Sunday, October 26, 2014

Pricing in Marketing

 I found this article on line. It gives and explanation for different pricing. This is one of the most important aspects of business. You have to be able to cover cost, and make a profit if you want your business to stay strong. You have to be ahead of other bussisness.






THE MARKETING MIX
PRICING STRATEGIES Mobile Edition Related Links: Pricing | Place | Promotion | Service Marketing Mix | Emarketing Mix
Introduction
Pricing is one of the most important elements of the marketing mix, as it is the only mix, which generates a turnover for the organisation. The remaining 3p’s are the variable cost for the organisation. It costs to produce and design a product, it costs to distribute a product and costs to promote it. Price must support these elements of the mix. Pricing is difficult and must reflect supply and demand relationship. Pricing a product too high or too low could mean a loss of sales for the organisation.
Pricing Factors
Pricing should take into account the following factors into account:
  1. Fixed and variable costs.
  2. Competition
  3. Company objectives
  4. Proposed positioning strategies.
  5. Target group and willingness to pay
An organisation can adopt a number of pricing strategies, the pricing strategy will usually be based on corporate objectives.

pricing strategies

Types of Pricing Strategy
 Pricing StrategyDefinitionExample 
Penetration PricingHere the organisation sets a low price to increase sales and market share. Once market share has been captured the firm may well then increase their price. A television satellite company sets a low price to get subscribers then increases the price as their customer base increases.
Skimming PricingThe organisation sets an initial high price and then slowly lowers the price to make the product available to a wider market. The objective is to skim profits of the market layer by layer. A games console company reduces the price of their console over 5 years, charging a premium at launch and lowest price near the end of its life cycle.
Competition Pricing Setting a price in comparison with competitors. Really a firm has three options and these are to price lower, price the same or price higherSome firms offer a price matching service to match what their competitors are offering.
Product Line PricingPricing different products within the same product range at different price points. An example would be a DVD manufacturer offering different DVD recorders with different features at different prices eg A HD and non HD version.. The greater the features and the benefit obtained the greater the consumer will pay. This form of price discrimination assists the company in maximising turnover and profits.
Bundle PricingThe organisation bundles a group of products at a reduced price. Common methods are buy one and get one free promotions or BOGOF's as they are now known. Within the UK some firms are now moving into the realms of buy one get two free can we call this BOGTF i wonder?This strategy is very popular with supermarkets who often offer BOGOF strategies.
Psychological PricingThe seller here will consider the psychology of price and the positioning of price within the market placeThe seller will therefore charge 99p instead £1 or $199 instead of $200. The reason why this methods work, is because buyers will still say they purchased their product under £200 pounds or dollars, even thought it was a pound or dollar away. My favourite pricing strategy.
Premium PricingThe price set is high to reflect the exclusiveness of the product. An example of products using this strategy would be Harrods, first class airline services, Porsche etc.
Optional PricingThe organisation sells optional extras along with the product to maximise its turnover. TThis strategy is used commonly within the car industry as i found out when purchasing my car. 
Cost Based PricingThe firms takes into account the cost of production and distribution, they then decide on a mark up which they would like for profit to come to their final pricing decision.If a firm operates in a very volatile industry, where costs are changing regularly no set price can be set, therefore the firm will decide on their mark up to confirm their pricing decision.
Cost Plus PricingHere the firm add a percentage to costs as profit margin to come to their final pricing decisions. For example it may cost £100 to produce a widget and the firm add 20% as a profit margin so the selling price would be £120.00

Sunday, October 19, 2014

Branding

Allen Adamson
Allen Adamson, Contributor
I write on the impact of business, culture & world events on brands 
9/17/2010 @ 1:15PM

