Marketing Management

Unit 1.
Nature, Significance and scope of Marketing:
Marketing is an ancient art & is everywhere. Formally or informally, people &
organizations engage in a vast number of activities that could be called marketing. Good
marketing has become an increasingly vital ingredient for business success. Marketing
deals with identifying & meeting human & social needs or it can be defined as ―meeting
needs profitably. Marketing management is an art and science of choosing target markets
and getting, keeping and growing customers through creating, delivering and
communicating superior customer value. Or ― Delivering a higher standard of living.
E.g. The success of Indica, the first indigenously designed car by Tata Motors. Backed by
strong customers’ delight, the company designed a vehicle with luggage space & legroom
& offered it a price easily available & affordable to middle class.
(2) Gillette launched its March III razor.
Marketing persons are involved in marketing 10 types of entities: goods services, events,
experiences, places, persons, organizations, properties, information and ideas. Therefore,
ideal marketing should result in a customer who is ready to buy.

Importance of Marketing:
Financial success or achievement of any organization depends upon marketing ability of
that organization. There should be adequate demand for products and services so the
company can make profit. Therefore, many companies created chief marketing officer
(CMO) position to put marketing on a more equal footing with other level executives.
Marketing is tricky & large well known business such as Levi ‘s, Kodak, Xerox etc. had to
rethink their business models, Even Microsoft, Wal-Mart, Nike who are market leaders
cannot relax.
Thus, we can say that making the right decision is not easy & marketing managers must
take major decisions about the features of the product prices & design of the product,
where to sell products and expenditure on sales and advertising. Good marketing is no
accident but a result of careful planning & execution. Marketing practices are
continuously being advanced to increase the chances of success. But marketing excellence
is rare & difficult to achieve & is a never-ending task.
E.g. NIRMA – The brand icon of young girl has adorned the package of Nirma washing
powder. The jingle has become one of the enduring times in Indian advertising.

Nature of Marketing
This includes various related points like:
1. Marketing is a part of the total Environment:
The business environment defines its threats and opportunities. A marketing system is
directly related to the distribution and production of goods, ideas, services, place, and
persons for the satisfaction of human needs. However, it is better to look at the remote
and adequate environment of any marketing organization.
2. Marketing is Consumer-oriented:
A business is a work to satisfy human needs. The activities of marketing must be focussed
and directed at the customer. It involves the combination of various business activities
whose main objective is the gratification of customer needs and desires.
By satisfying the previous needs of the consumers and creating new needs or wants for
improved and better products, marketing sets the pattern of consumption and improves
the standard of living of the individuals.
3. Marketing is a Specialized Business Function:
In any business organization, the selling function did not require any special skill. But in
the previous days marketing requires a specialized skill, the management of a business
firm has to develop a business organization with a motive of absorbing new approaches,
new ideas, and new marketing demands.
4. Marketing as a Discipline:
The topic of marketing is an essential part of a business which has desired its existence
from economics.
After appearing from business, Marketing has got its strength from related areas-
psychology, law, sociology, anthropology, statistics, mathematics, because of the related
problems affecting heavily on consumer behaviour, research canon consumer needs,
advertising media, legal aspects of marketing, promotion, pricing method, etc.
5. Marketing is a System:
Marketing is a system including several inter-dependent and sub-systems. It is right that a
system might vary according to changes in the concept. In simple words, the marketing
system may be called as a socio-economic process.
In another sense, the marketing system is a combination of the firm and society.
6. Marketing is a Social Function:
Marketing is a kind of social function because it requires interaction with the various
segment of society. It involves the combination of various business activities whose main
objective is the satisfaction of consumer desires and needs.
7. Marketing Starts and Ends with the Consumer:
Traditional marketing is concerned only with the flow of goods or services from the
manufacturer to the consumer. Under consumer-oriented marketing, it is essential to
understand what the consumers really want. It is possible when data of information are
collected from the consumers.
So, that is the reason, marketing information system and marketing research have
emerged as a full-fledged function of marketing.
8. Marketing creates mutual relationships:
A customer is the focus of all marketing activities. But during the last previous years, the
focus has shifted to the way of doing business, i.e., the strategic approaches of marketing.
Here the means of marketers are their experience and knowledge, and the end result is in
the form of a mutual better relationship. Marketing is everything that results in mutually
better relationships with potential buyers or customers.

Scope of Marketing
Product Planning
A product refers to a bundle of benefit that offers satisfaction to the consumers. Product
planning starts with the generation of the idea and continues until the product is ready to
be launched in the market. to create a successful product the company must understand
the needs of the consumer and the currently available competition in the market.
Advertising
is the best tool of marketing. It makes the consumers aware of the product that is going
to hit the market. Through marketing, big companies are able to condition our
subconscious mind about the goodness of the product. The advertisement also helps to
increase the sale drastically and ultimately the profits. Advertising can be done through
various media sources such as newspapers, television, magazines, hoardings, internet etc.
Pricing Policies
Determination of the pricing policies of the product is crucial because good pricing policies
will help in attracting more consumers. generally, consumers are highly-priced elastic
which means lower the price, higher will be the demand and higher the price, lower will
be the demand. Cost of manufacturing the product, government policies, marketing,
competitors price etc. are the factors that influence the price of the product.
Distribution
The selection of the proper distribution channel is very necessary for the product to
attract new consumers towards it. selecting a distribution channel means defining the
route of the goods they will take while reaching from the producer to the ultimate
consumer. Wholesaling and retailing are the two most popular distribution channels.
Selling
It refers to the process of selling what is manufactured by the company as a product in the
market. selling refers to the supply of goods and services directly or indirectly to the
targeted consumers. Selling involves performing and managing various activities
simultaneously such as approaching to the new consumers, distributing the free samples,
making sales on a huge discount and getting feedback.
Packaging
Packaging is essential for delivering the product safely and secure a good image in the
consumer’s mind. it also helps in the goodwill formulation. Packaging involves designing
and producing the external covering for the product which will keep the product safe and
hygienic. packaging is inclusive of the product information which adds to the appeal of the
product which ultimately helps in the sales promotion.

