Communitation at Work (week 4)

Communicating at work (week 7&8) - Part C

Verbal and Nonverbal Messages p. 98

Verbal Messages p. 100

• Clarity and Ambiguity
• Inflammatory Language 
• Masculine and Feminine Laguage Use
• Meeting Gender-Related Language Challenges

Nonverbal Communication p. 112

• Characteristics of Nonverbal Communication 
• Types of Nonverbal Communication
• Improving Nonverbal Effectiveness

What is Active Learning?

The Future of Learning

What is Blended Learning ?

The Need for Blended Learning Solutions in Higher Education

Principles of Marketing (week I) - Part II

Marketing Strategy Planning p 30

Objectives

• Understand what a marketing manager does
• Know what marketing strategy planning is - and why it is the focus of this book
• Undertand target marketing
• Be familiar with the 4P's in a marketing mix
• Know the difference between a marketing strategy, a marketing plan, and a marketing program
• Understand what customer equity is and why marketing strategy planners seek to increase it
• Be familiar with the text's framework for marketing strategy planning - and why it involves a process of narrowing down from broad opportunities to the most attractive marketing strategy
• Know four broad types of marketing opportunities that help in identifying new stategies
• Understand why strategies for opportunities in itnernational markets should be considered
• Understand the important new terms (see list below)

What is a Marketing Strategy p33
A marketing strategy specifies a target market and a related marketing mix. 2 interrelated parts:

• A target market
• A marketing mix

Selecting a Market-Oriented Strategy is Target Marketing p34

• Target marketing: marketing mix tailored to fit some specific target customers. Target marketing can mean big markets and profits.
• Mass marketing (typical production-oriented approach) assumes that everyone is the same and considers everyone to be a potential customer. Not to be confused with Mass Marketers which aim at clearly define target markets (ex. Kraft Foods-Wall Mart).

Developing Marketing Mixes for Target markets p35

• Marketing mix: the 4Ps - Product, Place, Promotion, Price
• Product: The good or service for the target's needs
• Place: Reaching the target (channel of distribution: direct-wholesalers-retailers-logistics)
• Promotion: telling and selling the customer. Personal selling, mass selling, sales promotion. Customer service (good for repeat business). Mass selling (advertising-publicity). Sales promotion (coupons, point-of sale, materials, samples, signs, contests, events, catalos, novelties, and cirulars)
• Price: make it right

The Marketing Plan is a Guide to Implementation and Control p41
The Marketing Program Should Build Customer Equity p43
The Importance of Marketing Strategy Planning p45
Creative Strategy Planning Needed for Survival p46
What are Attractive Opportunities p47
Marketing Strategy Planning Process Highlights Opportunities p49
Type of Opportunities to Pursur p51
Internationa Opportunities should be considered p53

Principles of Marketing - Week 2

UBIS NEWS in Vietnamese

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myUBISclass: Principles of Marketing - Business & Organisationa...

myUBISclass: Principles of Marketing - Business & Organisationa...: "Principles of Marketing - Business & Organisational Customers Objectives Know who the business and organisational buyers are; See why busin..."

myUBISclass: Principles of Marketing - Product life-cycle theor...

myUBISclass: Principles of Marketing - Product life-cycle theor...: "Source: wikipedia The product life-cycle theory is an economic theory that was developed by Raymond Vernon in response to the failure of ..."

Principles of Marketing - Product life-cycle theory

Source: wikipedia

The product life-cycle theory is an economic theory that was developed by Raymond Vernon in response to the failure of the Heckscher-Ohlin model to explain the observed pattern of international trade. The theory suggests that early in a product's life-cycle all the parts and labor associated with that product come from the area in which it was invented. After the product becomes adopted and used in the world markets, production gradually moves away from the point of origin. In some situations, the product becomes an item that is imported by its original country of invention.^[1] A commonly used example of this is the invention, growth and production of the personal computer with respect to the United States.
The model applies to labor-saving and capital-using products that (at least at first) cater to high-income groups.
In the new product stage, the product is produced and consumed in the US; no export trade occurs. In the maturing product stage, mass-production techniques are developed and foreign demand (in developed countries) expands; the US now exports the product to other developed countries. In the standardized product stage, production moves to developing countries, which then export the product to developed countries.
The model demonstrates dynamic comparative advantage. The country that has the comparative advantage in the production of the product changes from the innovating (developed) country to the developing countries.

Product life-cycle

There are five stages in a product's life cycle:

• introduction
• growth
• maturity
• saturation
• decline

The location of production depends on the stage of the cycle.

Stage 1: Introduction

New products are introduced to meet local (i.e., national) needs, and new products are first exported to similar countries, countries with similar needs, preferences, and incomes. If we also presume similar evolutionary patterns for all countries, then products are introduced in the most advanced nations. (E.g., the IBM PCs were produced in the US and spread quickly throughout the industrialized countries.)

