Summary of all required readings from digital course pack from the course Pricing and Monetization Strategies 2021. Includes 7 readings: note on marketing strategy, principles of pricing, note on behavioral pricing, more isn't always better, product line pricing, the new york times paywall, keurig ...
Any business enterprise has only two basic functions: marketing and innovation. All else is
detail. (Peter Drucker)
Central role in enterprise stems from the fact that marketing is the process by which a firm
creates value for its chosen customers. Value is created by customer needs.
→ Firm needs to define itself by the customer benefit provided
→ After creating value for customers, capture portion of it through pricing
→ Sustain process of creating and capturing value over time (= marketing strategy)
Marketing strategy involved two major activities:
1. Selecting a target market and determining the desired positioning of product in target
customers’ minds
2. Specifying the plan for the marketing activities to achieve the desired positioning
Five major areas of analysis underlie marketing decision making - 5Cs:
- Customer needs: What needs do we seek to satisfy?
- Company skills: What special competence do we possess to meet those needs?
- Competition: Who competes with us in meeting those needs?
- Collaborators: Who should we enlist to help us and how do we motivate them?
- Context: What cultural, technological and legal factors limit possibilities?
→ Results in specification of target market, positioning, marketing mix. Then customer
acquisition and retention
Marketing process:
Nowadays markets of one, suggesting that marketing campaigns can and should be customized
to individuals
, → Two key questions:
1. Which potential buyers should the firm attempt to serve? (segmentation)
2. How much customization should the firm offer? (mass, segments, niche, individuals)
As part of segmentation and targeting, the firm has to specify the position it wishes to occupy in
the target consumers’ minds (positioning).
→ Enables company to solve marketing mix problem: working out of the tactical details
Marketing mix - 4Ps
- Product
> Product has to be considered from the point-of-view of value delivered to the customer.
→ Can be delivered simultaneously by a number of vehicles (brand name, repairs)
> Product line planning decisions (breadth, length, depth)
> Individual item decisions (deleting, introducing product, repositioning)
> New product development process
→ Opportunity identification, design, testing, product introduction, life cycle
management
- Price
> Perceived value: customer’s maximum price willing to pay
→ Primary guide to pricing product
> Effective pricing: once firm has created value for customers, it is entitled to capture
some of that value for itself to fund future value-creation efforts
> Floor: costs
> Price skimming / penetration
> Price customization can be achieved by:
1. Developing a product line
2. Controlling the availability of lower prices
3. Varying prices based on observable buyer characteristics
4. Varying prices based on observable characteristics of the transaction
- Place
> Marketing channel: set of mechanisms / network via which a firm goes to market
> Eight generic channel functions to assess needs in particular context
1. Product information 5. Product assortment
2. Product customization 6. Availability
3. Product quality assurance 7. After-sale service
4. Lot size 8. Logistics
> Recommended approach: develop customer-driven systems assessing channel
> Two major decisions: 1. Channel design, 2. Channel management
- Promotion
> Marketing communications: deciding the appropriate set of ways to communicate with
customers to foster their awareness of the product, features, purchase interest etc.
> Planning communications strategy - 6Ms:
1. Market 4. Media
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