Comprehensive Marketing and Pricing Strategies for Business Success

Captive-product pricing

Setting a price for products that must be used along with a main product, such as toner cartridges for a printer and games for a video game console.

Geographical pricing

Setting prices for customers located in different parts of the country or world.

Product bundle pricing

Combining several products and offering the bundle at a reduced price.

Cost-based pricing

Setting prices based on the costs of producing, distributing, and selling the product, plus a fair rate of return for effort and risk.

Value-added pricing

Attaching value-added features and services to differentiate a company's offers and charging higher prices.

Optional product pricing

The pricing of optional or accessory products along with a main product.

Cost plus pricing

(markup pricing), adding a standard markup to the cost of the product.

Market-skimming pricing

setting a high price for a new product to skim maximum revenues layer by layer from customer segments in line with their willingness to pay.

Market-penetration pricing

Setting a low price for a new product in order to quickly attract buyers and gain a large market share.

Pricing

The strategy and method used to determine the appropriate price for a product or service, taking into account various factors such as costs, competition, and consumer perceptions.

Distribution

The process of making a product or service available for use or consumption by consumers or businesses.

Intensive distribution

Stocking the product in as many outlets as possible.

Selective distribution

The use of more than one but fewer than all of the intermediaries that are willing to carry the company's products.

Exclusive distribution

Giving a limited number of dealers the exclusive right to distribute the company's products in their territories.

Disintermediation

(or channel disruption) the cutting out of marketing channel intermediaries by product or service producers.

Competition-based pricing

Setting prices based on competitors' strategies, prices, costs, and market offerings.

The 22 Immutable laws of Marketing

The law of the Ladder: The strategy to use depends on which rung you occupy on the ladder.

Retail price maintenance

When a manufacturer requires a dealer to charge a retail price for its products.

Price fixing

Sellers must set prices without talking to competitors.

Everyday low pricing (EDLP)

Charging a constant everyday low price with few or no temporary price discounts.

High low pricing

Charging higher prices on an everyday basis but running frequent promotions to lower prices temporarily on selected items.

Fixed cost

The costs that do not vary with production or sales level (rent, heat, interest, executive salaries).

Variable costs

The costs that vary with the level of production (packaging, raw materials).

Total costs

The sum of the fixed and variable costs for any given level of production.

Experience or learning curve

When average cost falls as production increases because fixed costs are spread over more units.

Discount and allowance pricing

Reduces prices to reward customer responses such as paying early or promoting the product.

Segmented pricing

Used when a company sells a product at two or more prices even though the difference is not based on cost.

Customer-segment pricing

Denny's Senior Citizen Menu.

Product-form pricing

Round Trip Air to China (Econ. vs. Bus. First).

Time-based pricing

Matinees, Happy Hour, etc.

Psychological pricing

Occurs when sellers consider the psychology of prices and not simply the economics. (Price as a surrogate, or signal, of quality)

Promotional pricing

When prices are temporarily priced below list price or cost to increase demand. (Loss leaders, Special event pricing, Cash rebates, Low-interest financing, Longer warranties, Free maintenance)

Risks of promotional pricing

Used too frequently, and copied by competitors, can create 'deal-prone' customers who will wait for promotions and avoid buying at regular price, Can erode brand value in eyes of customers, Creates price wars

Dynamic pricing

When prices are adjusted continually to meet the characteristics and needs of the individual customer and situations.

Product line pricing

Takes into account the cost differences between products in the line, customer evaluation of their features, and competitors' prices.

Price elasticity of demand

Illustrates the response of demand to a change in price.

Inelastic demand

Occurs when demand hardly changes when there is a small change in price.

Elastic demand

Occurs when demand changes greatly for a small change in price.

Price elasticity of demand formula

Price elasticity of demand = % change in quantity demand / % change in price.

Break-even pricing

The price at which total costs are equal to total revenue and there is no profit.

Target return pricing

The price at which the firm will break even or make the profit it's seeking.

Exclusive territorial distribution

A business strategy where a supplier grants a single distributor the sole right to sell its products within a specific geographic area.

Multichannel marketing system

Uses multiple, independent channels to reach customers, with each channel having its own strategy, messaging, and goals.

Independent channels

Each channel operates with its own strategy and may not be directly linked to others.

Siloed information

Data and messaging can be restricted to individual channels, leading to inconsistencies.

Tailored content

Businesses adapt content for each platform to leverage its strengths, such as using videos on social media and blog posts on a website.

Channel-specific goals

A company might run a social media campaign to attract new leads while using email to nurture existing customers.

Product life cycle strategies

Introduction, Growth, Maturity, Decline.

Introduction stage

Slow sales growth, Little or no profit, High distribution and promotion expense.

Growth stage

Sales increase, New competitors enter the market, Price stability or decline to increase volume, Consumer education, Profits increase, Promotion and manufacturing costs gain economies of scale.

Maturity stage

Slowdown in sales, Many suppliers, Substitute products, Overcapacity leads to competition, Increased promotion and R&D to support sales and profits.

Maturity stage modifying strategies

Market modifying, Product modifying, Marketing mix modifying.

Decline stage

Maintain the product, Harvest the product, Drop the product.

Ways to obtain new products

Acquisition and New product development.

Acquisition

Refers to the buying of a whole company, a patent, or a license to produce someone else's product.

New product development

Refers to original products, product improvements, product modifications, and new brands developed from the firm's own research and development.

Idea generation

The systematic search for new-product ideas.

Sources of new-product ideas

Internal and External.

Law of leadership

First Movers Advantage, Category Dominance, Perception vs. Reality.

First Movers Advantage

Brands that are first to market often establish themselves as pioneers, shaping consumer perceptions and creating lasting impressions.

Category Dominance

Once a brand is first in the mind, it becomes synonymous with the category, making it difficult for later entrants to compete effectively.

Immutable Laws

The Law of Leadership is one of the two immutable laws of marketing, alongside the Law of Category.