Stage 2: Growth

A copy product is produced elsewhere and introduced in the home country (and elsewhere) to capture growth in the home market. This moves production to other countries, usually on the basis of cost of production. (E.g., the clones of the early IBM PCs were not produced in the US.) The Period till the Maturity Stage is known as the Saturation Period.

Stage 3: Maturity

The industry contracts and concentrates—the lowest cost producer wins here. (E.g., the many clones of the PC are made almost entirely in lowest cost locations.)

Stage 4: Saturation

This is a period of stability. The sales of the product reach the peak and there is no further possibility to increase it. this stage is characterised by:

Saturation of sales (at the early part of this stage sales remain stable then it starts falling).    
It continues till substitutes enter into the market.    
Marketer must try to develop new and alternative uses of product. 

Stage 5: Decline

Poor countries constitute the only markets for the product. Therefore almost all declining products are produced in developing countries. (E.g., PCs are a very poor example here, mainly because there is weak demand for computers in developing countries. A better example is textiles.)
Note that a particular firm or industry (in a country) stays in a market by adapting what they make and sell, i.e., by riding the waves. For example, approximately 80% of the revenues of H-P are from products they did not sell five years ago. the profits go back to the host old country.

References

1. ^ Hill, Charles (2007). International Business Competing in the Global Marketplace 6th ed.. McGraw-Hill. pp. 168. ISBN 978-0-07-310255-9.

• Hill, Charles W.L. International Business: Competing In The Global Marketplace. New York: McGraw-Hill, 2007.
• Appleyard, Dennis R. Alfred J. Field Jr., Steven L. Cobb. International Economics. Boston: McGraw-Hill, 2006.

Retrieved from "http://en.wikipedia.org/wiki/Product_life-cycle_theory"

Principles of Marketing - Business & Organisational Customers wk 5

Principles of Marketing

Business & Organisational Customers

Objectives

• Know who the business and organisational buyers are;
• See why business and organisational purchase decisions often involve multiple influences;
• Understand the problem-solving behaviour of organisational buyers;
• Understand the different types of buyer-seller relationships and their benefits and limitations;
• Know the basic e-commerce methods used in organisational buying;
• Know about the number and distribution manufacturers and why they are an important customer group;
• Know how buying by service firms, retailers, wholesalers, and governments is similar to - and different from - buying by manufacturers;
• Understand important new terms.

Business and organisational customers - a big opportunities

Most people think about an individual final consumer when they hear the term customer. But many marketing managers aim at customers who are not final consumers. In fact, more purchases are made by businesses and other organisations than by final consumers.

Business and organisational customers are any buyers who buy for resale or to produce other goods and services.

• Producers or goods and services - including manufactures, farmers, real estate developers, hotel operators, bankers and even doctors and lawyers.
• Middlemen - wholesalers and retailers
• Government units - federal agencies in the US and other countries, sstate and local governments
• Nonprofit organisations - national organisations like the Red Cross, Girl Scouts, local organisations, associations.

Key differences between organisational customers and final consumer

• Purchase criteria and specifications

1. Organisations buy for a basic purpose. Buy goods & services to meet demand for their clients.
2. Direct approach helps to finetune marketing mix, as even small differences are important.
3. Good opportunities for international markets as pattern of buying almost the same.
4. Purchasing specifications are standardised and often well described for more sophisticated requirements.
5. Customers may require certification (ISO 9000 is a way for suppliers to document its quality procedures according to internationally recognized quality standards.

• Multiple buying influence

1. Purchasing managers are specialists (procurement officer, supply manager, purchasing agent, or buyer). In large organisations they usually specialise by product area and are real experts. Although purchasing managers usually coordinate relationships with suppliers, other people may also play important roles in influencing the purchase decision.
2. Multiple buying influence in a buying center: users - influencers - buyers - deciders - gatekeepers (receptionists, secretaries, research assistants, others)
3. Vendor analysis - formal rating of suppliers on all relevant areas of performance - considers all of the influences to rate the total costs associates with purchases.
4. Behavioral needs are relevant too: beside economic factors, the human factor must be taken into consideration.
5. Ethical conflicts may arise between personal self-interest and company outcomes.
6. Purchasing may be centralised - purchases are handled through standardises requisition (Purchase order).
7. Spend management systems control purchasing: Some firm use 'spend management' systems to track every single purchase.
8. The buying firm's values affect purchasing practices - ex. environmental considerations.

• Problem-solving process

1. Three kinds of buying process are useful: New-task buying involve setting product specifications, evaluating sources of supply and establishing an order routine. Straight rebuy is routine purchase that may have been made many times before. Modified rebuy is the in-between process where some review of the buying situation is done.
2. New-task buying requires information: Much time required, much multiple influence involved, much more effort to review suppliers, much more information needed.
3. What buying procedure becomes routine is critical: once a buying firm ges beyong the early stages of a new-task buying decision, it needs to make important decision to choose what supplier.

