Manage Pricing Decisions PDF

**[What is Manage Pricing Decisions?\ ]**\ Manage pricing decisions is the process of determining and modifying the cost of\ goods or services in order to accomplish particular company goals, such boosting\ revenue, gaining market share, or gaining a competitive edge. Determining what manufacturers...

**[What is Manage Pricing Decisions?\ ]**\ Manage pricing decisions is the process of determining and modifying the cost of\ goods or services in order to accomplish particular company goals, such boosting\ revenue, gaining market share, or gaining a competitive edge. Determining what manufacturers receive in return for the goods is another aspect of this process.\ \ Managing pricing decisions is also determined by a number of variables, including\ profit margin, cost of raw materials, and manufacturing costs. It is also a method of\ figuring out what manufacturers get in return for the goods and it is determined by a\ number of variables, including profit margin, cost of raw materials, and manufacturing\ costs. **[Simple Pricing]**\ It is setting a price based on what rival businesses charge for comparable goods\ and services. When selling commodities, retailers and wholesalers frequently employ\ this tactic. Simple pricing decisions made by businesses frequently aim to boost sales\ by implementing little, competitive changes like purchase allowances, volume discounts,\ and discounts on purchases.\ \ **[Complex Pricing]** This relies on the distinctiveness of the good or service in question and what\ consumers are willing to pay for it. This kind of price, which is usually negotiated with\ the client, is typical for custom furniture, artwork, and advisory services.\ \ **[Factors Influencing Pricing]** Pricing of a product is influenced by various factors as price involves many\ variables. Factors can be categorized into two, depending on the variables influencing\ the price.\ **[Internal Factors]** The following are the factors that influence the increase and decrease in the price of a\ product internally: Marketing objectives of company Consumer's expectation from company by past pricing Product features Position of product in product cycle Rate of product using pattern of demand Production and advertisement cost Uniqueness of the product\ \ **[External Factors]** The following are the external factors that have an impact on the increase and decrease in the price of a product: Open or closed market Consumer behavior for given product Major customer negotiation Variation in the price of supplies Market opponent product pricing Consideration of social condition Price restricted as per any governing authority **[The Significance of Manage Pricing Decisions]** Most businesses employ many pricing models.\ Differential and Competitive pricing strategies are utilized by retailers and e-commerce\ firms. They have seasonal promotions. Bulk purchasers save money per item. Bigger\ stores match prices on everything they sell.\ \ **[A company\'s inability to appropriately price its goods can have numerous consequences:]** If you set your prices too cheap, you risk losing out on revenue or having clients\ think your product is \"less valuable.\"\ When prices are excessively expensive, clients leave because they can\'t justify\ the expense given the value.\ Having a price structure that is too complex to comprehend does not attract new\ customers.\ Your potential consumer base is significantly reduced if price levels are\ overlooked.\ **[\ What is managing marketing channels logistics and supply chain?]** Managing marketing channels, logistics, and supply chains involves overseeing\ the various activities and processes that ensure products and services move efficiently\ from production to the end consumer.\ \ **[Marketing Channels]** Marketing channels are the pathways through which products or services flow\ from the manufacturer to the end consumer. They involve various intermediaries and\ can be direct or indirect.\ \ ***Types of Marketing Channels***\ **[Direct Channels]**: The manufacturer sells directly to the consumer, bypassing\ intermediaries. Examples include company-owned retail stores, e-commerce websites,\ and direct sales teams.\ **[Indirect Channels]**: Involves intermediaries such as wholesalers, distributors, and\ retailers who facilitate the sale of products to the end consumer. ***Channel Members\ *[Wholesalers]**: Purchase large quantities from manufacturers and sell to retailers or\ other businesses.\ **[Distributors:]** Act as intermediaries that handle the logistics and distribution of products\ to various retailers or directly to consumers.\ **[Retailers]**: Sell products directly to the final consumer. ***Channel Design and Management\ *[Channel Structure]**: Deciding on the number of intermediaries and their roles (e.g.,\ single or multiple channel levels).\ **[Channel Relationships]**: Building and managing relationships with channel partners to\ ensure cooperation and alignment with business\ \ goals.\ **[Channel Strategy]**: Developing strategies for channel selection, market coverage, and\ competitive advantage.\ ***\ Supply Chain Management*** **[Supply chain management (SCM)]** involves the coordination and management of all\ activities involved in sourcing, procurement, production, and distribution of goods.\ \ ***Key Components of Supply Chain Management*** **[Sourcing and Procurement]**: Identifying and managing suppliers, negotiating contracts,\ ensuring the availability of raw materials or components.\ **[Production]**: Managing manufacturing processes, quality control, and inventory levels.\ **[Logistics:]** Overseeing the transportation, warehousing, and distribution of products.\ **[Demand Planning]**: Forecasting customer demand and aligning supply chain activities\ to meet that demand efficiently.\ **[Order Fulfillment:]** Ensuring that customer orders are processed, packed, and delivered\ accurately and on time. ***Supply Chain Strategies*** **[Just-in-Time (JIT):]** Reducing inventory levels by receiving goods only as they are\ needed in the production process.