Download Pricing and Promoting Your Product or Service

Pricing and Promoting Your Product or
Service
chapter
6
Chapter 6
Prepared by
Ron Knowles
Algonquin College
Copyright © 2007 by Nelson, a division of Thomson Canada Limited.
6-1
Business Plan Building Block
chapter
6
Chapter 6
Chapter 6 will help you:
 Price your product or service.
 Connect with the customer
 Develop and refine your marketing
strategy.
 Refine your product features and
benefits.
 Develop a cost-effective promotional
strategy.
Copyright © 2007 by Nelson, a division of Thomson Canada Limited.
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Learning Opportunities
 Understand how to price your product or
service.
 Develop a pricing strategy.
 Understand how to communicate with target
customers using both conventional and
guerrilla marketing techniques.
 Get free publicity.
Chapter 6
Copyright © 2007 by Nelson, a division of Thomson Canada Limited.
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Learning Opportunities
 Maximize economy in advertising and
promotion.
 Understand the value of personal selling.
 Use creative techniques to arrive at the right
promotional mix.
 Develop a customer list.
 Promote through networking and build your
own network.
 Attach price tags to your promotional strategies.
Chapter 6
Copyright © 2007 by Nelson, a division of Thomson Canada Limited.
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The Marketing Mix
• The marketing mix is a blend of
Product offering
Pricing
Promotion
Place (location)
• Some refer to this mix as the
4“Ps” of marketing
Chapter 6
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Product
• Product
Product, Service, or Combination
• Focus on
Quality
Customer Service
Chapter 6
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Customer Service and Quality
Some Market Facts
If you provide quality service, you can:
•
Charge up to 10 percent more for your product or
service

Increase sales growth

Reduce costs

Gain new customers

Make word-of-mouth advertising work for you
AND
• Increase Profits!
Chapter 6
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Service and Quality Tips
 Set a new standard for your industry
 Don’t make customers pay for your mistakes
 Measure the service you provide
 Provide speedy service
 Relieve your customer’s stress
 Use feedback to stay in touch with your customer’s
needs
 Surround your product with customer benefits
Source: Adapted from Rick Spence, Secrets of Success from Canada’s Fastest-Growing Companies (Toronto: Wiley & Sons
Canada, Ltd., 1997), pp. 143-144.
Copyright © 2007 by Nelson, a division of Thomson Canada Limited.
Chapter 6
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Your Pricing Strategy
• The price you charge must be acceptable
to you, the seller, your customer and the
market
• Your price depends on a number of
factors including cost of production, the
market, competitive forces, and so on
• Begin with a ceiling price strategy
• Follow up to ensure your price covers
costs and leads to a profit
Chapter 6
Copyright © 2007 by Nelson, a division of Thomson Canada Limited.
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Promotion
• Promotion
The art or science of moving the image
of your business into the forefront of a
prospective customer’s mind.
• Promotional plan
Your promotional plan must be consistent
with your image, your target market and
your business mission.
Chapter 6
Copyright © 2007 by Nelson, a division of Thomson Canada Limited.
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Promotional Mix
• Promotional mix
The key to connecting with
customer is your promotional
mix—all the elements that you blend
to maximize communication with
your customer.
Chapter 6
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Promotion
in
Cyberspace
Promotional Mix
Working
visibly
Paid media
advertising
Industry
Literature
Branding
Yourself
Trade
Shows
Business
Cards
Point-ofpurchase
displays
Promotional Mix
Catalogues
Discount
ChapterCoupons
6
Personal
Selling
Free Ink and
Free Air
Direct Mail
Money-Back
Guarantees
Copyright © 2007 by Nelson, a division of Thomson Canada Limited.
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Promotional Strategy
Two Important Considerations
Select sales reps carefully
• Interview potential buyers
• Ask sales reps about their customers, geographic area, and
so on.
• Provide encouragement and support to your reps.
• Insist on sales call reports.
• Write monthly sales letters.
• Encourage feedback.
Use courtesy as promotion
• Impress upon your employees the importance of customer
courtesy.
• Reward employees for exceptional courtesy.
Chapter 6
Copyright © 2007 by Nelson, a division of Thomson Canada Limited.
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Guerrilla Marketing
• Guerrilla Marketing
An important part of your promotional mix will
be your “guerrilla marketing” promotional
strategies—unconventional methods of
getting the customer’s attention at minimal
cost.
Chapter 6
Copyright © 2007 by Nelson, a division of Thomson Canada Limited.
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Networking—Another Source of
Promotional Power
Networking
• Communicating through person-toperson channels in an attempt to sell or
gain information.
• Talking to people with the purpose of
doing business.
Chapter 6
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Networking—Another Source of
Promotional Power
Research Shows
•
Successful entrepreneurs spend more than 50 percent of
their time maintaining their personal networks.
•
Personal entrepreneurial networks outlast individual
business ventures.
•
Managing a personal entrepreneurial network requires
initiative.
Build Your Own Network
• Complete Action Step 33 p. 142
Chapter 6
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Nine Rules for Networking
1. Recognize that entrepreneurial
know-who is just as important as know-how
2. Be systematic
6. Identify and communicate with
your gatekeepers
3. Assess your network in terms of
specific types of ventures that you peruse
7. Assess your network in terms
of entrepreneurial functions
4. Get close to your natural contacts
8. Contribute regularly to your
personal network
5. Use your network regularly
9. Find a balance between your
know-who and know how
Chapter 6
Copyright © 2007 by Nelson, a division of Thomson Canada Limited.
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Promotion and Market Research
• Develop your core benefit proposition:
A statement about the benefits of your
product or service to your target market
• Do primary research. Ask your customers
questions:
find out how customers perceive your
business.
listen to the answers and value the
information.
Chapter 6
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Your Promotional Plan
Attach a Price Tag
Promotional Method
Yellow Pages
Window Signs
Point of Purchase Signs
Newspaper Ads
Fliers
Sales Promotions
Publicity
Personal Sales Calls
Freebies & Gifts
Networking
Thank You Letters
Chapter 6
Frequency
Annual Cost
Copyright © 2007 by Nelson, a division of Thomson Canada Limited.
Comment
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Plotting Your Future
Checklist
 What is your marketing strategy?
 What prices will you charge?
 What are your promotional mix, goals and objectives?
 What stimulates your target market to buy or use your
product or service?
 What has your primary and secondary research told you
about promoting your business?
Chapter 6
Copyright © 2007 by Nelson, a division of Thomson Canada Limited.
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Plotting Your Future
Checklist
 Develop a promotional strategy for your business.
 How will you cost out your promotional budget?
 Does your business have a unique twist for a possible
publicity story?
 Why did you select the business name you are using?
Chapter 6
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