How does consumers process and evaluate prices?
Someone has rightly said that the consumer is a king when it comes to product choices. When it comes to making a decision of buying a certain product, the consumer would always look at the price of the particular product or a brand in question. The consumer would process and evaluate the price in the following ways:
- Based on the need and its recognition (Kotler, p. 186). A consumer would first evaluate the price with reference to his need. If the product price is comparatively higher than the need, the probability of selecting that particular product would reduce.
- External factors such as advertisements, informal communication with friends and information available on the internet.
- Past buying experience also plays a vital role in evaluation of product price.
- Price quality inference is a way in which the consumer perceives a particular product price with reference to its quality and value.
How should a company respond to a competitor’s price change?
There are several pricing strategies that can be adopted to counter the competitor’s price change. However, these strategies depend upon the direction in which the competitor changes its price. In general, the most effective way to respond depends with the situation (Kotler, p396). The company has to consider the stage in which its product is present in the product life cycle. Other important factors that need to be considered are the relevance of the product in the company’s portfolio, market conditions, competitor’s financial condition and quality factors. If the market is filled with similar products, the company needs to find ways to enhance the quality and capability of its product. If the company is unable to augment its product, it needs to reduce its price. If the competitor increases the price of its product, then the company can use this price advantage and try to increase its sales without any price increase.
3. What is a marketing channel system and value network?
Marketing channel system is a set of marketing channels that is used by a particular company to sell its product to the final customer. In most of the cases, the producers do not sell their goods to the final users. The goods pass through a set of intermediaries which enable it reach the end consumer. Some of the marketing channels are wholesalers, retailers, agents, sales representatives, brokers and even the internet. The main objective of a marketing channel system is to convert a potential buyer into a loyal customer.
A value network is basically value chain that will deliver a promised service to the final consumer (Kotler, p35). It is a responsibility of the company in question to measure and evaluate its costs, results in each value creating activity and derive ways to improve it. A value network is a combination of activities that are performed to design, manufacture, promote, deliver and support the final product.
What decisions do company face in managing their channels?
It is very important for any company to decide and manage its channels so that its final customers stay happy, loyal and satisfied with its products or services. The key decisions that a company has to take to manage their channels are:
- Training and development of the channel members: Since channel members are an integral part of the company’s value chain, it is the company’s duty to provide adequate training and development facilities to its channels.
- Evaluation of performance and effectiveness of channels is also an important decision. Any channel which is underperforming should be evaluated and improvement must be made at the earliest.
- Make necessary changes in the channels according to the market condition, channel performance and customer satisfaction.
What does the future hold for private label brands?
Private label brand is the one that is developed by the retailers and the wholesales (Kotler, p442). Retailers such as Walmart and Carrefour offer a large portion of their products under their own name or some other private labels. One of the advantages that these private brands have is that they are relatively cheaper than the other national- international brands. As per AC Nielsen, about 72% of the shoppers feel that national brands are not worth the extra cost (Kotler, p443). As per Private Label Manufacturer’s association, private labels account for nearly one of every five item sold in the United States market (Kotler, p 442). Due to the cost factor, private labels now have a distinct advantage over their national – international counterparts. Therefore, the future for private label brands seems to be very bright and promising.
How can companies evaluate and select specific foreign markets to enter?
In order to evaluate as to which specific foreign market a company has to enter, it must first look at its marketing objective and long term strategy. The company needs to first decide as to how many countries it needs to enter. Once this is done, the company needs to look at the following aspects for selecting specific foreign markets.
- Enter a developed or a developing country: The needs and requirements of a developing nation are quite different from that of an already developed nation. If a company is a market leader in its category, then it needs to choose a developing nation like Brazil, Russia, India or China to fuel its growth (Kotler, p 588).
- Evaluation of potential markets: The Company needs to choose a foreign market that suits its overall objectives, aspirations, long term strategic- financial goals and values. The Company needs to evaluate a foreign market based on these crucial factors before it makes any decision to expand its overseas operations.
References
Kotler, P (2011). Marketing Management 4th ed. Washington. Pearson. Print
