discuss the same benefits of a product as mentioned in television advertisements.  In this way no matter how customers are exposed to a marketer’s promotional efforts they all receive the same information.

Thus, the communication process should start with an audit of the potential interactions target customers may have with the product and company. For example, someone purchasing a new computer may talk to others, see television ads, read articles and ads in newspapers and magazines, and try out computers in the store. The marketer needs to assess the influence that each of these communications experiences will have at different stages of the buying process. This understanding will help marketers allocate the communication dollars more efficiently and effectively.

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PROMOTION

Promotion is a form of corporate communication that uses various methods to reach a targeted audience with a certain message in order to achieve specific organizational objectives.  Nearly all organizations, whether for-profit or not-for-profit, in all types of industries, must engage in some form of promotion.  Such efforts may range from multinational firms spending large sums on securing high-profile celebrities to serve as corporate spokespersons to the owner of a one-person enterprise passing out business cards at a local businessperson’s meeting.

“Nile, its nature” is a new Product that is going to be launched in the month of Ramadan. The

promotion campaign for “NILE, its nature” would last for two months starting from the Holy month of Ramadan. So we have designed our promotion campaign that helps us to cater the market besides creating the brand identity.

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Like most marketing decisions, an effective promotional strategy requires the marketer understand how promotion fits with other pieces of the marketing puzzle (e.g., product, distribution, pricing, target markets).  Consequently, our promotion decisions should be made with an appreciation for how it affects other areas of the company. 

For instance, running a major advertising campaign for a new product without first assuring there will be enough inventory to meet potential demand generated by the advertising would certainly not go over well with the company’s production department (not to mention other key company executives).  Thus, we don’t want to work in a vacuum when making promotion

decisions.  Rather, the overall success of our promotional strategy requires input from others in impacted functional areas.

Targets of Marketing Promotions

The audience for an organization’s marketing communication efforts is not limited to just the marketer’s target market.  While the bulk of a marketer’s promotional budget may be directed at the target market, there are many other groups that could also serve as useful target of a marketing message. 

Targets of a marketing message generally fall into one of the following categories:

Members of the Organization’s Target Market – This category would include current customers, previous customers and potential customers, and as noted, may receive the most promotional attention.

Influencers of the Organization’s Target Market – There exists a large group of people and organizations that can affect how a company’s target market is exposed to and perceives a company’s products.  These influencing groups have their own communication mechanisms that reach the target market and the marketer may be able utilize these influencers to its benefit.  Influencers include the news media (e.g., offer company stories), special interest groups, opinion leaders (e.g., doctors directing patients), and industry trade associations.

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Participants in the Distribution Process – The distribution channel provides services to help gain access to final customers and are also target markets since they must recognize a product’s benefits and agree to handle the product in the same way as final customers who must agree to purchase products. 

Aiming promotions at distribution partners (e.g., retailers, wholesalers, distributors) and other channel members is extremely important and, in some industries, represents a higher portion of a marketer’s promotional budget than promotional spending directed at the final customer.

Other Companies –Reaching out to other companies, including companies who may be competitors for other products, could help create interest in discussing such a relationship.

Other Organizational Stakeholders – Marketers may also be involved with communication activities directed at other stakeholders.  This group consists of those who provide services, support or, in other ways, impact the company. Communicating with this group is important to insure the marketer’s views of any changes in standards are known.

Incase of “Nile, its nature”, we would cater the current customers, previous customers and potential customers of the competitors. But our focus will not be limited to urban areas or developed areas only; we also want to create awareness to the consumers in rural and remote areas giving them the benefit of Pure and Clear water.

In the distribution process the following promotion would be done…

Distributor Each distributor would be given a Target on Monthly basis on

each bottle segment. On achievement of the Target, the distributor would be given an extra Margin of 2% as Cash

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Incentive over and above his margin. (Generic but logically would be different for each segment)

Wholesaler Each wholesaler would be given a Target on Monthly basis. On

achievement of the Target on each segment (Based on the area), the wholesalers would be given a “FREE” Trip to Thailand with his family. (All expenses paid)

Retailer Just like distributor and wholesaler, Retailers would also be given

a Target on Monthly basis. On achievement of the Target, there would be a “Lucky Draw” of free items such as refrigerators, air conditioners, mobile phones, television, DVD players, and a bumper prize of motor bike. The retailer would also be given a higher % than its competitors on Nile product.

Objectives of Marketing Promotions

Customers often move through several stages before a purchase decision is made.  Additionally before turning into a repeat customer, purchasers analyze their initial purchase to see whether they received a good value, and then often repeat the purchase process again before deciding to make the same choice.

The type of customer the marketer is attempting to attract and which stage of the purchase process a customer is in will affect the objectives of a particular marketing communication effort. 

Types of Promotion Objectives

The possible objectives for marketing promotions may include the following:

Build Awareness – As new products and are often unknown to a market, therefore our initial promotional efforts are focused on establishing an identity. In this situation we have focused our promotion to:

1) Effectively reach customers, and

2) Tell the market who we are and what we have to offer. 

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Create Interest – Moving a customer from awareness of a product to making a purchase can present a significant

challenge. Customers must first recognize they have a need before they actively start to consider a purchase.  The focus on creating messages that convince customers that a need exists has been the hallmark of marketing for a long time.

Provide Information –In situations, where the product competes in an existing market, informational promotion may be used to help with a product positioning strategy

Stimulate Demand – The right promotion can drive customers to make a purchase.  In the case of products that a customer has not previously purchased or has not purchased in a long time, the promotional efforts may be directed at getting the customer to try the product. 

Complete Campaign Details.The campaign would be done through:

Print Media (Press Ad’s etc)

Electronic Media (TV, Radio etc)

Mass Media (Printings, Photography)

Since a marketer often has multiple simultaneous promotional campaigns, the objective of each could be different.

The most obvious objective we have for our promotional activities is to convince customers to make a decision that benefits our product (of course we believe the decision will also benefit the customer). 

However, we understand that getting customers to commit to a decision, such as a purchase decision, is only achievable when a customer is ready to make the decision. So we have made benefits for the customers in order to make the purchase decision easy for the customers. 

In order to provide information about “NILE, its nature”, we may use promotional means, including direct comparisons with competitor’s products,

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in an effort to get customers to mentally distinguish the marketer’s product from those of competitors.

The challenge of “NILE, its nature” is to catch and convince buyers to make a purchase decision by creating the interest in the product. The focus is to get customers to try a product. In case of

“NILE, its nature; this has been done by putting the following benefits in the product for the buyer:

Product Wise Interest We have placed the following benefits in our products:

500ml (600ml in price of 500ml)

1.5liter (Free TANG sachet)

6 liter (Lucky draw for HAJJ/ UMRAH)

Characteristics of Different Promotions

Some characteristics that are widely understood as being important in evaluating the effectiveness of each type of promotion, they are by no means the only criteria used for evaluation.  In fact, as new promotional methods emerge the criteria for evaluating promotional methods will likely change.

For our product we will look at the following characteristics of a promotional method:

1. Intended Audience: Mass vs. Targeted2. Payment Model: Paid vs. Non-Paid3. Interaction Type: Personal vs. Non-Personal4. Message Flow: One-Way vs. Two-Way5. Demand Creation: Quick vs. Lagging6. Message control7. Message credibility8. Effective Cost of Promotion

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1. Intended Audience: Mass Promotion vs. Targeted Promotion

Promotions can be categorized based on the intended coverage of a single promotional message.  For instance, a single television advertisement for a major sporting event could be seen by millions of viewers at the same time.  Such mass promotion, intended to reach as many people as possible, has been a mainstay of marketers’ promotional efforts for a long time.  Unfortunately, while mass promotions are delivered to a large number of people, the actual number that fall within the marketer’s target market may be small.  Because of this, many who use mass promotion techniques find it to be an inefficient way to reach desired customers. 

Advertisers are much more likely to have their ads displayed to customers within their target market and, thus, receive a higher return on their promotional investment.  The movement to highly targeted promotions has gained tremendous traction in recent years and, as new and improved targeting methods are introduced, its importance will continue to grow.

2. Payment Model: Paid Promotion vs. Non-Paid Promotion

Most efforts to promote products require marketers to make direct payment to the medium that delivers the message.  For instance, a company must pay a magazine publisher to advertise in the magazine.  However, there are several forms of promotion that do not involve direct payment in order to distribute a promotional message.  While not necessarily “free” since there may be indirect costs involved, the ability to have a product promoted without making direct payment to the medium can be a viable alternative to expensive promotion options.

