Bundle Pricing Why is it so Appealing.

When people think of buying multiple things in a package for one price they think of some associated discount. I believe its more then that. I think there is a huge element of convenience with this type of pricing.

Think about gift baskets it would be a pain to construct your own. There are plenty of people that would find this enjoyable but a great deal of people would rather not spend the time. Another example would be tool sets its much easier to buy a set then go out and hand pick tools and construct your own set.

Part of the value of bundle pricing is in the time it saves the consumer. This type of pricing has a great deal of value in convenience.

Here is an article on Price bundling:

http://www.wiglafjournal.com/pricing/2008/01/price-bundling-to-profit/

Prestige Pricing a Way to Sell to Snobs

Do people really buy things because most others cant afford them or wont waste the money. According to prestige pricing they do. To me if there was anyone I would want to market to it would be this group of people. That seems unreal that you could make artificially high prices that would sell because they are artificially high. Not only that but this method of pricing appeals to the wealthiest people.

I have heard before that I.V. league schools weren't worth the money in terms of the value of education compared to other institutions. Could this be a form of prestige pricing? The extra money is just to get a degree that has a prestigious name. Another example to me would be food. There are certain types of food like caviar or expensive wine that seem to possess prestige prices. What extra value or sustenance is in these products, in the end your stomach is full or you are intoxicated to the same degree. In fairness I'm not a wine connoisseur but please some bottles of wine are almost cost half a million dollars. There is caviar that's more expensive because it comes from a rare fish, to me fish eggs are fish eggs.

The crazy part about this kind of pricing is that some things that are prodigiously priced used to be peasant food and now because some awesome marketer raised the price and created demand for that product people will pay top dollar for it.

This is a link to some expensive Wines:

http://www.huffingtonpost.com/2011/11/10/most-expensive-wine_n_1084988.html

Caviar link:

http://most-expensive.net/caviar-world

Everyday Low Prices

I have one major problem with this type of pricing is it real? The whole idea is that products are continually priced very low on a consistent basis. Leaving not much margin for profit. OK that seems like a good way to get value for a customer but, why then do stores that use this method put things on significant sales.

If they were really putting things at bottom line prices how could large price reductions be possible. I understand things may need to be put on sale for clearing inventory but still they cant be loosing much money. Or else it seems these sales would catch up to them.

This strategy has helped many large stores become successful in recent years it is apparent this may be the wave of the future.Many companies are now switching to this strategy to stay competitive.

Here is an article on J.C. Penney moving to (EDLP)

http://www.dailyfinance.com/2012/02/02/why-j-c-penney-will-never-be-great-again/

Public Relations a Necessity?

Does every company need PR. To me it seems like if a company were already ethical PR wouldn't be needed, actions speak louder then words. It seems like the only reason for PR is when the company screws up.

 The fact is companies need PR to communicate in a non-selling way. Its not just there for handling crisis in the public eye it also represents the company in good times. If a company is very ethical it is unlikely the general public will ever know. Without PR a highly ethical company is basically neutral in the public eye That is why PR is still important even to companies that don't have problems in the public eye. In addition if they ever did mess up they would be able to handle it.

Public relations will always be present for a company. Even if the company's doesn't organize public relations there still will be PR. Therefore might as well take the effort to organize it.

This is some information on PR:

http://www.futuresimple.com/blog/pr-without-breaking-your-budget/

Price Anticipateing inflation

The book doesn't really make light of this but when someone gives out a loan inflation has to significantly determine that price.

When you give out a loan you not only charge interest to make money on lending money, but also to get the total value back on your investment.

I believe anything that is financed has its price determined by inflation after costs are covered.

Anticipated inflation:


http://www.clevelandfed.org/research/data/inflation_expectations/index.cfm

Ad agencies

Many companies use ad agencies. Along with the company's own marketing department they help companies prepare and use advertising in order to have effective promotion. This is interesting because why would a company with its own marketing department risk valuable sales information and other valuable competitive information to an Ad agency that could be used by any other business. I believe its because these Ad agencies not only specialize in advertisements but, they have information the company doesn't. Through their effort they have compiled enormous databases on customers along with other information the company doesn't have.