• Buyer-seller relationships

1. Close relationships between buyer-seller may produce mutual benefits.
2. Relationships may not make sense: however long-term commitment to a partner may reduce flexibility. Many small suppliers make the mistake of relying to heavily on relationships with too few customers - a dependency which could cost the business in case of bankcruptcy.
3. Relationships have many dimensions: 5 key dimensions are to be considered: cooperation, information sharing, operational linkages, legal bonds and relationship adaptation. see Exhibit 6-5 p 151.
4. Cooperation treats problems as joint responsibilities - in cooperative relationships, the buyer and seller work together to achieve both mutual and individual objectives.
5. Shared information is useful but may be risky. Exchange of information involve proprietory cost data, discussion of demand forecasts, and joind work on new product design. With e-commerce, intranet allows better decisions for future planning. However, problem of ethics may arise concerning misuse of confidential economic and technological information.
6. Operational linkages share functions between firms.
7. Contracts spell out obligations - in complexed relationships, it is better to have detailed legal contracts as compared to straight rebuy deals.
8. Specific adaptations invest in the relationship: specific adaptations are usually made when the buying organisation chooses to outsource (to cut costs).
9. Powerful customer may control the relationship.
10. Buyers stilll may use several sources to spread their risk. Hedging.

• B2B e-commerce - Technology is reshaping many business markets

1. Buyers rely heavily on search engines
2. Online marketplaces connect buyers and sellers in particular industries
3. Catalog sites automate search and delivery
4. Procurement sites operate for the benefit of the buyes
5. Reverse auction sites foster competition among sellers
6. Auction sites focus on unique items
7. Collaboration hubs support cooperation
8. More progress is needed - marketing mix
9. e-commerce order system are common
10. Its pays to have an ongoing relationship
11. variations in buying by customer type

Key characteristics of specific types of organisational customers

• Manufacturers are important customers

1. Customers cluster in geographic areas
2. Business data often classifies industries (North Amercian Industry Classification codes - NAICS -)

• Producers of services - smaller and more spread out

1. Buying may not be as formal
2. Small service customers like Internet buying

• Retailers and wholesalers buy for their customers

1. Committee buying is impersonal
2. Buyers wactch computer output closely
3. Reorders are straight rebuys
4. Some are not 'open to buy'
5. Residents buyers - independent buying agents - may help a firm's buyers

• Government units

1. Government agencies are important customers for a wide variety of products.
2. Competitive bids may be required.
3. Rigged specs are an ethical concern.
4. The approved suppliers list.
5. Negotiated contracts are common too.
6. Learning what government wants.
7. Dealing with foreign governments.
8. Is it unethical to 'buy help'? Problem of Corruption - Foreign Corruption Practices Act

Conclusion

Buying behaviour and marketing opportunities - may change when there's a close relationship between a supplier and a customer. However, close relationships are not all or nothing. There are different ways that a supplier can build close relationships with its customers. We identified key dimensions of relationships and their benefits and limitations.

Advances in technology and e-commerce play a key role in changes in organisational buying and B2B marketing. Buying behaviors are very similar between organisational buyer, but some can be different.

Understanding how organisations buy can help marketing managers identify logical dimensions for segmenting markets and developing marketing mixes. The nature of products, their classes, variations, may provide additional segmenting dimensions to help a marketing manager fine tune a marketing strategy.

Key terms

Business and organisational customers

Purchasing specifications

Purchasing managers

multiple buying influence

buying center

vendor analysis

requisition

new-task buying

straight rebuy

modified rebuy

just-in-time delivery

negotiated contract buying

outsource

competitive bids

NAICS North American Industry Classification System

Open to buy

resident buyers

Foreign Corrupt Practices Act
-------

End of lesson

Principles of Marketing - Consumer Behaviour et al. week 4c

Dear All,

This is the soft copy for those missing class for this module.

http://www.yourvietnamexpert.com/projet_UBIS_Marketing/Principles_Marketing_fichiers/frame.htm

Please follow-up with texts I posted under marketing. 

For today's lesson, we will continue on 'Consumer Behaviour'  

Demographics  

Market segmentation

Positioning
Pricing

------------------

Complementary Information from Wikipedia

Consumer behaviour is the study of when, why, how, and where people do or do not buy a product. It blends elements from psychology, sociology, social anthropology and economics. It attempts to understand the buyer decision making process, both individually and in groups. It studies characteristics of individual consumers such as demographics and behavioural variables in an attempt to understand people's wants. It also tries to assess influences on the consumer from groups such as family, friends, reference groups, and society in general.

