November 19, 2021

PRICE /PRICING This is the amount of money charged for a good or service. This is the sum of value consumers exchange for the benefit of having or using a good or service. This is the market value of a product as it is offered in market. FACTORS AFFECTING PRICING DECISIONS/FACTORS TO CONSIDER WHEN PRICING Marketing objectives-a marketer must consider the marketing mix in terms of product design, distribution and promotion inorder to form a consistent and effective marketing programs Cost-consider the cost of production, cost of distribution and marketing expenses. Profit maximization-the management must consider profits expected before setting the final price. Organizational considerations-prices must always be set by management rather than by the marketing department/sales Market and demand for the product-a markter must understand the relationship between price and demand for the product(factors affecting demand). Environmental elements-prices must take into consideration the existing competitors prices. Prices of substitute goods. Intermediaries demands Suppliers-if an organization suppliers notice that prices of an organization products are rising,they may seek a rise in price of their supplies(inputs) to that organization 10.Inflationary conditions prevailing in the country 11.income effects of the consumers. IMPORTANCE OF PRICING Price is a means of regulating the economic activities  ie keeping the economy in balance. Price has a considerable impact on consumer perception ie a marketer can either increase the price  and emphasize on quality or lower the price and emphasize on bargaining. Price is one of the four pcs that can be changed quickly to respond to changes in the environment. Price determines the entire marketing strategies of a  company PRICING OBJECTIVES. This gives the directions to the whole pricing process. determining what your objectives are is he first step in pricing. when deciding on pricing objectives, you must consider. Overall financial, marketing and strategic objectives of the company. Objective of your product/brand. Consumer price elasticity and price points. Resources you have available. SPECIFIC OBJECTIVES. Maximize long-run profit Maximize short run profit. Increase sales volume(quantity). Increase monetary sales. Increase market share. Obtain a target of return on sales. Stabilize market price. Ensure company growth. Maintain price leadership. To desensitize customers to price. Discourage new entrants into industry. Match competitor’s prices. Encourage exit of marginal firms from the industry. Survival in the market. Avoid government investigation/intervention. Obtain/maintain loyalty and enthusiasim of distributors and other sales personnel. To be perceived as fair by customers and potential customers. Social, ethical or ideological objectives. METHODS OF PRICING/DETERMINING PRICE LEVELS. 1.Cost-based pricing. Mark-up pricing-this involves adding a standard markup to the product cost .markups  are higher on seasonal items,slower moving items and items with high sewerage and handling costs.a high mark up however may be disadvantageous if competitors prices are low.ie hotels peak mostly in holidays. Advantages of high mark up. It is adavantagious in that sellers can determine their costs more easily and hence by basing their prices on cost,they simplify the pricing task. Where all firms use this pricing method, prices tend to be similar hence price competition is minimized. Most people feel that pricing method is fair to both buyers and sellers. Target return pricing-the firms determines a price that will yield its target rate of return on investments. if the firm doesn’t reach  expected unit sales, the marketer can prepare a break even chart to learn what would happen at other sales levels based on different prices. the manufacturer will then use different prices and estimate the probable impact on sales volume and profits. 2.Value based pricing. Perceived value pricing-companies based their price on customer perceived value.they see the buyers perception of value and not the sellers cost as the key to pricing e.g. a car manufacturer may price his car at a million while his competitor charges 90,000.he may explain the difference due to longer warranty of the car, superior services, superior durability etc. the customer will be convinced that such a car operating costs will be lower and hence buy the more expensive car. Value pricing-companies charge a low price for low quality goods and a high price for high quality goods.the price must reflect a high value offer to customers. 3.Competition based pricing. v. Going rate pricing-the firms basis its price largerly on competitors prices smaller firms follow the leader changing their prices only when the market leaders change theirs rather than when their own demand or costs change some firms may charge a slight premium or a slight discount but they preserve the amount of difference to minimum. Vi sealed bid pricing-this is where a company submits sealed bid for jobs the firm bases its price on expectations of how competitors will price and for a firm to win a contract, it has to submit the lowest price bid, however it can not price below costs and neither can it compromise on quality, hence a firm will bid a price that will maximize the expected profits in the long –run. Pricing strategies This  are defined as long plans and they are not limited, compared to ways of establishing prices. 