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.

Types of Pricing Strategy

	Pricing Strategy	Definition	Example
	Penetration Pricing	Here 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 Pricing	The 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 higher	Some firms offer a price matching service to match what their competitors are offering.
	Product Line Pricing	Pricing 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 Pricing	The 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 Pricing	The seller here will consider the psychology of price and the positioning of price within the market place	The 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 Pricing	The 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 Pricing	The organisation sells optional extras along with the product to maximise its turnover. T	This strategy is used commonly within the car industry as i found out when purchasing my car.
	Cost Based Pricing	The 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 Pricing	Here 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

Branding

     I found this article on Paul Newman's branding of his products. I think he was a very smart man. Everyone just new him as a actor, but coming out with Newman's Own products showed that he also was a entrepreneur. It was also wonderful what he done with the money he made and still making today. He must have been a special guy. Melissa.

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

comments, called-out

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.

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.

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.

Knowing customers and Competitors

 When starting a new business you have to no what the customers consider to be important. A business does not have to have the best all around product, just one that customers believe will meet their expectations and needs. Everybody can be different in a lot of ways, but are alike in their need for everyday living. Say if you  want to buy a pair of shoes, most everybody are going to look at 3 main things: comfort, durability and looks. If people go out to eat dinner, they want to be treated like their business is important to the restaurant.  Who wants a rude and uncaring waitress? Their food might not be the greatest, but if they treat people well and with respect they will probably keep coming back.
 To know the competition will help people figure out what the customers expect. It will also help to figure out what people do not like about a product. Knowing this it will help to make your product better.
 I read an article on line about the legalization on marijuana. They are definitely keeping up with their customers need for privacy, plus some are to sick to go themselves to pick it up. If you read the complete article, you would find there is not and age or financial class distinction.

Marijuana delivery services evade bans on dispensaries, spreading across California

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June 5, 2010 | Gary Cohn and Michael Montgomery, California Watch

A flourishing and unregulated industry of pot delivery services is circumventing bans on storefront dispensaries and bringing medical marijuana directly to people’s homes, offices and more unconventional locations across the state, records and interviews show.
The unfettered delivery of marijuana through hundreds of these services highlights how quickly California’s fabled pot industry is moving from the shadows and into uncharted legal territory. These new couriers include enterprising farmers, business entrepreneurs and even a former Los Angeles pot dealer methodically switching her former clients to legal patients.
In newspapers and on the Internet, hundreds of “mobile dispensaries” advertise a wide range of strains and other products, such as brownies and cookies laced with THC, the active ingredient in marijuana. One service delivers organic vegetables along with medical marijuana, as part of a “farm-direct” service.
Some operate in multiple counties, including jurisdictions where storefront dispensaries are banned, or make local deliveries to drop-off points, such as Starbucks parking lots and gas stations. At least three ship to clients around the state using private prescription-drug couriers.

Matt Mills McKnightAngel Raish suffers from conditions related to a brain tumor. She uses a delivery service for her prescribed marijuana.

Although delivery of medical marijuana is not a new phenomenon, advocates say the growth of these services could be a game-changer in the state’s pot war, which pits law enforcement, elected officials and community groups in some localities against dispensary owners and patients.
And these businesses could increase in popularity if voters approve an initiative on the November ballot that would legalize pot possession.
“They’re delivering the product better, cheaper, more discreetly and probably at a higher profit rate than dispensaries,” said Allen St. Pierre, director of the National Organization for the Reform of Marijuana Laws, which advocates legalization. “These delivery services are starting to grab more and more market share.”

This story was reported in collaboration with KQED public radio, with assistance from the USC Annenberg School for Communication & Journalism. It was edited by Robert Salladay and copy edited by William Cooley.

Filed under: Public Safety, Health & Welfare

Tags: Los Angeles, medical marijuana, regulation, Riverside, San Francisco

Market Research

  We live in a society that has unlimited access to do market research. There are on line survey's, telephone survey's, mail survey's and in store survey's. This is just a few ways to gather information you might need to launch a new product. The internet has unlimited information about similar pass products. This could help with information anyone might need to help them make up their mind on if they should try to launch a new product. We live in a ever changing world though, what was bad yesterday, might not be bad today. What one person fail's at, another may succeed. I think talking and really listening to people are very important when trying to establish important statistics. People do not mind telling what they want to people who will listen.
  It always helps to know who could afford the product you might want to put on the market. Price range questions is something to think about before you get to far in the process. If very few can afford your product you probably want be successful.

New media marketing is a relatively new concept used by businesses in developing an online community, which allows satisfied customers to congregate and extol the virtues of a particular brand. In most cases, the online community includes mechanisms such as blogs, podcasts, message boards, product reviews, Wikipedia, and social networks all of which contribute to a transparent forum to post praises, criticisms, questions, and suggestions.
One of the primary arguments to promote new media marketing is the premise that traditional advertising is losing its influence on consumers. Backed by statistical evidence demonstrating a growing trend of consumers making purchasing decisions based on Internet research and referrals.^[1] These advocates strongly adhere to the notion that consumers are more inclined to believe feedback from like-minded peers than corporate marketing verbiage dispersed through traditional television, radio, direct mail, or newspaper advertising.
Although businesses would be exposing certain weaknesses to the marketplace by allowing individuals, or even competitors, to post critical comments, responding with an honest and transparent answer designed around solving the issue at hand may mitigate potential risks.
New media marketing is most effectively marketed by internet-driven technology such as blogs, RSS, web video productions, podcasts and social networking platforms.^[2]
 
   I found this article in Wikipedia. The internet has made it very easy for people to research anything they might want to buy, or services they made need. Service industries are easier to investigate their history and background before you hire them, or use their services. People need to be careful though, not everyone will be honest. It could be competition  trying to ruin the business of their competitors.
  I think that the internet advertising is good and bad. The good part is that people have to be more aware of how they treat others. If they do not do a good job are sell a good product it will be hard to continue to make money. The bad to me is that you do not know for sure who is giving the approval ratings.(Most of the time) Just because it is on the internet does not make it true!
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