Company Orientations towards the market place

Businesses orientate themselves to the marketplace in different ways. The theory of
company orientation towards the marketplace categorises businesses into one of five
main orientations – production, product, selling, marketing and holistic marketing.
The production concept focuses on production efficiency, low cost and mass distribution.
It assumes that consumers prefer products that are cheap and easy to obtain. Companies
pursuing this strategy are effectively stating they can deliver their product to the end
customer quicker and cheaper than their rivals.
At odds with the production concept is the product concept. The founding belief of this
concept is that consumers prefer higher quality products that are innovative, more
effective, or more styled than their cheap and easy to obtain counterparts. The
assumption of this concept is that customers are able to detect and appreciate the higher
quality.
The selling concept is applicable to companies that have products or services that would
not sell without significant selling effort. Examples where a selling orientation strategy
may be required are with unrequired goods, or where there is a large stock surplus. This
concept can be risky as the hard sell can alienate their customers and assumes that the
sold product will not be returned.
The marketing concept is where the company is more focused on the needs of the
customer than on the selling. The first three concepts are product focused and rely on the
company finding the right customer for their products. The marketing concept is different
in that it is concerned with finding the right products for their customers.
The holistic marketing concept is a much more wide-reaching orientation and is
increasingly being used in preference to the other models. Holistic marketing states that
all facets of marketing matter and is broken down into four main groups – internal
marketing (employees, departments, management), integrated marketing
(communication, products and services, channels), performance marketing (revenue,
brand, ethics, environment, legal and community) and relationship marketing (customers,
channels and partners).
Basic Marketing Concept – Getting the competitive edge
Marketing provides businesses with a competitive edge, since that is what they need to
do, to gain loyal customers.
Businesses achieve this by convincing potential customers that their product is the nearest
thing that satisfies their needs and wants and do it consistently, with the result that the
loyal customer starts buying from them without looking at the competition.
This is what all businesses dream of and achieving this is possible only with a solid
marketing plan in place.
With the advent of the internet, there are several marketing channels available to
businesses, besides traditional marketing. All of them focus on engaging the customer.
Types of Marketing
Traditional marketing involves offline channels such as face-to-face selling, print
advertisements, direct mails, billboards, television and radio to grab the target market’s
attention.
Digital marketing uses the internet to reach its markets via websites, social media, video
sites, emails, mobile phones and apps and forums.
Social media marketing is a popular medium for businesses to connect with and engage
their audiences and is an effective brand builder and market research tool. This works
best when used in conjunction with other marketing strategies.
Mobile marketing. Considered the third screen, mobile is one of the main marketing
channels today, what with consumers getting their information on the go.
No matter what route the marketer decides to take, two or more of the above will
inevitably overlap to offer customers the best marketing experience since the goal is to
reach customers where they are rather than wait for them to approach the business.

Strategic Market Planning

Market Planning is an ongoing process through which the company creates marketing
strategies and plans its implementations in the target market. The process taken into
account the current position of the company, helps in identifying the promotional
opportunities & then evaluating these opportunities. Target market is identified through
comprehensive research. Marketing is a complicated process and mostly cannot be
planned in short period of time. The strategic market planning takes into account long
term and short-term view of the market and considers various parameters to plan
according to the target market. The strategic market planning has three stages:
1. Segmentation of the market and customers
2. Profiling of the market segments
3. Development of the actual marketing strategy
Scanning the Marketing Environment
Environmental scanning is a review of external sources to discover factors that impact a
business. The main goal is to identify and consult sources outside the business. Although
these sources are uncontrollable from the business's perspective, it is important to
consider them in decision-making processes.
One popular method of environmental scanning is SWOT analysis. Each letter stands for
one area to review: Strengths, Weaknesses, Opportunities, and Threats. The strengths and
opportunities are factors within the company, and the weaknesses and threats come from
sources outside the company.
When companies are putting resources and time toward an environmental scan, they
want the results to be as comprehensive as possible. Most scans include a thorough look
at competition, economics, technology, legal issues, and social/demographic factors. Let's
dive a little deeper into each of these areas using The Pool Stop, an imaginary small
business that sells and services swimming pools.
Environmental Scanning is a process of analyzing internal and external factor of the
environment. Environment scanning is a process in which the organization undertakes a
study to identify the opportunities and threats in an industry. Environmental scanning is a
part of SWOT Analysis. The information obtained through environmental scanning can be
used by leaders to design new objectives and strategies or modify existing objectives and
strategies. An organization must be agile in responding to environmental challenges while
making most of the available opportunities.
Importance of Environmental Scanning
Environmental scanning is an important aspect to predict future and be prepared in the
volatile business environment. The frequency of environmental scanning depends on the
needs of the organization. An organization operating in an industry which is highly
impacted by technological innovations needs to constantly monitor its environment and
use the results to design its processes. On the other hand, some organizations might need
to conduct an environmental scan on an ad-hoc basis.
Areas Covered in Environmental Scanning
a) Economic conditions
b) Competition
c) Global opportunities
d) Employment trends
e) Technological advancement
f) Industry
g) Geo-political climate
Hence, this concludes the definition of Environmental Scanning along with its overview.

Marketing research
Marketing research is "the process or set of processes that links the producers, customers,
and end users to the marketer through information used to identify and define marketing
opportunities and problems; generate, refine, and evaluate marketing actions; monitor
marketing performance; and improve understanding of marketing as a process. Marketing
research specifies the information required to address these issues, designs the method
for collecting information, manages and implements the data collection process, analyses
the results, and communicates the findings and their implications."
It is the systematic gathering, recording, and analysis of qualitative and quantitative data
about issues relating to marketing products and services. The goal of marketing research is
to identify and assess how changing elements of the marketing mix impacts customer
behaviour. The term is commonly interchanged with market research; however, expert
practitioners may wish to draw a distinction, in that market research is concerned
specifically with markets, while marketing research is concerned specifically about
marketing processes.

