Pricing and Promotion Flashcards
Define Pricing
The act of determining the price level for new and existing products. The price that a business charges will depend on the percentage of the market that it is trying to attract.
Define a lower price
A lower price can attract sales by undercutting the competition. This makes it possible to sell large quantities at a low cost per unit
Define an average price
An average price means a company will need to compete with its rivals through other means (such as better packaging, advertising and promotion).
Define higher or premium price
A higher or premium price can make a company appear better than its rivals in meeting the needs of customers.
Name the pricing methods
Cost plus pricing
Promotional Pricing
Competitive Pricing
Skimming
Penetration Pricing
What is promotion?
Promotion as an element of the marketing mix refers to ways in which consumers are made aware of the availability of the product or service and the qualities it has. A distinction is made between promotions “into the pipeline” and promotions “out of the pipeline”.
Explain “promotions into the pipeline”
Methods that are used to sell more products into the distribution system, i.e. they are aimed at wholesalers and retailers rather than final consumers. Examples are “dealer loaders” (such as 20 for the price of 10), display units, dealer competitions, extended credit to dealers, sale-or-return and so on.
Explain “promotions out of the pipeline”
They help to promote and sell products to the final consumer. These include free samples, trial packs, coupon offers, price reductions, competitions, demonstrations and point-of-sale materials.
What is Advertising?
This is any paid form of communication about goods and services by a business.
Functions of Advertising
i. Illustrating new trends: showing customers the shape of things to come.
ii. Communicating brand identity: advertising needs to complement the identity that a company has already built for a brand.
iii. Persuade a consumers to buy the product: in order to generate sales
iv. Provide information: so customers know about your good/service
v. Maintaining customer loyalty: it is important to maintain the customer base by reminding them about the brand.
What are the forms of advertising?
Informative
Persuasive
Comparative
Reminder
What is Informative Advertising
This type of advertisement gives factual information about a product. It informs potential customers about the benefits and where the product can be found.
What is Persuasive Advertising
This type of advertising tries to entice the consumer to purchase the product by using emotional and psychological appeals.
What is Comparative Advertising
This type of advertising compares one product to another.
What is Reminder Advertising
This type of advertising serves to inform customers that the product is still available. This type of advertising is usually used in areas where there are lots of competitions or when the product has reached maturity stage and new strategies are needed to improve the popularity of the product.