Customer behaviour study is based on consumer buying behaviour, with the customer playing the three distinct roles of user, payer and buyer. Relationship marketing is an influential asset for customer behaviour analysis as it has a keen interest in the re-discovery of the true meaning of marketing through the re-affirmation of the importance of the customer or buyer. A greater importance is also placed on consumer retention, customer relationship management, personalisation, customisation and one-to-one marketing. Social functions can be categorized into social choice and welfare functions.

Each method for vote counting is assumed as social function but if Arrow’s possibility theorem is used for a social function, social welfare function is achieved. Some specifications of the social functions are decisiveness, neutrality, anonymity, monotonicity, unanimity, homogeneity and weak and strong Pareto optimality. No social choice function meets these requirements in an ordinal scale simultaneously. The most important characteristic of a social function is identification of the interactive effect of alternatives and creating a logical relation with the ranks. Marketing provides services in order to satisfy customers. With that in mind, the productive system is considered from its beginning at the production level, to the end of the cycle, the consumer (Kioumarsi et al., 2009).

ENVIRONMENTAL FACTORS		BUYER'S BLACK BOX		BUYER'S RESPONSE
Marketing Stimuli	Environmental Stimuli	Buyer Characteristics	Decision Process
Product Price Place Promotion	Economic Technological Political Cultural Demographic Natural	Attitudes Motivation Perceptions Personality Lifestyle Knowledge	Problem recognition Information search Alternative evaluation Purchase decision Post-purchase behaviour	Product choice Brand choice Dealer choice Purchase timing Purchase amount

The black box model shows the interaction of stimuli, consumer characteristics, decision process and consumer responses. It can be distinguished between interpersonal stimuli (between people) or intrapersonal stimuli (within people). The black box model is related to the black box theory of behaviourism, where the focus is not set on the processes inside a consumer, but the relation between the stimuli and the response of the consumer. The marketing stimuli are planned and processed by the companies, whereas the environmental stimulus are given by social factors, based on the economical, political and cultural circumstances of a society. The buyers black box contains the buyer characteristics and the decision process, which determines the buyers response.

The black box model considers the buyers response as a result of a conscious, rational decision process, in which it is assumed that the buyer has recognized the problem. However, in reality many decisions are not made in awareness of a determined problem by the consumer.

Information search

Once the consumer has recognised a problem, they search for information on products and services that can solve that problem. Belch and Belch (2007) explain that consumers undertake both an internal (memory) and an external search.

Sources of information include:

• Personal sources
• Commercial sources
• Public sources
• Personal experience

The relevant internal psychological process that is associated with information search is perception. Perception is defined as "the process by which an individual receives, selects, organises, and interprets information to create a meaningful picture of the world".

The selective perception process

Stage Description

• Selective exposure consumers select which promotional messages they will expose themselves to.
• Selective attention consumers select which promotional messages they will pay attention to.
• Selective comprehension consumer interpret messages in line with their beliefs, attitudes, motives and experiences.
• Selective retention consumers remember messages that are more meaningful or important to them.

The implications of this process help develop an effective promotional strategy, and select which sources of information are more effective for the brand.

Information evaluation

At this time the consumer compares the brands and products that are in their evoked set. How can the marketing organization increase the likelihood that their brand is part of the consumer's evoked (consideration) set? Consumers evaluate alternatives in terms of the functional and psychological benefits that they offer. The marketing organization needs to understand what benefits consumers are seeking and therefore which attributes are most important in terms of making a decision. It also needs to check other brands of the customer’s consideration set to prepare the right plan for its own brand.

Purchase decision

Once the alternatives have been evaluated, the consumer is ready to make a purchase decision. Sometimes purchase intention does not result in an actual purchase. The marketing organization must facilitate the consumer to act on their purchase intention. The organization can use a variety of techniques to achieve this. The provision of credit or payment terms may encourage purchase, or a sales promotion such as the opportunity to receive a premium or enter a competition may provide an incentive to buy now. The relevant internal psychological process that is associated with purchase decision is integration. Once the integration is achieved, the organization can influence the purchase decisions much more easily.

Postpurchase evaluation

The EKB model was further developed by Rice (1993) which suggested there should be a feedback loop, Foxall (2005) further suggests the importance of the post purchase evaluation and that the post purchase evaluation is key due to its influences on future purchase patterns.

Internal influences

Consumer behaviour is influenced by: demographics, psychographics (lifestyle), personality, motivation, knowledge, attitudes, beliefs, and feelings. Consumer behaviour concern with consumer need consumer actions in the direction of satisfying needs leads to his behaviour of every individuals depend on thinking

External influences

Consumer behaviour is influenced by: culture, sub-culture, locality, royalty, ethnicity, family, social class, past experience reference groups, lifestyle, market mix factors.

---------------------------

Demographics are the statistical characteristics of a population. These types of data are used widely in sociology (and especially in the subfield of demography), public policy, and marketing. Commonly examined demographics include gender, race, age, disabilities, mobility, home ownership, employment status, and even location. Demographic trends describe the changes in demographics in a population over time (for example, the average age of a population may increase or decrease over time). Both distributions and trends of values within a demographic variable are of interest.