3. Interaction Type: Personal vs. Non-Personal

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A promotion that involves real people communicating with other people is considered as “personal promotion”.  While salespeople are a common and well understood type of personal promotion, another type of promotion, called controlled word-of-mouth promotion (a.k.a., buzz marketing), is emerging as a form of personal promotion.  Unlike salespeople who attempt to obtain an order from customers, controlled word-of-mouth promotion uses real people to help spread information about a product but is not designed to directly elicit orders.  Many non-personal forms of promotion, such as a radio advertisement, are inflexible, at least in the short-term, and cannot be easily adjusted to address questions that arise by the audience experiencing the ad.

4. Message Flow: One-Way vs. Two-Way Communication

Most efforts at mass promotion, such as television advertising, offer only a one-way information flow that does not allow for easy response by the message receiver.  However, many targeted promotions, such as using a sales force to promote products, allow message recipients to respond immediately to information from the message sender.

5. Demand Creation: Quick vs. Lagging

When a marketer is looking to increase demand, certain promotional activities offer advantages in turning exposure to promotion into a quick increase in demand.  In general, these activities are most effective when customers are offered an incentive to make the purchase either in a monetary way (e.g., save money) or in psychological way (e.g., improves customer’s perceived group role or status level).

6. Message Control

No marketer can totally control how the news media, customers or others talk about a company or its products.  Reporters for magazines, newspaper

and websites, as well as posters to Internet forums may discuss a company’s products in ways that can benefit or hinder a company’s marketing efforts.  7. Message Credibility

The perceived control of the message can influence the target market’s perception of message credibility.  For example, many

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customers viewing a comparative advertisement in which a product is shown to be superior to a competitor’s product may be skeptical about the claims since the company with the superior product is paying for the advertisement.  Yet, if the same comparison is mentioned in a newspaper article it may be more favorably viewed since readers may perceive the author of the story has possessing an unbiased point-of-view. 8. Cost Effectiveness

Promotional cost is measured in several different ways though the most useful are measured in terms of cost-per-impression (CPI), cost-per-targeted impression (CPTI), and cost-per-action (CPA).  The CPI metric (also measured in terms of cost-per-thousand impressions or CPM) relates to how many people are exposed to a promotion in relation to the cost of the promotion. 

A national or international television advertisement, while expensive to create and broadcast, actually produces a very low CPI given how many people are exposed to the ad.  Yet, a low CPI can be misleading if a large percentage of the promotion’s audience is not within the marketer’s target market, in which case the CPTI may be a better metric for gauging promotion effectiveness.  The CPTI approach looks at what percentage of an audience is within the marketer’s customer group and, thus, legitimate targets for the promotion.  Clearly, CPTI is higher than CPI, but it offers a better indication of how much promotion is reaching targeted customers.

An even more effective way to evaluate promotional costs is through the cost-per-action metric.  With CPA the marketer evaluates how many people actually respond to a promotion. Unfortunately, measuring CPA is not always easy and tying it directly to a specific promotion can also be difficult because taking several weeks to make the purchase does not mean the advertisement was not effective in generating sales, though if the CPA was

measured within a day or two after the ad was broadcast this person’s action would not have been counted.. 

Because we are launching a new product in the market, so in order to stimulate demand we will first go for Mass promotion and after

creating identity of “NILE, its nature”, we’ll direct our promotion activities towards target market. Cricket Medium would be used as one

of the sources for promotion. For this purpose “Nile, its

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nature”, would be heavy advertised during the Champions Trophy held in Pakistan and the event would be sponsored. Moreover,

“NILE, its nature”, will be used during the entire event at subsidized rates.

Types of Promotion – Promotion Mix

A company’s total marketing mix_ also called its promotion mix_ consists of specific blend of advertising, personal selling, sales promotion, and public relations tools that the company uses to pursue its advertising and marketing objectives. Marketers have at their disposal four major methods of promotion.  Taken together these comprise the promotion mix. The four major promotion tools are as follows:

Advertising – Involves non-personal mostly paid promotions often using mass media outlets to deliver the marketer’s message.  While historically advertising has involved one-way communication with little feedback opportunity for the customer experiencing the

advertisement, the advent of computer technology and, in particular, the Internet has increased the options that allow customers to provide quick feedback. 

Sales Promotion – Involves the use of special short-term techniques, often in the form of incentives, to encourage customers to respond or undertake some activity.  For instance,

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the use of retail coupons with expiration dates requires customers to act while the incentive is still valid.

Public Relations – Building good relations with the company’s various publics by obtaining favorable publicity, building up a good “corporate image,” and handling or heading off unfavorable rumors, stories, and events. This type of promotion uses third-party sources, and particularly the news media, to offer a favorable mention of the marketer’s company or product without direct payment to the publisher of the information.

Personal Selling – As the name implies, this form of promotion involves personal contact between company representatives and those who have a role in purchase decisions (e.g., make the decision, such as consumers, or have an influence on a decision, such as members of a company buying center).  Often this occurs face-to-face or via telephone, though newer technologies allow this to occur online via video conferencing or text chat.

Communication goes beyond these specific promotion tools. The product’s design, its price, the shape and color of its package, and the stores that sells it_ all communicate something to buyers. Thus, although the promotion mix is the company’s primary communication activity

As “NILE, its nature” is not a highly priced consumer product rather it is the finest quality at convenient price; therefore, it doesn’t strongly need personalized promotion, even then, for the purpose of personal selling we

are hoping to place our stalls at shopping malls such as Pace, Al-Fateh, HKB, CSD, Metro Cash and Carry, etc. Moreover, we’ll air a live program on Radio FM consisting of questioners that would be asked from the callers and the winners would e awarded with surprise gifts. Apart from Stalls and FM questionnaires, Brochures and Feedback

forms would be used as well. Although “NILE, its nature”, is not a complicated product and doesn’t require answering numerous complex questions, even then we will use two way communication approaches in order to avoid any confusion or misunderstanding.

Promotion Summary Table

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The table below compares each of the promotion mix options on the eight key promotional characteristics.  The summary should be viewed only as a general guide since promotion techniques are continually evolving and how each technique is compared on a characteristic is subject to change.

Characteristics Advertising Sales Promotion

Public Relations

Personal Selling

Directed Coverage mass & targeted mass & targeted mass targeted

Message Flow one & two-way one & two-way one-way two-way

Payment Model paidlimited non-paid

Paid non-paid paid

Interaction Type non-personal personal & non-personal

non-personal personal

Demand Stimulation Lagging Quick lagging quick

Message Control Good Good poor very good

Message Credibility low-medium low-medium high medium-high

Cost of Promotion CPI - LowCPTI - VariesCPA - Varies

CPI - MediumCPTI - VariesCPA - Varies

CPI - NoneCPTI - NoneCPA - None

CPI - HighCPTI - HighCPA - High

Factors Affecting Promotions Choice

With four promotional methods to choose from how does the marketer determine which ones to use?  The selection can be complicated by company and marketing decision issues especially if a company is going to launch a new product in the market.

Company Issues:

Promotional Objective –There are several different objectives a marketer may pursue with their promotional strategy.  Each type of promotion offers different advantages in terms of helping the marketer reach their objectives. 

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Availability of Resources – The amount of money and other resources that can be directed to promotion affects the marketer’s choice of promotional methods.  Marketers with large promotional budgets may be able to spread spending among all promotion options while marketers with limited funds must be more selective on the promotion techniques they use.

Company Philosophy – Some companies follow a philosophy that dictates where most promotional spending occurs.  For instance, some companies follow the approach that all promotion should be done through salespeople while other companies prefer to focus attention on product development and hope word-of-mouth communication by satisfied customers helps to create interest in their product. However the promotion of a “drinking water” can be done through either salespeople or word-of-mouth communication.

Marketing Decision Issues:

Target Market –Characteristics such as size, location and type of target markets affect how the marketer communicates with customers. 

For instance, for a small marketer serving business markets with customers widely dispersed, it may be very expensive to utilize a sales force versus using advertising.

Product –Different products require different promotional approaches.  For the consumer market, products falling into the convenience and shopping goods categories (as our mineral water) are likely to use mass market promotional approaches while higher-end specialty goods are likely to use personalized selling.

 

Distribution –Marketing organizations selling through channel partners can reach the final customer either directly using a pull promotion strategy (creates demand for a product) which is used when channel partners are hesitant about stocking a product unless they are assured of sufficient customer interest or indirectly using a push promotional strategy (pushing the product down the channel and into customer’s hands) which is used to encourage channel partners to stock and promote the product to their customers.