Here is a list of big ad agencies
http://www.adbrands.net/us/top_us_advertising_agencies.htm

Product Placement with no Negotiation

Product placement seems to be the wave of the future when it comes to advertising on T.V. Many of these placements are done through negotiation and payment for the advertisement. This got me thinking though part of this placement is due to T.V. shows needing props. Some realistic props are not made by many companies.

Like an apple laptop, there are not very many companies that make laptops therefore apple could be in a position to not have to pay for this. Just by putting a big old apple logo on all their laptops natural non negotiated product placement could happen with no effort by the company. If the show is nationally broadcast this could be a huge expense less promotion. Talk about a deal.This more importantly infers a good strong obvious brand with that one could get this free promotion with no effort.

Here is an example of what I'm writing about

http://money.howstuffworks.com/product-placement.htm

Off Season Selling

Many companies that sell seasonal things have seasonal lows. Things like lawn equipment which doesn't sell good in winter obviously. To boost sales companies use sales promotions. By putting things on sale or offering awesome deals during these low seasons companies can level off production and sales to be more stable all year.

Do they still make money during these times or do they have spillover from more productive seasons and this is just to keep operations level. If they don't have spillover and they are still making money during off seasons why don't they do these sales promotions during the most productive times of year and up sales there when demand is high. Could this overall make them more profitable yearly.

I think the main reason companies try to level operations is because employment, they want to keep employees working year around and not have to hire seasonal workers or pay overtime during peak seasons. But if profits for the entire year are higher by running more sales promotions during peak seasons this could potentially allow a company to do some unique things. Like raising employees yearly incomes and letting them have most the winter off in the case of lawn equipment. Then during peak seasons working employees with no likeliness of slow operations. Or if sales promotions create huge demand in the peak seasons maybe work employees year around to prepare for those seasons. These all entail some risky hard economic analysis but its something to think about.

Here is some info. about increasing sales in off seasons

http://www.entrepreneurchic.com/how-to-increase-your-sales-in-slow-seasons/

Telemarketing Worth Annoying

Everyone I know hates getting a phone call from a telemarketer. I have always wondered if this was effective because the percentage of people who actually buy this stuff must be tiny. Information I looked up had various dependent statistics, to me effectiveness seemed like it could be around 10% on a wide average. I was really surprised because I've never met anyone that said they gave one of these phone calls consideration.

To me this kind of marketing is infringing on privacy. Is it worth making nine people mad to sell to one? I don't know my question is from an economic standpoint is the cost worth the benefit? Apparently it is or else no one would do telemarketing. If I get  call from a telemarketer I wont ever use that business ever because of that phone call. This method is intriguing because it is a way to do personal selling efficiently but you also make people really mad. How is it worth it?

Here is some statistic information I found
http://www.accucoms.com/sites/default/files/reports/Survey-2010_0.pdf

What Makes A Good Brand?

What do you think of as a good brand? Why is the Nike swoosh so successful or Apple's apple? Some would say its the visual appeal others would say the product itself. My guess is in the short run the brand makes the product and in the long run the product makes the brand. The brand is a symbol of the company not just the product. Think about it what comes to mind when you see the BP symbol or in contrast the Red Cross. Therefore you can have a good brand but, you better back it up or it wont be good for long.

Rapid Product Growth

What causes a product to be introduced to a market then receive huge amounts of demand? For me I think of innovation, a new product that finds a niche in the market. At least that is an obvious way to look at it. But is there other considerations, ones that do not rely on a extremely creative unique idea. I think there are strategies for this.

One I came up with is better production. For  example you plan to introduce a brand competitor into the market. Lets say the already established product has some monopoly power in its market therefore they have upped the price and with no real competition they haven't been producing efficiently. When you introduce your product you make it considerably cheaper and of equal to or greater value. You can make it cheaper because unlike your competition you have figured out a less expensive way to make it. Then what happens you create ill-will for your competition's product and boom your product received rapid growth because you have just taken your competition's market from them.

