Bussines Management
Lilyb660
5.pptxB207A Big ideas in organizations
Shaping Business Opportunities I
Block 1
Session 7: The marketing mix- promotion, pricing, services and non-profit marketing
Block 1- Reading 8
The marketing mix- Marketing communication
The promotion mix
Is the various communication techniques such as advertising, personal selling, sales promotion, and public relations/product publicity available to a marketer that are combined to achieve specific goals.
Direct marketing, digital marketing and sponsorship are also recognized as part of the promotion mix
Reading 8: The marketing mix- Marketing communication
| Marketing communication techniques | Description | Benefits | Risks |
| Advertising | Paid, mass communication through mass media | Builds wide awareness | Impersonal, one-way Limited flexibility |
| Personal Selling | Oral communication between a salesperson and a customer | Personal, interactive and flexible Builds relationships | Expensive Dependent on salesperson’s skills |
| Direct marketing | Direct marketing Communication delivered directly to targeted consumers to elicit an immediate response | Targeted Can be personalized Unseen by competitors Easy to measure response | Low response rates Can cause annoyance if poorly targeted |
| Digital marketing | Communication using digital channels | Global reach Can be personalized, targeted and interactive Flexible | Set up costs can be expensive Can be intrusive Security risks |
| Sales promotion | Purchase incentives | Can promote sales | Potential damage to brand perceptions - Short-term effects |
| Sponsorship | Paid association with an event, organization or person | High visibility Positive association | Association can backfire if sponsored entity attracts bad publicity |
| Public relations | Non-paid, third-party communication | High credibility Potential reach and relevance | Lack of control over communication |
Reading 8: The marketing mix- Marketing communication
The promotion mix
The choice of mix can be influenced by the activities of competitors, the cost of media, an organization's and marketing agency’s preferences and marketing strategy.
Reading 8: The marketing mix- Marketing communication
Mixed message in marketing mix
It is important that all forms of marketing communications convey a consistent & coherent message.
Mixed messages can impair perceptions of a brand.
One of the ways in which mixed messages about a brand can occur is when celebrities are used to promote brands.
Inconsistent messages can also be communicated if a customer service experience conflicts with values conveyed by the brand identity or in advertising messages
Reading 8: The marketing mix- Marketing communication
Block 1- Reading 9
The marketing mix- Pricing
Price
Is the cost of exchange in return for an offering.
Is a powerful element of the marketing mix.
Is a key purchasing consideration in relation to competing offerings.
Can be used as a communication device signaling (ex. inferred quality, exclusivity or expertise).
Pricing promotions are used as an incentive to encourage purchasing behavior
Price is the only element of the marketing mix that generates revenue, while all others are costs.
It is a means of creating value for customer & developing customer relationship
Reading 9: The marketing mix- Pricing
Types of pricing
There are three main approaches to pricing:
Cost-based pricing .
Competitor-based pricing .
Customer-based pricing
Reading 9: The marketing mix- Pricing
Types of pricing- cost based pricing
How many units would need to be sold at ≠ price levels to cover the full cost (direct/variable costs & fixed costs) of production, distribution & marketing using break-even analysis.
Limitation: if sales fall, prices would need to be raised to compensate & breakeven, which could jeopardize further sales, but the approach is useful for highlighting costs & the price required for an initial profit
Reading 9: The marketing mix- Pricing
Types of pricing- cost based pricing
Pricing decision:
Direct cost pricing or marginal pricing: costs increase as sales go up
This approach may be used in a service offering where capacity would otherwise be unused (theaters, restaurants & hotels may offer lower prices at times in which they would otherwise operate below capacity)
Second-market discounting: It involves pricing different prices to different markets
Cost-plus pricing: involves adding a percentage for profit to the cost of a product.
This approach is called Mark-up pricing when it is used by retailers to set a price by adding a ‘mark-up’ or margin to the price they paid for their stock of the product to obtain a profit
Reading 9: The marketing mix- Pricing
Types of pricing- competitor-based pricing
It is where pricing is set in relation to competitors.
Many companies, however, prefer to try to differentiate themselves from competitors and use customer-based pricing.
When comparing against competitors, Kotler and Armstrong (2016, p. 332) recommend asking the following questions:
How does the company’s market offering compare with competitors’ offerings in terms of customer value?
How strong are current competitors?
What are their [competitors’] current pricing strategies?
If a company’s offering is perceived to offer greater value to customers than its competitors, then a higher price may be charged.
Reading 9: The marketing mix- Pricing
Types of pricing- Customer-based pricing
Involves setting the price of an offering on its value to customers:
There are 4 types of customer-based pricing:
Demand pricing: This is setting a price based on customers’ professed willingness to buy a company’s offering at various price options.
