Chapter 17, Question 3.1: Explain the role of supply and demand in determining price.
The price marketers set for a product depends mostly on two factors: the demand for the good or service and the cost to the seller for that good or service. When pricing goals are mainly sales oriented, demand considerations usually dominate.
If there is no demand for a product, the manufacturers and retailers will likely reduce the cost to reduce inventory. If supply is low and demand is high, the price could potentially increase but would definitely at least stay constant until demand begins to decline. Price equilibrium occurs when demand and supply are equal.
Monday, April 7, 2008
Chapter 17, Question 2.1:
Chapter 17, Question 2.1: Give an example of each major type of pricing objective.
Profit-Oriented: Firms like Apple are examples of profit-oriented companies. When the ipod came to the market, it was a new product and there was no competition to speak of in the MP3 player industry. Apple was and, because of quality and a relative monopoly, is able to set prices high in order to maximize profit.
Sales-Oriented: Coffee sales between Folgers and Maxwell House are an example of sales oriented pricing. Both companies set price as a means to control a larger share of the market.
Status Quo-Oriented: Air-travel is an example of status quo pricing. Across the board, airlines closely monitor their prices in comparison to other airlines in the same market. When an airline reduces its price between two markets, the competitors usually follow suit.
Profit-Oriented: Firms like Apple are examples of profit-oriented companies. When the ipod came to the market, it was a new product and there was no competition to speak of in the MP3 player industry. Apple was and, because of quality and a relative monopoly, is able to set prices high in order to maximize profit.
Sales-Oriented: Coffee sales between Folgers and Maxwell House are an example of sales oriented pricing. Both companies set price as a means to control a larger share of the market.
Status Quo-Oriented: Air-travel is an example of status quo pricing. Across the board, airlines closely monitor their prices in comparison to other airlines in the same market. When an airline reduces its price between two markets, the competitors usually follow suit.
Chapter 14, Question 5.2:
Chapter 14, Question 5.2: How does a website’s ease of use affect its ability to create attention, interest, desire, and action? Visit www.kohler.com and determine how successful they are at moving customers through the AIDA process.
A website is great for generating attention, interest, build a compelling case or desire, and command an action. Building attention starts with a compelling headline and layout – commanding the reader to continue viewing. Generating interest on a website is also key and answers the reader’s question, “what’s in it for me?” Desire on a website is created through testimonials, ratings, studies, etc. The placement of these facts on the site will help generate desire for that specific product. Action is where you close the deal. Making purchasing the product easy is key to having an effective website. If the product is only available at a certain store, the site should have direct links to where the product can be purchased.
Kohler’s website is very nice. The homepage is simplistic and it is very clear what they sell and they do a great job in generating attention to their product. When you click on kitchen and bath, you are re-directed to a flash site that brings you further through the AIDA process. Interest is generated through great pictures, and shows the depths of their product mix. Desire is also created through pictures and persuasive language. Action is made simple with an online store that makes it easy for the customer to design and purchase the product.
A website is great for generating attention, interest, build a compelling case or desire, and command an action. Building attention starts with a compelling headline and layout – commanding the reader to continue viewing. Generating interest on a website is also key and answers the reader’s question, “what’s in it for me?” Desire on a website is created through testimonials, ratings, studies, etc. The placement of these facts on the site will help generate desire for that specific product. Action is where you close the deal. Making purchasing the product easy is key to having an effective website. If the product is only available at a certain store, the site should have direct links to where the product can be purchased.
Kohler’s website is very nice. The homepage is simplistic and it is very clear what they sell and they do a great job in generating attention to their product. When you click on kitchen and bath, you are re-directed to a flash site that brings you further through the AIDA process. Interest is generated through great pictures, and shows the depths of their product mix. Desire is also created through pictures and persuasive language. Action is made simple with an online store that makes it easy for the customer to design and purchase the product.
