Discussion 7 : Marketing Management
Read the Linking Marketing and Pricing Strategy and answer the following questions:
- Your marketing strategy must be tightly linked with marketing tactics. The classic four Ps of marketing, product, price, promotion, and place. Your strategy won't succeed unless you execute it properly. Let's look at how you make this linkage in pricing. Before I do that, let's make sure you understand what a marketing strategy is. In its most simple form, strategy involves two choices. Which part of the overall market do you want to compete in? And, how you'll compete, meaning how will you position your offering in a way that beats the competition? Every market has four parts that you can focus on.
First, is your current, 100% loyal customers. They buy exclusively from you. Second, are those customers who buy only from your competitors. Third, are customers who buy from you and your competitors, I call them multi-brand customers. And finally, are potential customers who don't buy anything from you or your competition. I call them non-category customers. They have a potential to become a customer if you give them a good reason.
Take a look at this matrix, a good marketing strategist focuses most of their resources on one group at a time, based on which choice yields the best financial return. If you try to focus on more than one, you dilute your resources, and that becomes risky. As the old saying goes, fish where the fish are. Your pricing approach changes depending on what group you're going after. So here's how to make that link. If you're going after non-category users, you set price based on the sum of all the sources of value, economic, emotional, and functional, minus any costs the customer has to bear to use your product.
And then, you offer a temporary discount off this price to motivate the customer to try your product. To set price for your loyal customers, you take the same approach, value-based pricing. But then you offer them occasional discounts or other rewards to recognize their loyalty. When going after these two groups, you must avoid making comparisons between your products or services and your competitors. Only focus their attention on the value delivered for the price they pay.
When you set prices for customers who use your competitor's products, the approach is much different. In this case, you have to set your price relative to the competitor's price. Now, here's an important tip. Remember, price is a signal of value, and customers use that price to make comparisons between products and the value they bring. So, if your product is better than the competition, set your price higher. If it's not as good as the competition, set your price lower.
And if your products are identical to the competition's, set your price exactly equal to their price. If you follow these guidelines, price now becomes a very useful piece of information for the customer. They'll understand exactly what you're trying to tell them. And most importantly, you've made that critical link between your marketing strategy and pricing strategy.
Question One
After watching the pricing video, refer back to the Are You Sitting on a Million Dollar Idea? video from Week 6. Choose the most beneficial pricing strategies and suggest two ways in which this selection could potentially affect consumer adoption of the new product.
Question Two
Provide a rationale for your response.
Question Three
Imagine that you are a manager at a brick-and-mortar store that has an online storefront as an additional source of revenue. The company has tasked you with creating ideas to improve logistics in order to increase profitability. Discuss at least two ideas and how these will increase profitability.
Respond to Peer(s)
Read and respond to at least two of your classmates' posts.
Respond to Peer 1 : Sherry Carroll
Question One
· After watching the pricing video, refer back to the Are You Sitting on a Million Dollar Idea? video from Week 6. Choose the most beneficial pricing strategies and suggest two ways in which this selection could potentially affect consumer adoption of the new product.
The most beneficial pricing strategy is target-return pricing. The company determines the price that yields its target rate of return on investment (Kotler et al, 2016). The selling price is the most competitive price the consumer is willing to pay (Bhasin, 2018). This pricing takes both consumer and company into consideration.
Question Two
· Provide a rationale for your response.
It is a dynamic method of price determination that takes into account and responds to market factors of demand and supply while determining the selling price (Bhasin, 2018). It complements new products because new products do not have a history of sales, supply or demand. And, It results in higher profitability for business by way of reducing cost as the selling price is already fixed in advance (Bhasin, 2018); an additional plus for new products.
Question Three
· Imagine that you are a manager at a brick-and-mortar store that has an online storefront as an additional source of revenue. The company has tasked you with creating ideas to improve logistics in order to increase profitability. Discuss at least two ideas and how these will increase profitability.
One idea is to create an application that is promoted to brick and mortar customers. The application would integrate store and online marketing. Brick and mortar customers can order a product online and pick it up at the store. Additionally, according to (Zorzini, 2018) you have the chance to cross promote your physical and online stores. Tell people to come into your store for a promotion on your website, or even tell people in-store that they can get a coupon if they shop online with you as well. (Zorzini, 2018).
References
Bhasin, (2018). Target Pricing. Retrieved from https://www.marketing91.com/target-pricing/
Kotler, P., Keller, K. (2016). Framework for Marketing Mgmnt (6th e.d.). USA: Pearson Education, Inc.
Zorzini, C. (2018). How to Build an Ecommerce Presence for Your Brick and Mortar Store. Retrieved from https://ecommerce-platforms.com/ecommerce-selling-advice/how-to-build-an-ecommerce-presence-for-your-brick-and-mortar-store
Respond to Peer 2 : Georgina Onomake
The Value of Price
Price is determined by cost. Profit occurs when price is higher than cost, all thing being equal; ceteris paribus. According to the website Khanacademy.com, the Latin words ceteris paribus, explain: demand curve or a supply curve is a relationship between two and just two variables. These variables are quantity and price. The hypothesis behind a demand curve or a supply curve is that no pertinent economic influence, other than the price of a product, may change. This assumption is called ceteris paribus by Economists. (Ceteris Paribus, 2019)
Beneficial pricing strategies: Pricing strategy becomes beneficial when value surpasses price. According to the message given in the video a good market strategy should include Value Placing Pricing, this happens when the price of the product being sold is beneficial or has more satisfactory value compared to the price.
Another way to look at price strategy is when price is compared to that of your customers. If you customers price is high than yours then you should try to make your price lower to attract customers. If you customer's price is lower but has a high value product you may have to ensure that your product is of a better value and lower price.
A look at the other type of pricing strategy is when you categorize the market customers into your customers, the competitors' customers, customers of both your business and that of the competitors' and potential customers.
Two ways in which this selection could potentially affect consumer adoption of the new product.
1. When a new product or service is brought into the market, customers first assess it using price.
2. Next assessment will be the value derived from the product or service, matched to the price.
Question Two
· Customers trust what they believe in.
Another factor could be whether the customer trusts the product, has access to the product and whether the product will always be available at the price the customer expects for its value.
Question Three
As a manager at a brick-and-mortar store, with an additional source of revenue from its online storefront, the company has tasked out the ideas of creating ways to improve logistics in order to increase profitability. Big companies like Home Depot and Lowe and even Amazon have an edge over any new business that may try to compete with them. Although price is one of the major advantages in marketing strategy, having online stores and App stores have become the norm and best option in the future of any business. The most valuable service any online business can provide today that has surpassed price is delivery. (Julie Cresswell, 2019)
Delivering merchandise on time for free, (has made amazon prime users loyal and hard to move to other competitor), safely, and undamaged with low prices and value is a major plus in marketing online.
Reference:
https://www.nytimes.com/2018/06/28/technology/amazon-start-up-delivery-services.html