Building Customer Value, Satisfaction and Loyalty

Creating loyal customers is at the heart of every successful business.
Managers who believe the customer is the company's only true profit centre consider the
person serving the customer as the most important person in the organization. The rest of
only support staff to him. Some companies have been founded with the customer-on-top
business world, and customer advocacy has been their strategy-and competitive
advantage.
Why does a user become a loyal customer? Why does he make the first buy from a
company? Customers tend to be value maximisers or perceived value maximisers, within
the bounds of search costs and limited knowledge, mobility and income. Customers
evaluate various offers available to satisfy a need and estimate the perceived value of
each offer. Customer-perceived value (CPV) is the difference between the prospective
customer's evaluation of all the benefits and all the costs of an offering. Total customer
benefit is the perceived monetary value of the bundle of economic, functional, and
psychological benefits customers expect from a given market offering because of the
products, accompanying services and image involved. Total customer cost is the perceived
bundle of costs customers expect to incur in evaluating, obtaining, using, and disposing of
the given market offering, including monetary, time, energy, and psychological costs.
If customers are perceived value maximisers, firms also have to try to increase that value.
The marketers can try to increase the benefit bundle but improving the product,
accompanying services and improving the image related feature of the product and their
organization. They can also try to reduce the cost incurred by the customers by reducing
the price (by emphasizing rational cost reduction of products and services), improving
their marketing communication so that customer spend less on search and evaluation and
improving their sales process so that customer spend less on purchase activity.
Companies often conduct value analysis to compare their products with competitor's
products to identify areas that can be taken up for improvement.
Maximizing Customer Life Time Value
The amount of goods a customer is likely to buy from the company and thereby
contribute to its profits can be estimated from the past buying behavior and anticipated
trends. This gives an estimate of customer life time value.Customer acquisition cost has to
be less than it and also if a customer leaves the company it is a value loss and this can be
also be calculated. These calculations give the idea that company have to take actions to
retain customers. Relationship marketing emerged from this finding. Companies have to
take actions to retain customers.
Cultivating Customer Relationships
Customer relationship management emerged as an important marketing area once
relationship marketing concept was created. One aspect of CRM is maintenance and use
of detailed information about individual customers and their touch points with the
company.
Customer Databases and Database Marketing
A customer database is an organized collection of comprehensive information about
individual customers or prospects that is current, accessible, and actionable for marketing
purposes - lead generation, lead qualification, sale of a product or service, or maintenance
of customer relationships. Database marketing is the process of building, maintaining, and
using customer databases and other databases to contact, transact, and build customer
relationships.
Benefits of Database Marketing
1. Prospects can be identified.
2. Decisions regarding which customers should receive a particular offer can be taken.
3. Customer loyalty can be increased by sending information of particular interest to a
customer.
4. Customer purchases can be reactivated by sending a timely reminder.
5. Properly maintained and used database will help in preventing some marketing
mistakes or errors.
Problems in Using Databases
1. There is a significant cost involved in developing and maintaining a database.
2. Employees have to trained in using databases and taking marketing decisions.
3. Some customers may not like the database marketing initiatives.
4. The assumptions behind CRM may not always hold true.

UNIT 2
Consumer behaviour
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Consumer behaviour is the study of individuals, groups, or organizations and all the
activities associated with the purchase, use and disposal of goods and services, including
the consumer's emotional, mental and behavioural responses that precede or follow
these activities. Consumer behaviour emerged in the 1940s and 50s as a distinct sub-
discipline in the marketing area.
Consumer behaviour is an inter-disciplinary social science that blends elements from
psychology, sociology, social anthropology, anthropology, ethnography, marketing and
economics, especially behavioural economics. It examines how emotions, attitudes and
preferences affect buying behaviour. Characteristics of individual consumers such as
demographics, personality lifestyles and behavioural variables such as usage rates, usage
occasion, loyalty, brand advocacy, willingness to provide referrals, in an attempt to
understand people's wants and consumption are all investigated in formal studies of
consumer behaviour. The study of consumer behaviour also investigates the influences,
on the consumer, from groups such as family, friends, sports, reference groups, and
society in general.
The study of consumer behaviour is concerned with all aspects of purchasing behaviour –
from pre-purchase activities through to post-purchase consumption, evaluation and
disposal activities. It is also concerned with all persons involved, either directly or
indirectly, in purchasing decisions and consumption activities including brand-influencers
and opinion leaders. Research has shown that consumer behaviour is difficult to predict,
even for experts in the field. However, new research methods such as ethnography and
consumer neuroscience are shedding new light on how consumers make decisions.
Customer relationship management (CRM) databases have become an asset for the
analysis of customer behaviour. The voluminous data produced by these databases
enables detailed examination of behavioural factors that contribute to customer re-
purchase intentions, consumer retention, loyalty and other behavioural intentions such as
the willingness to provide positive referrals, become brand advocates or engage in
customer citizenship activities. Databases also assist in market segmentation, especially
behavioural segmentation such as developing loyalty segments, which can be used to
develop tightly targeted, customized marketing strategies on a one-to-one basis

Which factors influence consumer behaviour?

