Marketing Mix Slides.pdf - Marketing(MM2 2018\/19 Session 6 Vincent Mak Reader(Associate Professor in Marketing Decision Sciences CJBS

Marketing (MM2, 2018/19): Session 6 Vincent Mak Reader (Associate Professor) in Marketing & Decision Sciences, CJBS [email protected]

Framework of Marketing Strategy Situation Analysis Targeting Positioning Marketing Mix Execution -Product -Price -Place -Promotion -Customer -Competition -Company -Context -Collaborator 5Cs 4Ps Sessions 6-8

Today’s Agenda Marketing Mix (Part 1) I. Price • Steps in price setting/pricing strategies • Psychology of pricing II. Promotion • Developing promotion strategies/communication channels • Integrated marketing communications • Response hierarchy models • Message content

PRICE

“Pricing is the moment of truth – all of marketing strategy comes to focus on the pricing decision” - Prof. Raymond Corey, Harvard Business School

Steps in Setting Price Select pricing objective Analyse demand Estimate costs Analyse competitors Select pricing strategy Select final price

Pricing Objectives Often tactical (could also be part of a high-level marketing strategy) • Gain market share • Short-term profitability • Respond to competition • Product positioning • Entry deterrence • Part of an exit strategy • Acquire experience

Price Elasticity • But when might demand increase with price?

Price sensitivity: What make customers less price sensitive?  Unique value  Low awareness/Lack of substitutes  Difficult comparison  Total expenditure is large relative to price  End benefit is high  Cost sharing with other parties  High switching cost  Consumers believe price signals quality  Low inventory-holding capabilities  Fairness effect (Reference price)

Cost and Pricing • Volume effect • Experience curve effect • Break-even analysis: • “With these fixed & marginal costs and this price, what’re the sales we need to break even?” An Experience Curve