Diapositiva 1
MGTA02: Managing the Business Organisation
Promotion and Place
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First Midterm Test: Schedule
LEC01: Monday Feb 28th
10:15 am to 11:30 am
LEC02: Tuesday Mar 1st
2:15 pm to 3:30 pm
Chapters 1 – 6
Test: Room Assignments
Probable Format
30-50 MCQs: 1 – 5 options
text and lectures, week 1 – 6
1 mark each
2 – 4 SAQs: ½ page case or scenario
you must find relevant info
explain in your own words
8 to 12 marks each
Today’s Agenda & Key Points
1. Review: Price
2. The 3rd “P”: Promotion
(purpose, promotional mix, buyer decision process)
Break (10 minutes)
3. The 4th ‘P”: Place
(meaning and purpose, intensity, channels)
Review: Marketing
Efforts to satisfy the needs and wants of the target market (People)
the “marketing mix”
Review: The Marketing Mix
The term “4Ps” originally used by Prof. Carthy (Michigan State) in 1960
Review: The 1st “P” Product
Benefits Features
Value Package: What consumer is hoping
or expecting to get when buying a product
Review: Product Life Cycle
Review: The 2nd “P” Price
No formula for setting price
Pricing involves judgement and choice
Because a business has two objectives:
Satisfy customers
Make profits
Review: Price and Costs
In order to set a product’s price:
managers must understand
the business’ costs
VC = cost to produce the product
FC = cost to run the organisation
OC = Benefit of the best alternative sacrificed
Review: Mark-Up
What business adds to variable cost (VC) to arrive at its price
costs to make a pizza = $5.00
+ mark-up = + 3.00
selling price = 8.00
Review: Cost + Mark-up = Price
pizza sold
$3 or 37.5%
goes toward making
Pie Crust Cheese Tomatoes Mushrooms Box Margin 1 1 0.5 0.5 0.4 0.4 0.2 2
Review: “Skimming” Strategy
large markup
high price
High price = small market = low sales
But, sales don’t have to be large
Large contribution margin from each sale
Review: “Penetration” Strategy
small markup
Low price = large market = high sales
But, sales volume needs to be large
small contribution margin from each sale
Review: Break-Even Analysis
Helps managers understand relationship
between: costs, chosen selling price,
and necessary volume of sales
Answers the question:
“If I choose this price, how many units
must I sell – to make a profit?”
The 3rd “P” – Promotion
Promotion: Purpose
In a “market”:
buyers looking to make purchases
sellers looking to make sales
Promotion should:
raise awareness
create interest
stimulate sales
How promotion works?
Can you spot the larger circle?
Buyer Decision Process
Before considering methods of promotion
You must understand
process buyers go through
before and after making purchase
Buyers go through 5 stage process
The Buyer Decision Process
Problem or need recognition
Information search
Evaluation of alternatives
Purchase decision
Post-purchase evaluation
The Buyer Decision Process
Need recognition
Information search
Evaluate alternatives
Purchase decision
Post-purchase evaluation
“I’m hungry”
“I wonder where I can eat”
“I like pasta, but this place is expensive”
“I’ll have spaghetti”
“I’ll come here again!”
Why did you decide to continue your education? (Need Recognition)
Did you research several universities/colleges? (Information search)
Did you evaluate various options (Evaluations of Alternatives)
Why did you choose U of T? (Decision)
How do you feel about your decision? (Post-decision evaluation)
Promotion: 4 Methods
the “promotional mix”
intended to address stages of
buyer decision process:
1. Advertising
2. Personal Selling
3. Sales Promotion
4. Publicity & Public Relations
Advertising
Paid, non-personal communication used to inform an audience about a product
Advertising Media
Sellers advertise in any medium that get their names in front of people
e.g.: Internet
Television
Direct mail
Outdoor (billboards & signs)
Advertising Media – Global
Advertising
Used for: raising awareness
No good for: educating
No good for: “closing the sale”
(stimulating the
purchase decision)
Advertising Addresses
Problem or need recognition
Information search
Evaluation of alternatives
Purchase decision
Post-purchase evaluation
Consumer Generated Advertising
Ads created by the consumers (You and I)
Ethical Advertising?
