marketing
...wn as the product mix, take Ford for example they have small cars to meet the needs of the driver on a budget, up to larger company car drivers. Each targets a different market, Ford have designed a range to meet everybody’s needs. Price The price of a product should reflect its cost to make, companies will often give special offers on new products to boost sales and get brand recognition. These offers may include credit terms, discounts or larger amounts (buy one get one free), this is known as penetration pricing and although it gives a lower profit margin can lead to a bigger market share, penetration is used when direct competition is high. Setting international prices can cause problems, most companies nearly always sell their products for more abroad, and it must add the cost of transportation, tariffs and wholesaler mark up. If demand for a product is high prices are usually raised, if demand is low prices are dropped to encourage sales. Another pricing strategy is market skimming; prices are set high at first and then lower them over time as you start to keep up with demand, or when competitors start to move in. Mark-up pricing is the pricing of a product based on cost, it costs x amount to produce the mark-up may be 50% higher; the mark-up price represents the profit margin. Commodity products use a going rate pricing strategy, for example a petrol station would not get away with charging much higher prices than the garage next door. Some companies carry out market research first to find out what customers will pay then design a product on that budget. Place The place, this is the path to the buyer. The length of distribution channels can affect price and specifications may need to be changed to comply with different countries, car manufacturers have to make right hand drive cars for England. It is sometimes more cost effective to manufacture the product where it is sold, the Japanese had this problem, they had the longest distribution channels and decided to open factories in England. A company can draw up a channel map taking into account all the middlemen agents, shops, wholesalers etc. There is also the question of control, when AES launched the world’s first word processor, it signed up the Lanier Company to handle U.S. sales, and Lanier started selling the AES product under its own name. When Lanier switched suppliers because of competition, AES had no control over the U.S. market, to increase its market share it had to start from the beginning in a market it created. If it is too expensive or risky to launch a new product in an existing market, it makes sense to take the Lanier route, your partner absorbs the up front sales expenses leaving you to concentrate on product development. Freeport’s help third world countries encourage investment and now represent 9% of world trade, it is difficult to compete with Freeport’s and they provide exemption from taxes, duties, minimum wage controls and even health and safety l...