Marketing Mix: Product and Price - Marketing Course, Apuntes de Administración de Empresas

¡Descarga Marketing Mix: Product and Price - Marketing Course y más Apuntes en PDF de Administración de Empresas solo en Docsity! Sandra Guillamón Salso – Departamento de Economía TOPIC 13 MARKETING MIX PRODUCT AND PRICE Sandra Guillamón Salso sguillam@pa.uc3m.es Office: 9.1.09b Departamento de Economía de la Empresa Sandra Guillamón Salso – Departamento de Economía  “There is only one valid definition of business purpose: to create a customer” Peter Drucker Sandra Guillamón Salso – Departamento de Economía Marketing Process 1 2 3 4 5 Segmentation and targeting Research and analysis Defining marketing strategy and plan Apply strategy and plan to the Marketing mix Post-Analysis. Review of results Universidad uc3m | Carlos lll de Madrid Marketing mix Sandra Guillamón Salso - Departamento de Economía Sandra Guillamón Salso – Departamento de Economía 13.1 Product • Product: Physical goods or services that can be offered in a market that might satisfy a need or want  Difference? • Brand: Name, term, sign, or design, or a combination of these, that identifies the maker or seller of a product or service • Packaging: The container or wrapper for a product • Label: Identifies the product or brand, describes attributes, and provides promotion Sandra Guillamón Salso – Departamento de Economía 13.1 Product PRODUCT PORTFOLIO Product mix (Width) Sandra Guillamón Salso – Departamento de Economía 13.1 Product PRODUCT PORTFOLIO - EXAMPLES Sandra Guillamón Salso – Departamento de Economía 13.1 Product PRODUCT PORTFOLIO - EXAMPLES Sandra Guillamón Salso – Departamento de Economía 13.1 Product PRODUCT LIFE CYCLE • Promotion  introduce the product and make consumers aware of it. What do they think? • Slow sales growth • Initial cost of producing and advertising  may exceed the revenue.  Low or not profit • Price  may initially be set high if no other competing products are in the market yet.  price skimming. The introduction phase is the initial period in which consumers are informed about a new product. Sandra Guillamón Salso – Departamento de Economía 13.1 Product PRODUCT LIFE CYCLE • Better product knowledge • Sales grow (attracts competition) • Profits • Begin to differentiate the product • New distribution channels • Prices are reduced (reduces the unit cost)  more competence • The promotion and advertising expenses continue to be high The growth phase is the period in which sales of the product increase rapidly. Sandra Guillamón Salso – Departamento de Economía 13.1 Product PRODUCT LIFE CYCLE • Differentiate product. • Search new segments. • Special discounts to maintain market share. The maturity phase is the period in which additional competing products have entered the market, and sales of the product level off because of the increased competition. Sandra Guillamón Salso – Departamento de Economía 13.1 Product How can we gain market share?? Sandra Guillamón Salso – Departamento de Economía 13.1 Product PRODUCT STRATEGIES - DIVERSIFY • When their primary product is subject to changes in demand, firms tend to diversify their product mix so that they will not be completely dependent on one market. • Firms with flexible production facilities that allow for the production of additional goods are more capable of diversifying their product mix. •  Examples? Sandra Guillamón Salso – Departamento de Economía 13.1 Product CREATING NEW PRODUCTS • Profitability, survival and growth of the company • Replace an existing product (in decline) • Introducing us in new segments of market • Add products of complementary use to the already existing • Launch new products to reach new markets An original product or an existing product with modifications or improvements, which may involve creation of a new version or a new brand WHAT IS A NEW PRODUCT? WHAT FOR? Sandra Guillamón Salso – Departamento de Economía 13.1 Product PRODUCT STRATEGIES – DIFFERENTIATION Product differentiation is the effort of a firm to distinguish its product from competitors’ products in a manner that makes the product more desirable. By: • Unique design: Higher level of product safety, reliability, or ease of use. • Unique packaging: Packaging to get consumers’ attention or to improve convenience. • Unique branding : Using the firm’s image to gain credibility, or using a unique brand name to imply prestige. Sandra Guillamón Salso – Departamento de Economía 13.2 Price Price is the sum of all values that consumers exchange for the benefits of having or using the product or service. Price communicates the product’s value to customer, and identifies the company’s positioning. Therefore, prices should be aligned to the customer’s value Pricing objectives: • Maximize profits • Maximize market share • Stabilizing prices, avoiding price wars Sandra Guillamón Salso – Departamento de Economía 13.2 Price Methods of pricing: • Profit maximization • Cost of production • To achieve a desired rate of return • Based on the competitors price • Other methods: demand elasticity, based on the perception of the relationship quality-price, based on competition, inventories, ... Sandra Guillamón Salso – Departamento de Economía 13.2 Price ACCORDING TO COMPETITORS Examples? Sandra Guillamón Salso – Departamento de Economía 13.2 Price ACCORDING TO COMPETITORS You are introducing a novel product to the market with significant network effects and high switching costs. Your product has significant economies of scale from production. You should: a. Set a market penetration price b. Set a market skimming price c. Set both a market skimming and market penetration price d. None of the above Sandra Guillamón Salso – Departamento de Economía 13.2 Price Given an expected level of sales, the price is determined so that a certain rate of return TO ACHIEVE A DESIRED RATE OF RETURN ROA = EBIT A = P x Q – Fc – (Vc x Q) A p = A x ROA + Fc + (Vc x Q) Q