Image Building
Advertising helps in building brand image
Most effective in delivering message re perceived value of the product/service
Businesses are required to take responsibility for the content
Personal Selling
Salesperson deals
directly (one-on-one)
with potential buyers
Appropriate if:
complex products – many features
buyers needs individual attention
Personal Selling
Some consumer products use it:
Tupperware
Personal selling is most expensive
form of promotion
Personal Selling
However, more likely used for complex or customised products:
investments
Personal Selling
educating (info search)
Create enthusiasm (evaluating alternatives)
closing the sale (purchase decision)
Less effective for: raising awareness
Personal Selling Addresses
Problem or need recognition
Information search
Evaluation of alternatives
Purchase decision
Post-purchase evaluation
Sales Promotion
Short-term promotional activities designed to stimulate consumer interest and excitement
Promotion: Strategies
Every Day Low Pricing (EDLP)
Dollarama; Walmart; No-frills
High-Low Pricing (HLP)
Bay days at Hudson’s Bay
Boxing Day sale at most other stores
Sales Promotion: Example
Sales Promotion: Example
Coupons and discounts
Gets people to sample
Sales Promotion: Example
Bonuses or premiums
Get people excited about a “deal”
Sales Promotion
Effective for: creating enthusiasm
Effective for: closing the sale
Less effective for: raising awareness
Less effective for: educating
Sales Promotion Addresses
Problem or need recognition
Information search
Evaluation of alternatives
Purchase decision
Post-purchase evaluation
Publicity & Public Relations
any activity that generates positive news coverage about a business
sending press releases
sponsoring causes or events
Publicity & Public Relations
Advantage: Can be done free
Disadvantage: You can’t control it
“US to probe Toyota brake problems”
“Toyota’s botched response”
“Toyota to recall Prius in US and Japan”
Public Relations
Activity designed to create goodwill
e.g. sponsor an individual
sponsor an event
Public Relations
Effective for:
post purchase evaluation
post purchase validation
Less effective for: educating
Less effective for: closing the sale
Publicity & PR Addresses
Problem or need recognition
Information search
Evaluation of alternatives
Purchase decision
Post-purchase evaluation
Public Relations in 21st Century
What about this one?
The 4th “P” – Place
“Place” – Key Points
“Place” – What it means, why it matters
Intensity – How pervasive (available) do you want your product to be?
Channels – Getting the product into consumers’ hands
E-Tailing – Growth and importance
Place – What it Means
part of marketing mix concerned with getting product from seller to buyer
“Place” (Distribution Strategy)
Why It’s Important
People less likely to buy product if:
it’s hard to find
it’s hard to get
“Place” (Distribution Strategy)
Therefore, the business must:
make product easy to find
make product easy to get
Business must have strategy for getting product into customers’ hands
Marketing: Satisfying Customer Needs
Market research must
ask questions like…
Where do you live?
Where do you shop?
How can we reach you?
… and so on
“Place” (Distribution Strategy)
Customers must be able to find it,
see it, sample it, easily
Customers have to able to buy it
quickly and easily
PizzaPizza understood this:
“30 minutes or its free”
2 key issues
Intensity:
How common/easy to find?
How to get it to consumers?
Distribution Intensity
Producers can distribute:
everywhere or a few selected
they can locations
Distribution Intensity
3 general strategies:
Intensive distribution
Selective distribution
Exclusive distribution
Intensive Distribution
Obtain maximum exposure,
saturate all possible outlets
Appropriate when:
Buyers won’t go out of their way
there are acceptable substitutes
Examples: soft drinks, snack food
Selective Distribution
Product is available through
limited number of selected stores
Appropriate when consumers willing to “shop around” – they have brand loyalty
Examples: medium priced goods with strong branding: “ ”, “Black & Decker”
Exclusive Distribution
Product is available through
very limited number of selected stores
Typical of luxury goods, where exclusivity is important part of value package
Examples: Gucci, ,
How to get it into consumers’ hands?
Producers can distribute product themselves, or use intermediaries
Direct Channel
Nike sells directly to consumers, through its own retail stores
Nike store in City
Direct Channel
Indirect Channel:
Sell Through Retailers
Nike sells to sporting goods stores
Nike available at Sporting Life stores
Indirect Channel
use intermediaries
Indirect: Sell To Wholesalers
Nike sells to wholesalers, who sell to retailers
Nike shoes on a wholesale website
Indirect Channel
use intermediaries
Indirect Channel
Intermediaries (retailers and wholesalers) to some of the work
They get some of the revenue
The Arrival of the Internet
Internet has changed the way we shop
Technology allows us to “see” a product without leaving our homes
Technology allows us to browse for products 24 hours a day
Marketing roundup..
Definition: A social process by which individuals and groups acquire what they need and want through profitable exchange of value.
Marketing begins with..
Segmentation: Selecting the “right” customer
– Targeting: Approaching the “right” customer through “right” medium
Positioning: Building brand recognition
Market Research: Knowing your Customer
Marketing Mix: Building the “right” product
Lets build a laptop..
Product features:
14” screen
10 Different colour schemes
4.8GHZ processor
Specialized Display Card with 3D features
Stereo Theater-style Audio
100% Secure operating system
Dreamy-Marvelous Laptop
Value Based?
Cost Based?
Market/Competition Based?
Psychological Pricing?
Bundle Pricing e.g. Warranty?
Payment Terms?
Dreamy-Marvelous Laptop
Own stores
Through retailers e.g. BestBuy; Walmart..
Telephone Orders
Internet Orders
Home Delivery
Dreamy-Marvelous Laptop
Social-Media Advertising
Bill-boards
See you next week…
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