Demographic profiles in marketing

Marketers typically combine several variables to define a demographic profile. A demographic profile (often shortened to "a demographic") provides enough information about the typical member of this group to create a mental picture of this hypothetical aggregate. For example, a marketer might speak of the single, female, middle-class, age 18 to 24, college educated demographic.

Marketing researchers typically have two objectives in this regard: first to determine what segments or subgroups exist in the overall population; and secondly to create a clear and complete picture of the characteristics of a typical member of each of these segments. Once these profiles are constructed, they can be used to develop a marketing strategy and marketing plan. The five types of demographics for marketing are age, gender, income level, race and ethnicity.

Market segmentation

Market segmentation is a concept in economics and marketing. A market segment is a sub-set of a market made up of people or organizations with one or more characteristics that cause them to demand similar product and/or services based on qualities of those products such as price or function. A true market segment meets all of the following criteria: it is distinct from other segments (different segments have different needs), it is homogeneous within the segment (exhibits common needs); it responds similarly to a market stimulus, and it can be reached by a market intervention. The term is also used when consumers with identical product and/or service needs are divided up into groups so they can be charged different amounts for the services. The people in a given segment are supposed to be similar in terms of criteria by which they are segmented and different from other segments in terms of these criteria. These can be broadly viewed as 'positive' and 'negative' applications of the same idea, splitting up the market into smaller groups.

Examples:

• Gender
• Price
• Interests

While there may be theoretically 'ideal' market segments, in reality every organization engaged in a market will develop different ways of imagining market segments, and create Product differentiation strategies to exploit these segments. The market segmentation and corresponding product differentiation strategy can give a firm a temporary commercial advantage.

Positioning

Once a market segment has been identified (via segmentation), and targeted (in which the viability of servicing the market intended), the segment is then subject to positioning. Positioning involves ascertaining how a product or a company is perceived in the minds of consumers.

This part of the segmentation process consists of drawing up a perceptual map, which highlights rival goods within one's industry according to perceived quality and price. After the perceptual map has been devised, a firm would consider the marketing communications mix best suited to the product in question.

View also Pricing for this lesson.

Thanks,

Principles of Marketing - Pricing - Week 4b

Pricing

Pricing is the process of determining what a company will receive in exchange for its products. Pricing factors are manufacturing cost, market place, competition, market condition, and quality of product. Pricing is also a key variable in microeconomic price allocation theory. Pricing is a fundamental aspect of financial modeling and is one of the four Ps of the marketing mix. The other three aspects are product, promotion, and place. Price is the only revenue generating element amongst the four Ps, the rest being cost centers.

Pricing is the manual or automatic process of applying prices to purchase and sales orders, based on factors such as: a fixed amount, quantity break, promotion or sales campaign, specific vendor quote, price prevailing on entry, shipment or invoice date, combination of multiple orders or lines, and many others. Automated systems require more setup and maintenance but may prevent pricing errors. The needs of the consumer can be converted into demand only if the consumer has the willingness and capacity to buy the product. Thus pricing is very important in marketing.

What a price should do

A well chosen price should do three things:

• achieve the financial goals of the company (e.g., profitability)
• fit the realities of the marketplace (Will customers buy at that price?). Price is influenced by the type of distribution channel used, the type of promotions used, and the quality of the product
• support a product's positioning and be consistent with the other variables in the marketing mix. Price will usually need to be relatively high if manufacturing is expensive, distribution is exclusive, and the product is supported by extensive advertising and promotional campaigns. A low price can be a viable substitute for product quality, effective promotions, or an energetic selling effort by distributors

From the marketer's point of view, an efficient price is a price that is very close to the maximum that customers are prepared to pay. In economic terms, it is a price that shifts most of the consumer surplus to the producer. A good pricing strategy would be the one which could balance between the price floor (the price below which the organization ends up in losses) and the price ceiling (the price beyond which the organization experiences a no demand situation).

Terminology

There are numerous terms and strategies specific to pricing:

Effective price

The effective price is the price the company receives after accounting for discounts, promotions, and other incentives.

Line Pricing

Line Pricing is the use of a limited number of prices for all product offerings of a vendor. This is a tradition started in the old five and dime stores in which everything cost either 5 or 10 cents. Its underlying rationale is that these amounts are seen as suitable price points for a whole range of products by prospective customers. It has the advantage of ease of administering, but the disadvantage of inflexibility, particularly in times of inflation or unstable prices.

Loss leader

A loss leader is a product that has a price set below the operating margin. This results in a loss to the enterprise on that particular item in the hope that it will draw customers into the store and that some of those customers will buy other, higher margin items.

Promotional pricing

Promotional pricing refers to an instance where pricing is the key element of the marketing mix.

