PRICING RESEARCH

Price is what buyer pay to acquire product from seller

It is the way to express value of product in money

terms In pricing research, answers are sought to questions relating to the ability of consumers to pay

Pricing Research includes:

Determine the price expectations of consumers in the

different market segments Comparing the pricing strategies of the competitors Testing the alternative pricing strategies Evaluating the consumer reactions and responses to the company prices

Pricing Strategies
Economy Pricing Low price Cost of marketing and manufacture are minimum Penetration Pricing Initially price charged is low in order to gain market share Once this is achieved, the price is increased Price Skimming Charge a high price because of substantial competitive advantage Advantage is not sustainable Price inevitably falls due to increased supply

 Premium pricing Uniqueness of the product or service fetch them a high price High prices are charged for luxuries

Types of Pricing Research

Comparative Pricing Research Single respondent is questioned to react to two or more prices of the same product Declarative Design Respondents are exposed to a product profile and asked to declare a price that they perceive to be acceptable or realistic or the maximum they would pay

Pricing Research Methods

Price Sensitivity Meter (Van Westendorp): Too expensive Too cheap Expensive Cheap Concept Test/Concept Evaluation: Definitely would purchase Probably would purchase Might or might not purchase Probably would not purchase Definitely would not purchase

 Conjoint Analysis: Respondents are forced to make trade-offs between products and product features To determine how people value different features that make up an individual product or service To determine what combination of a limited number of attributes is most influential on respondent choice or decision making

 Discrete Choice: Involve choices between two or more discrete alternatives Discrete choice models are statistical procedures that model choices made by people among a finite set of alternatives The models have been used to examine, e.g. the choice of which car to buy, where to go to college, which mode of transport (car, bus, rail) to take to work among numerous other applications

Advertising Research
Concentrates on the type of advertising campaign that

would be most suitable for the product, the ideal time for product launch, limitations of the product

Step involved in developing an advertising program

Setting/formulating objectives
Finding the right target audience Selecting the message

Choosing an appropriate media vehicle

Setting Advertising Objectives

DAGMAR-Defined Advertising Goal for Measuring

Advertising Results
Takes the consumer through successive levels of

inwardness, awareness through exposure, comprehension (recognition), intention and finally action (purchase)

DAGMAR Approach
Defining Advertising Goals for Measured Advertising

Results Russel H. Colley gave this approach He distinguished 52 advertising goals These goals pertain to sales, image, attitude and awareness

 Some of the goals are: Persuade a prospect to visit a showroom and ask for a demonstration Build up the morale of the companys sales force Facilitate sales by correcting false impression, misinformation and other obstacles Announce a special reason for buying now (price, discount, premium and so on) Make the brand identity known and easily recognizable Provide information and implant attitude regarding benefits and superior features of brand

 According to DAGMAR approach, the communication

task of the brand is to gain:

Awareness Comprehension Conviction Image

Finding the Right Target Audience

Requires knowledge of market, the universe and

quantitative techniques

Determining or Selecting Message

Message consist of idea together with relevant

information Message design identifies the consumer perceptions about the product
What is the nature of the product? For whom it is targeted? The segment What are the unique characteristics of the product?

Who are the competitors?

Is the product different form other available offerings?

Choosing an appropriate Media Vehicle

Advertising media are the vehicles which carry the

advertising messages Choose medium that offers the maximum reach in the target audience of the specific product Cost effectiveness Demographic characteristics and market potential of target group

Methods of Copy Testing

Rating test: Ads are rated in accordance with the scale values and a numerical score is obtained Portfolio test: A no. of alternative copies that are to be tested are placed in portfolio The audience of the target group are given the folio and asked to go through it Interviewer ask series of recall questions related to portfolio

 Physiological Tests: Records an individuals physiological responses on advertisements like respondents eyes and emotions on seeing an advertisement

Post Testing Methods

Memory Test Recognition test:

Readership and listenership survey Show cards are developed containing clippings of advertisements Asked to identify the brand name and the media in which it appeared

 Enquiry Test The number of enquiries produced by consumer about an ad copy is considered a measure of its effectiveness success in attracting or retaining readers Couponing techniques Sale Test Advertising effectiveness in terms of increase in sales

Product Research
A product is anything that can be offered to a market

for attention, acquisition, use or consumption that might satisfy a want or need Tangibility, Intangibility, Exchange value, Attribute association (brand, package, warranty etc), Consumer Satisfaction.

Product Classification
Industrial Goods Used for further production of goods Capital Goods, Raw materials, components parts etc. Consumer Goods Ready for final consumption by consumers Shopping Goods( fans, furniture)
Convenience Goods (soaps, vegetables, fruits etc.) Specialty Goods (special eating items, fancy goods etc.

