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part 1
Chapter 9
Chapter
Marketing: Product and
Price
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Learning Objectives
• Define marketing and its eight functions.
• Understand market segmentation and name the
types of segmentation.
• Explain the process consumers go though when
purchasing products and how consumer markets
differ from business-to-business markets.
• Describe the various aspects that go into the product
element of marketing’s 4Ps.
• Describe the different types of pricing that should be
considered in marketing products.
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The Eight Functions of Marketing
• Exchange
– Buying
– Selling
• Physical distribution
– Transportation
– Storage
• Facilitating
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Quality and quantity
Financial
Risk
Marketing information
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Market Segmentation
• Target marketing
Segmenting the Consumer Market
• Geographic
• Demographic
• Psychographic
• Benefit
• Volume
• Niche marketing
• Relationship marketing
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Consumer Behavior
• Understand
consumers’ motivation
• Decision-making
factors:
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Learning
Reference group
Culture
Subculture
Cognitive dissonance
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The Business-to-Business Market
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Larger purchases
Fewer customers
Geographically concentrated
More rational buyers
Sales are direct
More personal selling
More functional packaging
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The 4Ps of Marketing: Product
• Marketing management
• 4Ps:
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Product
Price
Place
Promotion
Total Product Offer
• Everything that consumers evaluate
• Important beyond product
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Market Research
• Past and future purchase
• 4 steps:
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Define the question.
Collect data.
Analyze data.
Choose and implement solution.
• Primary research
– Focus group
• Secondary research
• Product line
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Product Differentiation
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Small differences
Loyalties
Classification of goods/services
Consumer goods and services
Industrial goods and services
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Packaging
• Goals
– Protect goods, attract buyers, describe content,
explain benefits, provide info, indication of price,
values, & use, and provide dimension & weight info
Branding
• Brand equity
• Brand loyalty
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Example of a UPC Barcode
12 34567 89012 8
Example only: not a valid UPC barcode
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Product Development Process
• Ideas
• Profit potential
• Prototype
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The 4Ps of Marketing: Price
• Objectives
– Profit
– Building traffic
• Loss leader
– Market share
– Image
– Social objectives
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Product Life Cycle
• 4 stages:
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Introduction
Growth
Maturity
Decline
• Affects pricing
Cost-Based Pricing
• Producers use cost as a primary basis for
setting price
• In the long run, market determines price
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Demand-Based Pricing
• Target Costing
Competition-Based Pricing
• Price leadership
Break-Even Analysis
• BEP=
Total fixed cost
Price of 1 unit – Variable cost of 1 unit
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Breakeven Analysis
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Other Pricing Strategies
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Skimming price strategy
Penetration strategy
Everyday low pricing
High-low pricing strategy
Bundling
Psychological pricing (odd pricing)
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