Price/quality relationship

The price/quality relationship refers to the perception by most consumers that a relatively high price is a sign of good quality. The belief in this relationship is most important with complex products that are hard to test, and experiential products that cannot be tested until used (such as most services). The greater the uncertainty surrounding a product, the more consumers depend on the price/quality hypothesis and the greater premium they are prepared to pay. The classic example is the pricing of Twinkies, a snack cake which was viewed as low quality after the price was lowered. Excessive reliance on the price/quantity relationship by consumers may lead to an increase in prices on all products and services, even those of low quality, which causes the price/quality relationship to no longer apply.

Premium pricing

Premium pricing (also called prestige pricing) is the strategy of consistently pricing at, or near, the high end of the possible price range to help attract status-conscious consumers. The high pricing of premium product is used to enhance and reinforce a product's luxury image. Examples of companies which partake in premium pricing in the marketplace include Rolex and Bentley. As well as brand, product attributes such as eco-labelling and provenance (e.g. 'certified organic' and 'product of Australia') may add value for consumers and attract premium pricing. A component of such premiums may reflect the increased cost of production. People will buy a premium priced product because:

1. They believe the high price is an indication of good quality;
2. They believe it to be a sign of self worth - "They are worth it;" it authenticates the buyer's success and status; it is a signal to others that the owner is a member of an exclusive group;
3. They require flawless performance in this application - The cost of product malfunction is too high to buy anything but the best - example : heart pacemaker.

Demand-based pricing

Demand-based pricing is any pricing method that uses consumer demand - based on perceived value - as the central element. These include: price skimming, price discrimination and yield management, price points, psychological pricing, bundle pricing, penetration pricing, price lining, value-based pricing, geo and premium pricing. Pricing factors are manufacturing cost, market place, competition, market condition, quality of product.

Multidimensional pricing

Multidimensional pricing is the pricing of a product or service using multiple numbers. In this practice, price no longer consists of a single monetary amount (e.g., sticker price of a car), but rather consists of various dimensions (e.g., monthly payments, number of payments, and a downpayment). Research has shown that this practice can significantly influence consumers' ability to understand and process price information.

Nine Laws of Price Sensitivity & Consumer Psychology

In their book, The Strategy and Tactics of Pricing, Thomas Nagle and Reed Holden outline 9 laws or factors that influence how a consumer perceives a given price and how price-sensitive s/he is likely to be with respect to different purchase decisions:

1. Reference Price Effect Buyer’s price sensitivity for a given product increases the higher the product’s price relative to perceived alternatives. Perceived alternatives can vary by buyer segment, by occasion, and other factors.
2. Difficult Comparison Effect Buyers are less sensitive to the price of a known / more reputable product when they have difficulty comparing it to potential alternatives.
3. Switching Costs Effect The higher the product-specific investment a buyer must make to switch suppliers, the less price sensitive that buyer is when choosing between alternatives.
4. Price-Quality Effect Buyers are less sensitive to price the more that higher prices signal higher quality. Products for which this effect is particularly relevant include: image products, exclusive products, and products with minimal cues for quality.
5. Expenditure Effect Buyers are more price sensitive when the expense accounts for a large percentage of buyers’ available income or budget.
6. End-Benefit Effect The effect refers to the relationship a given purchase has to a larger overall benefit, and is divided into two parts: Derived demand: The more sensitive buyers are to the price of the end benefit, the more sensitive they will be to the prices of those products that contribute to that benefit. Price proportion cost: The price proportion cost refers to the percent of the total cost of the end benefit accounted for by a given component that helps to produce the end benefit (e.g., think CPU and PCs). The smaller the given components share of the total cost of the end benefit, the less sensitive buyers will be to the component's price.
7. Shared-cost Effect The smaller the portion of the purchase price buyers must pay for themselves, the less price sensitive they will be.
8. Fairness Effect Buyers are more sensitive to the price of a product when the price is outside the range they perceive as “fair” or “reasonable” given the purchase context.
9. The Framing Effect Buyers are more price sensitive when they perceive the price as a loss rather than a forgone gain, and they have greater price sensitivity when the price is paid separately rather than as part of a bundle.

Approaches

Pricing is the most effective profit lever. Pricing can be approached at three levels.The industry, market, and transaction level.

Pricing at the industry level focuses on the overall economics of the industry, including supplier price changes and customer demand changes.

Pricing at the market level focuses on the competitive position of the price in comparison to the value differential of the product to that of comparative competing products.

Pricing at the transaction level focuses on managing the implementation of discounts away from the reference, or list price, which occur both on and off the invoice or receipt.

Pricing tactics

Micromarketing is the practice of tailoring products, brands (microbrands), and promotions to meet the needs and wants of microsegments within a market. It is a type of market customization that deals with pricing of customer/product combinations at the store or individual level.

