Implementing Market Program Part 1 Flashcards
Marketing Mix theory
Marketing Mix is a set of Controllable Marketing Variable that the company uses to reach its targets on the market
4 P’s
- Product
- Price
- Place
- Promotion
Product range
Total mix of products offered to customers by a winery. Composed of different product lines
Product line
Products that are perceived as homogeneous by the consumer
Product mix (3)
- Width: number of product lines
- Depth: number of products in each line
- Consistency: homogeneity and connection among the products
5 Product development phases
- Introduction
- Growth
First phases categorized by an incline (Organic/orange wines) - Maturity
- Saturation
middle phases showing the top of the bell curve (DOC/DOCG wines) - Decline: Table wines or revitalization
4 types of products for the sales approach
- Key products: Backbone of firm
- Attractive products: bring in new customers
- Aggressive Products: Reaction to competition
- Accessory Products: Complete the line
Economic/financial approach
Innovative products, key products must be self sufficient
Most important of the 4 P’s
Price
3 considerations for price
- Consumer
- Seller
- Competitors
4 considerations for definition of price
- Demand
- Competition
- Price of substitute products
- Cost to the company
Price level considerations
We need to considered if the price is too low resulting in a perceived quality, too high and its seen as prohibitive compared to quality
6 steps for determining price
- Set the target
- Estimate demand
- Calculate costs
- analyze competition
- choose the method
- Fix final price
Price policy must respect two main principles
- Internal: costs and profitability limits
- External: Competition, distribution
Price and demand relationships
Higher the price, lower demand
Demand Elasticity
Measures how the demand quantity of a product reacts to the price variation.
Elastic demand vs. inelastic demand
How quantity reacts to price variations, if its more than proportionally its elastic and less than proportionally its inelastic
Elasticity equation
(Q2-Q1)/Q1
e = —————–
(P2-P1)/P1
Negative line
elasticity of e>1
Vertical line
perfectly inelastic
Horizontal line
Perfectly elastic
Essential commodities
inelastic demand
Luxury Items
Elastic demand
4 aspects of cost determination
- Basic price: Direct Cost
- Technical price: Fixed Cost
- Target Price: Profit
- Mark-up price: mark-up
Perceived value by a consumer
= benefits perceived / sacrifices for consumption
Conventional distribution channel (4)
- Wine producer
- Intermediary
- Retailer
- Consumer
Vertical distribution channels
mega companies that control the production system, distribution of its brands, and distribution of other brands
Supermarkets and vertical distribution
Vertical integration: Buying other wine retailers
Horizontal Integration: controlling production and consumption
3 Intermediaries
- Market Makers: Take ownership of the product
- Matchmakers: Do not take ownership
- Negotiants: Paul Johnson, buys the grapes or must and blends and bottles in an appellation and then sells under his own label
Ho.Re.Ca
Hotels, Restaurants, cafe/catering
