Marketing Management Notes...

Hi ,
here are the notes of marketing management....
Entire 4p's of marketing their objectives and methodologies..

Product
Price
Place(Distribution)
Promotion
Regards

MANJU

i need to find a project on rural markeying
...................

Thanks a lot............................................... ..............................

Thanks...................................

I need a project report on Marketing Management, may be on rural or International marketing or any technology marketing

thnks

really helpful...thnx

thank you, good job

pricing - introduction

Setting the right price is an important part of effective marketing . It is the only part of the marketing mix that generates revenue (product, promotion and place are all about marketing costs).

Price is also the marketing variable that can be changed most quickly, perhaps in response to a competitor price change.

Put simply, price is the amount of money or goods for which a thing is bought or sold.

The price of a product may be seen as a financial expression of the value of that product.

For a consumer, price is the monetary expression of the value to be enjoyed/benefits of purchasing a product, as compared with other available items.

The concept of value can therefore be expressed as:

(perceived) VALUE = (perceived) BENEFITS %u2013 (perceived) COSTS

A customer%u2019s motivation to purchase a product comes firstly from a need and a want:e.g.

%u2022 Need: "I need to eat

%u2022 Want: I would like to go out for a meal tonight")

The second motivation comes from a perception of the value of a product in satisfying that need/want (e.g. "I really fancy a McDonalds").

The perception of the value of a product varies from customer to customer, because perceptions of benefits and costs vary.

Perceived benefits are often largely dependent on personal taste (e.g. spicy versus sweet, or green versus blue). In order to obtain the maximum possible value from the available market, businesses try to %u2018segment%u2019 the market %u2013 that is to divide up the market into groups of consumers whose preferences are broadly similar %u2013 and to adapt their products to attract these customers.

In general, a products perceived value may be increased in one of two ways %u2013 either by:

(1) Increasing the benefits that the product will deliver, or,

(2) Reducing the cost.

For consumers, the PRICE of a product is the most obvious indicator of cost - hence the need to get product pricing right.

Factors affecting demand

Consider the factors affecting the demand for a product that are

(1) within the control of a business and

(2) outside the control of a business:

Factors within a businesses%u2019 control include:

%u2022 Price (assuming an imperfect market %u2013 i.e. not perfect competition)

%u2022 Product research and development

%u2022 Advertising & sales promotion

%u2022 Training and organisation of the sales force

%u2022 Effectiveness of distribution (e.g. access to retail outlets; trained distributor agents)

%u2022 Quality of after-sales service (e.g. which affects demand from repeat-business)

Factors outside the control of business include:

%u2022 The price of substitute goods and services

%u2022 The price of complementary goods and services

%u2022 Consumers%u2019 disposable income

%u2022 Consumer tastes and fashions

Price is, therefore, a critically important element of the choices available to businesses in trying to attract demand for their products.

pricing - full cost plus pricing

Full cost plus pricing seeks to set a price that takes into account all relevant costs of production.� This could be calculated as follows:

Total budgeted factory cost + selling / distribution costs + other overheads + MARK UP ON COST

Budgeted sales volumes

An illustration of applying this method is set out below:

Consider a business with the following costs and volumes for a single product:

Fixed costs:


Factory production costs

�750,000

Research and development

�250,000

Fixed selling costs

�550,000

Administration and other overheads

�325,000

Total fixed costs

�1,625,000

Variable costs


Variable cost per unit

�8.00

Mark-Up


Mark-up % required

35%


Budgeted sale volumes (units)

500,000

What should the selling price be on a full cost plus basis?

The total costs of production can be calculated as follows:

Total fixed costs

�1,625,000

Total variable costs (�8.00 x 500,000 units)

�4,000,000

Total costs

�5,625,000

Mark up required on cost (�5,625,000 x 35%)

�1,968,750

Total costs (including mark up)

�7,593,750

Divided by budgeted production (500,000 units)


= Selling price per unit

�15.19

The advantages of using cost plus pricing are:

- Easy to calculate

- Price increases can be justified when costs rise

- Price stability may arise if competitors take the same approach (and if they have similar costs)

- Pricing decisions can be made at a relatively junior level in a business based on formulas

The main disadvantages of cost plus pricing are often considered to be:

- This method ignores the concept of price elasticity of demand - it may be possible for the business to charge a higher (or lower) price to maximise profits depending on the responsiveness of customers to a change in price

- The business has less incentive to cut or control costs - if costs increase, then selling prices increase.� However, this might be making an "inefficient" business uncompetitive relative to competitor pricing;

- It requires an estimate and apportionment of business overheads.� For example, total factory overheads need to be calculated and then allocated in some way against individual products.� This allocation is always arbitrary.

- If applied strictly, a full cost plus pricing method may leave a business in a vicious circle.� For example, if budgeted costs are over-estimated, selling prices may be set too high.� This in turn may lead to lower demand (if the price is set above the level that customers will accept), higher costs (e.g. surplus stock) and lower profits.� When the pricing decision is made for the next year, the problem may be exacerbated and repeated.

Amongst the factors that influence the choice of the mark-up percentage are as follows:

� Nature of the market - a mark-up should reflect the degree of competition in the market (what do the close competitors do?)

- Bulk discounts - should volume orders attract a lower mark-up than a single order?

- Pricing strategy - e.g. skimming, penetration (see more on pricing strategies further below)

- Stage of the product in its life cycle; products at the earlier stages of the life cycle may need a lower mark-up percentage to help establish demand.