The monopoly is an extreme example but I think the concept still stands if you can produce a product more efficiently then the competition and you introduce it to the market at a much lower price you should see rapid product growth.

Here are some examples of how a product grows:
http://www.ehow.com/way_5240458_product-growth-strategy.html

Product Recognition is Everything

Changing your image can have bad results. Reorienting your market strategy can help save a company or it can make it loose a bunch of money.

The first example is when Pepsi came out with a clear caffeine free Pepsi. For what ever reason this was a failure. Its main difference from regular successful caffeine free Pepsi was the fact it was clear. For some reason consumers did not not buy into that image, clear cola it is just weird.

Another example is Redstripe beer a Jamaican based beer company. This beer is widely available throughout the Caribbean, gulf of Mexico and in a great deal of areas its the only available beer so naturally the american consumer would see it at some point vacationing. It has an iconic red stripe on its label and comes in a short stout brown bottle. When it was first imported into the U.S. the company tried to market it in a green bottle because they thought it would have better results instead it failed. Then they tried importing it in the regular brown bottles and now it is a big success. This is just product recognition. Imagine if Coke changed its label green kind of freaky huh.

References:

http://en.wikipedia.org/wiki/Red_Stripe

http://en.wikipedia.org/wiki/Crystal_Pepsi

Consumer Personalized Products

Have you used a service that lets you customize the product that you were buying. Examples of this are usually online like how Nike lets you design your own shoes.

I have done this before and I see it as a potentially powerful marketing research tool. For example what better way to decide what colors will go into a specific shoe line then actually seeing what people given real a choice of multiple colors will use for their shoes. After collecting data on the most popular colors you can see what statistically was most sought after.

Although this service could be costly for companies it can provide real life information. Seeing what people choose when they actually are spending money is different than asking them the hypothetical. It is much more accurate.

Example:

http://store.nike.com/us/en_us/?l=shop,nikeid

Pepsi and Coke Eternal Enemies?

Both Coke and Pepsi announced that they will put over 600 million each into advertising not to long ago. When I look at the Cola market I am reminded of the Butter Battle mentality or the Cold War mentality. Obviously these are the two cola super powers  competing for the same market. Really this is a oligopoly with two brand competitors.

That being said do these market conditions lead to the butter battle mentality this tit for tat decision making process. Meaning, what one side does has to be matched by the other or is there an alternative to competing like this. I think they will match each other till it no longer is economically practical and then they will still have the same proportions of the market as they always have had.

I relate this competition to the Cold War. Advertising is like their military's, it is the most obvious show of power but, what will win eventually for one side is what it does besides promotion, the other aspects of the marketing mix. Just like how the U.S. won the cold war it was because of success with everything else besides the military which led to the soviet union not being able to afford keeping up with the U.S. military.

Reference

http://bottomline.msnbc.msn.com/_news/2012/02/14/10383732-coke-and-pepsi-may-be-readying-another-cola-war?lite

Promotion

Maybe the most obvious aspect when we think of marketing is promotion. I like to think of it as the means in which your product or service is placed into the consumers thought. Think of it as a way to plant a seed, you can use a shovel, tractor, lay it on top of the ground, kick some dirt with your foot or any other way to plant a seed if you ponder it you can actually think of a bunch of ways.These all will have initial influence on the seeds success. After that the success of that seed will be determined by mainly a few things. These include location and the support it will receive in that location. To put this into promotional terms say you want to sell skateboards. If you advertise them in lets say Martha Stewart Living you are planting the seed in a terrible way and will not have much success to begin with. Now lets say you plant the seed in a better way like Thrasher Magazine a skateboard magazine that will be much more successful to begin with.. Next we consider location which isn't the actual place of the promotion but, the consumers mind. Since the planting process went well and the seed was planted in a good location it now is in a successful place to grow. A skateboarder is going to give far more consideration and thought to buying a new skateboard as time passes and eventually that plant will grow big enough to be harvested.