MKT 3401 Lecture Notes - Lecture 2: Price Skimming, Psychological Pricing, Marketing Mix
MARKETING 3401
Thomas Karam
Exam 2 Notes and Information
4/3/18
3 Types of Presenters – presenting to entertainment industry
1. show runner – just WOW; maybe 5 in this class; just good and have the gift;
make sure there’s something like content behind the show runner
2. novice – amateur; everyday person who present okay but not sensational or
terrible; can be nervous; rather a hint of nervousness than a hint of arrogance;
default look doesn’t go away; leave and have left something good
3. artist – one who’s just a little different
• your group will consist of these 3 types of presenters
• you never know
• article says that artistic look are the ones who have all the information and you
got to be able to listen to
• he will look at the person who’s really not that good
4 Ps of Marketing Mix
Price
• have to make money and price it right
• if you misprice, you might mismanage brand
• price is so important
• 3 Pricing Strategies ***
o 1. price skimming
▪ set price as high as you can for as long as you can within reason
▪ electronic / technology leader can usually set as high as possible
o 2. penetration pricing
▪ as low as you can for the sake of market share, being seen by others
▪ not making as much money but product can captivate mind
▪ cars – Mitsubishi is price skimming as low as they can go
o 3. status quo
▪ competition matching
▪ what most companies do
• iPhone costing
• psychological pricing / odd even pricing – ends in an odd number, not 0s;
important in negotiations “round vs. precise numbers” are the language and in
negotiations, do a precise number because precise tells you you put a little bit of
thought in it; job offer numbers like that because they will think you’re smarter
and more genuine and that you care
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o Tiffany’s always ending in 0s $1500 or $200 because the studies say that
we as consumers view this differently and the round number is pricier and
more luxurious
o Kay jewelers odd numbers because they want you to think you’re saving a
little bit of money and are getting more of a bargain
• single pricing – dollar store is the greatest store because everything is a dollar
“how much does it cost really” and dollar menu
• *** bundling – enormous like technology and accessories; for bundling to be
effective there has to be one name brand / unique product within the bundle that
everyone is after to make it more attractive
• professional pricing – dentist, doctor examinations – sprained ankle, attorney
charging by an hour; going to $450 attorney an hour because you’re getting your
money’s worth; have to understand how to do it
• dynamic pricing – booking a plane ticket and every time the price changes at the
press of a button; Tuesday is the best day to buy airline tickets according to Wall
Street Journal; algorithms and can see how the dynamic pricing works
• discount cheapens a brand and then can be segatious and come up with an
inventive term
• 70s term when automobiles weren’t selling and then “rebate” invented and tactic
someone came up with
• grown up with rebates as a pricing tactic and trying to encourage customer to
consider your product
• so many things are pivotal to price
• gamesmanship
• loss leader – tactic some say is ethical; company prices name brand product way
ridiculously low for the sake of stirring excitement and getting you to store but
while you’re there you’ll buy several other things; name brand drinks at grocery
stores “Coca-Cola 2 Liter 50 cents” and buying alcohol because it’s there and
you’ve saved a little money; Best Buy
Place
• location where are you going to be? where are you going to place product?
starbucks at every airport in America and know what terminal to be in, not on
every corner but have an algorithm, starbucks secret is location and algorithm for
knowing it and systematic way to decide where exactly to place them based on
traffic by car and foot that is in the vault; Coca-Cola secret is ingredients
Promotion
• 4th P
• promotional mix
o 1. advertising – so critical; pay a lot of money to certain venues in hopes of
reaching a certain population; NCAA basketball championship; Master’s
running with no commercials so first one at the end is so fresh
▪ traditional ways we advertise
• 1. television – 30 second commercial is NOT dead; variations
of commercial times; beauty of it is that you want to reach a
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given population at a given time so you have to know where
the big population watching television is; everything is not
prime time / super bowl / grammys / ncaa championship;
prime time sometimes is right now with the old people at
home watching stations and reruns; advertising is their
entertainment; it’s a lot of people out there; watch mash one
day and see what products they are selling; gallery furniture
iconic – HTX, sell normal warehouse furniture, guy says
want to be better at selling furniture and make it even better;
need to buy television time; cheap at 1-3 am for ads; owner
interested in this time slot because his clientel watch tv at
this time because they aren’t the people with good jobs –
young have nothing to get up for and hang around watching
tv matching profile of typical bargain hunting shopping; time
when you buy product matters; use television to be able to
change the brand of a company (institutional); article in
second section about Wendy’s cute until last year when she
got sassy on the internet and has changed brand and made
stock go up
• radio is not dead and can really target; Warren Buffett
Berkshire Hathaway stock one share is $311,000 said he’s
buying furniture company and bought 32 little newspapers
because he saw something we didn’t see, obituary and real
estate life
• billboards – Lamar owns BR ones but is one of biggest
company in USA; huge advertising
• circulars – ton of those on Wednesday that you’ll throw away
but sometimes something buried nice but will tell you all the
discounts; play the circular game; mailing address chances
are you will get a circular because they know market
• most money is spent in all of advertising – direct mail
• school security when running for office; if not you are
doomed not to win; do it in direct mail to influence and not
offend certain groups of people
• always changing forms of advertising
• product advertising, institutional advertising to promote the
brand to be seen in a different way; e-cigarettes are the new
villain, tobacco, oil in order to change our perceptions; bp
terrible oil spill; Walmart not employee friendly launched
incredible brand rebirths (sometimes these overlap)
• purpose of promotion
o 1. inform
o 2. persuade
o 3. remind you
• product placement – product embedded in movie, audio cast, video game; enter
to negotiation with tv show or movie and want it seen; apple in Harry Meets
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