  

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Price – The higher the price of a product the more likely a marketer will need to engage in personalized promotion compared to lower priced products that can be marketed using mass promotion.

Advertising

Advertising is a non-personal form of promotion that is delivered through selected media outlets that, under most circumstances, require the marketer to pay for message placement.  Advertising is a method of mass promotion in that a single message can reach a large number of people.  But, this mass promotion approach presents problems since many exposed to an advertising message may not be within the marketer’s target market, and thus, may be an inefficient use of promotional funds.  However, this is changing as new advertising technologies and the emergence of new media outlets offer more options for targeted advertising.

Advertising also has a history of being considered a one-way form of marketing communication where the message receiver (i.e., target market) is not in position to immediately respond to the message (e.g., seek more information).  Another characteristic that may change as advertising evolves is the view that advertising does not stimulate immediate demand for the product advertised.  That is, customers cannot quickly purchase a product they see advertised. 

Importance of Advertising

Spending on advertising is huge. This huge level of spending supports thousands of companies and millions of jobs.  In fact, in many countries most media outlets, such as television, radio and newspapers, would not be in business without revenue generated through the sale of advertising.  While worldwide advertising is an important contributor to economic growth, individual marketing organizations differ on the role advertising plays.  For some organizations little advertising may be done, instead promotional money is spent on other promotion options such a personal selling through a sales team.  For some smaller companies advertising may consist of occasional advertisement and on

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a very small scale, such as placing small ads in the classified section of a local newspaper. 

Managing Advertising Decisions

Delivering an effective marketing message through advertising requires many different decisions as the marketer develops their advertising campaign.  For small campaigns, that involve little creative effort, one or a few people may handle the bulk of the work.  For larger campaigns the skills needed to make sound advertising decisions can be quite varied and may not be easily handled by a single person.  While larger companies manage some advertising activities within the company, they are more likely to rely on the assistance of advertising professionals, such as those found at advertising agencies, to help bring their advertising campaign to market.

Advertising Agency Functions

Professionals at advertising agencies and other advertising organizations offer a number of functions including:

Account Management – Within an advertising agency the account manager or account executive is tasked with handling all major decisions related to a specific client.  These responsibilities include locating and negotiating to acquire clients.  Once the client has agreed to work with the agency, the account manager works closely with the client to develop an advertising strategy. 

Creative Team – For large accounts one task account managers routinely delegate involves generating ideas, designing concepts and creating the final advertisement, which generally becomes the responsibility of the agency’s creative team.  An agency’s creative team consists of specialists in graphic design, film and audio production, copywriting, computer programming, and much more.

Researchers – Full-service advertising agencies employ market researchers who assess a client’s market situation, including understanding customers and competitors, and also are used to test creative ideas. Researchers also help in following the completion of an advertising campaign to measure whether the campaign reached its objectives.

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Media Planners – Once an advertisement is created, it must be placed through an appropriate advertising media.  Each advertising media, of which there are thousands, has its own unique methods for accepting advertisements, such as:

different advertising cost structures (i.e., what it costs marketers to place an ad),

different requirements for accepting ad designs (e.g., size of ad),

different ways placements can be purchased (e.g., direct contact with media or through third-party seller), and

Different time schedules (i.e., when ad will be run). 

Understanding the nuances of different media is the role of a media planner, who looks for the best media match for a client and also negotiates the best deals.

For the purpose of media planning, Professional Advertising Agency would be hired and it will design and plan all the following functions to do the job effectively.

Account Management Creative Team Researchers Media Planners

Types of Advertising

Type of advertising refers to the primary “focus” of the message being sent and falls into one of the following four categories:

Product-Oriented Advertising

Most advertising spending is directed toward the promotion of a specific good, service or idea, what we have collectively labeled as an organization’s product. The goal of product advertising is to clearly promote a specific product to a targeted audience.  Marketers can accomplish this in several ways from a low-key approach that simply

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provides basic information about a product (informative advertising) to blatant appeals that try to convince customers to purchase a product (persuasive advertising) that may include direct comparisons between the marketer’s product and its competitor’s offerings (comparative advertising).

As marketer of new products, we are planning to follow the “teaser” approach in advance of a new product introduction to prepare the market for the product

Image Advertising

Image advertising is undertaken primarily to enhance an organization’s perceived importance to a target market. Image advertising does not focus on specific products as much as it presents what an organization has to offer.  In these types of ads, if products are mentioned it is within the context of “what we do” rather than a message touting the benefits of a specific product.  Image advertising is often used in situations where an organization needs to educate the targeted audience on some issue.  Advocacy Advertising

Organizations also use advertising to send a message intended to influence a targeted audience.  Mostly there is an underlying benefit sought by an organization when they engage in advocacy advertising.  Public Service Advertising

Sometimes, organizations are permitted to run advertisements through certain media outlets free-of-charge if the message contained in the ad concerns an issue viewed as for the “greater good” of society. But this approach is usually applicable for non-profit organizations.

As marketer of new products, we are planning to follow the “teaser” approach in advance of a new product introduction to prepare the

market for the product One week before the launch of “NILE, its nature”, we’ll air our teaser proclaiming “its nature, its your

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body” this teaser will help to create curiosity about our product among the buyers.

In case of image advertising, our major concern here is to let people

know about the benefits and purity of “NILE, its nature” rather then enhancing the organization’s perceived importance to a target market.

Advertising TrendsLike most areas of marketing, advertising is changing rapidly. This change has affected advertising more than any other marketing function.  The more important trends in advertising include:

Digital Convergence

In advertising convergence, and more appropriately digital convergence, refers to a growing trend for using computer technology to deliver media programming and information. Convergence allows one media outlet to take advantage of features and benefits offered through other media outlets.  But convergence is not limited to just television.  Many media outlets are experiencing convergence as can be seen with print publications that now have a strong web presence. These include outdoor billboards that alter displays as cars containing geographic positioning systems (GPS) and other recognizable factors (e.g., GPS tied to satellite radio) pass by or direct mail postcards that carry a different message based on data that matches a household’s address with television viewing habits.

Focus on Audience Tracking

The movement to digital convergence provides marketers with the basic resources needed to monitor user’s activity, namely, digital data. All digital information can be stored and later evaluated. For media outlets delivering information in digital form, the potential exists for greater tracking and matching this with information about the person receiving the digital data.  And tracking does not stop with what is delivered; it also works with information being sent from the customer. Tracking can be used in future marketing efforts.

Audience Concern with Tracking

While media convergence offers marketers more options for tracking response to advertisements, such activity also raises ethical and legal

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concerns.  Many consumers are not pleased to learn their activities are being monitored when they engage a media outlet.  Yet consider the following examples of how marketers are tracking users:

Television Viewing –The advent of digitally delivered television allows cable, telephone and satellite providers to track user activity through the set-top boxes connected to a subscriber’s television.

 

Television recording –A digital video recorder (DVR), such as TiVo, can track users recording habits and, based on a viewer’s past activity, make suggestions for programs they may want to record.  Additionally, advertising services can program the DVR to insert special advertisements within a program targeted to a particular viewer.

Internet Spy ware –Spy ware is a special program that runs in the background of a user’s computer and regularly forwards information over the Internet to the spy ware’s company.  In some cases spy ware keeps track of websites the user has visited.  The information is then used to gain an understanding of the user’s interests, which then results in delivery of special ads when a user visits a certain site.

Ad Skipping and Blocking

Viewer convenience is not the only advantage of the DVR.  The other main reason consumers are attracted to the DVR is their ability to quickly skip over commercials.  Of course this presents major issues for advertisers who are paying for advertisements.  As more DVR devices with ad skipping or even ad blocking features are adopted by mainstream consumers the advertiser’s concern with whether they are getting the best value for the advertising money becomes a bigger issue. 

Changing Media Choices

There is a major cultural shift occurring in how people use media for entertainment, news and information.  Many traditional media outlets, such as newspapers and major commercial television networks, are seeing their customer base eroded by the emergence of new media outlets. A number of important applications tied to the Internet are

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creating new media outlets and drawing the attention of many, mostly younger, consumers.  Examples include:

Pod casting Audio – This involves delivering programming via downloadable online audio that can be listened to on music players, such as Apple’s I-Pod.  Many news websites and even other information site, such as blogs, offer free downloadable audio programming.

Pod casting Video – While audio downloading has been available for some time, the downloading of video to small, handheld devices, including cell phones, is in its infancy.

