The way in which a business will use marketing will depend on its approach to developing and selling its goods and/or services. There are three main strategies that can be used:
Product – Oriented business
Inventing and developing products in the belief that they will find consumers to purchase them. Is often used for innovative products or luxury high-quality products, that have feature above markets fashion.
The disadvantages of oriented business is that it can be difficult and very expensive to sell product consumers may not want to buy it.
The disadvantages of oriented business is that it can be difficult and very expensive to sell product consumers may not want to buy it.
Market – Oriented Business
Focusing on what the consumer wants and develops products to meet these. They first carry out market-research to see if consumers want to buy the product and can modify the product in response to this.
Market oriented business are more likely to be successful because they’re likely to be prepared for changes in consumer tastes. Customer needs have been identified before the product is introduced.
Market oriented business are more likely to be successful because they’re likely to be prepared for changes in consumer tastes. Customer needs have been identified before the product is introduced.
Asset Led marketing
It is a mix market and product orientations, when the firm does do market research into consumer tastes but will still only produce products that it considers it has strengths.
Pricing Stratagies
Cost based pricing
- Mark-up pricing
A bookstore adds 50% to the cost of the books that it buys from the publisher. It purchase the latest Harry Potter for £30.
Price= £30+£15 (50% or 30) = 45$
- Target pricing
Required return= £400,000 + 20%= £480,000
So price of each unit needs to be = £48
- Contribution cost pricing
The only fixed cost is rent, at £100,000. Each unit contributes £1 to the rent.
So price will be £3
The firm will breakeven if 100,000 units are sold.
100,000 x 1= £100,000
Competition based pricing
- Penetration pricing
- Price skimming
- Competitive pricing
Psychological pricing
Trying to change the consumers perception of the product.
This could involve:
This could involve:
- Charging a high price for a luxury product
- Charging just below a whole number to seem cheaper eg £1.99
- Charging low prices for the most common products purchased to give the impression of value for money, eg a supermarket might have cheap prices for bread, milk and meat and hope that consumers don’t notice the higher prices for other goods.
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