Pricing Strategies and Objectives

Market Analysis Techniques

• Market analysis is a quantitative and qualitative assessment of a market, focusing on market size, customer segments, buying patterns, competition, and economic environment.
• The 3C analysis business model consists of:
  • Customers: understanding their needs and viewpoints.
  • Competitors: analyzing their strengths and weaknesses.
  • Corporation/Company: evaluating the company's internal capabilities and resources.

Customer Analysis

• In-depth consumer research is essential to appeal to the target market.
• Demographic data plays a crucial role in customer analysis.
• Three elements of consumer analysis:
  • Affect and cognition: understanding customer attitudes and perceptions.
  • Behavior: analyzing customer behavior and buying patterns.
  • Environment: considering the external factors that influence customer behavior.

Competitor Analysis

• Analyzing competitors involves:
  • Identifying rival brands and companies.
  • Evaluating their strengths and weaknesses.
  • Analyzing their marketing strategies and tactics.
• Five forces involved in competitor analysis:
  • Competitive rivalry.
  • Supplier power.
  • Buyer power.
  • Threat of substitution.
  • Threat of new entry.

Company Analysis

• This analysis provides insights into the company's marketing strategies, strengths, and weaknesses.
• Analyzing web analytics data can help identify which pages of the company's website are most interesting to users.

Evaluating Marketing Performance

• Marketing performance measurement is essential to evaluate the effectiveness of marketing strategies.
• Benefits of marketing performance evaluation:
  • Improving brand awareness.
  • Educating customers and prospects about product benefits.
  • Strengthening stakeholder relationships.
• Key performance indicators (KPIs) are used to gauge the success of marketing activities.
• Establishing marketing performance metrics helps to:
  • Satisfy customers.
  • Establish a clear company image.
  • Be proactive in the market.
  • Fully incorporate marketing into the company's overall business strategy.

Sales Force Structure and Size

• Designing sales force structure involves specifying various roles, the nature and degree of specialization, and coordination and control mechanisms.
• Types of sales representatives:
  • Inside Sales Representatives.
  • Field Sales Representatives.
  • Key Account Managers.
  • Technical Sales Representatives.
  • Sales Support Representatives.
  • Inside Sales Support Representatives.
• Sales force size is determined by dividing total workload (calls) by average number of calls a salesman can make in a year.
• Three methods to determine sales force size:
  • Breakdown Method.
  • Workload Method.
  • Incremental Method.### Sales Force Management
• Sales force management involves designing sales force structure, determining sales force size, and setting sales quotas.
• Sales force structure refers to the organization of the sales team, including roles, specialization, and coordination mechanisms.

Determining Sales Force Size

• Three methods to determine sales force size:
  • Breakdown method: divides total sales figure by sales generated by each individual.
  • Workload method: estimates total workload and divides it by selling time available per salesperson.
  • Incremental method: compares marginal profit contribution with incremental cost for each salesperson.

Sales Quota

• A sales quota is a performance expectation that sellers must achieve to earn target incentive pay.
• Types of sales quotas:
  • Volume-based: determined by number/units of products/services sold.
  • Revenue-based: determined by sales generated by sales of products or services.
  • Profit-based: determined by profit earned through the sale.
• Objectives of sales quota:
  • Define amount of sales achievable in a geography and time period.
  • Identify areas of high or low sales.
  • Set targets for sales performance.
  • Determine advertising budget.
  • Motivate sales team.
  • Ensure coordination between internal and external stakeholders.

Marketing Channels

• A marketing channel is a set of interdependent organizations involved in making a product or service available to the consumer.
• Few producers sell directly to final users; most use third parties or intermediaries to bring products to market.
• Marketing channel decisions directly affect other marketing decisions.

Marketing Channel Functions

• Members of the marketing channel perform various functions:
  • Information gathering and distribution.
  • Promotion.
  • Contact.
  • Matching.
  • Negotiation.
  • Physical distribution.
  • Financing.
  • Risk taking.

Number of Channel Levels

• A channel level is a layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer.

• The number of channel levels affects the assignment of functions to channel members and the costs and prices of the product.### Distribution Channels

• A distribution channel is a series of firms or individuals involved in the process of making a product or service available to the consumer.