8 factors that influence consumer behaviour the most
– Age.
It is undoubtedly an essential factor. The reaction, as a consumer, of an 18-year-old
teenager has nothing to do with that of a 68-year-old veteran. The needs are also
different. With regard to the latter, there is a curious phenomenon. At the moment we
are born, our requirements are usually very basic (food, care, etc.). As we reach adulthood
and enter into it, our life becomes more complex and with it our needs become more
complex. In recent years, however, old age brings us back to more fundamental demands,
such as those of our childhood.
– Culture.
This is another essential factor. Culture (and education as part of it) largely determines the
individual’s way of being and the decisions they make. The purchasing attitude of a
person educated in the Caucasus mountains has little to do with that of a person trained
in technological Tokyo. Their needs will also be different. It will be something you have to
bear in mind, especially if you want your products to reach a large number of people living
in different parts of the world.
– The socio-economic level.
Some entrepreneurs, for example in the luxury goods sector, know well what we are
talking about. Nothing has anything to do with how a wealthy person buys with someone
who has difficulty making ends meet. Both the products and how to approach one group
or another will differ greatly. Some will be reached through factors such as aesthetics and
exclusivity, and for others conditions such as durability or price will be more important.
But don’t forget, everyone deserves the same respect.
– Perception.
We humans are sensory beings. We have a series of receptors (commonly known as
senses: sight, hearing, smell, taste and touch) that serve us to move around the world,
and of course to make decisions.
Marketing and advertising are well aware of the importance of perception as one of the
factors influencing consumer behaviour. Concepts such as sensory marketing, or even
emotional marketing have been developing over the last few decades on the knowledge
of the influence of perceptions in making the purchase decision. However, it is worth
remembering that there are many factors that influence people’s perception of a product
or service, such as brand image, customer experience, etc.
– Attitude.
There are needs and needs, and to each their own. It has nothing to do with buying paper
towels or having a cup of coffee with buying an anniversary present or a home. Some
purchases are routinary, almost thoughtless, as a habit, but people can spend days or
even weeks trying to decide about others. The attitude with which your potential
customers approach your products or services will depend on what they are. Think about
this when planning what you want to offer and how you want to do it.
– Trends.
Either we like them or not, trends exist. Some people get off – to a greater or lesser extent
– their influence, while others are so convinced of their importance that they get to call
themselves “fashion-victims”. Trends are an expression of market trends, that powerful
force that every businessman would want to be able to foresee. Whatever your sector,
you’ll have to take them into account if you want to survive.
– Personality.
It is undoubtedly the most difficult factor to differentiate. The personality of a human
being is influenced by factors such as those we have already seen (age, culture, socio-
economic level, etc.), but also by many others. Education, or life experience are crucial.
But also genetic and biological conditioning factors. It is very difficult to know in depth the
personality of human beings. Even self-knowledge is not an easy task. But there is no
doubt that personality is a determining factor when deciding on the purchasing process.
That’s why it’s so important to know your customers as well as possible.
– Experience.
It is undoubtedly a determining factor. People have memory, and they also use it when
they are shopping. That’s why customer experience is so important in the purchasing
process. Getting the customer to have a good memory of your products or services is as
meticulous a task as it is important. If you don’t succeed, it will be difficult for your
company to survive for a long time. If you do, they’ll be more likely to come back to you
and speak well of your business to friends, family and acquaintances.
These are some of the factors that influence consumer behaviour. Remember that they
are free and their will is sovereign. What can you do to make them decide to buy your
products or services? A good start is to offer excellent customer service.
There are many ways to do this, and tools that can help you, such as Integria IMS. Integria
IMS is a software that, among other functionalities, includes an incident management
system that can help you improve customer service in your company.
7 Important Factors That Influence The Buying Decision Of A Consumer
1. Economic Factor
The most important and first on this list is the Economic Factor. This one is the main
foundation of any purchasing decision. The reason is simple people can’t buy what they
can’t afford. The need of a product also doesn’t play a role here, but the most important
thing is affordability.
2. Functional Factor
The factor is totally about needs, backed by a logic that what makes sense and also fits in
the best interest of the customer. This one factor also plays a very important role in the
buying decision.
3. Marketing Mix Factors
There are 4 components in the marketing mix, i.e. product, pricing, promotion and place
of distribution and each of these components have a direct or indirect impact on the
buying process of the consumers. The consumers consider various things like the
characteristics of the product, price charged, availability of the product at the required
location and much more.
4. Personal Factors
The personal factors include age, occupation, lifestyle, social and economic status and the
gender of the consumer. These factors can individually or collectively affect the buying
decisions of the consumers.
5. Psychological Factor
When it comes to the psychological factors there are 4 important things affecting the
consumer buying behaviour, i.e. perception, motivation, learning, beliefs and attitudes.
6. Social Factors
Social factors include reference groups, family, and social status. These factors too affect
the buying behaviour of the consumer. These factors in turn reflect an endless and
vigorous inflow through which people learn different values of consumption.
7. Cultural Factors
Cultural factors have a subtle influence on a consumer’s purchasing decision process.
Since each individual lives in a complex social and cultural environment, the kinds of
products or services they intend to use can be directly or indirectly be influenced by the
overall cultural context in which they live and grow. These Cultural factors include race
and religion, tradition, caste and moral values.
Consumer behaviour can indicate different things like how individuals or groups choose to
buy, use and dispose goods or services, to satisfy their needs and desires. Hence it is
important to understand that the consumer behaviour is affected by several factors .
Segmenting Consumer and Business Markets
Segmentation bases (variables) are used to identify particular characteristics, attributes,
or traits of consumers or businesses. Consumer markets are typically segmented using 5
bases, including geographic, demographic, psychographic, benefit, and usage-rate
segmentation.
Market segmentation can be defined as the process of dividing a market into different
homogeneous groups of consumers.
Market consists of buyers and buyers vary from each other in different ways. Variation
depends upon different factors like wants, resources, buying attitude, locations, and
buying practices. By segmentation, large heterogeneous markets are divided into smaller
segments that can be managed more efficiently and effectively with products and services
that match to their unique needs. So, market segmentation is beneficial for the companies
serving larger markets.
Criteria for selecting Market Segments
Measurable
A segment should be measurable. It means you should be able to tell how many potential
customers and how many businesses are out there in the segment.
Accessible
A segment should be accessible through channels of communication and distribution like:
sales force, transportation, distributors, telecom, or internet
Durable
Segment should not have frequent changes attribute in it.
Substantial
Make sure that size of your segment is large enough to warrant as a segment and large
enough to be profitable
Unique Needs
Segments should be different in their response to different marketing efforts (Marketing
Mix).
Consumer and business markets cannot be segmented on the bases of same variables
because of their inherent differences.

Bases for Business Market Segmentation

Business market can be segmented on the bases consumer market variables but because
of many inherent differences like
Businesses are few but purchase in bulk
Evaluate in depth
Joint decisions are made
Business market might be segmented on the bases of following variables:
Company Size: what company sizes should we serve?
Industry: Which industry to serve?
Purchasing approaches: Purchasing-function organization, Nature of existing relationships,
purchase policies and criteria.
Product usage
Situational factors: seasonal trend, urgency: should serve companies needing quick order
deliver, Order: focus on large orders or small.
Geographic: Regional industrial growth rate, Customer concentration, and international
macroeconomic factors.

Target market
A target market is a group of customers within a business's serviceable available market at
which a business aims its marketing efforts and resources. A target market is a subset of
the total market for a product or service.
The target market typically consists of consumers who exhibit similar characteristics (such
as age, location, income or lifestyle) and are considered most likely to buy a business's
market offerings or are likely to be the most profitable segments for the business to
service.
Once the target market(s) have been identified, the business will normally tailor the
marketing mix (4Ps) with the needs and expectations of the target in mind. This may
involve carrying out additional consumer research in order to gain deep insights into the
typical consumer's motivations, purchasing habits and media usage patterns.
The choice of a suitable target market is one of the final steps in the market segmentation
process. The choice of a target market relies heavily on the marketer's judgement, after
carrying out basic research to identify those segments with the greatest potential for the
business.
Occasionally a business may select more than one segment as the focus of its activities, in
which case, it would normally identify a primary target and a secondary target. Primary
target markets are those market segments to which marketing efforts are primarily
directed and where more of the business's resources are allocated, while secondary
markets are often smaller segments or less vital to a product's success.
Selecting the "right" target market is a complex and difficult decision. However, a number
of heuristics have been developed to assist with making this decision
A target market is a group of customers (individuals, households or organisations), for
which an organisation designs, implements and maintains a marketing mix suitable for the
needs and preferences of that group.
Target marketing goes against the grain of mass marketing. It involves identifying and
selecting specific segments for special attention.Targeting, or the selection of a target
market, is just one of the many decisions made by marketers and business analysts during
the segmentation process.
Examples of target markets used in practice include:
Rolls-Royce (motor vehicles): wealthy individuals who are looking for the ultimate in
prestige and luxury
Dooney and Bourke handbags: teenage girls and young women under 35 years

