Marketing Plan
Executive summary
What is your company name?
What is your product?
Market situation.
What is available in the market?
What need can you fill in the market?
What has Marketing got to do with
pricing?
Who’s responsible for setting and Changing
Price?
Different Brands for Different Market
Segments at Different prices.
Asking the right questions
The good question to ask:
What irritates your customers?
This might open for you a sure market because
it tells you what your customer really need from
a product.
Example: Bayad Centers. (limited offices- and far
out from place of work and time constraints- for
utility payments.)
• BDO’s 8:30am -6:00 pm, Monday to Saturday
banking hours.
• BPI’s online banking. (no more long queue
please!)
Asking the right question:
• At what price are you NOT willing to buy
this product anymore?
• People don’t know what they want.
But they do know what they don’t
want.
What is the most common
question asked in the TV today?
Hanggang saan aabot ang Php 20 mo?
Question
• You prescribed in a previous column that a
market leader with a premium product should
introduce its own low-priced product when
it’s threatened by price brands such as
generics. But won’t that cannibalize its
premium brand’s market share and therefore
lose business?
Answer
The case of Tang orange juice drink.
It’s important to diagnose the situation
correctly.
The first thing to remember in this diagnosis is
that the market is segmenting into a premium
segment and a price segment.
• When faced with two different market
segments each with its own priority needs, be
sure you have two products each specifically
tailored to satisfy what each segment is
looking for, if you want to maintain market
share and competitive status.
How should you respond to our
competitors’ lowering of their prices?
• Let’s say you’re into packaged food and bottled
beverage markets. Your competitors are cutting
prices of their products, but your products’ prices
still has about 10% or 15% more than the
competitors.
• You’ve seen mixed results of your responses to
cutting prices. Sometimes sales fall only slightly.
Sometimes it remains unaffected. Then at other
times, it really falls. This tells you that you don’t
know or really understand whether lowering your
prices is the right response to competition.
The Insight
• There are essentially two basic ways of looking
at pricing in this case. The traditional/
conventional way and the non-traditional way.
• Traditional way means you lower your prices
whenever your competitors lower theirs.
• Non-traditional means you look at your
consumers’ behaviour. It’s a consumer
segmenting behaviour.
• Just as positioning is both a marketer behaviour
and a consumer behaviour, so is segmentation.
• But what most people assume is that it’s the
marketer who segments the market. This maybe
true, but it’s just as true that consumers segment
themselves.
• Consumers’ most frequent segmentation
behaviour is by price.
Research on consumer purchases of vitamin
supplements
Two set of values: Quality and price.
• Subeconomy : top priority is for really cheap vitamin
and “as long as BFAD approved”. E.g. generics
• Economy: cheap vitamins but with at least minimum
level of quality. E.g. United Home Products.
• Premium: Priorities are quality and price is secondary.
E.g. Clusivol
• Super-premium : quality is first and foremost and price
is not an issue; “Don’t talk to me about price. What do
you think of me? Poor?” ; Pharmaton, Centrum are in
this category.
• The brands representing the four segments
are widely apart and differing in prices. But
they are all selling and making money. That’s
solid proof that there’s price segmentation
among vitamin consumers.
Think price segmentation
Thinking about the pricing in terms of price
segmentation drastically shifts the focus of the
pricing problem. You no longer ask: “Should the
price be changed or not (reduced or not, raised
or not)?”
Instead, your question becomes: “What product
variant or new product formulation best fits the
subeconomy segment? What variant for the
economy, premium and super premium?
The issue of changing price still remain. But
that’s when another brand in the same price
segment makes the predatory pricing move. It’s
not about price changes by a brand in another
price segment.
Pricing a staple food
• Subeconomy: NFA variety, P18/ kilo
• Economy: Angelica variety 24/kilo or the
Jasmin or Magnolia variety of P 25/kilo
• Premium: Sinandomeng P 34/kilo or Dinurado
at P 35/kilo
• Super premium: Malagkit haba P 43/kilo or
Malagkit bilog P52/ kilo, or organic variety P
60/kilo
Positioning through price
segmentation
Case: Company’s low cost brand is selling faster
than premium brand. Should you increase price
of the low cost brand to take advantage of its
growth?
Analysis
That all depends on how your economy brand’s
percent increase in price compares with percent
fall in the quantity that its consumers will buy
after the price increase.
Analysis
Economic principle of Price Elasticity of
Demand:
• Revenue = price x quantity bought
Individual / Group Project