 

RSS Feeds – This is an Internet information distribution technology that allows for news and content to be delivered instantly to anyone who has signed up for delivery.  Clearly those registering for RSS feeds represent a highly targeted market since they requested the content.

Networked Gaming –Gaming systems attached to the Internet for group play is relatively new and becoming more practical as more people move to faster Internet connections. 

For marketers these new technologies should be monitored closely as they become accepted alternatives to traditional media outlets.  While these technologies are currently not major outlets for advertising, they may soon offer such opportunity.  As these technologies gain momentum and move into mainstream acceptance marketers may need to consider shifting advertising spending. 

The bottom line for marketers is they must stay informed of new developments and understand how their customers are using these in ways that may offer advertising opportunities.

But here we are not concerned with such complicated types of

advertising, we want to launch “NILE, its nature” in a simple but effective and strongly convincing way, so that it becomes easy to persuade people and create demand.

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Managing the Advertising CampaignWhether a marketer employs a professional advertising agency to handle its advertising campaign or chooses to undertake all advertising tasks on its own, a successful campaign requires a number of important decisions including:

Setting the Advertising Objective

Setting the Advertising Budget

Creating a Message

Selecting Media for Message Delivery

Evaluating Campaign Results

For major consumer products each of these decisions will be intensely evaluated and knowledge of all advertising campaign decisions is important and should be well understood by all marketers.

Setting the Advertising Objective

Marketing promotion, which includes advertising, can be used to address several broad objectives including: building product awareness, creating interest, providing information, stimulating demand and reinforcing the brand.  To achieve one or more of these objectives, advertising is used to send a message containing information about some element of the marketer’s offerings. 

Message About Product – Details about the product play a prominent role in advertising for new products.  In fact, a very large percentage of

product-oriented advertising includes some mention of features and benefits offered by the marketer’s product.

 

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Message About Price – Companies that regularly engage in price adjustments, such as running short term sales (i.e., price markdown), can use advertising to let the market know of price reductions.

 

Message About Other Promotions – Advertising often works hand-in-hand with other promotional mix items. Also, advertising can help salespeople gain access to new accounts if the advertising precedes the salesperson’s attempt to gain an appointment with a prospective buyer. This may be especially effective for a company entering a new market and launching a new product where advertising may help reduce the uncertainty a buyer has about a new product.

Message About Distribution – Within distribution channels, advertising can help expand channel options for a marketer by making distributors aware of the marketer’s offerings.  Also, advertising can be used to let customers know locations where a product can be purchased.

Setting the Advertising Budget

Setting an advertising objective is easy, but achieving the objective requires a well-thought out strategy.  One key factor affecting the strategy used to achieve advertising objectives is how much money an organization has to spend.  The funds designated for advertising make up the advertising budget and it reflects the amount an organization is willing (i.e., approved by high-level management) to commit to achieve its advertising objectives. Organizations use several methods for determining advertising budgets including:

Percentage of Sales – Under this approach advertising spending is set based on either a percentage of previous sales or a percentage of forecasted sales. For example, an organization may set next year’s advertising budget at 10% of this year’s sales level

What is Affordable – Many smaller companies find spending of any kind to be constraining.  In this situation, advertising may be just one of several tightly allocated spending areas and, thus, the level spent on advertising may vary over time.  For these companies, advertising may only occur when extra funds are available.

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Best Guess – Companies entering new markets often lack knowledge of how much advertising is needed to achieve their objectives.  In cases where the market is not well understood, marketers may rely on their best judgment (i.e., executive’s experience) of what the advertising budget should be.

Selecting Media Outlets

With an objective and a budget in place, the advertising campaign will next need to focus on developing the message.  However, before effort is placed in developing a message the marketer must first determine which media outlets will be used to deliver their message. These range from traditional outlets, such as print publications, radio and television, to newly emerging outlets, such as the Internet and mobile devices.  The characteristics by which different media outlets can be assessed include the following factors:

1. Creative Options.2. Creative Cost.3. Media Market Reach.4. Message Placement Cost.5. Length of Exposure.6. Advertising Clutter.7. Response Tracking.

1.Creative OptionsAn advertisement has the potential to appeal to four senses – sight, sound, smell and touch.  However, not all advertising media have the ability to deliver multi-sensory messages.  Traditional radio, for example, is limited to delivering audio messages while roadside billboards offer only visual appeal.  2.Creative CostThe media type chosen to deliver a marketer’s message also impacts the cost of creating the message.  For media outlets that deliver a multi-sensory experience (e.g., television and Internet for sight and

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sound; print publications for sight, touch and smell) creative cost can be significantly higher than for media targeting a single sensory experience.  3.Media Market ReachThe number of customers exposed to a single promotional effort within a target market is considered the reach of a promotion.  Some forms of advertising, such as television advertising, offer an extensive reach, while a single roadside billboard on a lightly traveled road offers very limited reach. 

Market reach can be measured along two dimensions:

Channels Served - This dimension relates to whether a media outlet is effective in reaching the members within the marketer’s channel of distribution.  Channels can be classified as:

Consumer Channel – Does the media outlet reach the final consumer market targeted by the marketer?

Trade Channel – Does the media outlet reach a marketer’s channel partners who help distribute their product?

Business-to-Business – Does the media outlet reach customers in the business market targeted by the marketer?

Geographic Scope – This dimension defines the geographic breadth of the channels served and includes:

International – Does the media outlet have multi-country distribution?

National – Does the media outlet cover an entire country?

Regional – Does the media outlet have distribution across multiple geographic regions such as counties, states, provinces, territories, etc.?

Local – Does the media outlet primarily serve a limited geographic area?

Individual – Does the media outlet offer individual customer targeting?

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4.Message Placement Cost

The other cost is for media placement; the purchase of ad time, space or location with media outlets that deliver the message. Media outlets set placement cost using several factors though the most important are determined by audience size, audience type and an advertisement’s production characteristics:

Audience Size – Refers to the number of people who experience the media outlet during a particular time period.  In general, the more people experiencing a media outlet, the more the outlet can charge for ads

 

Audience Type –the key to marketing is aligning marketing decisions to satisfy the needs of a target market.  The more selectively targeted the audience, the more valuable this audience is to advertisers since with targeted advertising promotional funds are being spent on those with the highest potential to respond to the advertiser’s message.

Characteristics of the Advertisement – Media outlet also charge different rates based on creative characteristics of the message.  Characteristics that create ad rate differences include:

Run Time (e.g., length of television or radio ads) Size (e.g., print ads size, billboard size) Print Style (e.g., black-and-white vs. color) Location in Media (e.g., back magazine cover vs. inside pages)

5.Length of Exposure

Media outlets vary in how much exposure they offer to their audience.  Magazines and other publications provide opportunities for longer exposure times since these media types can be retained by the audience (i.e., keep old magazines) while exposure on television and radio are generally limited to the time the ad was broadcast.

6.Advertising Clutter

In order to increase revenue, media outlets often include a large number of ads within a certain time, space or location To break through the clutter advertisers may be required to increase the

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frequency of their advertising efforts (i.e., run more ads).  Yet greater advertising frequency increases advertising expense. 

7.Response Tracking

Newer media developed using Internet technology offer effective methods for tracking audience response compared to traditional media.  But Internet-media are not alone in providing response tracking.  Other advertising outlets, such as advertising by mail and television infomercial programming, also provide useful measures of audience reaction.

Type of Media Outlets

The reason for the growing number of media outlets lies with advances in communication technology.  Here we provide an overview of 10 leading media outlets:

Television. Radio. Print Publications.

 Internet. Direct Mail. Signage. Product Placement.  Mobile Devices.  Sponsorships. Others.

Television Advertising

Television advertising is viewed as the pillar of advertising media outlets. Television advertising offers the benefit of reaching large numbers in a single exposure.  Yet because it is a mass medium capable of being seen by nearly anyone, television lacks the ability to deliver an advertisement to highly targeted customers compared to other media outlets However, television remains an option that is best for products that targeted to a broad market.

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Radio Advertising

Promotion through radio has been a viable advertising option for over 80 years.  Radio advertising is mostly local to the broadcast range of a radio station. In many ways radio suffers the same problems as television, namely, a mass medium that is not highly targeted and offers little opportunity to track responses.  But unlike television, radio presents the additional disadvantage of limiting advertisers to audio-only advertising.  For some products advertising without visual support is not effective.

