Course Name – Marketing Management
Module 6 Discussion Forum –
Question: Which is more detrimental to a firm, pricing your product or service too high, or pricing your product or service too low?

Instructions:

1.The required length for your original posting is 400 above words, and 2 replies for your classmate discussions, replies should be a minimum of 250 words. (Classmate discussions are provided below)

2.APA format

3. Two references must under discussion

Materials

Below is the Textbook PDF format

Reading Assignment

Read Chapter 7

Supplemental Resources
Inbound vs. Outbound Marketing – click on resources…many articles on the blog are useful and interesting

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Classmate 1:

by Jyothsna Malluri – Saturday, 25 July 2020, 7:53 PM

Number of replies: 1

Prices can influence consumer buying a product. The price of the product is important for the buyer, but also for the seller. Creating sales requires a combination of favourable market trends, product quality, and consumer taste and product difference at the right price, leading to product success. If we take prices into account, setting prices that are too high or too low can affect sales.

The company has different pricing strategies. However, there is no single sampling method that works for all types of products, companies or markets. The price of your product usually includes consideration of several important factors, including identifying the target customer, tracking the price charged by competitors, and understanding the relationship between quality and price. The good news is that you have flexibility in pricing. There is also bad news. You may think that the premium price is higher than you should for your well-being or service. However, a higher price may be a price that reflects the current market value of your offer. A higher price indicates your trust in the true value of your product or service (Hess 2001). Another relatively simple article is identifying and dividing the desired destination by the number of expected customers, resulting in the amount you need to bill the customer. This calculation is easy to calculate because sales and customer goals are based on your company’s current strategic goals. Customers ’earnings and goals can help you reach your goals, but you never know if customers are willing to pay the calculated price or if they underestimate their willingness to pay.

For example, you can find your favourite fashion at different prices depending on the counter. Clothing industry includes retailers, retail chains, wholesalers, e-commerce sites and more. Each supplier pays the same amount for the same product and will likely cover these costs for the customer. Add prices when you need to, but don’t be greedy. If the profit is large, the price increase must be cautious. Otherwise, customers will see that your goal is to earn more and they don’t want to do business with you in the future. (Cohen 2007).

Classmate 2:

by Varun Chillamcharla – Monday, 27 July 2020, 1:44 AM

Pricing is one of the vital factors for a product or a service. If the price of a product or a service is too high, then most of the customers may not buy them. If the price of the product is low, then it will result in huge losses to a company. So the company should price a product or a service based on some factors (Kienzler & Kowalkowski, 2017). Every company should establish a pricing strategy depending upon those factors. If the company prices a product or service without a proper plan, then it will create an unnecessary problem with the company from which they cannot recover easily.

Overpricing

Overpricing the product or service is the most hazardous factor for the company because whenever a customer wants to buy a particular product, then he/ she will look for a similar product for a lower price if they are available in the market. If your competitors sell a similar product at a reasonable price compared to you, then the customers will attract only to him. If the company prices a product or service above the customer’s expectations, then it will reduce the sales of the company (Dogu & Albayrak, 2018). Most of the company’s that they want to recover all their budget like salaries, rents by overpricing the product, but it will not work in most of the cases. So instead of overpricing, the company should put a fair price by conducting surveys or asking questions to the customers about the fair price.

Underpricing

Underpricing, a product or a service shows a massive impact on the economy of the company, and it will make the economy of the company completely fall, which is not recovered easily (Kienzler & Kowalkowski, 2017). Pricing the product or service correctly is a difficult task, but if not, it will lead to a decline in the entire economy of the company. So the company prices too low or too high for their product or service, then both will dangerous to the company.

References:

Dogu, E., & Albayrak, Y. E. (2018). Criteria evaluation for pricing decisions in strategic marketing management using an intuitionistic cognitive map approach. Soft Computing, 22(15), 4989-5005.

