Pricing the product is one of the important element in marketing mix. Until recently it has been one of the most neglected areas. Even today, pricing in some firms is simply based on the concepts of cost, market position, competition and necessary profits.
Factors Affecting Pricing Decisions
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- Objectives of the Business : There may be various objectives of the firm such as getting a reasonable rate of return, to capture the market, maintenance of control over sales and profits etc. A pricing policy thus, should be established only after proper consideration of the objectives of the firm.
- Cost of the Product: Cost and price of a product are closely related. Normally, the price cannot or shall not fixed below its cost (including the product, administrative and selling costs). Price also determines the cost.
- Market Position. The prices of the products of different producers are different either because of difference in quality because of the goodwill of the firm. A reputed concern may fix may fix higher prices for its products on the other hand, a new producer may fix lower prices for its products.
The marketing environment is dynamic it is always changing. Whether the forces of the marketing environment fluctuate slowly or rapidly, they create uncertainty, obstacles, and opportunities. Marketers must constantly monitor the marketing environment to be prepared to capitalize on opportunities and minimize adverse conditions. To monitor changes in the marketing environment effectively, marketing managers must engage in environmental scanning and analysis.
Environmental analysis is the process of assessing and interpreting the information gathered through environmental scanning. A manager reviews the information for accuracy, ties to reconcile inconsistencies in the data, and interprets the findings. Analysis allows a marketing manager to discern changes in the environment and, if possible, or predict future changes. By evaluating these changes, a marketing manager should be able to determine possible threats and opportunities associated with environmental fluctuations. Knowledge of current and predicted environmental changes aids a marketing manager in assessing the performance of current marketing efforts and in developing marketing strategies for the future.… Read More »
Compensating the sales force
A compensation plan should constantly stimulate the salesman to put in their best efforts, quantitatively and qualitatively, to achieve the desired and planned levels of sales. Compensation must be fair to the management and the salesmen. It should enthuse efficient salesmen and help remove inefficient ones. It should be simple, flexible, easy to administrate, economic and capable of achieving the personal selling objectives of the firm. Periodic review and vision of the compensation plan is essential.
Motivating the sales force
It is the crunch of sales force management. The mettle of sales manager always gets tested on the touch stone of their motivational skills- how well they are able to motivate salesmen under them. Motivation is an all encompassing concept; it is a product of all that a sales manager or an organization does in relation to sales person. Through a two fold motivational package consisting of financial and non financial factors, he entire hierarchy of needs of salesmen can be taken care of.… Read More »
Sales Management is an integral sub-system of Marketing Management. It translates the Marketing Plan into Marketing Performance. Sales Management is hence described as the muscle behind Marketing Management. Every organization has people who are entrusted with the responsibility of dealing with prospects and customers to sell their products or services — its salesmen. They may be called technical executives, sales executives or marketing executives. Whatever the term is used, their major concern in the sales function is to constantly improve the profitability of the territory.
The Sales Manager in a modern organization holds a multitude of responsibilities. He has to plan, direct and control the personal selling effort of the firm. His task does not stop with the achievement of sales quotas. He is also responsible for bringing in the required profits. In addition, he is also responsible for creating the desired image for the company and its products. In fact, a modern sales manager has to do marketing rather than mere selling.… Read More »
Economic objections against advertising
The criticisms leveled against modern advertising on economic grounds can be summarized as follows:
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- Advertising creates monopolistic tendencies: It is argued that skillful and forceful advertising tends to create semi-monopolies particularly for branded goods. Their plea is that the advertisements create new demands so that one product is preferred to the exclusion of others. But this allegation is baseless. Monopoly is not possible in a competitive market. Advertising stimulates competition. Very often many small advertisers complete successfully against the bigger traders.
- Advertising is unproductive: It is often argued that advertising is unproductive since it does not produce any tangible products. This argument is also worthless. All productive work need not result in tangible goods. Effective advertisement creates demand for the product and thereby stimulates production. It is indeed a valuable service to the producer. Thus, advertising is an economic necessity.
- Advertising compels the consumers to buy: Some people argue that advertising takes advantage of the emotion of the consumers and compel them to buy things which they cannot afford or things which are beyond their buying capacity.
There are two methods of measuring advertising effectiveness, viz,, experimental method and survey method. Under experimental method, consumers are given a controlled exposure to the message and the effects are measured on the basis of the change in opinion or attitude. A base line is observed with the use of a control group not exposed to the advertising campaign.
The results of the exposure in almost all the situations are recorded. The alternative effects of each exposure are considered for comparison and with a view to establishing a relationship between the exposure and the effects. Field experiments are conducted to measure the effects of mass communication. Sample surveys or interviews or questionnaires are used to obtain information about people’s exposure to the advertising campaign. The effectiveness is evaluated on the basis of the correlations between the exposure and the attitude or action.
Pre Testing Methods
Pre-testing is preferred because it enables one to know how effective an advertisement is likely to be, before spending the budget and adopting advertising actions.… Read More »