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University of Washington EMBA Program

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Goal Setting Segmentation, Targeting, and Positioning ... It is mandatory to articulate your objectives. It gives permission to ... Fuji Photo: ... – PowerPoint PPT presentation

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Title: University of Washington EMBA Program


1
University of Washington EMBA Program
  • Marketing Mix,
  • Capturing Value Pricing
  • Instructor Elizabeth Stearns

2
Course Structure
The Marketing Framework/Concept
Analysis 5Cs Opportunity Analysis
Marketing Research
Marketing Strategy Customer Strategy Goal
Setting Segmentation, Targeting, and Positioning
Implementation/Action Plans Marketing Mix (4 Ps)
3
Thrive
Survival
Profits
Competitors
Competitors
Customers
4
Overall Business Objectives
  • Profit
  • Share
  • Income
  • Growth
  • ROI

It is mandatory to articulate your objectives.
It gives permission to pursue or to decline to
pursue certain segments, and guides differential
spending between segments.
5
Overall Customer Objectives
  • Acquisition
  • Retention
  • Increase rate of purchase/trial new models
  • Referrals
  • Other?

6
The Strategy Development and Implementation
Process
Contention
Project Planning
Differing Perspectives
Consensus
Execution
Program Formulation
Marketing
Strategy Formulation
Finance
Human Resources
RD
Operations
Creativity
Coordination
Sales
7
The Marketing Toolbox
Product
Service
Marketing Mix
Price
Promotion (Communications)
Place (Distribution)
8
Marketing Mix




Product Variety


Channels

Qua
lity

Product
Place

Coverage



Design

(Distribution)

Target

Assortments



Features

Market

Locations


Brand Name

Inventory


Packaging

Transport


Sizes


Services

Warranties


Returns


Price


Promotion (Communications)

List Price

Sales Promotion


Discounts

Advertising


Al
lowances

Salesforce


Payment Period

Public Relations


Credit Terms

Direct Marketing



9
Chosing the right tool.
  • E tickets
  • Consistency between and among the tools.
  • Implementation does not drive your objectives.

10
Price Transforming the Bottom Line
  • Suppose your average price is 10 per unit. Add
    a dime to the price, making it 10.10, a 1
    improvement in the realized price.
  • (You dont necessarily do it by getting the price
    on every single order to improve by 1 but some
    by 2, some 5 just so it averages out to 1
    and you hold your sales volume.)
  • What would that be worth to you…..?

11
Price Transforming the Bottom Line
  • Estimated profit impact based on realization of
    1 price increase
  • Coca-Cola
  • Fuji Photo
  • Nestle
  • Ford
  • Phillips

Power Pricing (1996), Robert Dolan Hermann
Simon, The Free Press New York, NY
12
Connecting Price to the Customer
  • Two Key Questions
  • Who is the Customer?
  • What does the Customer Value?

13
Differential Advantage Shift Over Time
Psychological
  • Differential advantage sustained by focusing on
    functional or psychological values
  • Tends to erode over time in the direction of
    economic advantages
  • Competition drives offers from specialty to
    commodity

Economic
Functional
14
Price
  • In the nineteenth century the philosopher/economis
    t John Ruskin (1819-1900) wrote
  • It is unwise to pay too much, but it is worse to
    pay too little. When
  • you pay too much, you lose a little money- that
    is all. When you pay
  • too little, you sometimes lose everything,
    because the thing you
  • bought was incapable of doing the thing it was
    bought to do!
  • The common law of business prohibits paying a
    little and getting a
  • lot- it cant be done. If you deal with the
    lowest bidder, it is well to
  • add something for the risks you run, and if you
    do that, you will
  • have enough to pay for something better.

15
Price
  • Definition The economic cost of the product to
    the customer
  • Elements of Price Other Aspects of Economic Cost
  • List Price Barter
  • Discounts Returns
  • Credit terms Consignment
  • Warranties
  • Key Role of Price
  • Affects both unit volume, and margin

16
Designing Offers for Customers
Product
Price Time Effort Risk
Delivery
Services
Sales Relation- ship
Technical Innovation
Brand Equity
Cost
Value
Offer
17
Price


The purpose of price is
to recover costs

not

The purpose of price is to capture value in the
mind of the

customer.



Customer














Money

Getting



Benefits



Time



Giving Up













Effort













Risk


18
(No Transcript)
19
Price Strategic Considerations






Perceived
Strategic
Value



Costs






Competition
Objectives
Customer

Value



Determines What You Can Charge
Determines What You Can Earn
Determines What You Will Charge and What You Will
Earn


Critical For



Introducing new pro
ducts


Entering new markets


Undergoing major changes in competitive position


20
Price Strategy
Customers
Differential
Advantage
Who Pays
Latent
Demand
Brand
Loyalty
Substitutes
Price
Sensitivity
Product/Service
Class Expenditures
Switching
Costs
Price/Quality
Ease of
Imputation
Comparison
21
Price Strategy



Competitors



Sets Price of Referent Product



Both Direct and Indirect Competitors



What is Competitor Response to Change




What is Long Term Effect of Price Competition
22
Price Strategy Marketing Objectives



Objective







Price Strategy

Maximize Profits
Increase
Acquire New Customers
Drop for New Customers

Build Brand Equity
Hold
Create Entry Barriers
Lower
Hold Share
Match Competitors
Change Usage Patterns
Adjust Relative Prices Across the
Line
23
Price Dynamics















Differential






Offer
Advantage

Price








Referent Product














Time








24
Value Based Pricing






Focuses on the Customer




Requires Detailed Customer Knowledge




Involves a Shift in Orientation





Powerful Marketing Tool
25
Customer Value









Perceived Value of Offer



Consumer

Surplus









Value of








Differential Advantage

Price





Margin


Value of Referent Product/Service













Cost to Supply

26
Measuring Customer Value




Managerial Judgment/Value Pricing




Identify Benefit Components (Exclude Price)




Weight According to Relative Importance




Rate Competitive Products/Services




Calculate Value




Compare with Price

27
Value Pricing
_______________

______




















28
Lemons!
29
Salt!
30
Thank you!
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