Kienzler, M., & Kowalkowski, C. (2017). Pricing strategy: A review of 22 years of marketing research. Journal of Business Research, 78, 101-110.

strategic-marketing

.pdf

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Andrew Whalley

Strategic Marketing

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Strategic Marketing 1st edition © 2014 Andrew Whalley & bookboon.com ISBN 978-87-7681-643-8

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Strategic Marketing

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Contents

Contents

Preface 7

1 So what is marketing? 9 1.1 The Three levels of Marketing 9 1.2 The value of Marketing; Needs, Utility, Exchange Relationships & Demand 11 1.3 The Theoretical basis of competition 17 1.4 Alternative Frameworks: Evolutionary Change and Hypercompetition 32 1.5 The Marketing Concept 35

2 What can be marketed? 40 2.1 Core Benefit Product 44 2.2 Basic product 44 2.3 Augmented product 45 2.4 Perceived product 45 2.5 A note on branding 45 2.6 Summary of the Chapter 45

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Contents

3 Marketing’s role in the business 47 3.1 Cross-functional issues 47 3.2 Strategic issues 49 3.3 Forecasting market and sales 64 3.4 Implementation, Analysis, Control & Evaluation 64 3.5 Objectives setting 66

4 Segmentation, Targeting & Positioning 67 4.1 Segmentation 69 4.2 Targeting 71 4.3 What is positioning? 72 4.4 Positioning and Perception 73 4.5 Perceptual Mapping 75 4.6 Strategies for Product Positioning 78 4.7 Product Re-positioning 79 4.8 Corporate Positioning 79 4.9 Chapter Summary 79

5 Branding 81 5.1 Why do we brand products? 81 5.2 Chapter summary 85

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Contents

6 The Marketing Mix 86 6.1 Price 88 6.2 Place 91 6.3 Product 92 6.4 Promotion 96 6.5 Physical Evidence 98 6.6 People 99 6.7 Process 100

7 Product Management 102

8 Marketing Communications or MarCom or Integrated Marketing Communications (IMC) 104

8.1 The Marketing Communications Mix 104 8.2 The Marketing Communication Process 105 8.3 Marketing Related Messages 106 8.4 The development of Marcoms 107

9 Expanding marketing’s traditional boundaries 109

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Preface

Preface This book is aimed to give an overview of what marketing really means in the contemporary business environment. It’s not a “how to guide” it’s more a background/reference document to help stimulate some thinking and discussion about marketing, which is an essential part of any higher education course covering Marketing.

Let’s start with the premise that despite its importance, Marketing is the least well understood of all the business disciplines, both by those working within business and by the public at large. It is invisible to right-wing economists, whose credo is that prices carry all the information about supply and demand that markets, need to produce the goods and services that people want; the works of Adam Smith, Friedrich Hayek, Milton Friedman, Gary Becker, all leading economists in their field of their time have no mention of marketing whatsoever.

The left-wing socialists, social scientists, journalists, and popular mass media programme makers do at least acknowledge marketing as being real. But their views often present marketing as little more than manipulative, exploitative, hard-sell advertising used by greedy and morally bankrupt corporations in pursuit of their next set of bonuses. Both views are at best incomplete in terms of truly understanding markets from the key perspective – that of the customers and suppliers who interact to make the markets.

All commercial enterprises have products and services to sell and these are both the result of, and the reason for, marketing activities. Goods & Services, collectively called Products, are developed to meet customer needs and so those needs must be researched and understood. Each product can then be targeted at a specific market segment and a marketing mix developed to support its desired positioning. Product, Brand or Marketing Managers have to design marketing programmes for their products and develop good customer relationships to ensure their brands’ ongoing success

Marketing has arguably become the most important idea in business and the most dominant force in culture. Today mass media encapsulates our lives, satellite TV, broadband internet access, instant communications via web and mobile phone, all of which mean messages can reach you virtually at any time and place. This means that marketing pervades society not on a daily basis but on a second by second basis.