Good value-pricing: This involves setting a fair price based on a balance of quality against price.
Value-added pricing: This is adding features or services to increase the value of an offering to consumers that differentiates it from competitors and enables a higher price to be charged.
Psychological-based pricing: This involves using price to elicit an emotional response, for example using prestige pricing to signal quality or odd-even pricing
Reading 9: The marketing mix- Pricing
Product mix pricing
5 types of product mix pricing are identified
Product line pricing – This is pricing different products in a range based on the level of value each offers to buyers
for example, the Ford Fiesta is offered in 12 different variants, including Zetec, Titanium X and ST200, rising in price and additional features).
Optional-product pricing – This is offering optional products or accessories alongside the principal product
for example, a range of optional accessories offered when purchasing a mobile phone, such as screen protectors and cases.
Reading 9: The marketing mix- Pricing
Product mix pricing
Captive-product pricing – These are associated products needed to use the principal product
for example, replacement ink cartridges for printers or a supply of filters for coffee machines
By-product pricing – This is a process of offsetting the cost of a principal product by finding a way to sell by-products incurred in the principal product’s production, allowing the principal product’s price to be set more competitively
for ex., the first press of olives produces extra virgin olive oil. Then the leftover can be used for other purposes like soap making, or fuel for electric plants.
Product bundle pricing – This involves selling a set of related product in a bundle at a price lower than if purchased individually
for example, some fast food restaurants and supermarkets offer a ‘meal-deal’
Reading 9: The marketing mix- Pricing
Block 1- Reading 10
The marketing mix for services and non-profit marketing
The special characteristics of services
Intangibility – they are not physical offerings, although they may contain physical elements.
Inseparability – production and consumption are simultaneous.
Variability – service quality may vary depending on the person who performs the service.
Perishability – service is provided at a point in time and cannot be stored in the same way that physical goods can.
Reading 10: The marketing mix for services and non-profit marketing
Non-profit marketing
Non-profit marketing ‘includes marketing activities conducted by individuals and organizations to achieve some goal other than the ordinary business goals of profit
Although profit is not the principal goal of non-profit organizations, their goals may involve 'profit making', for ex., charities often engage in fund-raising to fund their charitable work
Reading 10: The marketing mix for services and non-profit marketing
Non-profit marketing
Non-profit marketing tends to be service-based but also often includes a blend of goods and services.
For example, educational organizations provide a service through teaching and learning, but typically also involves some physical elements such as teaching materials (textbooks)
Reading 10: The marketing mix for services and non-profit marketing
Goods and services are often represented as being positioned along a continuum as shown in Figure 1.
3P (people, Processes, physical evidence)
The 3 Ps are considered the extended elements added to the traditional 4Ps to take account of the differences in marketing services rather than physical products.
Within each of the service offerings, the mix elements of people, processes and physical evidence all play a role in the customer purchase or consumption experience or both.
Offerings usually consist of a blend of goods and services, for example:
hairdressers offer hair products for sale as well as using them on clients’ hair, and theatres
cinemas offer refreshments and sometimes souvenir programmes and merchandise in addition to their core business of plays and movies.
Reading 10: The marketing mix for services and non-profit marketing
People
The people who provide service elements for an offering play a key role in not only serving customers but in representing the brand.
Even when an offering is a physical good, staff can influence customers’ receptiveness to purchasing it,
The human resource function has an important role in selecting and training staff to ensure effective customer service to ensure that staff have the skills to support the organization’s offering.
Thus, customer-oriented training has been suggested as a means of equipping staff with skills needed to identify customer needs more accurately
Reading 10: The marketing mix for services and non-profit marketing
Processes
Processes for delivering the service may be visible to customers to varying degrees.
for example, by enabling customers to watch their food or coffee being prepared or involving customers in the process.
Process becomes part of the service experience
Processes maintain the efficiency of services. For ex., where customers have to queue for a service, effective queue management is vital to achieving customer satisfaction.(thru appointments, ticketing system)
The operations management function is central to ensuring that an organization’s processes contribute to the delivery of customer value.
Reading 10: The marketing mix for services and non-profit marketing
Physical evidence
Physical evidence examples of an office, a restaurant and a shopping emporium.
It associated with a service & can be interpreted by consumers as a cue to service quality & a component of the service experience affecting purchase selection.
It is important in representing a brand & provides tangible cues to support an offering, so it needs to be tailored appropriately to the target segment(s).
The physical environment that accompanies a service environment also offers the opportunity for differentiation and adding value.
Ex: Service environments such as banks & car showrooms may offer free refreshments
Reading 10: The marketing mix for services and non-profit marketing