\ **[Just-in-Case (JIC):]** Maintaining higher inventory levels to mitigate the risk of stockouts\ and disruptions.\ **[Lean Supply Chain]**: Streamlining operations to minimize waste and increase\ efficiency.\ **[Agile Supply Chain]**: Being flexible and responsive to changes in demand and market\ conditions. **[Promotion]** is a key component of marketing, utilizing various communication\ strategies to inform, persuade, or remind customers about a product, service, or brand.\ The promotion mix is made up of five essential elements: digital and social media\ marketing, advertising, sales promotion, public relations, and personal selling. Each of\ these elements plays a distinct role in enhancing the overall effectiveness of marketing\ campaigns. **[Personal selling]** involves direct\ customer engagement to build relationships and close deals, making it a vital part of the\ promotion mix. By effectively utilizing each aspect of the promotion mix, marketing\ managers can foster strong customer relationships, boost sales, and strengthen brand\ loyalty.\ \ ***Promotion Mix Element\ *[Digital and Social Media Marketing]*\ ***Promotion using digital tools like\ computers and smartphones lets\ customers interact without needing a\ salesperson. This approach, known as\ digital marketing, allows for easy\ back-and-forth communication between the customer and the business.\ \ **[Advertising\ ]**This refers to a paid form of marketing\ that is less personal and is used to reach\ one or more target markets. Examples of\ this type of media include magazines,\ newspapers, and outdoor advertising like billboards. **[Sales Promotion\ ]**This approach offers incentives to\ encourage customers to purchase a\ product or motivates salespeople or\ others in the distribution channel to sell it.\ It\'s typically used alongside other\ promotional methods rather than on its\ own. Examples of sales promotion tools\ for customers include coupons, rebates,\ and sweepstakes, while incentives for\ salespeople or channel members often\ involve bonuses or prizes for promoting a\ specific product. **[Public Relations (PR)\ ]**This method systematically aims to shape\ the attitudes, opinions, and behaviors of\ customers and others. It is often carried\ out through publicity, an unpaid and less\ personal form of promotion, typically\ delivered through news stories or\ mentions at public events.\ \ ***Capabilities of Promotions and Examples of Each*** **1. To Inform**\ - Indicate features when introducing new products or making product modifications\ - Provide explanation of product functionality\ - Articulate what a company and its brands stand for in order to develop a clear image\ - Discuss various uses and applications for the product\ **2. To Persuade**\ - Impact customer perceptions of a product, especially in comparison to competitors\' products\ - Get customers to try a product, hopefully resulting in a more permanent switch from a competitor\ - Influence customers to purchase right now due to some strong benefit or need\ - Drive customers to seek more information online or through a salesperson\ **3. To Remind**\ - Maintain a customer relationship with a brand\ - Provide impetus for purchase based on some impending event\ \ \ **Elements of the Marketing Manager\'s Role in Promotional Strategy** The role of a marketing manager in promotional strategy involves a broad understanding of various promotional elements, particularly as much of this work is outsourced to specialized agencies like advertising and PR firms. While companies often separate personal selling from marketing or use external distributors, it remains crucial for marketing managers to grasp the fundamentals of promotion. This knowledge ensures effective integration of external contributions into a coherent marketing strategy. Marketing managers must navigate several key responsibilities: identifying target audiences, setting promotional goals, choosing the right promotional mix, crafting the message, selecting media channels, preparing the budget, and measuring results. Balancing and integrating these elements is complex but vital, as the synergy between them creates a more impactful and sustainable brand message for customers.\ ***\ Selected Pros and Cons of Individual Promotion Mix Elements***\ **[Digital and Social Media Marketing]**\ ***[Pros]*** - Message customization without high costs of personal selling\ Strong relationship building, especially when customer can control the interaction\ ***[Cons -]*** Spam and other unwanted\ correspondence when targeting is poorly executed\ Reliance on CRM and database marketing requires constant updating\ **[Advertising]**\ ***[PROS]***- Many media choices\ Efficiently reaches large numbers of\ customers\ Great creative flexibility ***[CONS -]*** Shotgun approach reaches [ ] many outside the target***[\ ]*** Oversaturation of ads [ ] lessens impact [***\ ***] High production costs **[Sales Promotion]**\ ***[PROS]*** - Sales Promotion Stimulates purchase directly through incentive to buy\ Serves as an effective accompaniment to other promotion forms\ ***[CONS]-*** Can lead customers to continually wait for the next coupon, rebate, etc.\ Brand may be impacted by price-cutting image **[Public Relations]**\ ***[PROS]***- Unpaid communication seen as\ more credible than paid forms\ Association of offering with quality\ media outlet enhances brand\ ***[CONS-]*** Low control of how the message turns out\ Highly labor-intensive cost of\ mounting PR campaigns **[Personal Selling]**\ ***[PROS]***- Strong two-way communication of ideas\ Directly eases customer confusion\ and persuades purchase ***[CONS-]*** Very expensive cost per [ ] customer contact***[\ ]*** Salesperson may go \"off [ ] message\" from brand to [ ] secure the sale\ \ \ ***[Push and Pull Promotional Strategies]*** Marketing managers use two main approaches to promotional strategy: push and pull. In a push strategy, the focus is on getting the product into the distribution channel. This involves promoting the product to retailers or distributors who then push it to consumers. This approach often uses personal selling and sales promotions aimed at channel members.