• The length of a channel is determined by the number of intermediary levels.

• There are two types of distribution channels:

  • Direct marketing channel: a channel with no intermediary levels, where the manufacturer sells directly to the consumer.
  • Indirect marketing channel: a channel with one or more intermediary levels, where the manufacturer sells to a wholesaler or retailer, who then sells to the consumer.

Channel Behavior and Organization

• A distribution channel is a complex behavioral system where people and companies interact to achieve individual, company, and channel goals.
• Each channel member plays a role in the channel and specializes in performing one or more functions.
• The channel is most effective when each member is assigned tasks they can do best.
• Ideally, channel firms should work together smoothly to secure healthy margins or profitable sales.
• However, individual channel members may not take a broad view and may be more concerned with their own short-run goals.

Channel Organization

• There are two types of distribution channel structures:
  • Conventional distribution channel: a channel consisting of independent producers, wholesalers, and retailers, each seeking to maximize their own profits.
  • Vertical marketing system (VMS): a channel structure where producers, wholesalers, and retailers act as a unified system, with one channel member owning or having contracts with the others.

Sales Management

• Sales management is a business discipline that focuses on the practical application of sales techniques and the management of a firm's sales operations.
• Sales management involves personnel, buying, receiving, pricing, sales promotion, and customer services.

Types of Selling Jobs

• There are three types of selling jobs:
  • Order-takers: sales representatives who respond to customer requests and do not actively seek to persuade.
  • Order-creators: sales representatives who persuade customers to specify the seller's products.
  • Order-getters: sales representatives who persuade customers to make a direct purchase.

Pricing

• Price is the amount of money charged for a product or service, or the sum of the values that consumers exchange for the benefits of having or using the product or service.
• Pricing decisions are affected by both internal company factors and external environmental factors.
• Companies set prices by selecting a general pricing approach that includes one or more of the following factors: costs, consumer perception, and competitors' prices.
• Factors to consider when determining price levels include:
  • Company objectives
  • Marketing objectives
  • Demand considerations
  • Cost considerations
  • Competitor considerations

Market Analysis Techniques

• Market analysis is a quantitative and qualitative assessment of a market, focusing on market size, customer segments, buying patterns, competition, and economic environment.
• The 3C analysis business model consists of:
  • Customers: understanding their needs and viewpoints.
  • Competitors: analyzing their strengths and weaknesses.
  • Corporation/Company: evaluating the company's internal capabilities and resources.

Customer Analysis

• In-depth consumer research is essential to appeal to the target market.
• Demographic data plays a crucial role in customer analysis.
• Three elements of consumer analysis:
  • Affect and cognition: understanding customer attitudes and perceptions.
  • Behavior: analyzing customer behavior and buying patterns.
  • Environment: considering the external factors that influence customer behavior.

Competitor Analysis

• Analyzing competitors involves:
  • Identifying rival brands and companies.
  • Evaluating their strengths and weaknesses.
  • Analyzing their marketing strategies and tactics.
• Five forces involved in competitor analysis:
  • Competitive rivalry.
  • Supplier power.
  • Buyer power.
  • Threat of substitution.
  • Threat of new entry.

Company Analysis

• This analysis provides insights into the company's marketing strategies, strengths, and weaknesses.
• Analyzing web analytics data can help identify which pages of the company's website are most interesting to users.

Evaluating Marketing Performance

• Marketing performance measurement is essential to evaluate the effectiveness of marketing strategies.
• Benefits of marketing performance evaluation:
  • Improving brand awareness.
  • Educating customers and prospects about product benefits.
  • Strengthening stakeholder relationships.
• Key performance indicators (KPIs) are used to gauge the success of marketing activities.
• Establishing marketing performance metrics helps to:
  • Satisfy customers.
  • Establish a clear company image.
  • Be proactive in the market.
  • Fully incorporate marketing into the company's overall business strategy.