Pricing mistakes

Many companies make common pricing mistakes. Bernstein's article "Supplier Pricing Mistakes"^[6][7] outlines several which include:

• Weak controls on discounting
• Inadequate systems for tracking competitor selling prices and market share
• Cost-Up pricing
• Price increases poorly executed
• Worldwide price inconsistencies
• Paying sales representatives on dollar volume vs. addition of profitability measures

Marketing - Week 4 - Consumer Behaviour

Final Consumers and their Buying Behaviour


Learning Objectives

• Be able describe how economic needs and income influence the buyer decision process.
• understand how psychological variables affect an individual's buying behavior.
• understand how psychological variables affect an individual's buying behavior.
• be able to explain how characteristics of the purchase situation influence consumer behaviour.
• be able to explain the process by which consumers make buying decisions.
• understand important new terms.

Model of influences on Consumer Behaviour Exhibit 5-3 (p.119)

• Economic needs
• Economy or purchase or use;
• Convenience;
• Efficiency in operation or use;
• Dependability in use;

• Psychological variables
• Motivation
• Perception
• Learning
• Attitude
• Personality / lifestyle

• Social influences
• Family
• Social class
• Reference groups
• Culture

• Purchase situtation
• Purchase reason
• Time
• Surroundings

This exhibit shows that a number of psychological variables, social influences, and the purchase situation itself combine with economic needs to affect buying behaviour. 

Exhibit 5-5 the PSSP Hierarchy of Needs (physiological, safety, social, personal)

• Physiological needs: biological needs - food, drink, rest and sex.
• Safety needs: protection, physical well-being - health, food, medicine, exercise.
• Social needs: interaction with others: love, friendship, status, esteem.
• Personal needs: personal satisfaction. self-esteem, accomplishment, freedom, and relaxation.

Motivation theory suggests that we never reach a state of complete satisfaction. As soon as we get our lower-level reasonably satisfied., those at higher levels become more dominant.

Perception detemines what consumers see and feel

Consumer sometimes select varying ways to meet their needs because of differences in perception.

• Selective exposure: our eyes and midns seek out and notice only information that interests us.
• Selective perception: we screen out or modify ideas, messages and information that conflict with previously learned attitudes and beliefs.
• Selective retention: we remember only what we want to remember.

Learning determines what response is likely

The Learning Process: Learning is a change in a person's thought processes caused by prior experience. Consumer learning may result from things that make marketers do, or it may result from stimuli that have nothing to do with marketing. Either way, almost all consumer behaviour is learned.

• Drive is a strong stimulus that encourage action. 
• Cue: Depending on the cues - products, signs, ads, other stimuli in the environment, an indivividual chooses some specific response.
• Response: a response is an effort to satisfy a drive. The specific response chosen depends on the cues and the person's past experience.
• Reinforcement of the learning process occurs when the response is followed by satisfaction. Reinforcement strengthens the relationship between the cue and the response.
• Repeated reinforcement leads to development of a habit - making the individual's decision process routine. 

Positive cues help a marketing mix (scent)

Many needs are culturally learned (food)

Try to understand attitudes and beliefs

• Attitudes relate to buying: attitude is a person's point of view toward something. Attitudes are important because they affect selective processes, learning, and buying decisions.
• A belief is a person's opinion about something. Beliefs may have a positive or negative effect in shaping consumers' attitudes.
• Research on consumer attitudes and beliefs can sometimes help a marketing manager get a better picture of markets.
• Because attitudes tend to be enduring, it is usually more economical to work with consumer attitude than to try to change them. Changing negative attitudes is probably the most difficult job marketers face.

Expectation: 

• Attitudes and beliefs sometimes combine to form an expectation. 
• Consumer expectations often focus on the benefits or value that the consumer expects from a firm's marketing mix.  
• Promotion that overpromotes may cause dissatisfaction.

myUBISclass: Marketing - SWOT Analysis - Week 3

myUBISclass: Marketing - SWOT Analysis - Week 3: "SWOT Analysis Evaluating Opportunities in the Changing Marketing Environment Learning Objectives Know the variables that shape the enviro..."

Marketing - SWOT Analysis - Week 3

SWOT Analysis 

Evaluating Opportunities in the Changing Marketing Environment

Learning Objectives

• Know the variables that shape the environment of marketing strategy planning;
• Understand why company objectives are important in guiding marketing strategy planning;
• See how the resources of a firm affect the search for opportunities;
• Know how the different kinds of competitive situations affect strategy planning;
• Understand how the economic and technological environment can affect strategy planning;
• Know why you might be sent to prison if you ignore the political and legal environment;
• Understand the cultural and social environment and how key population trends affect strategy planning;
• Understand how to screen and evaluate marketing strategy opportunities;
• Under the important new terms (in red).

The Marketing Environment

• Economic environment
• Technological environment
• Political and legal environment
• Cultural and social environment

Company's objectives should shape the direction and operation of the whole business. 

