PRICING METHODS

Price of a product is the most considered factor when purchasing a product. The marketers should price the products in a manner that the consumers feel that its worth the value. For this variou pricing techniques may be used:

Cost-based Pricing:

Refers to pricing method in which some desired profit margins is added to the cost of the product to obtain the final price.

Demand-based Pricing:

Refers to a pricing method in which price of a product is finalised on the basis of the  demand of the product.

Competition-based Pricing:

The firm sets out the price of the product on the basis of the price of products offered by the competitors.

Other methods include:

Value-based Pricing: 

Companies try  to win customer loyalty by charging low price for high quality products.

Target return Pricing:

Aims to get back the investment done for a product.

Going Rate Pricing:

The price is set on the basis of current market trends 

                       

CONSUMER DECISION MAKING PROCESS

The buyer decision process represents a number of stages that the purchaser will go through before actually making the final purchase decision. The consumer buyer decision process and the business buyer decision process are similar to each other. Obviously core to this process is the fact that the purchase is generally of value in monetary terms and that the consumer/business will take time to actually assess alternatives. For FMCG the purchase decision process tends to be shorter/quicker, and for habitual purchase behaviour or repeat purchases the decision process does not take much time.

Common examples include shopping and deciding what to eat. Decision-making is a psychological phenomenon.This means that although a decision can not be "seen", we can infer from observable behaviour that a decision has been made. It is based on observable actions.

                       

The buyer decision making process is a complex one. A buyer's preference can be influenced by the reviews of friends, colleagues, family as well as social class. It is very unpredictable. 

MARKET AUDIT

Marketing Audit is a detailed and systematic analysis and interpretation of marketing environment of the business, both internal and external, its goals and objectives, to ascertain problem areas and then find out solutions to those problems.

The audit is conducted by a third person, who is not a part of the organisation and should be:

1)systematic
2)comprehensive
3)independent
4)periodical

COMPONENTS OF MARKETING AUDIT

                     

ASPECTS COVERED IN MARKET AUDIT

1)SWOT analysis
2)Customer and prospect reach
3)Competitor analysis
4)Market overview - external factors covering a PESTLE analysis
5)Marketing overview of your Internal factors assessing levels of internal communication

Marketing audit analyses the marketing strategy and the present position of the firm and helps the firm in deciding how it  intends to reach where it aims to reach

GROWTH STRATEGIES

ANSOFF MATRIX is a strategic planning tool which provides for future framework of growth of company and development of its products.The  matrix focused on the firm's present and future customers and markets. By considering ways to grow present and products in customers in new and existing markets, there are 4 possible product market combinations:

                                         

Market penetration

In market penetration strategy, the organization tries to grow using its existing products and services in existing markets.It tries to increase its market share in current market.This involves increasing market share within existing market segments. This can be achieved by selling more products or services to established customers or by finding new customers within existing markets  through more aggressive promotion and distribution.

This can be accomplished by: (i) Price decrease; (ii) Increase in promotion and distribution support; (iii) Acquisition of a rival in the same market; (iv) Modest product refinements

Market development

In market development strategy, a firm tries to expand into new markets using its existing offerings.

This can be accomplished by (i) Different customer segments (ii) Industrial buyers for a good that was previously sold only to the households; (iii) New areas or regions about of the country (iv) Foreign markets. This strategy is more likely to be successful where:- (i) The firm has a unique product technology it can leverage in the new market; (ii) It benefits from economies of scale if it increases output; (iii) The new market is not too different from the one it has experience of

Product development

In product development strategy, a company tries to create new products and services targeted at its existing markets to achieve growth.

This involves extending the product range available to the firm's existing markets. These products may be obtained by: (i) Investment in research and development of additional products; (ii) Acquisition of rights to produce someone else's product; (iii) Buying in the product and "branding" it; (iv) Joint development with ownership of another company who need access to the firm's distribution channels or brands.