7 Principles To Building A Strong Brand

Branding your business is one of the most important steps in building a company. It gives
your company a unique personality and establishes a differentiated position in the market
that attracts the right customers.
But for many start-ups, this can pose a challenge. Without the funding to hire large
branding agencies and with limited resources, start-ups often make common branding
mistakes such as not defining clear brand guidelines, which in turn neglects to give
potential customers a strong first impression.
1. Audit Your Marketplace
Start by looking at what your competition is doing well and what they are struggling with.
This will provide a good basis for you to find an angle that your company can leverage.
Start by identifying who your competitors are; and do your due diligence to identify the
right ones. Looking at a broad spectrum of competitors can lead you to analyzing
companies whose customer segment is vastly different than yours. And narrowing that
spectrum too much can lead to excluding companies whose customer is essentially the
same as yours.
2. Set Hard Deadlines When Making Creative Decisions
It can be easy to get stuck in the creative process and keep searching for that perfect logo,
tagline or the design of your website. While it can be difficult to put a schedule to the
creative process, setting deadlines will allow you to stay focused.
The creative process will allow you to develop new ideas and giving the team autonomy
during this process is very important, but moving on to the innovation process in order to
implement those ideas is equally as important. Set a clear objective upfront of what the
creative team needs to accomplish, set deadlines, and let everyone on the team have
complete creative freedom.
3. Answer These Questions About Your Brand
Brandathon has companies go through an in-depth questionnaire developed by Andrew
Kippen, Head of Marketing of SpokenLayer to get them thinking about their brand
holistically. The exercise allows companies to give their brand a personality and takes
them through some of these fun and engaging questions:
What problem are you solving?
What is the sexiest trait about your service or product?
If your company was a person, who would it be? A celebrity? Yourself?
What would you never tell a potential customer about your company on a first date?
When potential customers say no thanks, generally what is the reason?
4. Get Help From Outside Your Company’s Walls
This could be an agency, a consultant, or simply another set of eyes. Just be sure not to
make decisions in a silo and rely on only your own opinion and that of your colleagues.
This can be detrimental because you may not have anyone on your team that feels
comfortable giving honest criticism; but that’s exactly what you need.
Sometimes the best way to think about your brand laterally is to have someone from the
outside looking in, who can see it from a different perspective.
5. Explore Leaner Creative Options
Mid to high level agencies can cost tens of thousands of dollars. New services like Working
Not Working and Brandathon exist to accelerate the creative process, and do it in a highly
targeted fashion, while also making it affordable. There are so many ways to stay within
limited startup budgets, whether it be services such as these, hiring freelancers or working
with interns graduating within a creative field.
6. Create A Brand Manifesto
Stick to your manifesto like it’s your bible. Your company’s declaration of beliefs and what
it stands for will create an emotional connection with your customers.
This may require outside help because creating a value structure is difficult. The help of a
copywriter to vocalize what your company stands for can go a long way. If you can afford
the expense, hire a copywriter with experience writing company manifestos. A clear brand
strategy will help you and your team align every message, campaign and interaction with
the customer, with your branding.
Red Bull is a great example of a company that looks at their brand laterally and aligns
their message with their branding. They create ads about pushing life to the limits and
extreme sports, not about their drink. This message speaks to their customers on an
emotional level and is very memorable.
7. Embrace the Feeling That You Will Never Be 100% Comfortable
If you’re not energized or emboldened by this reality, you may have a tough road ahead of
you trying to build a brand.
The competition is on your heels. For the weary this can be nerve wrecking and it can be
easy to fall into the trap of wanting to constantly change what you’ve come up with. But
doing so, will have the opposite effect because in order for branding to be effective, it
needs to be consistent. Remember, branding is part of your company’s DNA and promotes
recognition.

Product management
Product management is an organisational lifecycle function within a company dealing with
the planning, forecasting, and production, or marketing of a product or products at all
stages of the product lifecycle. Similarly, product lifecycle management integrates people,
data, processes and business systems. It provides product information for companies and
their extended supply chain enterprise. The role may consist of product development and
product marketing, which are different (yet complementary) efforts, with the objective of
maximizing sales revenues, market share, and profit margins. Product management also
involves elimination decisions. Product elimination begins with the identification of
elimination candidates, proceeds with the consideration of remedial actions, continues
with a projection of the impact on the business as a whole if a candidate product is
eventually eliminated, and concludes with the implementation stage, where management
determines the elimination strategy for an item.

Product Life Cycle Stages

The product life cycle has 4 very clearly defined stages, each with its own characteristics
that mean different things for business that are trying to manage the life cycle of their
particular products.
Introduction Stage – This stage of the cycle could be the most expensive for a company
launching a new product. The size of the market for the product is small, which means
sales are low, although they will be increasing. On the other hand, the cost of things like
research and development, consumer testing, and the marketing needed to launch the
product can be very high, especially if it’s a competitive sector.
Growth Stage – The growth stage is typically characterized by a strong growth in sales and
profits, and because the company can start to benefit from economies of scale in
production, the profit margins, as well as the overall amount of profit, will increase. This
makes it possible for businesses to invest more money in the promotional activity to
maximize the potential of this growth stage.
Maturity Stage – During the maturity stage, the product is established and the aim for the
manufacturer is now to maintain the market share they have built up. This is probably the
most competitive time for most products and businesses need to invest wisely in any
marketing they undertake. They also need to consider any product modifications or
improvements to the production process which might give them a competitive advantage.
Decline Stage – Eventually, the market for a product will start to shrink, and this is what’s
known as the decline stage. This shrinkage could be due to the market becoming
saturated (i.e. all the customers who will buy the product have already purchased it), or
because the consumers are switching to a different type of product. While this decline
may be inevitable, it may still be possible for companies to make some profit by switching
to less-expensive production methods and cheaper markets.