Setting whole-company objectives - within resource limits - is the responsibility of top management.

Top management must look at the whole business, relate its present objectives and resources to the external environment, then decide what the firm wants to accomplish in the future.

3 basic objectives provide guidelines - should be sought together to avoid failure of the business:

• Specific activities that will perform a socially and economically useful function
• Organisation to carry on the business and implement its strategies;
• Earn enough to survive.

Mission Statement

• Sets out the organisation basic's purpose for being.
• Should embrace on a few key goals rather than embracing everything.
• Should supply guidelines when managers face difficult decisions.

Objectives

• Whole firm must work toward the same objectives
• Company should lead to marketing objectives
• Both company objectives and marketing objectives should be realistic and achievable. 

Company objectives: Production- Finance - Marketing - Human Resource - R&D

Marketing objectives: Product - Place - Promotion - Price

Promotion objectives: Personal Selling - Mass Selling - Sales Promotion

Company resources may limit search for opportunities >>Strengths & Weaknesses

>>Competitive Advantage

To find its strengths, a firm must evaluate its functional areas (production, research and engineering, marketing, general management, and finance). By analyzing successes or failures in relation to the firm's resources, management can discover why the firm was successful - or why it failed in the past.

• Financial strength
• Producing capability and flexibility
• Marketing Strength

Analysing Competitors and the competitive environment >>Threats & Opportunities

• Choose opportunities that avoid head-on competition - marketing mix
• Competitor-free environment are rare - government agency
• Monopolistic competition is typical - and a challenge - USP

Competitor Analysis

• Analyse comptetitor to find a competitive advantage
• Anticipate competition that will come
• Watch for competitive barriers
• Seek information about competitors
• Ethical issues may arise
• Competition may vary from country to country

The Economic Environment

• Economic conditions change rapidly
• Interest rates and inflation affect buying
• The global economy is connected

The Technological Environment

• Technology affects opportunities
• Technology transfer is rapid
• Internet technologies are reshaping marketing
• Technology and ethical issues

The Political Environment

• Nationalism can be limiting in international markets
• Regional groupings are becoming more important
• The unification of European markets
• NAFTA is building trade cooperation
• Consumerism is here and basic

The Legal Environment

• Trying to encourage competition
• Antimonopoly law and marketing mix planning
• Prosecution is serious - you can go to jail
• Consumer protection laws are not new
• Food and Drugs are controlled
• State and local laws vary
• Consumerists and the law say 'let the seller beware'

The Cultural and Social Environment

• Where people are around the world (demographics)
• The shift to urban and suburban areas
• There is no market when there is no income (GDP)
• Developed economies have most of the income
• Reading, writing and marketing problems
• Much segmenting may be required

Use screening criteria to narrow down to strategies

• Developing and applying screening criteria
• Whole plans should be evaluated
• Total profit approach can help evaluate possible plans

Example

• Quantitative criteria
• Increase sales by 1.5ook per year for the next five years
• Earn ROI of at least 25pc before taxes on new ventures
• Break enven within one year on new ventures
• Opportunity must be large enought to justify interest but small enough so company can handle within resources available
• Several opportunities should be pursued to reach the objectives - to spread the risks.

• Qualitative criteria
• Nature of business preferred
• Should take advantage of our Internet order system and website promotion
• New goods and services to resent customers to strengthen relationships and customer equity
• 'Quality' products that do not cannibalize sales of current products
• Competition should be weak and opportunity should be hard to copy for several years
• There should be strongly felt (even unsatisfied) needs - to reduce promotion costs and permit 'high' prices.
• Constraints
• Nature of businesses to exclude : manufacturing / any requiring large fixed capital investments / Any requiring many support people who must be 'good' all the time and would require much supervision.
• Geographic: US/Mexico/ and Canada only.
• General: Make use of current strengths / Attractiveness of market should be reinforced by more than one of the following basic trends: technological , demographic, social, economic and political.
• Market should not be bucking any basic trends.

Planning grids help evaluate a portfolio of opportunities

• See example business strengths vs. industry attractiveness
• Strategic business unit may help (focus on some product-markets)

Evaluating opportunities in international markets

• Evaluating the risks
• Risks vary with environment sensitivity
• What if risks are still hard to judge?

Key terms to know

• mission statement
• competitive environment
• competitor analysis
• competitive rivals
• competitive barriers
• economic and technological environment
• consumerism
• cultural and social environment
• gross domestic product
• strategic business unit

End of lesson.

IMPORTANT NOTE: 

Please be informed that from today there will be 4 hours a week and not 3h30 for this module. Therefore the Registrar has deciced to split the classes into 2 times. Please note that we need to discuss how to catch up with the two missing sessions (2 Fridays - on weeks I and 8). 

Thanks,

Professor Anh Tho Andres