There are several good reasons for studying marketing. First of all, marketing issues are important in all areas of the organisation – customers are the reasons why businesses exist! In fact, marketing efforts (including such services as promotion and distribution) often account for more than half of the price of a product. As an added benefit, studying marketing often helps us become wiser consumers and better business people.

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Preface

Marketing is also vital to understanding businesses of any sort, thus any study of business that excludes an appreciation of marketing is incomplete. In particular at the highest levels marketing becomes an integrating holistic culture that drives integrated, co-ordinated and focussed business practices with the interests of the customer as its heart – a combination that makes such businesses difficult to beat in the market.

Some of the main issues involved include:

• Marketers help design products, finding out what customers want and what can practically be made available given technology and price constraints.

• Marketers distribute products – there must be some efficient way to get the products from the factory to the end-consumer.

• Marketers also promote products, and this is perhaps what we tend to think of first when we think of marketing. Promotion involves advertising – and much more. Other tools to promote products include trade promotion (store sales and coupons), obtaining favourable and visible shelf-space, and obtaining favourable press coverage.

• Marketers also price products to “move” them. We know from economics that, in most cases, sales correlate negatively with price – the higher the price, the lower the quantity demanded. In some cases, however, price may provide the customer with a “signal” of quality. Thus, the marketer needs to price the product to (1) maximise profit and (2) communicate a desired image of the product.

• Marketing is applicable to services and ideas as well as to tangible goods. For example, accountants may need to market their tax preparation services to consumers.

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So what is marketing?

1 So what is marketing? Marketing is commonly misunderstood as an ostentatious term for advertising and promotion; in reality it is far more than that. This perception isn’t in many ways unreasonable, advertising and promotion are the major way in which most people are exposed to marketing. However, the term ‘marketing’ actually covers everything from company culture and positioning, through market research, new business/product development, advertising and promotion, PR (public/press relations), and arguably all of the sales and customer service functions as well;

• It is systematic attempt to fulfil human desires by producing goods and services that people will buy.

• It is where the cutting edge of human nature meets the versatility of technology. • Marketing-oriented companies help us discover desires we never knew we had, and ways of

fulfilling them we never imagined could be invented.

1.1 The Three levels of Marketing

Almost every marketing textbook has a different definition of the term “marketing.” The better definitions are focused upon customer orientation and satisfaction of customer needs;

• The American Marketing Association (AMA) uses the following: “The process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.”

• Philip Kotler uses, “Marketing is the social process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others.”

• The Chartered Institute of Marketing (CIM), “Marketing is the management process that identifies, anticipates and satisfies customer requirements profitably.”

In a January 1991, Regis McKenna published an article in the Harvard Business Review (HBR) entitled “Marketing Is Everything.” In the article the McKenna states, “Marketing today is not a function; it is a way of doing business.” Indeed we now call this the top level of Marketing – Marketing as a business philosophy. So yes, marketing is everything. In essence it’s the process by which a company decides what it will sell, to whom, when & how and then does it!

This brings us to the second level of Marketing; Marketing as Strategy. This entails understanding the environment the business is operating in; customers, competitors, laws, regulations, etc. and planning marketing strategy to make the business a success. This second layer is about segmenting (S) the market, deciding which customers to target (T) and deciding what messages you want the targets to associate with you; what is called Positioning (P). The overall process is usually referred to as; segmentation- targeting-positioning (STP) which is covered in Chapter Three.

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So what is marketing?

STP however is not alone at this level; it is closely allied with the concept of Branding, which is not just about logos and names. Brands are now about image – or more correctly its perception, branding is a link between the attributes customers associate with a brand and how the brand owner wants the consumer to perceive the brand: the brand identity. Over time, or through poorly executed marketing or through societal changes in markets, a brand’s identity evolves gaining new attributes from the consumer’s perspective.

Not all of these will be beneficial from the brand owner’s perspective and they will seek to bridge the gap between the brand image and the brand identity, by trying to change the customers perceptions – brand image – to be closer to what’s wanted brand identity; sometimes this necessitates a brand re-launch. A central aspect to brand is the choice of name. Effective brand names build a connection between the brand’s personality as it is perceived by the target audience and the actual product/service, by implication the brand name should be on target with the brand demographic, i.e. based in correct segmentation and targeting. Level two of Marketing can thus be summarised as STP + Branding; Branding is covered in Chapter Four.

