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Principles of Marketing
Transcript of Principles of Marketing
The development of the product must emphasize delivering UTILITY to the consumer
One must consider the PRODUCT LIFE CYCLE, based on the biological life cycle. Promotion Product What is Marketing? Marketing seeks to meet the needs of the Types of Pricing
Premium pricing: charge a high price when there is a uniqueness about the product or service
Penetration pricing: set price artificially low in order to gain market share
Economy pricing: low price-- keep marketing and manufacturing costs low
Price skimming: charge a high price because you have a substantial, albeit, unsustainable competitive advantage
Psychological pricing: charge a price such that the consumer responds on an emotional rather than rational basis
Product line pricing: when there is a range of products or services, the pricing reflects the range
Optional product pricing: attempt to increase the amount customers spend once they start to buy (Usefulness) Utility by creating a sense of Exchange process through the What Defines a Target Market? Product Life Cycle Two part tariffs vs. Block Tariffs
Pure bundling vs. mixed bundling vs. component pricing Price discrimination Desired Pricing Aspects of
to consider Costs Fixed costs Personal Selling Marginal costs Labor costs Average total costs Average variable costs Sunk costs Taxes Transaction costs Accounting costs Sales promotion Direct (E-)Mail Trade fairs and exhibitions Advertising Sponsorships Place (Distribution, channel, intermediary) Major types of channel intermediaries Wholesalers: they buy from producers and sell to the retailers
Retailers: they sell the products or services to the end user
Agents: typically used in international markets. Generally, they secure an order for a producer and take a commission
Internet: uses e-commerce technology for the end user to interact directly with the vendor of Utility Form
Utility The utility gained from the physical characteristics of the product. Place Utility The utility one gets from having the product available in a convenient place Hotelling (1929): an economic model to help make pricing and other decisions based on place utility Time Utility The utility one gets from having the product available when one wants it Possession Utility The utility one gets from using the product as intended after the purchase Image Utility The satisfaction acquired from the emotional or psychological meaning attached to products Ex: one toothpaste container shape may be easier to use than another customer demographics Types The process by which two or more parties give something of value to each other to satisfy the perceived needs parties must have something of value to exchange Search Engines I propose a 6th type of utility: Networking Utility The utility one gains from his or her association with a product -The desire for more complex targeted advertisements
-Improving web app quality rendering previous OS' obsolete--> esp in mobile, a large growth segment
-Forthcoming M&A activity and antitrust lawsuits for major sites Driven by: -Reputational concerns due to one's personal identity being linked to one's online profile
-Increasingly pervasive websites
-More time spent on fewer websites Driven by: Driven by: -Networking, microblogging, and search sites as:
"Gatekeepers" of information over the internet
The primary source of communication, both on the personal and mass levels Driven By: Marketing efforts must emphasize :
A) Identifying and researching the target market
B) Delivering utility both to end users and to partner businesses
C) Ensuring an easy-to-use and customer centric exchange process Both parties need to be able to communicate Both parties must be able to exchange. Consider:
Other regulatory factors
Capital investments The customer must have the money to buy the product and must have access Both parties must want an exchange You must have at least two parties Condition 1 Condition 2 Condition 3 Condition 4 Condition 5 Condition 6 So What? Growth potential should inform product development to the approp riate channel
interm-ediary Search costs Price dispersion theory and tourist/ native search models are useful economic concepts when analyzing search costs & revenue
segmentation Assuming rational behavior, consumers solve the utility maximization problem. The firm must answer the following question: how can I ensure that the solution to the consumer's utility maximization problem is to buy my good or service? Behavioral economics uses psychology to question the economic assumption that human beings are rational actors Both The 4 P's, or "Marketing Mix"