Chapter 14, Question 5.1:
Chapter 14, Question 5.1: Discuss the AIDA concept. How do these different stages of consumer involvement affect the promotional mix?
The AIDA concept is a model that outlines the process for achieving promotional goals in terms of stages of consumer involvement with the message; the acronym stands for attention, interest, desire, and action. This model proposes that consumers respond to marketing messages in a cognitive (thinking), affective (feeling), and conative (doing) sequence.
Advertising is very effective in creating attention and interest and somewhat effective in creating desire for a product. However, advertising is not exxective in creating action. Public relations, is very effective in creating attention, interest and desire for a product but not effective in creating action. Sales promotion is very effective in creating desire for a product, not effective in creating action and somewhat effective in creating attention and interest for a product. On the other hand, personal selling is very effective in creating action desire and interest for a product and only somewhat effective in creating attention as it only person-to-person.
The AIDA concept is a model that outlines the process for achieving promotional goals in terms of stages of consumer involvement with the message; the acronym stands for attention, interest, desire, and action. This model proposes that consumers respond to marketing messages in a cognitive (thinking), affective (feeling), and conative (doing) sequence.
Advertising is very effective in creating attention and interest and somewhat effective in creating desire for a product. However, advertising is not exxective in creating action. Public relations, is very effective in creating attention, interest and desire for a product but not effective in creating action. Sales promotion is very effective in creating desire for a product, not effective in creating action and somewhat effective in creating attention and interest for a product. On the other hand, personal selling is very effective in creating action desire and interest for a product and only somewhat effective in creating attention as it only person-to-person.
Chapter 14, Question 4.1:
Chapter 14, Question 4.1: Why might a marketer choose to promote his or her product using persuasion? Examples of persuasive promotion?
Persuasive promotion is designed to stimulate a purchase or an action. Examples of this would be encouraging making the switch to MAC from PC, telling consumers to eat more Doritos, or the lifestyle enhancements of HDTVs from Phillips.
Persuasive promotion is designed to stimulate a purchase or an action. Examples of this would be encouraging making the switch to MAC from PC, telling consumers to eat more Doritos, or the lifestyle enhancements of HDTVs from Phillips.
Chapter 14, Question 3.1:
Chapter 14, Question 3.1: Why is understanding the target market a crucial aspect of the communication process?
Marketers are both senders and receivers of messages. As senders, marketers attempt to inform, persuade and remind the target market to adopt courses of action compatible with the need to promote the purchase of goods and services. As receivers, marketers attune themselves to the target market in order to develop the appropriate messages, adapt existing messages, and spot new communication opportunities. This two way communication is crucial to having a successful relationship with your target market.
Marketers are both senders and receivers of messages. As senders, marketers attempt to inform, persuade and remind the target market to adopt courses of action compatible with the need to promote the purchase of goods and services. As receivers, marketers attune themselves to the target market in order to develop the appropriate messages, adapt existing messages, and spot new communication opportunities. This two way communication is crucial to having a successful relationship with your target market.
Chapter 12, Question 3.1:
Chapter 12, Question 3.1: Describe the most likely marketing channel as well as an alternative channel for each of these consumer products:
Candy Bars: Wholesaler channel. The alternative would be retailer.
Tupperware: Direct channel. Alternative would be retailer.
Notification books: Retailer channel and the alternative is the wholesaler channel.
New automobiles: Retailer channel and the alternative could be the producer or the direct channel.
Farmers’ market produce: Direct channel and the alternative could be the wholesaler.
Stereo equipment: Wholesaler channel with the alternative being the retailer.
Candy Bars: Wholesaler channel. The alternative would be retailer.
Tupperware: Direct channel. Alternative would be retailer.
Notification books: Retailer channel and the alternative is the wholesaler channel.
New automobiles: Retailer channel and the alternative could be the producer or the direct channel.
Farmers’ market produce: Direct channel and the alternative could be the wholesaler.
Stereo equipment: Wholesaler channel with the alternative being the retailer.
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