The third level of marketing is about the day to day operational running of marketing, it encompasses the control of the Marketing Mix and the processes within a business that help create and deliver that company’s products and services to the customer. This level spans all aspects of a business and across all customer contact points including:

• A company’s web site; • How they answer the phones; • Their marketing and PR campaigns; • Their sales process; • How customer contact staff present themselves (in person and on the phone); • How a business delivers its services; • How a business “manages” its clients • How a business solicits feedback from its clients.

These operational issues are covered in Chapters Five, Six and Seven.

From the above we see that:

• Marketing involves an ongoing process. The environment is “dynamic.” This means that the market tends to change – what customers want today is not necessarily what they want tomorrow.

• This process involves both planning and implementing (executing) the plan.

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So what is marketing?

To summarise then we can see that a simple definition of marketing would be, “The right product, in the right place, at the right time, at the right price,” Adcock et. al. This is a succinct and practical definition that uses Borden/McCarthy’s 4Ps – Product, Price, Place & Promotion, which are covered in Chapter Five.

1.2 The value of Marketing; Needs, Utility, Exchange Relationships & Demand

It is a fundamental idea of marketing that organisations survive and prosper through meeting the needs and wants of customers. This important perspective is commonly known as the Marketing Concept which as we saw earlier at its highest is a philosophy and business orientation about matching a company’s capabilities with customers’ wants. This matching process takes place in what is called the marketing environment and involves both strategic and tactical marketing within the organisation’s structure. A truly marketing oriented business is actually structurally designed to facilitate the Marketing Concept as a philosophy and as a way of operating.

An entrepreneur realised that the feedback his company was getting had begun to show less and less positive results over the past twelve months. This period happened to coincide with an expansion of the business and a significant increase in the number of staff, form what had been before a relatively small team. Looking deeper a key issue seemed to be that customers where no longer finding the business easy and flexible to deal with.

The entrepreneur hit on a novel solution. He split his staff into those roles were to directly serve customers, e.g. Customer service, Sales, Marketing and those whose roles were to support the company, e.g. Accounting, Logistics, HR. Once complete a meeting was called and as the staff assembled he personally gave small blue button badges to the support group, he proudly wore his own to show commitment, and small green button badges to those directly serving the customers.

Once assembled he explained the reason for the meeting and that he had reached a solution; the badges. “From this moment on we only have two rules that I want you all to bear in mind at all times. Those of you wearing a green badge – it is your job to say yes to a customer and find a way to do it. Those of you wearing a blue badge – when someone wearing a green badge comes to you and says I need to do this for a customer, your job is to find a way to say yes and to then do it”.

Now that’s the Marketing Concept as a cultural philosophy for a business.

Example 1: Management by Button Badge

Businesses do not undertake marketing activities alone. They face threats from competitors, and changes in the political, economic, social and technological aspects of the macro-environment. All of which have to be taken into account as a business tries to match its capabilities with the needs and wants of its target customers. An organisation that adopts the marketing concept accepts the needs of potential customers as the basis for its operations, and thus its success is dependent on satisfying those customer needs.

So to understand customers better – which as students striving to be better marketers we need to do, we should actually define what we mean by wants and needs, rather than just use such terms loosely;

• A “need” is a basic requirement that an individual has to satisfy to continue to exist.

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So what is marketing?

Source: Maslow (1943) Figure 1: A Representation of Maslow’s Hierarchy of Needs

Maslow’s hierarchy of needs is depicted as a five level pyramid. The lowest level is associated with physiological needs, with the peak level being associated with self-actualisation needs; especially identity and purpose.

