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Summary Lessons Marketing & Communication (ArteveldeHogeschool)
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Summary of the lessons 'Marketing & communication) (ArteveldeHogeschool)
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Samenvatting: marketing & communicationPart 1: marketing
Class 1: marketing mix: 4P’s
4P’s:
- Price
- Product
- Place
- Promotion
P1: Price
Crucial component to run your business:
- To target your ideal market
- Amount of money coming into your business
- Set the right price from the start
Most flexible ‘P’
Value of a product/service
Price lowering:
- Easy way to attract customers/prospects
- Negative for long-term success
- ‘quick fix’
Factors influencing pricing:
- Internal (company) factors
- External (environmental) factors
Internal factors
- Marketing objectives
- Marketing mix strategy
- Costs
- Organizational considerations
Marketing objectives:
Before determining the price:
- Target audience
- Positioning
- Project objectives short term and long term
1
, - Product quality
- Service offered
PRICE = to achieve certain objectives
- Low price:
o To scare away competition
o To attract customers/prospects
o Create interest/enthusiasm for a product
- Price set as competitor:
o To stabilize the market
o Price competition= the lowest level of competition
Marketing mix strategy:
Price = part of the marketing mix = key element to position a product
Always linked to:
- Design (=product)
- Distribution (=place)
- Promotion
Best strategy:
- Not the lowest price (Unless this is the image you are going for)
- Define a marketing offer that is worth a high price (price value)
- Example: Gucci (strong image and exclusive reputation) consumer willing to pay
more
Costs:
Costs = bottom for the asking price
Price has to cover the costs of:
- Production, distribution & sales
- + profit margin for the effort & risks
Fixed costs = overhead costs (don’t fluctuate with the production)
Variable costs = move with production level
Totals costs = fixed costs + variable costs
Organizational considerations:
Small companies:
- Prices set by management, not by marketing
- Under the influence of sales managers, accountants, …
Large companies:
2
, - Prices set by division- or product line managers
External factors
- Nature of the market & demand
- Competition
- Other environmental factors
Nature of the market & demand:
= limit to set prices
Price/demand different from market-to-market
Markets:
- Free competition
- Monopolistic competition
Competition:
Price of our competitors
Competitors reaction to our pricing strategy
Consumer will:
- Evaluate price & value of your product to other (comparable) products
- Competing brands
- Your company will set the price of their offer +/- on the same level as its competition
Other environmental factors:
Economy:
- Inflation, interest rates, …
- affect the price-/ value perception of the consumer
Resellers (retailers, wholesalers, …):
- Their reaction to prices
Government
Pricing strategies
Premium pricing:
- ‘image’ pricing/ ‘prestige’ pricing
- Early days of PLC
- Ideal if unique products: no mass production
- (-) limited customer base
3
, - (+) create a high value perception
Pricing for market penetration:
- Offering lower prices
- To draw attention away from competition
- (-) can lead to initial loss of income for the business
- (+) increase in awareness can drive profits
- (+) can help small business to stand out from the crowd
Economy pricing:
- Used most commonly: (food) suppliers/ retailers
- Aims to attract price-conscious consumers
- Minimize marketing- & production cost
- (+) effective for large companies
- (-) dangerous for small businesses: lack of volume
Psychology pricing:
- To encourage customers to respond on emotional level rather than logical level
- Example: setting the price at 199euros
o Attracts more customers than at 200euros
o Consumers pay more attention to the first number on a price tag, than the
last one
Competition based pricing:
- Based upon price of the competitor
- Less attention for business’ costs or demand
- More, less or equal to competitor
- Example: SME
o Change prices when a large competitor does
o Not necessarily when demand or costs changes
Inverse pricing:
- Start from the need/demand
- Example: SWATCH
o At the start researched the market thoroughly
o Opportunity: rather cheap fashion accessory that indicated the time
o SWATCH tried to keep the costs as low as possible
Designed a simple, fashionable watch
Less options/parts
Used high-tech material, that was cheaper
revolutionary automated mass production process
o Watch fashion functionality
o price according to what the consumer wanted to pay
Pricing strategies for new products
4
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