Production decisions
In decisions on producing or providing products and services in the international market it
is essential that the production of the product or service is well planned and coordinated,
both within and with other functional area of the firm, particularly marketing. For
example, in horticulture, it is essential that any supplier or any of his "outgrower" (sub-
contractor) can supply what he says he can. This is especially vital when contracts for
supply are finalised, as failure to supply could incur large penalties. The main elements to
consider are the production process itself, specifications, culture, the physical product,
packaging, labelling, branding, warranty and service.
Production process
The key question is, can we ensure continuity of supply? In manufactured products this
may include decisions on the type of manufacturing process - artisanal, job, batch, flow
line or group technology. However in many agricultural commodities factors like
seasonality, perishability and supply and demand have to be taken into consideration.
Table 8.1 gives a checklist of questions on product requirements for horticultural products
as an example6
Table 8.1 Checklist of questions on product requirements by market
Existing sources of supply
Recommendations for new suppliers, or increased supply
Current important suppliers?
Seasonality of supply, start of season, peak season and end of season?
Packaging specifications, weight of produce per packaging unit, type of packaging?
Grading and quality standards?
Prices obtained, and net profit returned to farmer, average price, maximum and minimum
prices, effect of different quality standards on price?
Problems with existing suppliers and produce?
Volumes sold daily, monthly, annually?
Popularity trend?
Types of buyers and consumers?
Use of crop?
Factors affecting sales, e.g. weather, special festivals, day of arrival in market?
Is the crop stored; if so where and by whom?
Best period of supply?
Type and size of packaging material?
Grading and quality standards:
*acceptable size ranges?
*whether different sized produce should be packed separately or jumble-packed?
*state of ripeness and should produce of the same ripeness be packed together?
*acceptable level of blemishes?
*important appearance characteristics such as colour, variety, shape, presence of stalks,
bunch size?
Budget gross and net prices?
Volumes required.
Frequency of shipment, best day and arrival time on market?
Transport arrangements, e.g. whose responsibility is it to arrange transport?
Storage arrangements, if any?
Potential and techniques for developing sales?
Quantity and quality of horticultural crops are affected by a number of things. These
include input supplies (or lack of them), finance and credit availability, variety (choice),
sowing dates, product range and investment advice. Many of these items will be catered
for in the contract of supply.
Specification
Specification is very important in agricultural products. Some markets will not take
produce unless it is within their specification. Specifications are often set by the customer,
but agents, standard authorities (like the EU or ITC Geneva) and trade associations can be
useful sources. Quality requirements often vary considerably. In the Middle East, red
apples are preferred over green apples. In one example French red apples, well boxed, are
sold at 55 dinars per box, whilst not so attractive Iranian greens are sold for 28 dinars per
box. In export the quality standards are set by the importer. In Africa, Maritim (1991)2,
found, generally, that there are no consistent standards for product quality and grading,
making it difficult to do international trade regionally.
Culture
Product packaging, labeling, physical characteristics and marketing have to adapt to the
cultural requirements when necessary. Religion, values, aesthetics, language and material
culture all affect production decisions. Effects of culture on production decisions have
been dealt with already in chapter three.
Physical product
The physical product is made up of a variety of elements. These elements include the
physical product and the subjective image of the product. Consumers are looking for
benefits and these must be conveyed in the total product package. Physical characteristics
include range, shape, size, color, quality, quantity and compatibility. Subjective attributes
are determined by advertising, self image, labelling and packaging. In manufacturing or
selling produce, cognisance has to be taken of cost and country legal requirements.
Again a number of these characteristics is governed by the customer or agent. For
example, in beef products sold to the EU there are very strict quality requirements to be
observed. In fish products, the Japanese demand more "exotic" types than, say, would be
sold in the UK. None of the dried fish products produced by the Zambians on Lake Kariba,
and sold into the Lusaka market, would ever pass the hygiene laws if sold internationally.
In sophisticated markets like seeds, the variety and range is so large that constant watch
has to be kept on the new strains and varieties in order to be competitive.
Packaging
Packaging serves many purposes. It protects the product from damage which could be
incurred in handling and transportation and also has a promotional aspect. It can be very
expensive. Size, unit type, weight and volume are very important in packaging. For aircraft
cargo the package needs to be light but strong, for sea cargo containers are often the best
form. The customer may also decide the best form of packaging. In horticultural produce,
the developed countries often demand blister packs for mangetouts, beans, strawberries
and so on, whilst for products like pineapples a sea container may suffice. Costs of
packaging have always to be weighed against the advantage gained by it.
Increasingly, environmental aspects are coming into play. Packaging which is non-
degradable - plastic, for example - is less in demanded. Bio-degradable, recyclable,
reusable packaging is now the order of the day. This can be both expensive and
demanding for many developing countries.
Labelling
Labelling not only serves to express the contents of the product, but may be promotional
(symbols for example Cashel Valley Zimbabwe; HJ Heinz, Africafe, Tanzania). The EU is
now putting very stringent regulations in force on labelling, even to the degree that the
pesticides and insecticides used on horticultural produce have to be listed. This could be
very demanding for producers, especially small scale, ones where production techniques
may not be standardised. Government labelling regulations vary from country to country.
Bar codes are not widespread in Africa, but do assist in stock control. Labels may have to
be multilingual, especially if the product is a world brand. Translation could be a problem
with many words being translated with difficulty. Again labelling is expensive, and in
promotion terms non-standard labels are more expensive than standard ones.
Requirements for crate labelling, etc. for international transportation will be dealt with
later under documentation.

Packaging and labelling:

Packaging is the science, art and technology of enclosing or protecting products for
distribution, storage, sale, and use. Packaging also refers to the process of designing,
evaluating, and producing packages. Packaging can be described as a coordinated system
of preparing goods for transport, warehousing, logistics, sale, and end use. Packaging
contains, protects, preserves, transports, informs, and sells.In many countries it is fully
integrated into government, business, institutional, industrial, and personal use.
Ancient era
The first packages used the natural materials available at the time: baskets of reeds,
wineskins (bota bags), wooden boxes, pottery vases, ceramic amphorae, wooden barrels,
woven bags, etc. Processed materials were used to form packages as they were
developed: for example, early glass and bronze vessels. The study of old packages is an
important aspect of archaeology.
Modern era
Tinning
The use of tinplate for packaging dates back to the 18th century. The manufacturing of
tinplate was the monopoly of Bohemia for a long time; in 1667 Andrew Yarranton, an
English engineer, and Ambrose Crowley brought the method to England where it was
improved by ironmasters including Philip Foley.By 1697, John Hanbury had a rolling mill at
Pontypool for making "Pontypoole Plates". The method pioneered there of rolling iron
plates by means of cylinders enabled more uniform black plates to be produced than was
possible with the former practice of hammering.

What is product labelling?

Product labelling is a part of the packaging of a product. Labelling is the written
information on the packages. These written labels on the package cover important
information which needs to be communicated to a customer. Product labelling is different
from packaging. A product packaging might have the brand colours, the logo and the
material as well as the shape of the package etc. The product is the informational /
written part.
Example – A food product like Maggi noodles might have the ingredients of the product as
well as the instructions on how to make the product written and illustrated on the
package. These instructions are nothing else but product labelling by the brand.
Product labelling can be as less as simple one or two lines on the back of the product. Or it
can be as much as the whole back end of the product being full of written information. If
you pick up any shampoo, you will find the back to be full of information about the
manufacturing location, customer service, ingredients, ways to apply, safety instructions
and whatnot.

