Planning the Marketing Mix

A Good Marketing Plan

Looks at the Big Picture Leads to Changes Estimate Production & Profit Risks Anticipates the Reactions of Competitors Looks at a Longer Time Horizon Meet Your Business and Family Goals A Written Plan

Marketing is finding, developing, and profiting from opportunities

Promotion Products

Target Market
Place Price

Your target markets will determine your production and marketing practices, Not vise versa.

Determine Your Product

Give your customer a REASON to buy your products

Setting Pricing Policy

1. Selecting the pricing objective
2. Determining demand 3. Estimating costs 4. Analyzing competitors costs, prices, and offers 5. Selecting a pricing method 6. Selecting final price

Select Pricing Strategies

First Step is to Know Your Costs!
Quantitative: gross margin/mark-up Qualitative: unique value, no close substitutes, difficult to compare. Relative to competitors

Types of Costs
Fixed Costs (Overhead) Variable Costs
Costs that do vary directly with the level of production. Raw materials

Costs that dont vary with sales or production levels. Executive Salaries Rent

Total Costs
Sum of the Fixed and Variable Costs for a Given Level of Production

Select Pricing Strategies

Price Making vs Price Taking

The Three Cs Model for Price Setting

Low Price No possible profit at this price

Costs

Competitors prices and prices of substitutes

Customers High Price assessment No possible of unique demand at product this price features

Some important pricing dimensions

Utility: The attribute that makes it capable of want satisfaction Value: The worth in terms of other products Price: The monetary medium of exchange.

Pricing Methods
Markup Pricing Target Return Pricing Perceived Value Pricing Value Pricing (demand) Going-Rate Pricing Sealed-Bid Pricing

Promotional Pricing
Loss-leader pricing Special-event pricing Cash rebates Low-interest financing Longer payment terms Warranties & service contracts Psychological discounting

Psychological Pricing
Most Attractive?

A
32 oz.

$2.19

Better Value?

B
26 oz.

$1.99

Psychological reason to price this way?

Assume Equal Quality

Select Place/Distribution Strategies

Location, Location, Location?
Wholesale channels
through a wholesaler through a retailer marketing cooperatives

Direct-to-consumer channels
Home-based shopping: e-commerce, mail order Store-based shopping

Customers, Customers, Customers!

Selecting Promotion Strategies

Five Promotion Tools 1. 2. 3. 4. 5. Advertising Sales Promotion Activities Public Relations Sales Force Direct Marketing

Advertising
Most effective when trying to reach large amount of people to build awareness Most effective when narrowly targeted

Select a media
will reach the target audience is appropriate for the message conveyed

Does not increase sales quickly - Changes minds but does not change behavior.

Sales Promotion
Coupons, discounts, in-store displays, trade shows, samples, in-store demonstrations, contests, and sponsoring retailers.
Motivate consumers to change behaviors Overused? Weaken brand loyalty To supplement efforts in the advertising and personal selling. Most sales promotion lost money - except a superior product paired with low awareness

Public Relations
Publicity (or public relation) uses non-paid communication presented by the media.
Publications, Events, News, Community involvement, Identity media, Lobbying activity, Social responsibility

A broad effort to influence publics attitudes toward the firm or its products. Create an image

Sales Force
Most expenses (30% of time is spending on selling) One on one selling can effectively find what customer really want Evaluate the costs to sale ratio Hire good sales people, help them do a better job

Direct Marketing
Retail stores, direct selling, direct mailing, internet Data -base marketing Product demonstration

Which promotion strategy to use?

Who is the target?

The role of promotion

$ $ $ $ $ $ $ Provide product information Stimulate demand Differentiate products and/or build a brand image Remind current customers about product benefits Counter competitors Respond to the news Smooth out seasonal demand fluctuation

Multi-media approach

Implementing Phase
Determine Objectives
Measurable, quantifiable, and realistic

Budgeting
Percentage of sales approach Match the competitor approach Task or objective approach

Action Plan:
Who is responsible? What tasks are they responsible for? When the tasks are to be completed?

DO IT!

The Control Phase

Set Performance Targets Monitor progress Evaluate key indicators Sales by weekly/monthly Cost on key items Orders and profit at key times of the year Consumer feedback

Marketing plan can be modified. It is an ongoing process.

Activity 1