The higher needs in this hierarchy only come into focus when the lower needs in the pyramid are met. Once an individual has moved upwards to the next level, needs in the lower level will no longer be prioritized. If a lower set of needs is no longer being met, i.e. they are deficient; the individual will temporarily re-prioritize those needs by focusing attention on the unfulfilled needs, but will not permanently regress to the lower level.

People have basic needs for food, shelter, affection, esteem and self-development. Indeed many of you should recognise a link here to the work of Abraham Maslow and his hierarchy (figure 1) of needs in explaining human behaviour through needs motivation. In fact many of these needs are created from human biology and the nature of social relationships, it is just that human society and marketers have evolved many different ways to satisfy these basic needs. All humans are different and have different needs based on age, sex, social position, work, social activities etc. As such each person’s span of needs is likely to be unique and this it follows that customer needs are, therefore, very broad.

• A “want” is defined as having a strong desire for something but it not vital to continued existence.

Consumer wants are shaped by social and cultural forces, the media and marketing activities of businesses; as such a want is much more specific and goes beyond the basic to include aspirational values as well as the need satisfaction.

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So what is marketing?

Thus, whilst customer needs are broad, customer wants are usually quite narrow. Consider this example: Consumers need to eat when they are hungry. What they want to eat and in what kind of environment will vary enormously. For some, eating at McDonalds satisfies the need to meet hunger, others wouldn’t dream of eating at McDonalds or any other fast food restaurant. Some are perfectly happy with a microwaved ready-meal, others will only countenance a scratch cooked meal with organic ingredients. Equally there are those who are dissatisfied unless their food comes served alongside a bottle of fine Chablis or Claret, or is served silver service by waiters in evening wear or has to be ordered from menus written in French.

Indeed it is this diversity of wants and needs that allows a variety of ‘solutions’ to be developed in any market and that directly leads to the need to think carefully about how and what can satisfy wants and needs. It is this approach we will explore at 1.3.2 later in this Chapter when examining Porter’s Five Forces model.

This leads onto another important concept – that of demand. Demand is a want for a specific product/ service supported by the ability and willingness to pay for it, i.e. there is a market of customers who both want and can pay for the product/service. For example, many consumers around the globe want a Ferrari car, but relatively few are able and willing to actually buy one.

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So what is marketing?

The concept of demand is absolutely fundamental to marketing, and is what much marketing research is actually aimed at; establishing the level of demand, and what Product Managers & Planners in many businesses spend their time trying to predict – patterns of demand and how they change as new products and services come to market and the needs/wants of the consumers and customers in the market evolve.

Indeed the concept of demand is how we in marketing actually define a market – a group of potential customers with a shared need that can be satisfied through an exchange relationship to the mutual satisfaction of the potential customers and the supplier. Indeed looking at this you should be able to see that this very neatly brings together the Marketing concept with more traditional views on exchange, utility, needs and wants.

We can also take this a step further. Remember we earlier talked about STP, well in fact the process we use to segment a market is one of demand assessment via grouping potential customers together by their shared need and/or wants that can be fulfilled through an exchange relationship. This grouping through understanding shared needs is fundamental to effective marketing, but is also a major area of contention within most businesses because it is easy to get wrong. Good use of STP leads to a segmentation of the market into groups that are homogenous by need, these groups can then be prioritised by their potential return and one or more is then chosen to be served – it/they become a target market – and a marketing mix is chosen to do just that.

So to summarise;

• A firm’s marketers carefully study of the needs individuals and businesses in order to asses the potential of a market.

• A market consists of people with purchasing power, willingness to buy, and authority to make purchase decisions.

• A target market – The group of people toward who an organization markets its products or ideas with a

strategy designed to satisfy their specific needs and preferences. – Customer needs and wants vary considerably, and no single organization has the

resources to satisfy everyone.

Businesses therefore have not only to make products that consumers want, but they also have to make them affordable to a sufficient number to create profitable demand. Businesses do not create customer needs or the social status in which customer needs are influenced. It is not Burger King or KFC that make people hungry, nor Budweiser or Coco-cola that make them thirsty.

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