Print Publication Advertising

Print publications such as magazines, newspapers and Special Issue publications offer advertising opportunities at all geographic levels.  Newspapers have also incorporated color advertisements, though their main advantage rests with their ability to target local markets.

  Internet Advertising

The fastest growing media outlet for advertising is the Internet.  Internet advertising’s influence continues to expand and each year more major marketers shift a larger portion of their promotional budget to this medium.  The Internet offers many advertising options with messages delivered through websites or by e-mail. Direct Mail

This method of advertising uses postal and other delivery services to ship advertising materials, including postcards, letters, brochures, catalogs and flyers, to a physical address of targeted customers.  Direct mail is most effective when it is designed in a way that makes it appear to be special to the customer.  Direct mail can be a very cost-effective method of advertising, especially if mailings contain printed material.  Signage and Billboards

The use of signs to communicate a marketer’s message places advertising in geographically identified areas in order to capture customer attention. The most obvious method of using signs is through

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billboards, which are generally located in high traffic areas.  Outdoor billboards come in many sizes, though the most well-known are large structures located near transportation points intending to attract the interest of people traveling on roads or public transportation.  Indoor billboards are often smaller than outdoor billboards and are designed to attract the attention of foot traffic (i.e., those moving past the sign).  For example, smaller signage in airports, and large commercial office space fit this category.  While billboards are the most obvious example of signage advertising, there are many other forms of signage advertising include:

Mobile billboards where signs are placed on vehicles, such as buses and cars, or even carried by people

Plastic bags used to protect newspapers delivered to homes

Advertisements attached to grocery carts

Product Placement Advertising

Product placement is an advertising approach that intentionally inserts products into entertainment programs such as movies, TV programs and video games.  Placement can take several forms including:

visual imagery in which the product appears within the entertainment program

actual product use by an actor in the program

words spoken by an actor that include the product name

Mobile Device Advertising

Handheld devices, such as cell phones, personal digital assistants (PDA’s) and other wireless devices, make up the growing mobile device market.  Such devices allow customers to stay informed, gather information and communicate with others without being tied to a physical location.  Currently, the most popular advertising delivery method to mobile devices is through plain text messaging.

Sponsorships

Sponsorships are intended not to be viewed a blatant advertisement and in this way may be appealing for marketers looking to establish credibility with a particular target market.  However, many sponsorship options lack the ability to tie spending directly to customer response.  Additionally, the visibility of the sponsorship may be limited to

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relatively small mentions especially if the marketer is sharing sponsorship with many other organizations.

Others

While the media outlets discussed above represent the overwhelming majority of advertising methods, there are several more including:

advertising using telephone recordings (e.g., political candidate’s messages)

advertising via fax machine (though there may be certain legal issues with this method)

advertising through inserted material in product packaging (e.g., inside credit card bill)

advertising imprinted on retail receipts (e.g., grocery store, cash machine)

Creating a Message

In advertising, the act of creating a message is often considered the creative aspect of carrying out an advertising campaign.  And because it is a creative process, the number of different ways a message can be generated is limited only by the imagination of those responsible for developing the message. 

When creating an advertising message the marketer must consider such issues as:

General Message Factors

Message Structure

Message Testing

General Message FactorsThe makeup of the target audience (e.g., age, location, attitudes, etc.) impacts what is conveyed in the message. The media outlet (e.g., television, print, Internet, etc.) used to deliver the message impacts the way a message will be created. The objective of the advertising campaign can affect the type of ad that is designed.  For example, an advertisement with the objective of stimulating immediate sales for an existing product will be different than an advertisement that seeks to build initial awareness of a new product.

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Message Structure

Most advertising messages share common components within the message including:

The Appeal – This refers to the underlying idea that captures the attention of a message receiver.  Appeals can fall into such categories as emotional, fearful, humorous, and sexual.

Value Proposition – The advertising message often contains a reason for customers to be interested in the product which often means the ad will emphasize the benefits obtained from using the product.

Slogan – To help position the product in a customer’s mind and distinguish it from competitors’ offerings, advertisements will contain a word or phrase that is repeated across several different messages and different media outlets.

Message Testing

The most popular method of testing advertising for the marketer is to conduct focus groups where several advertising messages are presented.  On the Internet, advertising delivery technology allows for testing of ads by randomly exposing website visitors to different ads and then measuring their response. 

Evaluating Campaign Results

The final step in an advertising campaign is to measure the results of carrying out the campaign.  Whether a campaign is judged successful is not always tied to whether product sales have increased since the beginning of the campaign.  In some cases, such as when the objective is to build awareness, a successful campaign may be measured in terms of how many people are now aware of the product. Once the campaign has run, a second, post-campaign or post-test measure is undertaken to see if there is an increase in awareness. 

Because “NILE, its nature”, is a new product so, the chief objective of our advertising campaign is to create the brand identity.

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The strategy is to get market share by providing superior quality at acceptable price. We have

many competitors providing high quality, but even then we don’t believe to be skeptical and let down there product in order to show superiority. Because we are launching a product for the first time and the amount that would be used for promotion (electronic, print and other media types) is Capital Investment, so we have taken the cost of promotion in CAPEX (capital expenditure) of the company and after that it would be 5% of total sales.

For “NILE, its nature”, the media outlets that we have used are:

Television Radio Print publications Direct mail Billboards/ Hoardings Sponsorship Product placement Posters Stalls

For “NILE, its nature”, the act of creating a message is often considered the creative aspect of carrying out an advertising campaign. The basic purpose of our message is informing people about the finest quality and natural goodness of our water.  

Sales Promotion

Sales promotions are used by a wide range of organizations in both the consumer and business markets, though the frequency and spending levels are much greater for consumer products marketers. Sales promotion describes promotional methods using special short-term techniques to persuade members of a target market to respond or undertake certain activity because advertising alone is not enough to move people to take action, such as getting them to try a new product.  As a reward, marketers offer something of value to those responding generally in the form of lower cost of ownership for a purchased product (e.g., lower purchase price, money

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back) or the inclusion of additional value-added material (e.g., something more for the same price).

Objectives of Sales Promotion

Sales promotion is a tool used to achieve five major promotional objectives

Building Product Awareness – Several sales promotion techniques are highly effective in exposing customers to products for the first time and can serve as key promotional components in the early stages of new product introduction. 

Creating Interest –Creating interest is often considered the most important use of sales promotion.  In the retail industry an appealing sales promotions can significantly increase customer traffic to retail outlets.

 

Providing Information – Generally sales promotion techniques are designed to move customers to some action and are rarely simply informational in nature.  However, some sales promotions do offer customers access to product information.

 

Stimulating Demand – Next to building initial product awareness, the most important use of sales promotion is to build demand by convincing customers to make a purchase.  Special promotions, especially those that lower the cost of ownership to the customer (e.g., price reduction) can be employed to stimulate sales.

Reinforcing the Brand – Once customers have made a purchase sales promotion can be used to both encourage additional purchasing and also as a reward for purchase loyalty. 

As mentioned earlier, we have used various techniques to create buyers’ interest in our product. Therefore in order to persuade our

buyers to purchase “NILE, its nature”, we offer them something extra i.e.:

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(600ml in price of 500ml) Free Tang sachets Free Hajj/ Umrah packages

Types of Sales Promotion

Sales promotion can be classified based on the primary target audience to whom the promotion is directed.  These include:

Consumer Market Directed - The most well-known methods of sales promotion are those intended to appeal to the final consumer.  Consumers are exposed to sales promotions nearly everyday, and many buyers are conditioned to look for sales promotions prior to making purchase decisions.

Trade Market Directed – Marketers use sales promotions to target all customers including partners within their channel of distribution.  Trade promotions are initially used to entice channel members to carry a marketer’s products and, once products are stocked, marketers utilize promotions to strengthen the channel relationship.

 

Business-to-Business Market Directed –Sales promotions are also targeted to the business-to-business market.  While these promotions may not carry the glamour associated with consumer or trade promotions, B-to-B promotions are usually used in industries.

1) Consumer Sales Promotion

Consumer sales promotions encompass a variety of short-term promotional techniques designed to induce customers to respond in some way.  The most popular consumer sales promotions are directly associated with product purchasing.  These promotions are intended to enhance the value of a

product purchase by either reducing the overall cost of the product (i.e., get same product but for less money) or by adding more benefit to the regular purchase price (i.e., get more for the money).  Promotion techniques can be used to achieve other objectives such as building brand loyalty or creating product awareness.  A marketer’s promotional toolbox contains a large variety of consumer promotions.