1.Premium Pricing Use a high price where there is uniqueness about the product or service. This approach is used where a substantial competitive advantage exists. Such high prices are charge for luxuries such as Conrad Cruises, Savoy Hotel rooms, airplnes etc 2.Penetration Pricing The price charged for products and services is set artificially low in order to gain market share. Once this is achieved, the price is increased. This approach was used by France Telecom and Sky TV. 3.Economy Pricing This is a no frills low price. The cost of marketing and manufacture are kept at a minimum. Supermarkets often have economy brands for soups, spaghetti, etc. 4.Price Skimming Charge a high price because you have a substantial competitive advantage. However, the advantage is not sustainable. The high price tends to attract new competitors into the market, and the price inevitably falls due to increased supply. Manufacturers of digital watches used a skimming approach in the 1970s. Once other manufacturers were tempted into the

VALUE/IMPORTANCE OF BRANDING FOR CUSTOMER AND MARKETERS Brands facilitate purchasing-brands are often easily recognized by consumers and because they signify a certain quality level and contain familiar attributes, and also assits consumers make quick decisions e.g. Honda in terms of level of quality, engineering, relative status and generally the cost. without branding, how could we easily tell the difference between a Honda and Toyota without looking very closely?. Brands establish loyalty-overtime and with continued use, consumers learn to trust certain brands. Brands protects products from  general competition and price competition-strong brands are somewhat protected from this as the brands are more established in market and have a more loyal customer base,neither competitive pressure on price nor retail-level competition is as threatening to the firm. Brands reduce marketing costs-firms with well-known brands can spend relatively less on marketing costs than firms with little known brands because the brand sells itself people have become familiar with some logos of companies so advertisements don’t need to explain who the company or what it does .people just know. Brands are assets, brands are also assets that can be legally protected through trade marks and copy rights and thus constitute a unique ownership for the firm, this is to ensure that the value of their brands is not diluted with counterfeit merchandise or sales through unauthorized dealers. Brands impact market value-having well known brands can have a direct impact on company’s bottom line. PACKAGING This involves designing and producing the container/wrapper for a product.it has shifted from attracting attention to describing the product, to making the sale companies are realizing the power of good packaging to create immediate consumer recognition of a brand today, a competitive world, the package may be the sellers best and last chance to influence the buyers. Poorly designed packages can cause headaches for consumers and lost sales for the company. sometimes even seemingly small packaging improvements can make a big difference. In recent years, product safety has also become a major packaging concern. we have all learned to deal with hard-to open “child-proof packaging”. the company also must heed to growing environmental concerns ie go “green” by reducing their packaging and using environmentally responsible packaging materials. This usually ranges from simple tags attached to products to complex graphics that are part of the package.it helps or identifies product /brand. helps in describing the product ie who made it and where it was made;its contents;how it is to be used and how to use it  safely.it promotes the brand, support its positioning and connect with customers. E.g. pepsi; recrafted graphics on its soft drink to give the brand a more meaning and social relevance to its youth audience.   FUNCTIONS OF PACKAGING AND LABELLING Physical protection against damage, spoilage and pilferage-this is because products typically pass through several stages of handling between manufacturing and customer purchases and a package must protect its contents from damage. Assists in marketing the product as packaging nowadays have been use as a promotional tool. Cost effectiveness-although packaging must perform a number of functions for the producer, marketers and consumers must do it at a reasonable cost sometimes changes in packaging can make packages both cheaper and better for the environment a good example is given of compact disk manufacturers who once packaged music cds in two containers, a disc-sized plastic box inside a long cardboard that fit into the record bins in stores. Consumers protested against waste of long boxes and the recording industry and finally agreed to eliminate the cardboard outer packaging altogether. Portion control-single serving or single dosage packaging has a precise amount of contents to control usage e.g. Salt is in suitable size for individual households. Aids control of inventory ie selling sealed one litre bottle of milk rather than having people bring their own bottles to fill themselves. 