\ In contrast, a pull strategy focuses on creating demand directly from consumers. This is achieved through advertising, consumer promotions, public relations, or direct marketing, which encourages consumers to seek out the product. As a result, retailers are motivated to stock the product. In practice, most promotional strategies use a mix of both push and pull methods, balancing them according to what best suits the product and market.\ \ ***[Hierarchy Of Effects (AIDA) Model]*** In developing and executing promotional strategy, it is important that marketing managers remember that customers pass through purchase decision processes in three steps: cognitive (learn), affective (feel), and behavioral (do). Here we illustrate one popular version of such models, the AIDA model, so named because the effects (or stages) build in this order: Attention (or Awareness). Interest, Desire, and Action. The attention stage correlates to the cognitive stage of buyer decision making, the interest and desire stages to the affective stage, and the action stage to the behavioral stage.\ \ \ **[Attention]**- If target customers are essentially unaware of an offering, most of the investment in communication must be in raising awareness and gaining their attention. Depending on the situation, this may involve developing the customer\'s awareness for a whole new set of customer needs and wants, as well as revealing that your product exists to address those needs and wants. **[Interest]**- To translate customer attention into interest requires persuasive communication. For more technical or complicated products, this means beginning to inform customers more specifically about what a product offering can do for them-how it helps fulfill needs and wants. **[Desire]**- Moving from interest to desire means that a customer has to move past a need and begin to really want that specific product. Promotion feeds desire through strong persuasive communication. At this stage, salespeople and customized direct and interactive marketing enter the promotion mix.\ \ **[Action]**- The action stage is the purchase itself.***[\ ]*** ***[The Role of Marketing in Communicating Value]*** As access to the internet has grown and a wide range of internet access points has proliferated, digital marketing has become a critical component of promotional strategy. Digital marketing refers to the marketing of value offerings through the use of digital technologies (for example, desktops, laptops, tablets, and smartphones). Digital technologies have enabled individuals to access vast amounts of information almost instantaneously and have revolutionized the way organizations connect and communicate with their customers. **Examples of Digital options for Marketing Information Sharing** Infographics: Visual summaries that convey complex information quickly and attractively.\ Webinars: Live or recorded online presentations that educate and engage audiences on specific topics.\ Videos: Dynamic content that can demonstrate products, tell stories, or explain concepts. Blog Posts: Written content that provides in-depth information, insights, or updates on relevant topics.\ FAQs: A list of common questions and answers that help clarify details for customers.\ Testimonials: Customer reviews or success stories that build trust and credibility.\ \ ***Three Types of Digital Media*** **[Paid Media]** - refers to marketing communication channels requiring that the marketer pay someone else for customer access. In digital marketing, access to paid media can generally be purchased on a per-unit basis.\ ***[Owned Media]***- refers to marketing communication channels that the marketer\'s organization has complete control over. The content created on an organization\'s website is an example of owned media.\ ***[Earned Media]***- refers to the case where either a customer or a commercial entity (such as a news media organization) chooses to act as a marketing communication channel for the dissemination of information associated with the marketer\'s organization at no cost.\ \ **[Digital Advertising]** Digital advertising is the creation and execution of an advertisement via any form of digital media. Like other digital marketing efforts, digital advertising benefits from the richness of data that is generated by the customer\'s exposure to the ad, which in turn allows for a more granular review of the ad\'s performance. This measurement capability is especially clear when a digital ad drives a customer to take a specific action on a website that has a clear monetary value, such as when an ad contains a promotional offer to purchase a product at a discounted rate and clicking on it leads to a page where the offer can be redeemed and the purchase made. The ad\'s value generating sales can be directly measured by how many customers were exposed to the ad and how many of those exposed customers redeemed the offer. Unlike most non-digital types of advertising, with this approach the promotional strategy can be adjusted quickly if the data indicate that the current message isn\'t working\ \ Display Ads **[Display Ads]**\ that are displayed on a given page within a website that clearly demarcates the ad from the webpage\'s primary content (what the customer navigated to that page for) are called display ads. Display ads can take on multiple forms, including banner ads and interstitials. Banner ads are boxes embedded into a website that can contain graphics, text, or video elements, as well as an embedded hyperlink to take the viewer to a webpage intended to facilitate subsequent interactions between the viewer and the advertiser.