Upload
ignatius-mendoza
View
49
Download
3
Tags:
Embed Size (px)
DESCRIPTION
Marketing Mix and Relationship Marketing. Lecturer – Shahed Rahman Part – 2. The Pricing ingredient. Price is the ultimate measure of a good’s or service’s exchange value as agreed upon by the seller and buyer Price is important because it directly affects the channel member’s profitability - PowerPoint PPT Presentation
Citation preview
MARKETING MIX AND RELATIONSHIP MARKETINGLecturer – Shahed Rahman
Part – 2
THE PRICING INGREDIENT
Price is the ultimate measure of a good’s or service’s exchange value as agreed upon by the seller and buyer
Price is important because it directly affects the channel member’s profitability
Valuation –Perceived value In marketing channel each partner provides
some added value to the offering Not all buyer are not looking for the cheapest
price – ( Resellers)
A PRICE PREMIUM
A price premium is a price level in excess of the normal market or industry value. Channel members may justify price premiums for a number of reasons including:
Building relationship – In order to develop a long term relationship with a prospective exchange partner
Preserving a Relationship – Has a long history of association with an exchange partner.
A PRICE PREMIUM
Reducing Risk factors – when the situation is risky- to secure the intangible attributes. Consumers also pay more for an established
brand name product for a reduction in their perceptions of risks.
Obtaining perceived quality- Channel members can rationalize that the price premium is related to higher quality exchange performance such as on time delivery
Possessing Limited Information- Channel members may pay a price premium because they do not have sufficient information with regard to the market pricing
PRICE ELASTICITY OF DEMAND
Percentage change in the amount of a good demanded in response to a percentage change in price.
Situational considerations effect a product’s price elasticity
Changes in price elasticity of demand can occur at any channel level
PRICING METHOD
Algorithmic Pricing Method Inside – Out Approach Price is resulting from the channel member’s
forecast of their own cost and revenue Market oriented Pricing Method
Outside – in approach Pricing cues are generated from an evaluation of
threats and opportunities Relationship Oriented Pricing
Before a price is established , internal and external cues are simultaneously evaluated in an effort to build and maintain exchange relationships.
ALGORITHMIC PRICING METHODS
Break Even Analysis Convergence between the cost
associated with making a product and the revenues realized from selling the product
Buyers do not always behave rationally in the market
Revenues also depend on demand- and very hard to estimate the demand
ALGORITHMIC PRICING METHODS
Cost- Plus Pricing A percentage or fixed
markup is added to the cost to establish a price
Ignore the effect of market factors – consumer preference , brand loyalty
Modified Break-Even Pricing Several estimations of
quantity and price Also uncertain about the
demand
MARKET ORIENTED PRICING
Competitive Pricing Market Entry Pricing
Penetration Pricing Skimming the cream pricing
RELATIONSHIP ORIENTED PRICING
Volume pricing Functional Allowances Promotional Allowance
PRICE LEGITIMACY
Exists whenever a buyer and sellers perceptions of a market offerings value meet or come together.
Consumers dont believe the list price is a real price
Customers expect higher prices to result in better service
Do not view low prices as justification for poor service
SEVERAL TECHNIQUES TO JUSTIFY THEIR PRICING LEVELS
Price Guarantees Price Posting Cost of Service Pricing
THE PROMOTIONS INGREDIENT
Promotion involves any form of purposeful communications employed by channel members with the intent of informing, reminding, persuading prospects and customers regarding some aspects of their market offerings
THE PROMOTIONS INGREDIENT
Personal Selling Interpersonal communication process by which a
seller uncovers and satisfies the needs of a buyer, to the mutual long term benefit and both parties
No Personal Selling Involves all other types of promotions-
advertising, PR and sales promotion An organization targeted toward some particular
audiences
TRADITIONAL COMMUNICATION MODELS
Feedback
SENDERMessage
RECEIVER
EncodingDecoding
RELATIONAL COMMUNICATION MODELS
Cognition Cognition
Synchronous
cognition
Noise
NoiseNoise
Noise
PROMOTIONAL OBJECTIVES
Five objectives are generally associated with relational promotions in marketing channels Stimulating Sales Differentiating Offerings Sharing Information Accentuating a Market Offering’s Value Stabilizing Seasonal Demand
PULL VS PUSH STRATEGIES Pull Strategy – persuasive
communications aimed directly at the consumer Goal to stimulate the final
users’ desire for the offering Promotional message
generally involves price incentives,
Pull strategy often used with new product introductions to entice the consumer early demand for an offering
It used to create loyalty in the face of price competition
PULL VS PUSH STRATEGIES
Push Strategy Producers > Wholesaler> Retailers > Consumers
Target their influential communications at intermediaries – pushing against the next link in the distribution chain
Push promotional strategies allow the channel participants to exercise greater control over the promotional message Allowance Advance notice Training and support
THE PLACE INGREDIENT
Place is often described as distribution All those distribution, logistics and behavioral
functions that regulate the flow of market offerings between exchange partners
The goal of place is to minimize the costs of functions while maximizing customer satisfaction and market coverage
Minimizing distribution costs can damage long time channel relationships Forcing retailers to buy in large quantities to cuts
it distribution cost
STRATEGIC FORMULATION: ROLE OF MARKETING CONCEPT
A channel members' markets A channel member’s functional area
strategies A channel member’s strategic assets or skills