Http://mywebspace.wisc.edu/rkamath marketing 300 marketing 300 discussion section

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marketing 300


marketing 300discussion section


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agenda Evaluations Exam Quiz Promotions Skimming and Penetration Pricing


Evaluations


About the exam… Some, um, minor changes.

More questions What’s on the exam

Most of exam is not cumulative Questions on targeting, segmenting, positions, life cycles are fair game Attend lecture!


Quiz

Trade shows are a sales promotion device usually aimed at promoting products or services to:a) Final consumers.b) Business/industrial customers.c) A firm's own employees.d) All of the above.e) None of the above.


Quiz

In total, advertising costs less than sales promotion.

a)Trueb)False


What would you do?

If you were presented with the following situations, how would you, as a manager, respond?


Razor Blades

Improved razor blade that customers aren’t motivated to buy• Who is your target, and what is your goal?


Razor Blades

• Why might people be uninterested?– People don’t know that it’s improved– Improvement isn’t really an improvement that anyone cares about (improvement does not offer a benefit)– Improved product is still inferior to another product

• What might make someone interested?


Razor Blades

• Coupons• Sampling• Aisle displays explaining benefits• More market research?


Shaving Cream Snack Food

A grocery chain doesn’t think there’s demand for your new edible shaving cream and so won’t stock it



• What is the problem, and what is your goal?• Who do you direct your efforts towards?



Store (push strategy):• Free product for each case sold (effectively a discount that might get passed on to end user)• Pay stocking allowance (slotting fee)• Help set up sampling area in stores



End User (pull strategy):• Advertising in various media• Couponing• Samples in mail (if possible)

YUM.YUM.


Shaving Cream

A competitor (not you!) wants to test market a new type of shaving cream, and wants to track sales to fine-tune its marketing mix.• In this situation, what are your firm’s goals, and who is your target?• How might you achieve those goals through promotion?


Shaving Cream

• Special deals that cause consumers to stockpile your stuff (ex. buy 1 get 2 free)• Big display to draw attention towards your product (need retailer’s assistance for this!)• Others?


Thinking harder…• When competitor tries to enter the market, is your goal• …to maintain your market share by offering clear benefits• …or to disrupt competitor’s entry through “dirty tricks?”• …or “anything it takes?” • What are ethical dimensions of this?• What about the ethics from a consumer’s perspective?`


Some Might Say…


What happens when you run out of ideas

1901

1971

1998


2003

2006

2008

What happens when you run out of ideas


the bleeding edge


Pricing Strategies



• January 2007: $599• March 2007: $399


Oops“I have received hundreds of emails from iPhone customers who are upset about Apple dropping the price of iPhone by $200 two months after it went on sale… We have decided to offer every iPhone customer a $100 store credit…” – Steve Jobs

EPIC FAIL…OR IS IT?


Skimming

• What is “skimming”?– Selling high to first adopters– “Skimming the cream”

• What kind of situation might this be good for?– Small number of people willing to pay a lot– Few substitutes– If you don’t know shape of demand curve

• What is the objective of skimming?– Profit-maximization


Skimming


Skimming


Skimming


Skimming


Skimming


Skimming


Skimming


Skimming

•Other examples?


Penetration Pricing

• What is “penetration pricing”?– Selling cheap to whole market

•What kind of situation might this be good for?– Large potential market / high potential sales volume– Large potential competitor base– Need economies of scale

• What is the objective?– Expansion of market share– Possibly profit-maximization


Penetration Pricing

PalmPilotMarch 1996: $2501,000,000+ sold

Apple NewtonMarch 1993: $1000“discontinued”



Penetration Pricing

•Other examples?


Discussion Question

What technique would you use for each of the following, and why?


Skimming or Penetration?

A new-fangled jet-powered unicycle?• Skimming is ideal– A new technology that no one else offers– Small group of people will likely want to be first ones to get it (first adopters)– Price competition likely to follow



Mysterious soft drink that causes all skin problems to vanish• Skimming– A few people will really want this– Cost-benefit will make it worth it to buy even if expensive

• Penetration– Large potential market– More people will buy if perceived as good value



DVD of very popular, critically acclaimed movie• Skimming– A few fans will want it more than general public

• Penetration– Skimming approach might be risky– High level of competition already



A new piece of musical gear• Skimming– If device does something completely new or unusual– If there’s a market of “gearheads” who always rush out and get the latest gizmos

• Penetration– If there are many competitors whose products do similar things– If you can use as a tool to build dependence on other product



A new children’s toy• Skimming– If toy is very unique– If having “popular brand” is important for kids

• Penetration– If many competitors– If toy is not unique or brand is not important


have a good weekend

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Http://mywebspace.wisc.edu/rkamath marketing 300 marketing 300 discussion section