5.Convinience-packages can have features that add convenience in distribution,handling,stacking,display,sale,opening,reclosing,use,dispensing,reuse,recycling and ease of disposal. 6.Security-this is the important role played by packaging in reducing security risks of shipment;packages can be made with important tamper resistance to deter tampering and can also have tamper evident  features to indicate tamper. 7.Information transmission-packages and labels communicate how to use,transport,recycle or dispose off the package or product.with pharmaceuticals,food,medical and chemical products,some type of information are required by government.some packages and labels are used for track and trace purposes. 8.Containment or agglomeration-small objects are typically grouped together in one package for reasons of efficiency e.g. a single box of 1000 pencils requires less physical handling than 1000 single pencils.liquids,powders and granular materials need containment. 9.Barrier protection- this is mainly from oxygen,water vapour,dust.some packages contain dessicants/oxygen absorbers to extend shelf life. PRODUCT ATTRIBUTES This usually ranges from; Quality Performance level. Consistency ie freedom from defects and deliver the targeted level of performance. Development-TQM model is used. Features should be The style ie appearance should have no effect on performance.

NEW PRODUCT DEVELOPMENT PROCESS New products has three forms. New to the world-this is a truly unique product that is there is no other product like that in the market. Improvement /revision to the existing products. this are products that are significantly different from existing goods in that they provide improved performance. Imitative products-they are new to a particular company but not new to the world.eg sqny and not sony or addidias instead of addidas. A company would develop a new product for the following reasons. To improve the quality of its products To meet the pressure of competition. Ie defend market share position e.g. KBL developed new products when it realized it was facing competition from castle. To utilize excess capacity if the company has excess machines, capital, manpower, raw material etc. To sustain the company growth once a product has reached the maturity stage. To respond to environmental force-produce products that are environmental friendly. To respond to new technology. To establish a position in a new market e.g. equity bank –equitel. STEPS IN NEW PRODUCT DEVELOPMENT IDEA GENERATION– This is the creation of ideas .the ideas can be generated from; Customers ie Customer ways-this is where you ask customers their need and wants which are not being met. Focused group discussions-this is where you get a group of customers and introduce a topic to them.the fact will be towards their needs and lifestyle. Suggestion boxes or complaint letters from customers. Mails sent Telephone calls Projected lists. Company laboratories-when marketers are conducting experiments they may get an idea ie they may make discoveries by chance coming up with good ideas about a product. Competitors-ask competitors what they like about competitors products.also buy the products yourself,analyse it and then make a better product. Sales representatives and middlemen-because there is constant touch with customers,they can provide first hand information about customers needs and their complaints. Marketing research firms-they are consultants who find out and tell you what is wrong with your product and possibilities of new ideas in the market. IDEA SCREENING Sloot and drop poor ideas as early as possible.it tries to reduce the number of ideas to one attractive practical few.in improving ideas and screening items the company should avoid; Drop errors-occurs when a company drops a good idea. Go errors-occurs when a company permits a poor idea to move to other development stages.it is very important for one to screen the ideas because the product development costs rise substantially with each successive stage. GUIDELINES TO BE USED WHEN SCREENING IDEAS The existing or potential demand for the products-are there sufficient number of people in the market and do they have purchasing power?. The marketing compatibility-this is the extent to which the proposed product matches with the existing marketing variables. The environment and social standard compatibility-this is the extent the proposed new product harmonizes with the environment and social standards. Durability-this is the expected life cycle of the product. The long term expected sales growth-this is the extent to which the new product will generate profits for the company. Technical capability-this is the degree to which the proposed product matches with the existing production facilities e.g. time management to handle the product BUSINESS ANALYSIS- A company should evaluate the business attractiveness of the proposal and it is looked at from the point of view of sales,costs  involved and the profits you expect to make.it makes use of forecasting techniques which include use of historical data of similar products or through customer always in order to find out buyer intentions. PROTOTYPE PRODUCT DEVELOPMENT- This is where a company answers the question whether the product idea can be translated to a technically and commercially feasible product.it is the stage of making the idea concrete(reality).the research and development develops a prototype(model) that satisfies the following criteria. consumers see it as having the desired attributes. It perfoms safely under normal use and conditions.the model can be produced with the budgeted manufacturing costs. Must pass the funs size,shape,taste and scope. The company must choose a brand name in this stage and should be in the package. 