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Types of consumer sales promotions:

1. Coupons

2. Rebates

3. Promotional Pricing

4. Trade-In

5. Loyalty Programs

6. Sampling and Free Trials

7. Free Product

8. Premiums

9. Contests and Sweepstakes

10. Demonstrations

11. Personal Appearances

Coupons

Most consumers are quite familiar with this form of sales promotion, which offers purchasers price savings or other incentives when the coupon is redeemed at the time of purchase.  Coupons are used widely by marketers across many retail industries and reach consumers in a number of different delivery formats including:

Rebates

Rebates, like coupons, offer value to purchasers typically by lowering the customer’s final cost for acquiring the product.  Rebates are generally handed or offered to customers after a purchase is made and cannot be used to obtain immediate savings in the way coupons are used. Rebates tend

to be used as a value enhancement in higher priced products compared to coupons. 

Promotional Pricing

One of the most powerful sales promotion techniques is the short-term price reduction or, as known in some areas, “on sale” pricing. Lowering a product’s selling price can have an immediate impact on demand, though marketers must exercise caution since the frequent use of this technique can lead customers to anticipate the reduction and, consequently, withhold purchase until the price reduction occurs again.

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Trade-In

Trade-in promotions allow consumers to obtain lower prices by exchanging something the customer possess, such as an older product that the new purchase will replace.  While the idea of gaining price breaks for trading in another product is most frequently seen with automobile sales, such promotions are used in other industries, such as computers and golf equipment, where the customer’s exchanged product can be resold by the marketer in order to extract value.

Loyalty Programs

Promotions that offer customers a reward, such as price discounts and free products, for frequent purchasing or other activity are called “loyalty programs”.   Many loyalty programs have become ingrained as part of the value offered by a marketer.  That is, a retailer or marketing organization may offer loyalty programs as general business practice. 

Samples and Free Trials

Sampling and free trials give customers the opportunity to experience products, often in small quantities or for a short duration, without purchasing the product.  Today, these methods are used in almost all industries and are especially useful for getting customers to try a product for the first time.

  Free Product

Some promotional methods offer free products but with the condition that a purchase be made.  The free product may be in the form of additional quantities of the same purchased product (e.g., buy one, get one free) or specialty packages (e.g., value pack) that offer more quantity for the same price as regular packaging.

Premiums

Another form of sales promotion involving free merchandise is premium or “give-away” items.  Premiums differ from samples and free product in that these often do not consist of the actual product, though there is often some connection.  For example, a cell phone manufacturer may offer access to free downloadable ring tones for those purchasing a cell phone.

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Contests and Sweepstakes

Both contests and sweepstakes are games, which come in a variety of formats such as scratch-off cards and collection of game pieces.  Unlike contests and sweepstakes, which may not require purchase, to participate in a game customers may be required to make a purchase.  Contests are special promotions awarding value to winners based on skills they demonstrate compared to others.  For instance, a baking company may offer free vacations to winners of a baking contest. 

Demonstrations

Many products benefit from customers being shown how products are used through a demonstration.  Whether the demonstration is experienced in-person or via video form, such as over the Internet, this promotional technique can produce highly effective results.  

Personal Appearances

An in-person appearance by someone of interest to the target market, such as an author, sports figure or celebrity, is another form of sales promotion

capable of generating customer traffic to a physical location.  However, as with demonstrations, personal appearance promotion can be expensive since the marketer normally must pay a fee for the person to appear.

Trade Sales Promotions

Certain promotions can help “push” a product through the channel by encouraging channel members to purchase and also promote the product to their customers.  For instance, a trade promotion aimed at retailers may encourage retailers to instruct their employees to promote a marketer’s brand over competitors’ offerings.  With thousands of products competing for limited shelf space, spending on trade promotion is nearly equal that spent on consumer promotions. Some of the other approaches are:

1. Point-of-Purchase Displays

2. Advertising Support Programs

3. Short Term Allowances

4. Sales Incentives or Push Money

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5. Promotional Products

6. Trade Shows

Point-of-Purchase Displays

Points of purchase (POP) displays are specially designed materials intended for placement in retail stores.  These displays allow products to be prominently presented; POP displays come in many styles, though the most popular are ones allowing a product to stand alone, such as in the middle of a store aisle or sit at the end of an aisle where it will be exposed to heavy customer traffic. 

Advertising Support Programs

In addition to offering promotional support in the form of physical displays, marketers can attract channel members’ interest by offering financial assistance in the form of advertising money.  In certain cases the marketer

will offer to pay the entire cost of advertising, but more often, the marketer offers partial support known as co-op advertising funds.

Short Term Trade Allowances

Mostly, the allowance is not only given as encouragement to purchase the product but also as an inducement to promote the product in other ways such as by offering attractive shelf space or store location, highlighting the product in company-produced advertising or website display, or by agreeing to have the retailer’s sales personnel “talk-up” the product to customers.

Sales Incentives or Push Money

A marketer may offer sales promotions to their reseller’s sales force and customer service staff where they are used as incentives to help sell more of the marketer’s product. Sometimes called push money, these promotions typically offer employees cash or prizes, such as trips, for those that meet sales requirements.

Promotional Products

Among the most widely used methods of sales promotions is the promotional product; products labeled with the brand or company name that serve as reminders of the actual product.  For instance,

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companies often hand out free calendars, coffee cups and pens that contain the product logo.

Trade Shows

One final type of trade promotion is the industry trade show (exhibitions, conventions). Trade shows are organized events that bring both industry buyers and sellers together in one central location. Spending on trade shows is one of the highest of all sales promotions,

While launching “NILE, its nature”, our major focus is on consumer market and trade market. The customer based promotion would be done on daily basis and the trade based promotion would be done on monthly basis.

Besides consumer based promotion, we have specially emphasized on trade based promotion because type of promotion can help a lot in selling our product in a smooth and effective way. Moreover, we are

hoping to display “NILE, its nature” at Expo-centre in Fortress Stadium, Lahore by erecting specially built display booths that dominate that trade show floor.

Business-to-Business Sales Promotions

The use of sales promotion is not limited to consumer products marketing.  In business-to-business markets sales promotions are also used as a means of moving customers to action.  However, the promotional choices available to the B-to-B marketer are not as extensive as those found in the consumer or trade markets. Rather, the techniques more likely to be utilized include:

price-reductions

free product

trade-in

promotional products

trade shows 

As mentioned, trade shows are by far the mostly widely used sales promotion for B-to-B marketers. 

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For “NILE, its nature”, the challenge is to balance the advantages short-term promotions offer versus the potential to erode loyalty to the product.

Trends in Sales Promotion

Marketers who employ sales promotion as a key component in their promotional strategy should be aware of how the climate for these types of promotions is changing. The important trends in sales promotion include:

1) Customers Expectations

Many customers are conditioned to expect a promotion at the time of purchase otherwise they may withhold or even alter their purchase if a promotion is not present. 

2) Electronic Delivery

Sales promotions are delivered to customers in many ways such as website, in-person or within print media.  However, the Internet and mobile technologies, such as cell phones, present marketers with a number of new delivery options. 

3) Tracking

Tracking customer’s response to marketers’ promotional activity is critical for measuring success of an advertisement.  In sales promotion, tracking is also used.  For instance, mineral water retailers, whose customers are in possession of loyalty cards, have the ability to match customer sales data to coupon use.  This information can then be sold to coupon marketers who may use the information to get a better picture of the buying patterns of those responding to the coupon.

Therefore, we will issue customer cards to buyers of “NILE, its nature” in order to track there response.

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4) Internet Communication

The Internet is changing how customers obtain promotions. There are a large number of community forum sites where members share details about how to obtain good deals which often include information on how or where to find a sales promotion.  Monitoring these sites may offer marketers insight into how customers feel about certain promotions and may even suggest ideas for future sales promotions.

5) Clutter and Need for Creativity

An advertisement competes with other ads for customers’ attention, so to do sales promotions. This is particularly an issue with inserted coupon promotions that may be included in mailing or printed media along with numerous other offerings.  The challenge facing marketers is to find creative ways to separate their promotions from those offered by their competitors.

PUBLIC RELATIONS

Public relations involve the cultivation of favorable relations for organizations and products with its key publics through the use of a variety of communications channels and tools.  Traditionally, this meant public relations professionals would work with members of the news media to build a favorable image by publicizing the organization or product through stories in print and broadcast media. 

Advantages of PR

Public relations offers several advantages not found with other promotional options. 

