Marketing Management Final Review Framework

• Positioning is “To occupy a clear distinctive and attractive position in the target consumer’s mind” • Understand your current position, then identify your ideal position • Positioning should guide 4P decisions; 4P is the coherent execution of positioning
Sales and profits potentially increase from product line expansion, but cannibalization may offset gains – Marginal revenues from new products or SKU’s must be compared to marginal costs – Product complementarity/substitu tability must be assessed
Determine the objective
• Price can be set anywhere in between cost (lower limit) and consumer perceived value (upper limit) and exactly where to set the price depends on marketing objectives. • •If the objective is to maximize profit (temporarily), set the price high, known as Price Skimming. • •If the objective is to prevent competition, set the price low, known as Penetration Strategy. • In between the two extremes, the strategic decision concerns the tradeoff between profit and market share.
Setting price rules
• Cost Focus • Competition Focus • Customer Focus-Value Pricing
Strategic Pricing Considerations
Cost based pricing • Price above the variable cost to see if the contribution margin could cover the fixed cost • Problems: Fixed cost are difficult to allocate; Ignore the demand side; Disproportionately set price according to the variable cost. Value based pricing • True economic value(TEV) = Cost of the next-best alternative +Value of performance differential (Refer to reading material – 2, pp. 54) • Goal: to stretch customers’ willingness to pay
Impact of price cut
• Price cuts reduce the profit margin on each unit sold • But if MANY more units are sold, total profits might still increase • The manager’s challenge is to predict the profit impact of a price change by weighing margin changes against unit sales changes
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Managing Product and Services
Product Levels What’s Product Mix Managing Product Mix Product Line Profits
Product mix is the total variety of prodment Final Exam Review Framework
Marketing Mania – FY2015
Golden Analysis Framework
STP Segmentation, Target Marketing & Positioning
Market Segmentation
Positioning
Considerations of 4Ps
• • What are the benefits and features of the product? What’s the product mix like? And why you recommend to rationalize or extend the product line? Is you channel strategy consistent with the value proposition of you firm? How do you think of Efficiency, Power, Conflict, and Control of your channel strategy. What’s the role of your pricing? Is the category price sensitive? Have you consider the consequence of your pricing actions? Think about the strategic considerations of pricing. What’s the goal of IMC? New customer or more spending of current customers? Which communication channel you choose and why the such channels are relevant to your target? What’s you appeal? How is you budget? And how to evaluate?
Benefit: User Experience
Features: Tech/Knowho w
Potential goals of product line expansion – Serve multiple buyer segments – Block competition – Gain scale economies/utilize excess capacity – Refresh brand image – Support retailer exclusivity – Create opportunities for upselling, cross- selling, seasonal smoothing, etc
Start with Company resources and capabilities
Why STP? Because company resource is limited!
Targeting Segment
• Segmentation should be based on value • Demographic, geography, psychograph, lifestyle, etc • Criteria • Measurable, differentiable, coherent, accessible, actionable, sustainable, stable • Based on: • Size, potential growth • Competition assessment (can use 5 forces: entrant threat, substitution, buyer/supplier power) • Fit with company resources and objective
• Line interactions must be controlled and managed
Pricing Strategy
Roles of pricing
• Financial role – adding to the bottom line • Communication role – sending signals to customers and market • Relationship role – How much to charge, how to charge, and when to charge influence consumer behavior as well as competitive response
Business • Consists of various product lines • Key product line decisions include – Product line breadth (# different lines) – Product line length (# of different price points) – Product line depth (# items/variants within category) – Product line consistency • Relative positioning • Relative resource allocations