Creative Capitalism: Branding Lessons From Newman's Own


It would be hard to find anyone who doesn’t think Paul Newman was a super movie star. It would also be hard to find anyone in the marketing business who doesn’t think Paul Newman was a super branding guy.
When he launched his line of Newman’s Own products in 1982 he understood that clearly defining a brand’s purpose would clearly differentiate it in the minds of consumers, especially in categories as commoditized as those in which he competed, like salad dressing, lemonade and pasta sauce.
This thought came to mind recently when I read about the new ad campaign for Newman’s brand, the first initiative since the actor’s death two years ago. “Let the food speak for itself,” as it’s cleverly titled, builds on the company’s initial purpose to make stuff that tastes really good, the profits of which are used to do really good things for people, most notably the kids at his Hole in the Wall Camps. While I admit that it certainly helps to have Paul’s charming, irreverent countenance on all of the brand packaging, I still maintain that there is a lot we can learn from this master of branding. It’s a very strong brand on every level that counts.
To begin with, Newman’s Own is built on a simple, believable promise. The products that Paul concocted with his buddy, author A. E. Hotchner, are old family recipes. In fact, the company got its start after friends suggested that the two fellows market the delicious salad dressing they had been making and bottling at home and giving out as gifts. The products that followed are also in categories that are believable as homemade creations. It’s easy to imagine P.L. and A. E., as they billed themselves, hard at it in the kitchen discussing the best recipe for a chocolate chip cookie or a spicy marinara sauce and then donning aprons and getting down to the business at hand. It makes a nifty mental picture.
Also nifty is the way this simple promise has been executed across all points of customer touch, another of the measures of powerful branding well understood by this company. Everything having to do with the brand has been brought to life in exquisite alignment with its promise, starting with the name: Newman’s Own. It is Paul Newman’s own, and his signature on every wrapper substantiates this point. The packaging itself looks like someone designed it in the same kitchen in which the food was cooked up–no hint of slickness or artificiality, literal or figurative. Most important of all is that the food tastes great (although our family pet would have to vouch for the dog food!). And when you’re selling food, focusing on taste is a given, another basic tenet of the smart branding being followed by the folks who successfully carry on in Paul’s stead.
Perhaps most interesting when looking at why the Newman’s Own brand is successful, even after its founder’s passing, is how ahead of his time the actor-brander was in linking his brand promise to its purpose and making this the hallmark of his endeavor. He understood that he needed a purpose for his organization, beyond the actual food and the shiny name under which it was marketed. While many companies are philanthropic, especially in this uber-socially conscious era, Newman’s Own is defined by its philanthropic purpose. Consumers are deeply aware of what the brand stands for, and they care deeply about it, which is central to its continuing success.
Even back in 1982 when the number of product choices and media choices were far fewer, Paul Newman recognized that he couldn’t compete on good-tasting products alone. There had to be another way to differentiate his brand of pretzels and coffee and frozen pizza from all the rest. Good food that does good is how most people think about this brand. Given his cheeky humor, Paul, without any false pretense, put it forward as “Shameless exploitation in pursuit of the common good.” A tagline that’s as on-brand as every other of the company’s branding initiatives.
Now, with all due respect, we are talking about Paul Newman. He got the Sundance Kid to jump off a cliff. He conned Doyle Lonnegan into falling for his sting. He would certainly have been able to get a number of consumers to buy whatever goodies he was selling. The point, however, is that he got millions of consumers to buy the products he was selling under the Newman’s Own label because he knew he would need more than his baby blues to build and maintain a winning brand. He started with a simple, believable promise that was relevant to people. He made sure this promise was executed brilliantly in all aspects of the branding. And he aligned his promise with a purpose that helped differentiate it in a highly competitive marketplace.
While his name and stature as a star might have helped at the beginning of the brand’s run, it was adhering to the basic rules of branding that made this company a star on supermarket shelves.
Allen Adamson is managing director of the New York office of Landor Associates, a brand consultancy and design firm. He is also the author of BrandDigital and BrandSimple.

Sunday, October 12, 2014

Product Development

    The most important part of developing a new product is deciding what the customers want or need. If you are fortunate enough to develop a product or service that most people want or need, you will be a successful entrepreneur.
    Wilbur Wright said "If you are looking for perfect safety, you will do well to sit on a fence and watch the birds." I believe he was trying to tell people not to be afraid. Entrepreneurs should explore new ideas and products, and yes it is risky, but if you do not try you can not succeed.
    Some people have a natural instinct for product development, but some people will have to try and try again and again. Nobody should ever give up if they feel their product will be valuable to the customers. If you have an idea that does not seem to be just the right thing, it might be something that is very simple to turn it into the right thing. This is why it is important to know what the customers are looking for when the product is in the development stage.The world would be a very different place if there was nobody willing to take a chance on their ideas.

Sunday, October 5, 2014

Segmentation

 Segmentation can be complex. There are many aspects a person will need to consider before putting a product on the market. Segmentation, although can be expensive, will save a person money and time in the end. When trying to market a new product, there are many important questions to answer if  the product is going to be a success. Three of these being, who will buy, where will they buy and how much will they be willing to pay. People can gather information like this by surveys, listening to customers, checking statistics, or watching the competition who has similar products.
 Segmentation can save money and time by narrowing down the specifics on where and how to market a product. Knowing how the market works and reacts for different products is a must for any entrepreneur who wishes to succeed.