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BHM 206
MODULE 2
SELF-ASSESSMENT EXERCISE 2
Nowadays,
a
number
of
well-established
companies
are
trying
to
diversify
into
both
existing
as
well
as
new
areas.
New
companies
are
being
started.
For
example,
Guinness
and
Coca-cola
have
diversified
some of their products.
Find out three or four cases of diversification or
entry
into
existing
fields
and
study
the
advertisements
issued
by
these
companies and identify the critical advantage or the core benefit stressed
in the advertising copy.
3.6
Roles of Pricing and Advertising in Marketing Mix
(a)
Advertising
– Most often, only a few firms directly compete with
one
another
in
the
same
target
market.
Economists
call
such
a
situation an oligopolistic situation.
In this type of situation, many
firms prefer to increase their share by increasing demand through
advertising
rather
than
by
reducing
prices.
The
question
that
arises is – why do firms prefer such a strategy?
The reason is that
building up an image through advertising can be more difficult to
match
than
a
price
cut.
The
assumption
behind
this
preferred
approach
is
that
the
firm
can
achieve
a
competitive
edge
in
advertising
and
that
it
does
not
possess
such
a
large
cost
advantage over competition as to make price cutting an attractive
pre-empting strategy.
(b)
Pricing
– Price may be the major element in the marketing mix.
Pricing
decisions
should
be
carefully
coordinated
with
decisions
on product, promotion and distribution.
For example, the luxury
segments
of
consumer
markets
suggest
a
quality,
branded
product, extra-touches, high class outlets, appeals and media that
capture the luxury image and a high price to match.
SELF-ASSESSMENT EXERCISE 3
Are price and promotion, to some extent, substitutable?
SELF-ASSESSMENT EXERCISE 4
State whether the following statements are true or false:
1.
2.
3.
Advertising can have a wider reach and establish an image for a
product
that
cannot
be
matched
in
personal
selling.
(True
or
False).
Advertising can close a sale.
(True or False).
Advertising
can
distinguish
suspects
from
prospects.
(True or
False).
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