UNIT 3
Meaning of price
Price is the amount we pay for goods, services or ideas. The term price is known by a
variety of names in different sectors of the economy. For example, price is known as fare
in the transport sector; fee in education; rent in real estate and in certain services it is
known as charge. Generally speaking, the price is the exchange value between the seller
and buyer. So, price is the money charged by a marketer for his product or service. For the
marketer, price covers the total market offering. The ultimate user considers price as a
sacrifice of his purchasing power. For the buyer, it stands for quality and quantity of the
service bought.
Price is the source of revenue and a prime determinant of profit for the service provider.
In the service sector. price reflects the nature of relationship between customer and
provider.

What is pricing?
Pricing is equivalent to the total service offering. Pricing includes the brand name, delivery
and other benefits. Pricing translates the qualitative offering into quantitative terms.

Pricing of services
Pricing is a vital area in marketing. Price is one of the significant elements in the marketing
mix. It is the sole and an important element in the marketing mix of a firm that brings
revenue to the business. Organizations should use a sophisticated approach to pricing.
While pricing the services, due regard should be given to shifts in demand, the rate at
which supply can be expanded, prices of available substitutes, the price – volume
relationship and the availability of future substitutes. Service companies must understand
how customers perceive prices of services.
How do customers perceive?
The price charged by the service provider must be acceptable to the target customers. It
should coordinate well with the other components of the marketing mix. Pricing decisions
have an impact on all – suppliers, sales force, distributors, competitors and customers.
Price also indicates to the customers the kind of quality of the service that they are likely
to receive. For example, the menu card in a restaurant indicates the quality of its food and
service in terms of price.
Objectives of pricing
A firm approaches its target market with a tailor-made marketing mix of variables. The
marketing strategy of the firm represents the combination of strategic variables (product,
price, promotion and place). This strategy will vary from one market segment to another.
This necessitates the firm to develop pricing objectives. A firm may have a number of
objectives in the area of pricing. Some of these will be long-term while others will be
short-term. Also some will be primary objectives while others will be secondary. The
below chart shows the various pricing objectives of the firms.

1. Survival price: Survival price is only a short-run objective. A firm follows survival price
policy when there is an intense competition and changing consumption pattern in the
target market. Generally, it is a low pricing objective to maintain demand for the firm’s
product. Many ready-made garment sellers dealing in foreign brands like Lee, Arrow,
Peter England, Van Heusen etc., have followed pricing below cost. So pricing below cost
involves foregoing desired levels of profits to ensure survival. Factors such as intense
competition, changing consumer wants, critical cash conditions etc., force the service
provider to follow this objective.
2. Current profit maximization price: Profit maximization is the oldest objective of pricing.
It is generally a long term objective. It is the opposite to the survival price. The firm
charges high price that will maximize current profit of the firm. This pricing objective is set
when a good demand exists for the services of the firm. Profit maximization pricing
ensures maximization of profitability over a given period. The period concerned may be
related to the life cycle of the service.
3. Market share price: Price helps improve market share. Market share means that portion
of industry’s sale which a marketer wishes to retain Market share also represents. a
sensitive indicator of customer as well as trade acceptance. Maximization of market share
is adopted by those firms which are able to realize economies of scale in distribution and
promotion. When a marketer attains a high market share in the market, he is able to
enjoy lowest costs and highest long-term profits. A market share leader charges a low
price to maintain his market sharp.
4. Service quality leadership: A service company may use a pricing policy to prove its
prestige. The high price charged impresses the quality of the service. It also leads to price
– quality leadership in the target market. Service offerings positioned in high price
category build a quality image for the service provider. High-priced restaurants and
personal care centres aim at achieving leadership in service and quality by setting ‘service
quality’ price for their services.
Profit maximization cannot be the only objective of pricing. A multiplicity or mix of
objectives is invariably involved. Firms seek to meet a variety-of interests through price
policy. Interests may vary from one firm to another. Accordingly, pricing policy may vary.
No firm is satisfied with a single objective in pricing.

Approaches
Pricing is the most effective profit lever. Pricing can be approached at three levels: the
industry, market, and transaction level.
Pricing at the industry level focuses on the overall economics of the industry, including
supplier price changes and customer demand changes.
Pricing at the market level focuses on the competitive position of the price in comparison
to the value differential of the product to that of comparative competing products.
Pricing at the transaction level focuses on managing the implementation of discounts
away from the reference, or list price, which occur both on and off the invoice or receipt.
A "price waterfall" analysis helps businesses and sales personnel to understand the
differences which arise between the reference or list price, the invoiced sale price and the
actual price paid by a customer taking account of contract, sales and payment discounts

Factors affecting pricing decisions

Pricing the product is one of the important element in marketing mix. Until recently it has
been one of the most neglected areas. Even today, pricing in some firms is simply based
on the concepts of cost, market position, competition and necessary profits.
Most important Factors affecting Pricing Decisions
Objectives of the Business : There may be various objectives of the firm such as getting a
reasonable rate of return, to capture the market, maintenance of control over sales and
profits etc. A pricing policy thus, should be established only after proper consideration of
the objectives of the firm.
Cost of the Product: Cost and price of a product are closely related. Normally, the price
cannot or shall not fixed below its cost (including the product, administrative and selling
costs). Price also determines the cost.
Market Position. The prices of the products of different producers are different either
because of difference in quality because of the goodwill of the firm. A reputed concern
may fix may fix higher prices for its products on the other hand, a new producer may fix
lower prices for its products. Competition may also affect the pricing decisions.
Competitors Prices: Competitive conditions affect the pricing decisions. The company
considers the prices fixed and quality maintained by the competitors for their products.
Distribution Channels Policy : The nature of distribution channels used, and trade
discounts which have to be allowed to distributors and the distribution expenses also
affect the pricing decisions.
Price Elasticity and Demand Elasticity : Price elasticity affects the decisions of price
fixation. Price elasticity means the consequential change of demand for the change for the
change in the prices of the commodity. If demand is elastic, the firm should not fix high
prices rather it should fix lower prices than that of the competitors.
Product’s Stage in the Life Cycle of the Product : Pricing decision is affected by the stage of
product in its life-cycle. In the introductory stage of the product, it the price strategy
which determines the price of the product.
Product Differentiation : The price of the product also depends upon the characteristics of
the product. In order to attract the customers different characteristics are added to the
product such as quantity, size, color, alternative uses, etc.
Buying Patterns of the Consumers : If the purchase frequency of the product is higher,
lower prices should be fixed to have a low profit margin. It will facilitate increasing the
sale volume and the total profits of the firm.
Economic Environment : In recession period, the prices are reduced to a sizable extent to
maintain the level of turnover. On the other hand, the price and increased in boom period
to cover the increasing cost of production and distribution.
Government Policy : Price discretion is also affected by the price control by the
government through enactment of legislation when it is thought proper to arrest the
inflationary trend in prices of certain commodities.

