Chapter 16.docx

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Department
Management Information Systems
Course
MGIS 317
Professor
Ronald Schlenker
Semester
Winter

Description
Chapter 16: marketing mix: product and price The role of the customer – the four Cs - Customer solution: what the firm needs to provide to meet the customer´s needs and wants - Cost to customer: the total cost of the product including extended guarantees, delivery charges and financing costs - Communication with customer: providing up to date and easily accessible two-way communication links with customers to both promote the product and gain back important consumer market research information - Convenience to customer: providing easily accessible pre-sales information and demonstrations and convenient locations for buying the product What is meant by the term product? It includes consumer and industrial goods and service. Goods have a physical existence, such as washing machines and chocolate bars. Services have no physical existence though Product positioning The first stage is to identify the features of this type of product considered to be important to consumers – as established in market research. (diagram page 293 book) The product life cycle This is the pattern of sales recorded by a product from launch to withdrawal from market. These are the stages_ - Introduction: when the product has just been launched after development and testing. Sales are quite low but they may increase - Growth: when effectively promoted, the product will be well received by the market. Sales growth significantly - Maturity: sales are at the highest and fail to grow any more but they do not decline significantly either. - Decline: sales fall significantly until it reaches really low sales Extension strategies These are marketing plans to extend the maturity stage of the product before a brand new one is needed. Uses of the product life cycle - Assisting with planning marketing-mix decisions, such as new product launches and price or promotion changes - Identifying how cash flow might depend on the cycle - Recognizing the need for a balanced product portfolio Assisting with the planning of marketing-mix decisions - When would you advise a firm to lower the price of its product – at the growth or at the decline stage? - In which phase is advertising likely to be most important – during introduction or at maturity - When should variations be made to the product – during introduction or maturity? Identifying how cash flow might depend on the product life cycle - Cash flow is vital to business survival and ignoring the link between cash flow and product life cycle could be very serious - Cash flow is negative during the development of the product as costs are high, but nothing has yet been produced or sold - At introduction, development costs might have ended but heavy promotional expenses are likely to be incurred – and these could continue into the growth phase - The maturity phase is likely to see the most positive cash flow, because sales are high, promotion costs might be limited and spare factory capacity should be low. - As the product passes into decline, so price reductions and falling sales are likely to combine to reduce cash flows Tabla que te cagas en la pagina 296 Why is price a key part of the marketing mix? It will: - Determine the degree of value added, by the business, to bought-in components - Influence the revenue and profit made by a business due to the impact on demand - Reflect on the marketing objectives of the business and it can help establish the psychological image and identity of a product Price elasticity of demand This measures the responsiveness of demand following a change in price (p 298 graphs) Factors that determine price elasticity - How necessary the product is: the more necessary the more customers are going to want to buy it - How many similar competing products there a
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