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Marketing 300 Fall 2009 Exam 3: Pricing and Advertising - Prof. Kristy Reynolds, Study notes of Marketing Management

A marketing exam focusing on pricing strategies and tactics, as well as advertising concepts. It includes information on developing pricing objectives, estimating demand, determining costs, evaluating the pricing environment, choosing a price strategy, and developing price tactics. Additionally, it covers various types of advertising, such as product and institutional advertising, and different types of ads, including unique selling propositions and emotional appeals. The document also touches on the impact of new products on pricing and the role of personal selling.

Typology: Study notes

Pre 2010

Uploaded on 12/06/2009

mataylor
mataylor 🇺🇸

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Download Marketing 300 Fall 2009 Exam 3: Pricing and Advertising - Prof. Kristy Reynolds and more Study notes Marketing Management in PDF only on Docsity! Marketing 300 Fall 2009 Exam 3 Professor Kristy Reynolds Ch 11 Price and steps in setting prices Price: the assignment of value, or the amount the consumer must exchange to receive the offering Step 1: Develop Pricing Objectives • Sales or market share • Profit • Competitive effect • Customer satisfaction • Image enhancement Step 2: Estimate Demand Demand: customer’s desire for a product Step3: Determine Costs • Variable costs - expenses that change in proportion to the activity of a business • Fixed costs - business expenses that are not dependent on the activities of the business (ex,. tend to be time- related, such as salaries or rents being paid per month) • Total costs – Variable costs + Fixed Costs • Break-even analysis • Break-even point (in units) = (total fixed costs) divided by (variable cost per unit) • Break-even point (in dollars) = (total fixed costs) divided by [1 - (variable cost per unit divided by price) • BE in units • FC/VCU • $200,000/$50 = 4,000 units • (CPU = Price per unit – VCU) ($100-$50) • BE in dollars • FC/1-(VCU/Price per unit) • $200,000/1-($50/$100) • $200,000/1-.5 = $200,000/.5 = $400,000 • Or BE units * price per unit • 4,000 * $100 = $400,000 • Step4: Evaluate the Pricing Environment • The economy • The competition • Consumer trends Step5: Choose a Price Strategy • Cost • Demand • Competition • Customer needs • New product pricing Step6: Develop Price Tactics • Products • Channel members Objectives Estimating demand—all terms and concepts Costs—all terms and concepts, Break-even—be sure to know the formula Pricing environment Pricing strategies and tactics  Discounting – clearance discount to sell old stock or discount for making multiple purchases  Odd value pricing – selling it for $9.99 instead of $10  Loss Leader – selling a product at a low or even loss-making price,hopefully attracting customers to buy other more profitable products  Skimming – selling a unique product or service for a higher price  Penetration – opp. Of skimming…starting at a low price and gaining market share before competitors catch up with you New product pricing o Impact of new product on the entire product portfolio o Value Analysis (internal & external) o Competition and alternative competitive technologies o Differing value segments (price, value, and need) o Product Costs (fixed & variable) o Forecast of unit volumes, revenue, and profit Pricing and e-commerce • Dynamic pricing strategies • Online auctions • Online shopping Psychological issues and strategies  Buyer’s pricing expectations  Odd-even  Price-lining Ch 13 Marketer of the year – Hyundai Most effective ad ever – Fed Ex “face paced world” Advertising: nonpersonal communication paid for by an identified sponsor using mass media to persuade or inform an audience Types of advertising • Product advertising • The promotion of a particular good or service that is designed to increase demand. Ex newspapers, magazines, tv commercials • Institutional advertising • Promotion that attempts to influence public perception of a company, a brand, or a product. • Retail and local • Do it yourself – contests, ex Dorito’s “crunch video” winner, user generated content • Engagement Marketing – having customers help market the brand. Ex having a contest to have customers make a commercial Types of Ads  Unique selling proposition – company tells you why their product is better than another companies product  Comparative ad – comparing two companies , ex Captain D’s vs Red Lobster  Demonstration ad – shamwow, slapchop, infomercial type  Testimonial ad – celebrities or actors telling about their experience with the product  Humorous appeal – any funny or comical commercial  Sex appeal  Emotional appeal  Fear appeal – life insurance, scare tactics to sell o Apple 1984 – started the superbowl commercial craze Advertising campaign  a coordinated, comprehensive plan that carries out promotion objectives and results in a series of ads placed in media over a period of time Types of sales promotion
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