New Product Development Process

Idea Generation Gathering ideas Screening Idea Sales, production cost, profit potential, competitors response if the product is launched Concept Development and Testing Idea is developed into a product concept

 Market Strategy Development Target market, planned product positioning and sales, market share, profit goals Products planned cost and budget for the first year Planned long run sales, profit goals, marketing mix strategy

 Business Analysis Viability of the product idea Forecast of market size(e.g. overall demand) Operational costs(e.g. production cost) Financial projections( e.g. sales and profits) Competitor analysis Internal research (purchasing and production personnel) External research (customer and distributor surveys)

 Product and Marketing Mix Development Develops the product concept into a physical product Prototype is developed Customer experience the physical product Favorable reaction helps solidify the marketers decision Estimated purchase rates, how product will be used by the customer Test Marketing Checks the viability of the product in a more realistic market setting Commercialization Product is introduced in the markets

Product Life Cycle

Introduction Stage: To inform potential buyers To encourage middlemen to stock products To induce acceptance The main features of this stage are: Low sales volume High costs Profits are negative Promotional expenses are high

 Growth Stage: Sales volume increase Profits arise (economies of scale) Market expands Costs reduced due to economies of scale Customer awareness Competition increases

 Maturity Stage: Little growth potential for the product High sales volume High profits Prices tend to drop Increase in competitive offerings Decline Stage: Sales and profit decline Market begins to shrink Decision to drop the product

Distribution Research
Channels of distribution facilitates transfer of product

from manufacturer to ultimate consumer

Types of Channel Members

Resellers Wholesalers Retailers Agents Internet Specialty Service Firms Agents and Brokers Distribution Service Firms

Benefits offered by Channel Members

Helps in enhancing sales
Provide Financial Support Provide feedback

Cost Savings in Specialization

Reduce Exchange Time

Factors Affecting Distribution Channels

Product issues Nature of product Promotion Issues Type of promotional activities needed to sell the product Extensive salesperson to customer contact (eg. Electronics purchases) Pricing Issues Inclusion of resellers effect the products pricing

 Target Market issues Distribution coverage Channel Relationship Issues Relationships within the channel of distribution

Channel Power
Influence that one party within a channel has over

other channel member Product Power:

Product or service provider markets a brand that has

high level of customer demand Marketer of the brand is in a powerful position

Middlemen or Wholesale Power: Services a large number of small retailers with products obtained from a large number of manufacturers

 Retailer Power : Retailer commands a significant percentage of sales in the market they serve Channels are dependent on the sales generated by the retailer

Types of Distribution System

Direct Distribution System Direct Mailer Marketing Systems

Marketers website or marketers catalogue Toll-free telephone ordering Product marketer operates their own exclusive retail outlets Salesperson is involved in creating and managing sales

Personal Communication

Exclusive showrooms

Personal Selling

MOTIVATIONAL RESEARCH
Motive is a inner state that activates and directs the

behaviour of an individual towards certain goal and activity Motivation research attempts to identify forces and influences that consumers may not be aware of e.g. cultural, sociological forces

 Motivational research is based on two basic

assumptions:
Every individual has drive which when stimulated

generate a response Every individual is influenced to a certain extent by his environment

 Consumer motivation helps to improve marketing

strategies by understanding :
Consumer psychology which has been influenced by env.(e.g.

culture, family, media) Perception of consumer how they think, feel and select different alternatives Behaviour of consumer regarding decisions while marketing Enhancement of consumer knowledge to influence marketing outcomes To reach consumers how marketers can improve and adopt their marketing campaigns and strategies

Types of Motivation
External Motivation Positive motivation Negative or Fear Motivation Internal Motivation Intrinsic in nature and comes from within Self Motivation Our goal, our role model are our great motivators

Techniques of Motivational Research

Attitude Research: The Likert Scale Semantic Differential Scale Depth Research Indepth Interview The focus group Projective Research Sometimes a Respodent can see in

others what he cannot see or admit about himself.

Story Completion Word Association Test Sentence Completion. I love Diwali because Thematic Appreciation Test Pictures are shown

Sales and Market Forecasting

Market demand assessment is required because it

describes success or failure of a marketing task for a product Market potential is the highest limit that market demand can reach with the increase in marketing effort in a given environment

Factors Affecting Market Demand

Price of the product
Number of substitution available to the customer Comprehending the needs and desires of people

Forecasting the number of buyers in the specific

market for a product

Methods for Measuring Market Potential

Direct Data Method Comparison of actual sales with expected sales Corollary Data Method Measuring of market potential is based on the idea that data related to one product would automatically tell the sales potential of another

Factors affecting Sales Forecasting

Controllable forces Cost of the product Quality of product Sales promotional techniques Availability of products Uncontrollable Forces Competitors Government policies and practices Technological advancements Social changes Economic changes Political situations

Techniques used for sales forecasting

Qualitative Expert opinions Surveys Sales Force Estimate Quantitative Regression Analysis Moving Average Method Exponential Smoothing

Large no. of forecast are to be made for a number of items

 Ei=WYi+(1-W)Ei-1

Ei-1=previous computed exponentially smoothed value Y=present observed value of the time series W=subjectively assigned weighing factor or smoothing

coefficient W

Importance of Sales Analysis

Developing companys sales plan Establishing future sales Setting standards for sales performance Establishing sales goals for each unit and for each individual in the organization Estimating total sales force needed in the future Allocating salesmans time, effort, territory etc. Taking decision about salesman remuneration, training and compensation Preparing sales expense budget

Demand Measurement and Forecasting

It seeks to investigate and measure the forces that

determine sales for existing and new products Production or sales in anticipation of future demand Two methods of demand forecasting
Survey methods Statistical methods

Survey Methods
Consumers interview method: Survey of buyers intentions or preferences Direct Interview Method Complete enumeration method:

Sample survey method or the consumer panel method

Collective opinion method or opinion survey method

Statistical Methods
Trend Projection Method
Economic Indicators