Sales Force Structure and Size

• Designing sales force structure involves specifying various roles, the nature and degree of specialization, and coordination and control mechanisms.
• Types of sales representatives:
  • Inside Sales Representatives.
  • Field Sales Representatives.
  • Key Account Managers.
  • Technical Sales Representatives.
  • Sales Support Representatives.
  • Inside Sales Support Representatives.
• Sales force size is determined by dividing total workload (calls) by average number of calls a salesman can make in a year.
• Three methods to determine sales force size:
  • Breakdown Method.
  • Workload Method.
  • Incremental Method.### Sales Force Management
• Sales force management involves designing sales force structure, determining sales force size, and setting sales quotas.
• Sales force structure refers to the organization of the sales team, including roles, specialization, and coordination mechanisms.

Determining Sales Force Size

• Three methods to determine sales force size:
  • Breakdown method: divides total sales figure by sales generated by each individual.
  • Workload method: estimates total workload and divides it by selling time available per salesperson.
  • Incremental method: compares marginal profit contribution with incremental cost for each salesperson.

Sales Quota

• A sales quota is a performance expectation that sellers must achieve to earn target incentive pay.
• Types of sales quotas:
  • Volume-based: determined by number/units of products/services sold.
  • Revenue-based: determined by sales generated by sales of products or services.
  • Profit-based: determined by profit earned through the sale.
• Objectives of sales quota:
  • Define amount of sales achievable in a geography and time period.
  • Identify areas of high or low sales.
  • Set targets for sales performance.
  • Determine advertising budget.
  • Motivate sales team.
  • Ensure coordination between internal and external stakeholders.

Marketing Channels

• A marketing channel is a set of interdependent organizations involved in making a product or service available to the consumer.
• Few producers sell directly to final users; most use third parties or intermediaries to bring products to market.
• Marketing channel decisions directly affect other marketing decisions.

Marketing Channel Functions

• Members of the marketing channel perform various functions:
  • Information gathering and distribution.
  • Promotion.
  • Contact.
  • Matching.
  • Negotiation.
  • Physical distribution.
  • Financing.
  • Risk taking.

Number of Channel Levels

• A channel level is a layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer.

• The number of channel levels affects the assignment of functions to channel members and the costs and prices of the product.### Distribution Channels

• A distribution channel is a series of firms or individuals involved in the process of making a product or service available to the consumer.

• The length of a channel is determined by the number of intermediary levels.

• There are two types of distribution channels:

  • Direct marketing channel: a channel with no intermediary levels, where the manufacturer sells directly to the consumer.
  • Indirect marketing channel: a channel with one or more intermediary levels, where the manufacturer sells to a wholesaler or retailer, who then sells to the consumer.

Channel Behavior and Organization

• A distribution channel is a complex behavioral system where people and companies interact to achieve individual, company, and channel goals.
• Each channel member plays a role in the channel and specializes in performing one or more functions.
• The channel is most effective when each member is assigned tasks they can do best.
• Ideally, channel firms should work together smoothly to secure healthy margins or profitable sales.
• However, individual channel members may not take a broad view and may be more concerned with their own short-run goals.

Channel Organization

• There are two types of distribution channel structures:
  • Conventional distribution channel: a channel consisting of independent producers, wholesalers, and retailers, each seeking to maximize their own profits.
  • Vertical marketing system (VMS): a channel structure where producers, wholesalers, and retailers act as a unified system, with one channel member owning or having contracts with the others.

Sales Management

• Sales management is a business discipline that focuses on the practical application of sales techniques and the management of a firm's sales operations.
• Sales management involves personnel, buying, receiving, pricing, sales promotion, and customer services.

Types of Selling Jobs

• There are three types of selling jobs:
  • Order-takers: sales representatives who respond to customer requests and do not actively seek to persuade.
  • Order-creators: sales representatives who persuade customers to specify the seller's products.
  • Order-getters: sales representatives who persuade customers to make a direct purchase.

Pricing

• Price is the amount of money charged for a product or service, or the sum of the values that consumers exchange for the benefits of having or using the product or service.
• Pricing decisions are affected by both internal company factors and external environmental factors.
• Companies set prices by selecting a general pricing approach that includes one or more of the following factors: costs, consumer perception, and competitors' prices.
• Factors to consider when determining price levels include:
  • Company objectives
  • Marketing objectives
  • Demand considerations
  • Cost considerations
  • Competitor considerations

This quiz covers the factors involved in a general pricing approach, the determination of the upper limit of prices, and how marketing objectives shape the pricing decision. It also explores the relationship between pricing and profit in an organization.