Pricing Strategies
Penetration Pricing or Pricing to Gain Market Share
A few companies adopt these strategies in order to enter the market and to gain market
share. Some companies either provide a few services for free or they keep a low price for
their products for a limited period that is for a few months. This strategy is used by the
companies only in order to set up their customer base in a particular market. For example
France telecom gave away free telephone connections to consumers in order to grab or
acquire maximum consumers in a given market. Similarly the Sky TV gave away their
satellite dishes for free in order to set up a market for them. This gives the companies a
start and a consumer base.
In the similar manner there are few companies that keep their product cost low as their
introductory offer that is a way of introducing themselves in the market and creating a
consumer base. Similarly when the companies want to promote a premier product or
service they do raise the prices of the products and services for that particular time.

Economy pricing or No Frill Low Price

The pricing Strategies of these products are considered as no frill low prices where the
promotion and the marketing cost of a product are kept to a minimum. Economy pricing is
set for a certain time where the company does not spend more on promoting the product
and service. For example the first few seats of the airlines are sold very cheap in budget
airlines in order to fill in the airlines the seats sold in the middle are the economy seats
where as the seats sold at the end are priced very high as that comes under the premium
price strategy. This strategy sees more economy sales during the time of recession.
Economy pricing can also be termed as or explained as budget pricing of a product or a
service.
Use of Psychological Pricing Strategies
Psychological pricing Strategies is an approach of gathering the consumer’s emotional
respond instead of his rational respond. For example a company will price its product at
Rs 99 instead of Rs 100. The price of the product is within Rs 100 this makes the customer
feel that the product is not very expensive. For most consumers price is an indicating
factor for buying or not buying a product. They do not analyze everything else that
motivates the product. Even if the market is unknown to the consumer he will still use
price as a purchase factor. For example if an ice cream weighted 100 gms for Rs 100 and a
lesser quality ice cream weighted 200 gms is available at Rs 150, the consumer will buy
the 200 gms ice cream for Rs 150 because he sees profit in buying the ice cream at lower
cost ignoring the quality of the ice cream. Consumers are not aware price is also an
indicator of quality.
Pricing Strategies of Product Line
Products line pricing is defined as pricing a single product or service and pricing a range of
products. Let us take and understand this with the help of an example. When you go for a
car wash you have an option of choosing a car wash for Rs 200 or a car wash and a car wax
for Rs 400 or the entire package including a service at Rs 600. This strategy reflects a
strategic cost of making a product popular and consumed by the consumer with a fair
increment over the range of the product or the service. In another example if you buy a
pack of chips and chocolate separately you end up paying a separate price for each
product; however of you buy a combo pack of the two you end up paying comparatively
less price for both and if you buy a combo of both in a higher quantity you end up paying
even lesser.
For the manufactures of the product manufacturing and marketing of larger pack is much
more expensive as it does not fetch them good amount of profit, however they do the
same to attract more consumers and keep them interest in their products. On the other
hand manufacturing smaller packs and lesser quantity is more beneficial and fetches more
profit for the manufacturer of the product.
Pricing Optional Products
It is a general approach, if the companies decrease the price of a product or a service they
do increase their price for their other available optional services. Let’s take a very simple
and a common example of a budget airline. The prices of their airfare are low however
they will charge you extra if you want to book a window seat, if you want to travel with
your family and want to book an entire row together you might have to end up paying
extra charges as per the their guidelines, in case you have too much of luggage to carry
you will end up paying extra on the same, in fact you will end up paying extra charges
even if you need extra leg space in a budget airlines. You can say that even if the price of
the air fare is low you will end up paying more for the extra yet mandatory services that
you will require as you travel.
Pricing of Captive Products
Captive products have products that compliment the products without which the main
product is of no use or is useless. For example an inkjet printer is of no use without its
cartridge it will not work and have no value and a plastic razor will have no value without
its blades. If the company is manufacturing the inkjet printer it will have to manufacture
its cartridges and if the company is manufacturing a plastic razor it will have to
manufacture blades for the same. For a simple reason that any other company cartridge
will not fit into the inkjet printer and neither will any other companies blade fit into the
plastic razor. The consumer has no other option but to buy the complementary products
from of the same company. This increases the sales and the profit margin of the company
anyways.
Pricing for promotions
Promotional pricing is very common these days. You will find it almost everywhere.
Pricing for promoting a product is another very useful and helpful strategy. These
promotion offers can include, discount offers, gift or money coupons or vouchers, buy one
and get one free, etc. to promote new and even existing products companies do adopt
such strategies where they roll out these offers to promote their products. An old strategy
yet it is one of the most successful pricing strategies till date. Reason of its success is that
the consumer considers buying the product and service for the offer that the consumer
receives.
Pricing as Per Geographic Locations
For simple reasons such as the geographic location the companies do vary or change the
price of the product. Why does location of the market affect the price of the product? The
reasons can be many well some are scarcity of the product or the raw material of the
product, the shipping cost of the product, taxes differ in a few countries, difference in the
currency rate for products, etc.
Let’s take a few pricing strategies examples, when a few fruits are not available in a
country they are imported from another country, these fruits are exotic fruits, they are
also scarce this increases their value in the country they are imported to, scarcity, the
shipping cost of the imported product along with its quality increase its price, where as it
is much cheaper where it is originally grown. Similarly the government implies heavy
taxes on a few products such as petrol or petroleum products and alcohol to increase their
revenue; hence such products are expensive in a few countries or part of the country
compared to the other parts. Geographic location does create a huge impact on the
pricing strategy of a product as the company has to consider every aspect before they
price a product. Hence the price needs to be perfect and appropriate.
Value Pricing a Product
Let me first be clear about what value pricing means, value pricing is reducing the price of
a product due to external factors that can affect the sales of the product for example
competition and recession; value pricing does not mean that the company has added
something or increased the value of a product. When the company is afraid of factors such
as competition or recession affecting their sales and profits the company considers value
pricing.
For example McDonalds the famous food chain has started value meals for their consumer
since they have started facing competition with other fast food chains. They offer a meal
or a combination of a few products as a lower price where the consumer feels emotionally
content and continues to buy their products.
Pricing of Premium Products
Well this strategy works just the other way round. Premium products are priced higher
due to their unique branding approach. A high price for premium products is an extensive
competitive advantage to the manufacturer as the high price for these products assures
them that they are safe in the market due to their relatively high price. Premium pricing
can be charged for products and services such as precious jewelry, precious stones,
luxurious services, cruses, luxurious hotel rooms, business air travel, etc. The higher the
cost the more will be the value of the product amongst that class of audience.