First, PR is often considered a highly credible form of promotion.  One of PR’s key points of power rests with helping to establish

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credibility for a product, company or person (e.g., CEO) in the minds of targeted customer groups by capitalizing on the influence of a third-party -- the media. For example, a positive story about a new product in the business section of a local newspaper may have greater impact on readers than a full-page advertisement for the product.

Second, a well-structured PR campaign can result in the target market being exposed to more detailed information than they receive with other forms of promotion.  That is, media sources often provide more space and time for explanation of a product. 

Third, depending on the media outlet, a story mentioning a company may be picked up by a large number of additional media, thus, spreading a single story to many locations. 

Finally, in many cases public relations objectives can be achieved at very low cost when compared to other promotional efforts.  This is not to suggest public relations is not costly, it may be, especially when a marketer hires PR professionals to handle the work.. 

Apart from this, public relations can be helpful in many ways in order to give boost to a newly launched product and existing products as well.

For “NILE, its nature”, the role of public relations is much broader and includes:

building awareness and a favorable image for a company or client within stories and articles found in relevant media outlets,

closely monitoring numerous media channels for public comment about a company and its products,

managing crises that threaten company or product image, and

Building goodwill among an organization’s target market through community, philanthropic and special programs and events

For “NILE, its nature”, most of our focus is on how public relations supports marketing by building product and company image (sometimes referred to as publicity).  

Objectives of Public Relations

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Like other aspects of marketing promotion, PR is used to address several broad objectives including:

Building Product Awareness – When introducing a new product or re-launching an existing product, marketers use a PR element that generates consumer attention and awareness through media placements and special events. 

Creating Interest – Whether a PR placement is a short product article or is included with other products in “round up” article, stories in the media can help entice a targeted audience to try the product.

 

Providing Information –Through articles, collateral materials, newsletters and websites, PR delivers information to customers that can help them gain understanding of the product.

Stimulating Demand – A positive article in a newspaper, on a TV news show or mentioned on the Internet, often results in a discernable increase in product sales.

Reinforcing the Brand –Today it is ever more important for companies and brands to build a good image.  A strong image helps the company build its business and it can help the company in times of crises as well.

Public Relations Tools

Marketers should be aware of the tools used in the public relations function. Skilled PR professionals offer many advantages for marketers with their two most important being:

1) their ability to understand and unearth good stories about a company and its product, and 2) their knowledge of the media market may place them in a better position to match stories to the news angles media reporters look for.

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Whether handling PR internally or hiring professionals, marketers should be familiar with the tools available for public relations: Before choosing among the various tools marketers should begin by identifying their targeted audiences (e.g., target markets) and key messages they wish to send.  The key tools available for PR include:

Media Relations

Media Tours

Newsletters

Special Events

Speaking Engagements

Sponsorships

Employee Relations

Community Relations and Philanthropy

Media Relations

The core of public relations, media relations, includes all efforts to publicize products or the company to members of the press. In garnering media coverage, PR professionals work with the media to place stories about products, companies and company spokespeople. This is done by developing interesting and relevant story angles that are pitched to the media.  Key tools used in media relations include:

Press Kits - written information such as a news release, organization background, key spokesperson biographies and other supporting materials that provide information useful to reporters. Audio or Video News Releases - These are prerecorded features distributed to news media that may be included within media programming. 

Matte Release - PR professionals submit matte releases through syndicated services (i.e., services that supply content to many media outlets) or directly to targeted media via email, fax or snail mail.

 

Website Press Room - Marketers are well served by an online press room that caters to media needs and provides company

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contact information. Many story ideas for newspapers, magazines and television news often start with a suggestion from a PR person. 

Media Tour

Some new products can be successfully publicized when launched with a media tour.  On a media tour a company spokesperson travels to key cities to introduce a new product by being booked on TV and radio talk shows and conducting interviews with print and Internet reporters or influencers (e.g., bloggers). 

The spokesperson can be a company employee or someone hired by the company, perhaps a celebrity or “expert” who has credibility with the target audience. 

Newsletters

Marketers who have captured names and addresses of customers and potential customers can use a newsletter for regular contact with their targeted audience. Newsletters can be directed at trade customers, final consumers or business buyers and can be distributed either by regular mail or

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electronic means (i.e., e-newsletters delivered via email or rss feed). Online newsletters offer the opportunity to link to stores carrying the marketer's products. 

Special Events

Special events can be designed to reach a specific narrow target audience. Stunts, such as building the world’s largest ice cream captures the attention of an audience in the immediate area, but also attracts the attention of mass media such as TV news and major newspapers, which provide broad reach. 

Speaking Engagements

Speaking before industry conventions, trade association meetings, and other groups provides an opportunity for company experts to demonstrate their expertise to potential clients/ customers.  The right speaking engagement puts the company in front of a good target audience and offers networking opportunities for generating customer leads.

Sponsorships

Companies and brands use sponsorships to help build goodwill and brand recognition by associating with an event or group.  Marketers can examine sponsorship opportunities to find those that reach target groups, fit within a specified budget and provide sponsorship benefits that suit the marketer’s objectives.  There are numerous local, regional, national and international sponsorship opportunities that help marketer to enhance his business.

Employee Communications

Communicating regularly with employees is important in keeping employees informed of corporate programs, sales incentives, personnel issues, as well as keeping them updated on new products and programs. PR department often works in conjunction with the Human Resources Department to develop employee communications.

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Community Relations and Philanthropy

In order to be a successful company fostering good relations with key audiences includes building strong relationships with their regional community. The goal is generally to develop a positive relationship with members of the community (i.e., be known as a good neighbor).  Some companies also make an effort to contribute to charitable organizations, often organizations that have some relationship to the company’s mission or to a key principal of the company.

Market Monitoring

Monitoring public comment about a company and its products is becoming increasingly important especially with the explosion of information channels on the Internet. Monitoring includes watching what is written and reported in traditional print and broadcast media and also keeping an eye on discussions occurring through various Internet outlets. Marketers must be prepared to respond quickly to erroneous information and negative opinions about products.

The chief objective of our public relations is to create our brand awareness and creating demand to stimulate sales and this can be

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done through providing information about our product and reinforcing the brand.

For this purpose, we will go for “press conferences” and “Free” Water Supply to SHAUKAT KHANNUM MEMORIAL HAOPITAL for 3 months. This would be done through Special events, Media relations, News letters and Sponsorship.

PERSONAL SELLING

Personal selling is a promotional method in which one party (e.g., salesperson) uses skills and techniques for building personal relationships with another party (e.g., those involved in a purchase decision) that results in both parties obtaining value. However, getting a customer to purchase a product is not always the objective of personal selling.  For instance, selling may be used for the purpose of simply delivering information.

Among marketing jobs, more are employed in sales positions than any other marketing-related occupation. It has been estimated that over 14 million or about 11% of the overall labor force are directly involved in selling and sales-related positions.  Worldwide this figure

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may be closer to 100 million.  The techniques higher management employs to gain benefits for their company are the same used by the front-line salesperson to sell to a small customer. 

Advantages of Personal Selling One key advantage personal selling has over other promotional

methods is that it is a two-way form of communication. So if a customer does not understand the initial message (e.g., doesn’t fully understand how the product works) the salesperson can make adjustments to address questions or concerns.

Many non-personal forms of promotion, such as a radio advertisement, are inflexible, at least in the short-term, and cannot be easily adjusted to address audience questions.

Personal selling also makes it the most effective promotional method for building relationships with customers, particularly in the business-to-business market.  This is especially important for companies that either sell expensive products or sell lower cost but high volume products.

Finally, personal selling is the most practical promotional option for reaching customers who are not easily reached through other methods. 

Objectives of Personal Selling

Personal selling is used to meet following objectives of promotion in the following ways:

Building Product Awareness – A common task of salespeople is to educate customers on new product offerings. In fact, salespeople serve a major role at industry trades shows where they discuss products with show attendees.  But building awareness using personal selling is also

important in consumer markets.  The advent of controlled word-of-mouth marketing is leading to personal selling becoming a useful mechanism for introducing consumers to new products.

Creating Interest – Personal selling induces a person to experience product for the first time.  In fact, creating interest goes hand-in-hand with building product awareness as sales professionals can often accomplish both objectives during the first encounter with a potential customer.

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Providing Information – When salespeople engage customers, they majorly focus on product information.  Marketing organizations provide their sales staff with large amounts of sales support including brochures, research reports, computer programs and many other forms of informational material.

Stimulating Demand –The most important objective of personal selling is to convince customers to make a purchase and in this way creating demand for the product. 