5)MARKET TESTING- This involves testing the product to learn how customers and ideas react to its use,handling and purchasing the actual product. First, one selects a representative sample of consumers using probability and non probability techniques. The specific towns and markets are then visited. The length/duration of the test is the next step where the period that one carries the trial test is determined. How the product functions and how many people are buying or trying frequency of purchase and overall attitude towards the product is essential. Finally decide on the action to be taken based on the tested results. 6)COMMERCIALIZATION This is the final stage in which a company makes a final decision to launch the new product in market. A company can decide to launch a product by; Roll out introduction-this involves starting with a few towns when introducing to its entire country with time. Crash introduction-here, one introduces the product into the national level market at once ie the product is available country wide. A company has also to decide the time of the launch e.g. text book can be launched at the beginning of the year. The launching can be single, locational, international, national or regional. Market testing gives the management enough information to make a final decision about whether to launch a new product. When commercializing a new product, the following factors have to be taken into account: When (timing) Where (Geographical strategy) To whom (target market prospects) How (introductory market strategy) REASONS WHY A NEWPRODUCT FAILS Inappropriate promotion being used. Stiff competition from the competitors. Highly priced commodities. Poor quality products. When the new product has not penetrated in the market fully. When the new product fails to meet the customers specifications. When the frequency of use is minimal e.g. stamps When the product have already reached decline stage. FIVE LEVELS OF A PRODUCT Core benefit – The fundamental service or

PRODUCT CLASSIFICATIONS Durability and perishability. Durable goods normally service many uses and are consumed or used for a very long period of time. Perishables are used once or a very short period of time. Other products which are taken into account in this stage includes tangible items which are usually felt, touched or seen while intangible products can’t be felt, touched or seen e.g. services. Consumer and industrial goods Consumer goods-this are products bought by consumers for their own final consumption. They can be classified in four main categories. Convenience goods-this are goods that consumers know enough about them before purchasing them. They buy the goods on a day to day basis. they purchase them with minimum effort  thus no evaluations are made and frequently e.g. newspapers, foodstuff, airtime, milk, bread, tea leaves etc. Shopping goods-this are goods that consumers may want to compare in terms of features, quality, price, suitability and style in several shops before making a purchase most of them are desirable e.g. furniture, clothes, tv set etc. Specialty goods-this are goods that consumers have a strong brand preferences for and they are willing to spend a lot of time and effort in locating them because they are not in any shop ie they are got from specific outlets most are very expensive and have a unique brand identification and owning them carries a status in it e.g. tv, clothing. Unsought goods-they are products consumers may not yet be aware of and if they are aware they may not place so much meaning to them and have to be convinced of their importance in order to purchase them e.g. insurance policies a customer do not ordinarily purchase the product unless convinced through personal selling and are not in the budget. Industrial goods-they are products bought by businesses for further processing or for use in conducting their operations. they include. Material and parts-this includes raw materials such as wheat which is to be processed into flour then to bread and parts such as wires, yarn(for sweaters).the finised forms must be attached to others to function well e.g. for electricity lines, copper(finished product) is needed as well as some sufurias. Capital equipment-includes machinery equipment and installations such as generators, computers, wardrobe etc. Supplies and business services-this includes services such as banking, warehousing, insurance and cleaning services and also includes repair and maintenance services to machines as well as supplies of stationery. Component parts-this are finished products themselves but which need to be attached for another good for them to be useful e.g. tyres which are got from rubber(finished product). Standardized and custom made goods-standardized goods are produced in large quantities for use by everyone while custom made goods are produced based on customer specifications.