Diversification

In diversification an organization tries to grow its market share by introducing new offerings in new markets. It is the most risky strategy because both product and market development is required. (i) Related Diversification - Here there is relationship and, therefore, potential synergy, between the firms in existing business and the new product/market space. (a) Concentric diversification, and (b) Vertical integration. (ii) Unrelated Diversification: This is otherwise termed conglomerate growth because the resulting corporation is a conglomerate, i.e. a collection of businesses without any relationship to one another.A strategy for company growth through starting up or acquiring businesses outside the company’s current products and markets

Ansoff Matrix presents a clear view to the firm of the strategy it should follow in order to capture more markets and reach out to more consumers.

PRODUCT PORTFOLIO

A product portfolio is comprised of all the products which an organization has. A product portfolio may comprise of different categories of products, different product lines and finally the individual product itself. Management is needed on all the three levels of a product portfolio. There are managers for managing individual products, managing product lines and finally the top level management which manages the complete portfolio.

                                     

An organization is comprised of a number of different departments, all focused towards one goal – the betterment of the organization. In the same manner, the product portfolio should be such that each and every product in the portfolio is focused towards one goal – Bringing the organization on top by optimally using the resources available.

Product classification is done on the basis of the BCG matrix. The BCG matrix classifies products on the basis of the market share of the product as well as the growth rate which a product may have. On the basis of this classification, a product manager can decide what level of investments a particular product might need and what would be the returns from such a product. As the other goal of product portfolio management is cash flow management, the BCG matrix propagates balancing the cash flow between all products equally. 

MARKET RESEARCH

Market research is any organized effort to gather information about target markets or customers. Market research is one of the key factors used in maintaining competitiveness over competitors. Market research provides important information to identify and analyze the market need, market size and competition. Market research is a way of getting an overview of consumers' wants, needs and beliefs. It can also involve discovering how they act. The research can be used to determine how a product could be marketed.

Market research has got its wide importance in current market trends and exploring the needs of customers.

1. Provide better products and offerings through in-depth market research and understanding the consumer needs.
2. Explore the opportunities and gain the first mover advantage.
3. Understanding reaction of customers with respect to change in the price and quality of products.
4. Feedback from customers to gain an edge over competitors.
5. Satisfaction level of customers

Market research could help organizations with its two strands:

1. Problem Identification research
2. Problem Solving research

Under problem identification comes:

–          Forecasting demand

–          Sales Analysis

–          Market potential

–          Share analysis

Under Problem Solving comes:

–          Product research

–          Pricing research

–          Promotion research

–          Segmentation research

Research helps a company to find out its potential market. gain marketing insights, find out possible  improvements in existing products through customer feedback and thus gain profits and be ahead of its competitors.

BRAND AND PURCHASE DECISIONS

Consumers’ choice differs from person to person. Based upon their choices decisions are made. A brand becomes popular only when consumers create likeliness for the product/service. Based upon the 4 P’s the consumer behavior changes. The price determines the buying capacity of a consumer, the product create the need and the ability to satisfy it, place determines where to buy the product and the availability for the product and finally promotion decides about the quantity to buy the product based upon the media used to create awareness. When the consumer buys the product  it is important to know more about brand also it brings in the other factors that enables a consumer to buy it. The consumer also behaves differently based on various factors namely their attitude ,motivation  and information.

There are various attributes that makes a consumer choose different brands it can be due to their past experience, traditional views, advertisements, attractive brand name or packaging. An advertisement creates a huge impact in a consumers mind. It decides about how the product is different from their competitors even though they produce the same. An advertisement is to create a strong association for a product which can be done by persuading them to buy and to increase consumption for the organization.  An advertisement helps in forming up new ideas to encourage consumers. It decides upon creating the need and expectations of consumers and showcasing them by fulfilling it and finally making them buy. An advertisement can give positive and negative perceptions. Positive perceptions like the new Coca- Cola Ad which focused upon open happiness which can be found within their family and friends, has made it unique from its competitors Pepsi, Miranda, Mountain Dew etc. this has brought a positive image and a strong association of happiness that is spread, hence the consumers perception for the product changes and increases the consumption for Coca- Cola rather than any other soft drink in India.

                      

Thus, Brand really affects the purchasing decisions of consumers and once they fulfill customers' expectation they lead to customers loyalty for years to come. For example, for many people colgate is the synonym of toothpaste. The brand has established itself so well that it cannot be replaced easily. Such is the brand loyalty.