Reinforcing the Brand – Most personal selling is intended to build long-term relationships with customers. Meeting with customers on a regular basis allows salespeople to repeatedly discuss their company’s products and by doing so helps strengthen customers’ knowledge of what the company has to offer and also reinforcing the brand.

Personal selling would be done to deliver the information about our product as it results in two way form of communication and it will help the buyers to understand the initial message. This approach will help us to address the audience questions easily.

Moreover, it would help us to build relationships with customers, particularly in the business-to-business market. 

Classifying Selling Roles

The actual functions carried out by someone in sales may be quite different.  Below are four major types of selling roles, these roles are not mutually exclusive and that a salesperson can perform more than one and possibly all activities.

Order Getters

The role most synonymous with selling is a position in which the salesperson is actively engaged in using their skills to obtain orders from customers.  Such roles can be further divided into:

New Business Development– A highly challenging yet potentially lucrative sales position is one where the main objective

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is to find new customers.  Sales jobs in this category are often in fields that are very competitive, but offer high rewards for those that are successful.  The key distinguishing factor of these positions is that once a sale is made new business salespeople pass customers on to others in their organization who handle account maintenance.  These positions include:

Business Equipment Sales - These salespeople are often found in industries where a company’s main profits come from the sale of supplies and services that come after an initial equipment purchase.  The key objective of business equipment salespeople is to get buyers to purchase the main piece of equipment for which supplies and service are needed in order for the equipment to function.

Telemarketing – This category includes product sales over the phone, whether aimed at business or consumer.  While sometimes, laws restrict unsolicited phone selling, the practice is still widely used in the business market.

Consumer Selling – Certain companies are very aggressive in their use of salespeople to build new consumer business.  These

include: retailers selling certain high priced consumer products, housing products and in-home product sellers including those selling door-to-door and products sold at “home party” events such as cosmetics, kitchenware and decorative products.

Account Management – Most people engaged in sales are not only involved in gaining the initial order, but salespeople involved in account management are found across a broad range of industries.  Their responsibilities involve all aspects of building customer relationships from initial sale to follow-up account servicing.  These include:

Business-to-Business Selling – These salespeople sell products for business use with an emphasis on follow-up sales.  In many cases, business-to-business salespeople

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have many different items available for sale (i.e., broad and/or deep product line) rather than a single product.

 

Trade Selling – Its role is focused on first getting distributors, such wholesalers and retailers, to handle their products and once this is accomplished, helping distributors sell their product by offering ideas for product advertising, in-store display and sales promotion.

Order Takers

In this role, salespeople primarily assist customers with a purchase in ways that are much less assertive than order getters.  As might be expected, compensation for order takers is generally lower than that of order getters.  Among those serving an order taker role are:

Retail Clerks – While some retail salespeople are involved in new business selling, the vast majority of retail employees handle order taking tasks, which range from directing customers to products to handling customer checkout.

Industrial Distributor Clerks – Industrial purchase situations, such as distributors of building products, will also have clerks to handle customer purchases.

Customer Service – Order taking is also handled in non face-to-face ways through customer service personnel.  Usually this occurs via phone conversations or newer technologies such as online chat etc.

Order Influencers

Some salespeople are not engaged in direct selling activities at all. Instead these salespeople concentrate on selling activity that targets those who influence purchases made by the final customer.  The primary example of an order influencer is the missionary salesperson:

Missionary - These salespeople are used in industries where customers make purchases based on the advice or requirements of others.  Two industries in which missionary selling is commonly found are pharmaceuticals, where salespeople, known as product

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detailers, discuss products with doctors (influencers) who then write prescriptions for their patients (final customer) and higher education, where salespeople call on college professors (influencers) who make requirements to students (final customer) for specific  textbooks.

Sales Support

A final group involved in selling mostly assist with the selling activities of other sales professionals.  These include:

Technical Specialists - When dealing with the sale of technical products, particularly in business markets, salespeople may need to draw on the expertise of others to assist with the process.  This is particularly the case when the buying party consists of a buying center. If this buying center includes technical people, such as scientists and engineers, a salesperson may seek assistance from members of their own technical staff, who can help address specific questions.

Office Support – Salespeople also may receive assistance from their company’s office staff in the form of creating promotional materials, setting up sales appointments, finding sales leads, arranging meeting space or organizing trade shows exhibits.

As mentioned earlier, For the purpose of personal selling we are hoping to place our stalls at shopping malls such as Pace, Al-Fateh, HKB, CSD, Metro Cash and Carry, etc. moreover, we’ll air a live program on radio FM consisting of questioners that would be asked from the callers and the winners would e awarded with surprise gifts.Although NILE, it’s your body, is not a complicated product and doesn’t require answering numerous complex questions, even then we will use two way communication approaches in order to avoid any confusion or misunderstanding.

Apart from Stalls and FM questionnaires, Brochures and Feedback forms would be used as well.

Trends

While the basic premise of personal selling, building relationships, has not changed much in the last 50 years, there are a number of developments that are impacting this method of promotion including:

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1)Controlled Word-of-Mouth Promotion

One of the most influential forms of promotion occurs when one person speaks highly of a product to someone else.  The technique is especially useful when building awareness of new products and this approach has been dubbed “buzz” marketing as a way to describe its objective of building a high level of awareness for a product. Controlled word-of-mouth has received a great deal of publicity though much of it has focused on potential ethical concerns.  Some have expressed concern that paying people to “act” as if they are interested in a product without any indication of their relationship with the product breaches ethical standards.  As more companies explore controlled word-of-mouth marketing it is expect to become an even more scrutinized form of personal selling.

2) Customer Information Sharing

CRM is the name given to both the technology and the philosophy that drives companies to gain a better understanding of their customers with the goal of building stronger long-term relationships.  The essential requirement for an effective CRM system is the need for all customer contact points (e.g., salespeople, customer service, and websites) to gather information so that this can be shared with others in the company.  CRM and information sharing has proven to be critical for maintaining strong customer relations and salespeople must learn to adapt to it.

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3) Mobile Technology and Web-Based Computing

Mobile technologies, such as wireless internet (WiFi) and cellular Internet access, allow salespeople to retrieve needed information at any time.  For example, if a salesperson takes a customer to lunch, the salesperson can quickly access company material to respond to questions such as how long it may take to receive product if an order is placed.

Additionally, there is a growing trend to make key business applications available through a browser rather than having programs loaded on a salesperson’s computer.  This allows for the application to be accessed from anywhere at anytime.  Many new office productivity applications, such as word processing and spreadsheets, are now becoming web-accessible.

 

4) Electronic Sales Presentations

While audio/video conferencing has been available for many years using high-end telecommunication hookups, it has only been within the last few years that improvements in Internet access speeds, computing power and meeting software have made this method for reaching customers a practical alternative to face-to-face sales meetings.  These options include:

Online Video Conferencing – Online conferencing essentially acts in the same way as telecommunications videoconferencing, with one big exception; it is delivered over the Internet.  But sometimes delivering video over the Internet can be slow, jittery and sometimes not even recognizable

Web/Phone Conferencing – To offset the problems associated with Internet delivery of real time audio and video, many companies deliver sales presentations using a combination of web and telecommunications.  The most widely used services use the Internet, to deliver visual material (typically a slide presentation) and telecommunications, to allow for voice conversation.

 

Online Text Chat - Online chat (available on company’s web site) allows for real time communication between multiple participants using text messaging.  While this form of buyer-seller communication may not be very effective at getting customers to

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agree to make a purchase, it has proven very effective in building initial product interest. 

5) Electronic Sales Training

Sales training is the hallmark of professional selling.  If there is one thing that separates the truly successful salesperson from those who are not, it is the amount of training and preparation they engage in. Those involved in selling must continue to stay abreast of their products, customers, markets and competitors. 

Using electronic delivery, the cost to the company for adding or updating training material is inexpensive and quick compared to the cost and time needed to produce and ship paper-based materials.  Additionally, the use of RSS feeds or email enables salespeople to be quickly notified when new training material is available.  This is useful when the sales force must be made aware of a recent change that will impact how products are promoted such as a price change, new information to be used as comparison to competitor’s products.

6) Use of Customer Sales Teams

Companies are moving away from the traditional sale force arrangement, where a single salesperson handles nearly all communication with an account, in favor of a team approach where multiple people are involved.  Teams consist of individuals from several functional areas such as marketing, manufacturing, distribution, and customer service.  In some configurations all members share bonuses if the team meets sales goals

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